6 steps to using integrity and compliance to create a culture of ethics

Creating a culture of ethics is essential for businesses today. In a world where every infraction and mistake is broadcast instantaneously by the 24-hour news cycle or on social media, the customer–stakeholder relationship depends on demonstrating integrity and operating in an ethical manner. 

But this doesn’t happen overnight. Companies must purposely set out to shape their ethical culture, from top to bottom. An effective ethics and compliance program is essential to building a culture of ethics; it allows organizations to detect areas of concern and help people develop the confidence to act on the values that matter. The ideal structure for E&C programs in any industry uses a blend of integrity- and compliance-based elements. Here are six key steps to using integrity and compliance to create a company culture of ethics. 

Step 1: Outline universal ethical standards and procedures in your code of conduct 

An effective code of conduct should be your culture written down. By outlining your company’s desired culture of ethics, you ensure the ethical standards of compliance and integrity are clearly articulated to all members of staff. It’s also important to communicate that your code applies to all team members, no matter the tier, including contract labor or any other person who does work for the organization. Your code of conduct will be one of the most important methods of communicating company expectations and showing organizational commitment—especially from executive management—to meet those expectations. In addition to spelling out the compliance standards (and the penalties for not adhering to them), your code should include your company’s mission statement, goals, and values. Employees should declare an understanding of this code in writing. 

Step 2: Conduct effective ethics and compliance training programs 

All full-time and contracted staff members should be expected to participate in your ethics and compliance training program on an ongoing basis. It’s no secret that E&C programs are a major outlet for both communicating company ethical standards and reinforcing those standards. These programs also keep businesses in compliance with legal obligations to provide such training. But the legal requirement shouldn’t be the only reason you offer ethics and compliance training. Research shows that E&C programs can help change behaviors and go a long way towards prevention of non-compliance — especially when programs receive support from leadership. To ensure your ethics and compliance training is designed to meet the evolving needs of your business, it is worth conducting an assessment of each risk area to see whether any topic needs further refinement or customization.  

Step 3: Encourage communication and empower people to speak up 

Companies that wish to create a culture of ethics need to provide safe ways for employees to report any known or suspected violations. That means both encouraging communication and assuring that there won’t be retaliation against speaking up, as that tends to be the main reason most team members do not report issues. There are many ways you can foster communication and empower your team to speak up, including: 

• Developing an open-door reporting policy for team members reporting to their immediate supervisors.  
• Building an open line of communication between staff and the wider E&C function.
• Create an anonymous route to reporting, such as a toll-free hotline or website reporting system—provided that the method aligns with local laws. 

In order to build confidence in the reporting methods, it's also worth releasing anonymized reports regarding issues that have already been addressed. This works two-fold—it reminds team members of what constitutes unacceptable behavior, and it shows them how reports are handled. 

Step 4: Keep reports of ethics and compliance violations in a central location 

Developing a central database where all reports are entered—including verbal, written, and those that come from a helpline or intranet—will help you not only identify risk ideas, but also determine how effectively your current E&C training program resonates with staff. While you can certainly apply a variety data collection and management systems, what matters is that you maintain this information in a central location. It helps your compliance function, board members, and other leaders to track trends. And it can provide answers on where additional training may be needed. 

Step 5: Be consistent in responses to alleged ethics and compliance violations 

It is never okay to ignore or discount a report of misconduct. These reports should be investigated in a timely manner each and every time—which means it is first on the chief ethics and compliance officer and wider E&C function to determine what an acceptable timeframe is. In addition, the team member who reported the violation or misconduct should be kept updated about the progress of the report. While it is acceptable to triage a report and handle the most serious elements first, some reports may only require intervention from management or the chief ethics and compliance officer. Other reports may require an internal, or even an external, investigation. All reports should be handled according to the protocols set forth in the company code of conduct. 

Step 6: Monitor risk areas constantly, and adapt ethics and compliance training as needed 

Monitoring violations and evolving training are crucial parts of strengthening your ethics and compliance program. The E&C function is generally responsible for monitoring potential violations of standards of conduct, company policies, or even local and federal laws. But it’s important to go a step further and identify how E&C training can adapt to fix key problem areas in the organization. Both the board and the upper tiers of management should audit and do risk assessments on at least an annual level. The board should then release the results of the audit to the wider E&C team and bring in the chief ethics and compliance officer to help implement the strategies needed to combat the results. 

The key takeaway 

Instilling a culture of ethics requires an ongoing commitment from all sides of the company: from the ethics and compliance team, to members of staff, to executive leadership.

Adapted from: 6 steps to using integrity and compliance to create a culture of ethics (lrn.com)