NEW YORK, NY–(Marketwired – Sep 20, 2017) – Companies across the tech, automotive, financial services and airline industries have recently suffered from glaring cracks in their corporate cultures and ethical reputations, prompting many forward-thinking leaders to take a closer look at their own ethics and compliance policies. As they do so, the wisest will recognize that simply having detailed, stringent rules does not necessarily translate to less misconduct and more ethical behavior, according to ethics and compliance firm LRN.
Companies that get it right don’t have rules for the sake of having them; they design programs that work to generate specific behaviors, like ethical decision-making, organizational justice and freedom of expression, according to LRN’s Program Effectiveness Index Report, which identified workplace behaviors that strongly correlate to a healthy ethical culture and strong corporate performance.
“Too often, compliance policies are as complicated and opaque as a coral reef. No one can read them, and they don’t tell you what you’re supposed to do,” says Susan Divers, a Senior Adviser at LRN and co-author of the Program Effectiveness Report. “The best compliance programs act as a microcosm of what people in an organization should be doing — ideally by laying out specific behaviors.” Divers points out that the recent United Airlines scandal erupted when employees strictly followed company rules and forcibly ejected a passenger from a flight because of overbooking.
Many Compliance Programs Rely Too Much on Rules
Very few companies are taking the “values-based” approach to shaping employee behavior described by Divers and LRN, according to the report. In a survey of over 550 ethics, compliance and legal experts around the world, only 14% said that their ethics and compliance programs are increasingly focused on values and less on rules.
Another common problem is that leaders are disconnected from the compliance programs at their firms. Under half (49%) of compliance chiefs say the C-suite engages them while making strategic decisions, and even fewer (45%) say C-level executives consider ethical behavior a prerequisite for promotion.
“Overall, we’ve found that many companies over-rely on rules. But rules alone aren’t enough to ensure an ethical corporate culture,” says Divers. “For example, the global financial crisis unfolded in 2008 despite a multitude of rules, policies, codes of conduct and controls — including at offending institutions.”
Effective Compliance Programs Actively Describe How People Should Behave
Divers says that leaders should ensure their ethics and compliance officers are clear about the behavior they want to see from employees. About 80% of compliance chiefs in the LRN survey agree that expressing core company values in behavioral terms is an important part of the ethics and compliance process.
Ultimately, the key to an effective compliance program is to reflect a company’s core values and translate them into specific behaviors that employees, managers and executives can emulate, Divers adds. And according to the LRN survey, at companies that LRN has determined have the most ethical cultures, almost 90% of ethics officers have expressed their companies’ core values as specific behaviors in their Codes of Conduct.
“The best way to measure the effectiveness of any ethics and compliance program is to look for the presence or absence of ethical behaviors across an organization — rather than keep an inventory of program elements, which may not generate the specific behaviors you want,” says Susan Divers, a Senior Advisor at LRN.
To download LRN’s 2016 Program Effectiveness Report, please click here: http://pages.https://https://lrn.com/pei-2016