BUILDING EFFECTIVE COMPLIANCE PROGRAMS: It Takes a Village

“No member of a crew is praised for the rugged individuality of his rowing” ~Ralph Waldo Emerson

“If everyone is moving forward together, then success takes care of itself” ~Henry Ford

I had recently been contacted by an individual who had been tapped by her organization to launch a corporate compliance program. My colleague approached me with that perennial question, “How did you build your program?...” I paused to consider my response.

Despite the mythology to which some may wish to subscribe, individuals don’t design, build or improve corporate compliance programs alone. While certainly individuals contribute significant leadership, ideas, and work product to a successful compliance program, it is truly the efforts of interconnected contributors that weaves the fabric of the program.

From scoping and documenting the program charter through defining and populating a comprehensive compliance risk universe, it takes a village of invested professionals to build the program. Since a compliance program likely encompasses several lines of business and diverse operating functions spread across multiple locations, personal interaction with a variety of leaders and staff is necessary to identify, quantify, and rank risks across an organization. I don’t know about you, but I certainly have experiential limitations regarding various functions outside my areas of expertise. Without those subject matter experts, my program would be neither comprehensive nor effective.

Thus, while it would have been terribly tempting to my ego to lead my fellow professional colorfully through an anecdotal reprisal of my rugged journey to locate the holy grail of corporate compliance on a lonely mountaintop, my better angels prevailed. “Katherine, I’d be pleased to share with you how we built our program, and the lessons we’ve learned…” And with that discussion, another member was added to the compliance program “village.”

EXPOSING MY DIRTY LAUNDRY: Responding to Ethical Incidents in Advance

“Ethics is knowing the difference between what you have a right to do and what is right to do.”

~Potter Stewart, former U.S. Supreme Court Justice

“The time is always right to do what is right.”

~Martin Luther King, Jr., U.S. civil rights leader

Today’s revelation that former Olympus Corporation Chairman Tsuyoshi Kikukawa had received a suspended sentence for his role in a $1.7 billion accounting fraud is a reminder that neither business ethics courses nor prior real-world examples have stemmed the tide of high-profile executive wrongdoing.  In addition to former Olympus Executive Vice President Hisashi Mori, Hideo Yamada, the former auditing officer, also received a suspended sentence, debunking any myths that corporate audit and compliance professionals are above temptation.

Sufficient ink has been dedicated to detailing the corporate, government, and NGO ethical downfalls throughout the modern age. Fraud observes no geographical, political or industry boundaries. Ethical lapses remain pervasive and persistent, but I believe they are preventable.

What are you doing within your organization currently to acknowledge and mitigate the risks posed by executive ethical lapses?

Tone at the top is more than an email, a poster, or even a video distributed by your chief executive officer expounding the importance and benefits of maintaining an ethical cultural. Real ethical leadership takes root within an organization when the board of directors and senior leadership infuse the culture with relevant actions.

·         Strategic planning conferences and periodic governance meetings should include ethics discussions on the agenda.

·         Tabletop exercises should be built around current ethical lapse events in your industry.

·         Internal metrics should be tracked and benchmarked against other like organizations.

·         Employees at all levels must be encouraged to ask questions and report observed ethical lapses in good faith without fear of retaliation.

What are you doing when a significant ethical lapse strikes from within your own organization?

At one time or another nearly every organization, be it for-profit, government agency, faith-based, etc., will need to address an ethical incident that emanates from within its own walls. More than just the fear of negative publicity or criminal prosecution should drive the organization’s response. Many a relatively minor ethical incident has morphed into fodder for bloggers and 24/7 cable news outlets simply due to senior level fumbling and obfuscation amidst embarrassing revelations.

In fact, the best time to publicly address ethical lapses within your organization is before one has emerged.

·         Plan, document and test your organization’s Ethical Incident Response Plan (E-IRP).

·         Educate senior leadership regarding effective and transparent communication strategy, obtaining communication training in advance where needs dictate.

·         Communicate in a coordinated, transparent and timely manner both internally and externally to your organization, erring on the side of humility and candor.

Organizations are governed and led by human beings. Men and women, regardless of demographic variables across cultures, shun the humiliation and ridicule that scandal generates. Applying an objective E-IRP model in advance of ethical lapses will mitigate the risk that my dirty laundry—or yours—will hang too long on the proverbial corporate clothesline.