Day: February 17, 2022

This week, we are exploring the topic of Innovation in Compliance by considering some of the newest business strategies which can be applied by the compliance profession to corporate compliance programs. My inspiration comes from MIT Sloan Management Review Winter Edition. Today, I want to head in a different direction and provide some guidance on getting your organization’s culture right.
As most readers will recall, a very large part of Deputy Attorney General Lisa Monaco’s October 2021 speech dealt with corporate culture. Regarding culture, Vin DiCianni, founder of Affiliated Monitors, Inc. (AMI), said of Monaco’s remarks, the “announcement by Deputy Attorney General Lisa Monaco and the Justice Department reignited the agency’s concentration of corporate and individual liability for white collar crimes. In doing so, she emphasized to businesses, their leadership and the attorneys who represent them on the importance of implementing and maintaining strong effective compliance programs and how DOJ will continue to look at these programs going forward.” In other words, the criticalness of culture is now paramount. Chief Compliance Officers (CCOs) need to focus on growing corporate culture to build the ethical foundation for a successful compliance program.
In the most recent MIT Sloan Management Review issue, Donald Sull and Charles Sull penned an article entitled “10 Things Your Corporate Culture Needs to Get Right”, in which they posited that “knowing what elements of culture matter most to employees can help leaders foster engagement as they transition to a new reality that will include more remote and hybrid work.” It is an excellent review of some of the key elements around corporate culture and how CCOs can move forward to lay the foundation of one.
In the piece the authors explored “What distinguishes a good corporate culture from a bad one in the eyes of employees?” Of course, culture always starts at the top but unfortunately, the authors noted that “an organization’s official core values signal top executives’ cultural aspirations, rather than reflecting the elements of corporate culture that matter most to employees.” It is only by listening to what employees want that you can begin to understand how to improve culture. The authors found 10 key elements of culture that mattered most to employees.

1. Employees feel respected. Employees are treated with consideration, courtesy, and dignity, and their perspectives are taken seriously. This is by far and away the most important factor and “the single best predictor of a company’s culture score is whether employees feel respected at work. Respect is not only the most important factor, it stands head and shoulders above other cultural elements in terms of its importance. Respect is nearly 18 times as important as the typical feature in our model in predicting a company’s overall culture rating, and almost twice as important as the second most predictive factor.” The implications of this finding go to communications and a speak up culture and how they might be used by a compliance function.
2. Supportive leaders. Leaders help employees do their work, respond to requests, accommodate employees’ individual needs, offer encouragement, and have their backs. Here the authors found “Employees describe supportive leaders as helping them do their work, being responsive to requests, accommodating employees’ individual needs, offering encouragement, and having their backs. Leaders, of course, influence all aspects of culture, but being a source of support for employees is especially critical and is the leadership trait most closely associated with a highly rated culture.” This ties back into the respect finding and also ties into a speak up culture and trust at an organization.
3. Leaders live core values. Leaders’ actions are consistent with the organization’s values. While the regulators focus on this issue, employees need to see leaders not simply espousing words but actually doing deeds. Perhaps most interestingly, “Employees don’t expect leaders to live the core values, but they appreciate it when they do.”
4. Toxic managers. Leaders create a poisonous work environment and are described in extremely negative terms. Nothing will kill culture faster than a toxic manager. From the compliance perspective, this can be a disaster for not only does a toxic manager poison the atmosphere of those around them, but also those who train under him or her will garner their toxic approach as a role model.
5. Unethical behavior. Managers and employees lack integrity and act in an unethical manner. Once again this can portend a disaster for an organization. Integrity is the cornerstone of most organizations’ official culture and “Identifying toxic leaders, digging deeper to understand the context of their behavior, coaching them, or removing them from leadership positions are tangible actions organizations can take to root out people who are undermining corporate culture and potentially exposing the company to reputational or legal risk.”
6. Benefits. Employees’ assessment of all employer-provided benefits. While initially this might not seem like a compliance issue, when you look at the DOJ mandate for corporate compliance to be the bearer of institutional justice and institutional fairness you begin to see the connection. Perhaps most interesting is that “benefits are more than twice as important as compensation. Benefits are important for all employees, but which benefits matter most depend on an employee’s job. Health insurance and benefits are a better predictor of culture rating for front-line workers, while retirement benefits such as 401(k) plans and pensions matter more for white-collar employees.”
7. Perks. Employees’ assessment of workplace amenities and perks. This finding once again calls the CCO around institutional fairness and ties into the importance of talent attraction, acquisition and retention. Here the most interesting item I found for compliance was that “Among perks, company-organized social events are a particularly strong predictor of a high culture score. Even when you control for how employees talk about perks in general, social events like team-building exercises, happy hours, and picnics emerge as a reliable predictor of a high culture score. Organizing social events is a promising and relatively low-cost way executives can reinforce corporate culture as employees return to the office.” This provides insights on ongoing communications about compliance in the post-pandemic world.
8. Learning and development. Employees’ assessment of opportunities for formal and informal learning. This finding also portends well for compliance in terms of both formal and information compliance training and messaging.
9. Job security. Perceived job security, including fear of layoffs, offshoring, and automation. Most compliance functions do not consider job security as part of corporate culture. However, the authors note, “Job insecurity, however, weighs heavily on employees’ minds when they assess corporate culture. The larger the percentage of employees who talked about layoffs, outsourcing, or the possibility of getting fired, the lower the company ranked on culture.”
10. Reorganizations. How employees view reorganizations, including frequency and quality. I found this not too surprising, but the authors did note, “Virtually no one has any good things to say about reorganizations.” Further, “the fewer people who mention reorganizations, the higher a company’s culture score. While you might associate the mention of reorganizations with layoffs and job instability, the data reveals that employee concerns on this issue speak to wider strategic issues for companies.”

CCOs and compliance functions face a series of challenges while navigating the post-COVID-19 return to work. Through corporate culture, companies must maintain a healthy culture as mandated by the DOJ. The authors conclude, “Understanding the elements of culture that matter most to employees can help leaders maintain employee engagement and a vibrant culture as they transition to the new normal.”
Please join us tomorrow where we will look at why you need a career coach in compliance.