How to Create A Consistent Compliance Culture

A conversation with Tom Fox and Asha Palmer

I recently had the chance to visit with Asha Palmer, Convercent’s Chief Ethics and Compliance Officer (CEC) and Executive Vice President (EVP) of CONVERGE about the 2020 Update to the Evaluation of Corporate Compliance Programs (2020 Update) and creating a strong compliance culture within organizations. Asha had some interesting observations on the direction the Department of Justice (DOJ) is mandating for corporate compliance programs. We considered how compliance must ensure consistent outcomes.

The 2020 Update required a compliance function to take on a more wide-ranging role around institutional justice and institutional fairness when it mandated that compliance confirm consistency in the way a compliance program is administered. Obviously, this is true in the realm of discipline and incentives, but it also means fairness in the way investigations are handled and in creating a speak up culture. In Asha’s mind, it comes down to one word, consistency.

“This means compliance professionals have to be consistent in how they treat people,” Asha says, “whether it’s in Brazil or in the US, because people are watching and they want to know that there is a process that’s fair.” This means a process that is open and transparent. It is not outcome-driven; it is process-driven. It means consistent punishment, consistent corrective actions and disciplinary actions when cases arise.

We then turned to how a Chief Compliance Officer (CCO) can enlist key allies such as Human Resources (HR), the General Counsel (GC), Chief Financial Officer (CFO), Internal Audit and other executives who are co-equal with CCOs as heads of corporate disciplines. Asha said that cross-functional collaboration is critical in building a compliance culture because “we all look at things a little bit differently. There should be coordination and collaboration among departments.” Yet there should be consistency from this level of senior management.

Compliance culture and speaking up

Asha sees a speak-up culture as critical to corporate culture, because again, “we ask people, if you see it, say it, what are you as a CCO going to do about it? How are you going to protect me? And how are you going to make sure this doesn’t happen again? That’s why people speak up.” They want something different to happen. They want change.” This means it is up to the compliance function to demonstrate not simply that they will listen but that they will affect change. (Read Asha’s blog on empowering employees to speak up)

All of this ties back into consistency, as the compliance professional must demonstrate that they focused on that change. It also mandates that the corporate compliance function will be focused on protecting them. Moreover, organizational justice cannot be hierarchal. This means the C-Suite has to be obligated to the same standards as a person on the shop floor. This means that a CCO really does have to be ready and empowered to even investigate the Chief Executive Officer (CEO) if that becomes necessary.

Who owns culture?

Both Asha and I agree that culture is a key element of an ethics and compliance program. Yet who in your organization owns culture? The 2020 Update demonstrates the DOJ expects a corporate compliance function to a have a huge part in the ownership stake. From there the question becomes how to determine how employees feel about the organization. One of the most ubiquitous ways is what Palmer termed “the path of doing surveys”. In this exercise, you put out a culture survey to see how employees feel about the organization. If you discover employees feel that management would countenance circumvention of compliance controls in order to meet the bottom line, Asha noted, “the kind of thing that ethics and compliance professionals really need to tackle is what do you do with that data that comes in.”

Asha believes the answer is “ethical leadership”. This, of course, begs the question of “where does ethical leadership training happen within your organization? If people think managers would break rules in order to meet a bottom line, how do we counteract that and make sure that managers know what is required of them?” She believes the only way to do so is to address the elephant in the room head on and say “you do not break rules to meet a bottom line. If you feel you need to, you have an obligation to speak up about it and to put the onus on that leadership to really make sure they are owning the culture and to make sure that it’s ethical.”

To hear our entire conversation, tune into episode 5 of our special podcast series, A Conversation with Convercent and StoneTurn:  From the Code of Conduct to Risk Assessment to Continuous Improvement on Apple Podcasts, Spotify, or YouTube.