June 2016: Cultural Halftime

Regular diligence into your culture may help your compliance program stay healthy and avoid breeding major risks

Open up any news outlet in your internet browser and it’s hard to see past the headlines relating to compliance scandals. From the big splash this week hitting about Volkswagen’s settlement coming in at $14.7 billion, the largest in automobile history, it’s become absolutely crucial to not only pay attention to how these stories unfold but the why behind them. And from our seat, it comes down to severe cultural deficiencies.

We are smack in the middle of 2016. For some, that means Christmas in July and for others, they are still recovering from scandals that happened in 2015.

Scandals such as:

  • VW – Cheating on emissions tests and falsely advertising “Clean Diesel” vehicles (Read more)
  • Exxon Mobil – Deliberately misleading the public about climate change (Read more)
  • Turing Pharmaceuticals – Inflating the price, by 5,000 percent, for a drug that treats a rare infection found in patients suffering from HIV/AIDS (Read more)

These are just a few examples of companies that are still recovering – and in the midst of — significant laps in corporate culture.  Let’s face it: every company makes mistakes, but when issues of this magnitude strike, it’s no longer a mistake; it’s an obvious signal that serious ethical culture reform needs to occur and fast.

Building an ethical culture is challenging; however, repairing a shattered one can be even more challenging.

Take former CEO of MCI (formerly WorldCom) Michael Capellas. When he became CEO, his biggest challenge was fixing the lack of ethics at all levels throughout the organization.  Capellas and his CFO, Bob Blakely, took on the task of repairing the broken culture and focused on five main areas. (Reminder, MCI’s culture was injured due to antitrust suits)

  1. Communicate Expectations – They implemented a formal ethics and compliance training program and created a code of ethics that aligned with their corporate values and regulatory expectations.
  2. Tone at the Top and Middle – Simply put, Capellas recognized that you have to lead by example.
  3. Provide a safe way to report concerns – This may seem obvious to most, but even today, not all companies give their employees the ability to report a concern or better yet ask a question regarding ethics and compliance without fear of retaliation.
  4. Establish and “Open Door policy” – Employees need to feel comfortable talking to their managers, their manager’s manager, HR, Compliance… someone that can provide sound advice. If employees aren’t comfortable speaking up then you’re organization will always be at risk.

The time is now to check on your culture.
You don’t have to have a news worthy scandal to have a need for creating or repairing your corporate culture, but you can let these stories remind you to do regular check-ins on where your culture stands. Creating a culture of ethics and integrity is an ongoing process.  It’s like raising a child; just because you help them grow up and develop to be fully functioning adults, doesn’t mean that you don’t need to check in on them every now and then to make sure everything is okay.

Have you checked-in on your culture lately? Now is a better time than any to do so.