Tag: CCO

Categories
Blog

AI in Compliance Week: Part 2 – A Comprehensive Governance Approach

We continue our weeklong exploration of issues related to using Generative AI in compliance by examining some AI governance issues. In the rapidly evolving landscape of AI, the importance of robust governance frameworks cannot be overstated. The need for comprehensive governance structures to ensure compliance, ethical alignment, and trustworthiness has become paramount as AI systems become increasingly integrated into compliance. Today, we will consider the critical areas of compliance governance and ethics governance and present a holistic approach to mitigating the risks associated with these issues.

MIA AI Governance: The Problems

Missing compliance governance can have far-reaching consequences, undermining the integrity of an entire AI-driven initiative. Businesses must ensure alignment with enterprise-wide governance, compliance, and control (GRC) frameworks. This includes aligning with model risk management practices and embedding robust compliance checks throughout the AI model lifecycle. By promoting awareness of how the AI model works at your organization, you can minimize information asymmetries between development teams, users, and target audiences, fostering a culture of transparency and accountability.

The lack of ethical governance can lead to misalignment with an organization’s values, brand identity, or social responsibility. The answer is that companies should develop comprehensive AI ethics governance methods, including defining ethical principles, establishing an AI ethics review board, and creating a compliance program that addresses ethical concerns. Adopting frameworks like Ethically Aligned AI Design (EAAID) can help integrate ethical considerations into the design process while incorporating AI governance benchmarks beyond traditional measurements to encompass social and moral accountability.

Another outcome of the lack of trustworthy or responsible AI governance can result in unintentional and significant damage. To address this, compliance professionals should help develop accountable and trustworthy AI governance methods that augment enterprise-wide GRC structures. This can include establishing a committee such as an AI Advancement Council or similar structure in your company to oversee mission priorities and strategic AI advancement planning, collaborating with service line leaders and program offices to align with ethical AI guidelines and practices, and developing compliance programs to guide conformance with ethical AI principles and relevant legislation. Finally, implementing AI-independent verification and validation processes can help identify and manage unintentional outcomes.

The Solution

By addressing the critical areas of compliance governance and ethics governance through a more holistic approach, businesses can create a comprehensive framework that mitigates the risks associated with the absence of these crucial elements. This approach ensures that AI systems comply with relevant regulations and standards and align with your company’s values, ethical principles, and the pursuit of trustworthy and responsible AI. As the AI landscape evolves, this comprehensive governance framework will be essential in navigating the complexities and safeguarding the integrity of AI-driven initiatives.

Here are some key steps compliance professionals and businesses can think through to facilitate AI governance in your company:

  1. Establish a Centralized AI Governance Body:
    • Create an AI Governance Council that oversees your organization’s AI strategy, policies, and practices.
    • Ensure the council includes representatives from various stakeholder groups, such as legal, compliance, ethics, risk management, IT, and other subject matter experts.
    • Empower the council to develop and enforce AI governance frameworks, guidelines, and processes.
  2. Conduct AI Risk Assessments:
    • Identify and assess the risks associated with the organization’s AI initiatives, including compliance, ethical, and other compliance-related risks.
    • Prioritize the risks based on their potential impact and likelihood of occurrence.
    • Develop mitigation strategies and action plans to address the identified risks.
  3. Align AI Governance with Enterprise-wide Frameworks:
    • Ensure the AI governance framework is integrated with the organization’s existing GRC and Risk Management processes.
    • Establish clear lines of accountability and responsibility for AI-related activities across the organization.
    • Integrate AI governance into the organization’s broader risk management and compliance programs.
  4. Implement Compliance Governance Processes:
    • Develop and enforce AI-specific compliance controls, policies, and procedures.
    • Embed compliance checks throughout the AI model lifecycle, from development to deployment and monitoring.
    • Provide training and awareness programs to educate employees on AI compliance requirements.
  5. Establish Ethics Governance Mechanisms:
    • Define the organization’s AI ethics principles, values, and code of conduct.
    • Create an AI Ethics Review Board to assess and monitor the ethical implications of AI initiatives.
    • Implement processes for ethical AI design, such as the Ethically Aligned AI Design methodology.
    • Incorporate ethical AI benchmarks and accountability measures into the organization’s performance management and reporting processes.
  6. Implement Reliance-Related Governance:
    • Develop responsible and trustworthy AI governance practices that align with the organization’s enterprise-wide GRC frameworks.
    • Establish an AI Advancement Council to oversee strategic AI planning and alignment with ethical guidelines.
    • Implement AI-independent verification and validation processes to identify and manage unintended outcomes.
    • Provide comprehensive training and awareness programs on AI risk management for employees, contractors, and other stakeholders.
  7. Foster a Culture of AI Governance:
    • Promote a culture of accountability, transparency, and continuous improvement around AI governance.
    • Encourage cross-functional collaboration and communication to address AI-related challenges and opportunities.
    • Review and update the AI governance framework regularly to adapt to evolving regulatory requirements, technological advancements, and organizational needs.

By following these steps, organizations can implement a comprehensive governance framework that addresses compliance, ethics, and reliance-related governance. This framework enables organizations to harness the power of AI while mitigating the associated risks. 

AI Governance Resources

There are several notable resources the compliance professional can tap into around this issue of AI governance practices. The Partnership on AI Partnership on AI is a multi-stakeholder coalition of leading technology companies, academic institutions, and nonprofit organizations. It has been at the forefront of developing best practices and guidelines for the responsible development and deployment of AI systems. It has published influential reports and frameworks, such as the Tenets of Responsible AI and the Model Cards for Model Reporting, which have been widely adopted across the industry.

The Algorithmic Justice League (ALJ) is a nonprofit organization dedicated to raising awareness about AI’s social implications and advocating algorithmic justice. It has developed initiatives such as the Algorithmic Bias Bounty Program, encouraging researchers and developers to identify and report biases in AI systems. The AJL has highlighted the importance of addressing algorithmic bias and discrimination in AI.

IEEE Global Initiative on Ethics of Autonomous and Intelligent Systems is a multidisciplinary effort to develop standards, guidelines, and best practices for the ethical design, development, and deployment of autonomous and intelligent systems. It has produced key documents and reports, such as the Ethically Aligned Design framework, which guides the incorporation of ethical considerations into AI development.

The AI Ethics & Governance Roundtable is an initiative led by the University of Cambridge’s Leverhulme Centre for the Future of Intelligence. It brings together industry, academia, and policymaking experts to discuss emerging issues, share best practices, and develop collaborative solutions for AI governance. The roundtable’s insights and recommendations have influenced AI governance frameworks and policies at the organizational and regulatory levels.

These examples demonstrate the power of industry collaboration in advancing AI governance practices. By pooling resources, expertise, and diverse perspectives, these initiatives have developed comprehensive frameworks, guidelines, and standards being adopted across the AI ecosystem. Compliance professionals should avail themselves of these resources to prepare your company to take the next brave steps in the intersection of compliance, governance, and AI.

Categories
Blog

The Intersection of Creativity and Compliance: Lessons from Improv

In the most recent episode of the Creativity and Compliance podcast, Tom Fox and Ronnie Feldman delved into the fascinating intersection of improvisation and compliance with our special guest, Marla Caceres, an expert in applied improvisation. We explored how the skills and philosophies of improv can significantly enhance communication and leadership within the ethics and compliance community.

Marla introduced improvisation as the theatrical art of making it up on the spot. While it may seem spontaneous, successful improvisation relies heavily on technique, training, and practice. Like a basketball team practices fundamentals to be ready for any game, improvisers hone their skills to perform seamlessly as a team. This ensemble-based approach fosters a collaborative environment where each member supports the other, creating a space where innovation and quick thinking thrive.

Improvisation is not confined to the theater; its principles apply to various business practices, particularly in ethics and compliance. Marla explains that many students are drawn to improv not to pursue comedy but to improve their communication and leadership skills. Improv teaches others-focused communication, essential for building effective teams and fostering a positive organizational culture.

Communication that is others-focused is at the heart of improvisation. This concept involves shifting your focus from your agenda to genuinely listening and responding to others. In an improv scene, success depends on fully accepting and building on your partner’s input. This active listening and validation level creates a supportive environment where creativity and collaboration flourish. Marla highlighted that this approach can transform everyday interactions, making them more productive and meaningful. It also plays directly into the skills needed by a compliance professional.

Psychological safety is paramount for ethics and compliance professionals. Psychological safety refers to an environment where individuals feel safe speaking up without fear of retribution. Improv provides a low-stakes, fun way to practice the skills necessary to foster this environment. By focusing on deep listening and the “Yes” principle, compliance professionals can build trust and encourage open communication.

The “Yes, and” principle is fundamental in improv. It involves accepting your partner’s idea (Yes) and building on it (and). This technique fosters creativity and promotes a nonjudgmental and inclusive atmosphere. For compliance professionals, applying “Yes and” can shift their perception of their role from rule enforcers to supportive advisors. This change in approach can make employees more willing to engage with compliance, seeing it as a collaborative effort rather than a hindrance.

Marla and Ronnie discussed several practical techniques derived from improv that can benefit compliance professionals. One such exercise is the “Should vs. Could” activity. Participants pair up and share a problem, with one offering advice using “You should” statements and then “You could” statements. The difference in reception is profound, with “You could” fostering a more collaborative and empowering dialogue. This simple shift in language can significantly impact how compliance professionals communicate, making their advice feel more supportive and less authoritative.

Improvisation also teaches the importance of building trust and reducing fear in communication. By practicing techniques emphasizing validation and support, compliance professionals can create an environment where employees feel safe to raise concerns and seek guidance. This trust is crucial for effective compliance, as it encourages proactive problem-solving and early reporting of potential issues.

The principles of improv can be applied in various settings within the compliance field. For instance, compliance training sessions can incorporate improv exercises to make learning more engaging and memorable. Additionally, compliance professionals can use these techniques in their day-to-day interactions to build stronger relationships with employees and leadership.

Marla emphasized that organizational culture and communication nuances trickle down from the top. Leaders play a critical role in modeling the behavior and communication styles they want to see throughout the organization. By incorporating improv techniques, leaders can demonstrate openness, active listening, and collaborative problem-solving, setting a positive example for their teams.

Improvisation offers a unique and practical approach to enhancing communication and leadership within the ethics and compliance community. By practicing others-focused communication, fostering psychological safety, and embracing the “Yes, and” principle, compliance professionals can transform their interactions and build a more supportive and proactive organizational culture. If you want to explore how improv can benefit your compliance efforts, consider incorporating these techniques into your training and daily practices. As Marla and Ronnie have shown, a little creativity can go a long way in making compliance a collaborative and engaging endeavor.

Categories
Great Women in Compliance

Great Women in Compliance: Beth Colling – Common Sense and Compliance

Welcome to the Great Women in Compliance podcast on the Compliance Podcast Network, sponsored by Corporate Compliance Insights.

In this episode, Lisa speaks with Beth Colling, Senior Vice President and Chief Compliance Officer at CDM Smith. Beth joined organizations after they had to address a significant regulatory change or investigation, and she worked to operationalize and then maintain a compliance program. Lisa and Beth specifically talk about how, as issues inevitably arise, compliance officers will get the resources they need to make and implement changes, but over time, memories fade, and the attention and resources may diminish. Beth provides her insight on this.

Beth uniquely evaluates her work and program by “firing herself” on Friday and re-hiring herself on Monday to examine it with new eyes. After the past several years, with the pandemic and hybrid work, this review became even more relevant. This leads to a discussion of “common sense,” not just within a compliance program but also in terms of personal responsibility and how employees rationalize bad behavior.

One of Beth’s (and Lisa’s) childhood heroes was “Wonder Woman,” and Beth may be Wonder Woman. Outside her work, she coaches young adults to enjoy running, and by the end of 2024, she will have completed 5 of the 6 “World Marathon Majors.”

You can join the LinkedIn podcast community.
Join the Great Women in Compliance podcast community here.

Categories
Compliance Into the Weeds

Compliance into the Weeds: Analyzing The Trump Conviction: Compliance Lessons from an Unprecedented Case

The award-winning Compliance into the Weeds is the only weekly podcast that takes a deep dive into a compliance-related topic, literally going into the weeds to more fully explore a subject.

Looking for some hard-hitting insights on compliance? Look no further than Compliance into the Weeds!

In this episode of ‘Compliance Into the Weeds’, Tom and Matt take a deep dive into last week’s trial verdict against Donald Trump in NYC and lessons for the compliance professional.

We explore the importance of internal controls, consistent consequence management, and effective leadership. They also delve into how compliance officers can learn from the storytelling strategies used in the trial and emphasize the application of the rule of law.

Key Highlights:

  • Overview of Trump’s Criminal Conviction
  • Internal Controls and Compliance Lessons
  • Consequences Management and Consistent Enforcement
  • Ethical Leadership and Communication
  • Who is your audience? Storytelling in Compliance
  • Final Thoughts and Rule of Law

Resources:

Matt on Radical Compliance

 Tom 

Instagram

Facebook

YouTube

Twitter

LinkedIn

Categories
Innovation in Compliance

Making Compliance Training Memorable: Gamechanger 4 – Make Learning Playful

There is not much I enjoy more than sitting down with one of the innovative thinkers in compliance, Carsten Tams to find out what is on his mind regarding compliance. Tom Fox recently had the opportunity to do so on the topic of making compliance training memorable. Over this short, five-part series, we will introduce the problem and challenges and then provide you with four proven strategies for success in your compliance training.

In this concluding Episode 5, we discuss how making ethics and compliance training playful can enhance learning.

Our learning brain likes games. When people shift into a playful state of mind, they immerse themselves more deeply into the learning activity. Their mood brightens, their mind opens up, and they are intensely focused and more receptive to new information. Playful learning supports a deeper understanding of concepts, better recall of knowledge, and better transfer of skills to novel problems.

They explore the concept of the ‘Magic Circle’ in gaming, which engenders an immersive, playful state of mind that fosters openness and engagement. By employing game-based learning experiences like the ‘Ethics Kit Find Your Path’ card game, the discussion showcases how ethical scenarios can be addressed in an interactive, fun way.

Through the use of commitment, action, and resource cards, employees engage in collaborative problem-solving related to their organization’s ethical dilemmas. The episode emphasizes the importance of experiential, social, and strength-based learning, arguing that an engaging user experience (UX) in training not only makes learning enjoyable but also more effective in reinforcing ethical behaviors within organizations.

Highlights and Key Issues Discussed:

  • Introducing Playful Learning in Ethics and Compliance
  • The Magic Circle: A Concept for Playful Learning
  • Implementing Playful Learning: The Ethics Kit Card Game
  • Benefits and Outcomes of Playful Learning Experiences
  • Expanding Playfulness Beyond Games: Engaging Training Delivery
  • Key Takeaways from the Series

Resources:

Suggested Readings

  • Zosh, J. M., Hopkins, E. J., Jensen, H., Liu, C., Neale, D., Hirsh-Pasek, K., Solis, S. L., & Whitebread, D. (2017). Learning through play: a review of the evidence (white paper). The LEGO Foundation, DK.
  • Parker, Rachel & Thomsen, Bo & Berry, Amy. (2022). Learning Through Play at School – A Framework for Policy and Practice. Frontiers in Education. 7. 10.3389/feduc.2022.751801.

Carsten Tams on LinkedIn

Emagence Consulting

Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

Categories
Blog

Making Ethics & Compliance Training Memorable: Part 5 – Making Compliance Training Playful

There is not much I enjoy more than sitting down with one of the innovative thinkers in compliance, Carsten Tams, to find out what is on his mind regarding compliance. I recently had the opportunity to make Ethics and Compliance (E&C) training memorable. We explored this topic over a five-part podcast series on the Innovation in Compliance podcast on the award-winning Compliance Podcast Network.

Over the next five blog posts, I will also explore these topics in the blog format. I will introduce the problem and challenges and then provide you with four proven strategies for success in your compliance training. I will deeply dive into why traditional E&C training often fails to engage employees and needs more impact on their behavior despite significant investments. In this concluding Part 5, we consider how a compliance professional can create playful and fun compliance training to increase employee engagement.

We began with the question, ‘Why is it important to make ethics and compliance training playful?’ Tams noted that there is a concept in gaming called the “magic circle.” This means that as “we enter into a play frame of mind, we enter this magic circle, where we become more open to new information. Play facilitates experiential learning, where we actively engage all our senses and enter a generative mode. We become protagonists in our learning journey in a play situation, turning training into an adventure. Games also lend themselves well to social learning. Strength-based, social, and experiential learning converge in the play. There is evidence supporting the positive learning outcomes facilitated by playful learning.”

We turned to some examples of playful ethics and compliance training and how it can incorporate some of the other concepts we have explored over this series, such as strength-based training, experiential learning, and the social aspect. Tams noted he developed a game-based ethics learning experience called “The Ethics Kit: Find Your Path,” a “card game for three to five participants. Players start by selecting a scenario derived from the company’s ethics code, such as anti-harassment, money laundering, or anti-discrimination. One player, the Pathfinder, devises a strategy to address the issue, supported by others using commitment, action, and resource cards. Participants engage in a self-guided, open-ended experience, using their ingenuity and creativity to bring diverse perspectives together. This resembles real-life situations, and players are cast as heroes who intervene to stop unethical behavior. This aligns with the strength-based perspective, where employees are seen as ethical agents rather than potential delinquents.”

Tams led a training session at UNESCO using this approach, with 50 senior managers participating. He noted that the room was filled with chatter and problem-solving, which he believed “demonstrated the effectiveness of this approach. Through this process, participants realize they are not alone in caring about ethics, which builds confidence and fosters a supportive environment.”

Tams also believes playfulness is how the training is delivered, such as using animation, music, or cool graphic designs to drive engagement, as engaging different senses can add significant value. However, he cautioned that these elements should not be used as gimmicks and that ensuring meaningful learning is crucial. If you address learners as ethical agents who can actively uphold moral values rather than potential rule-breakers, then playful elements like cartoons and humor can be practical. Otherwise, it becomes merely cosmetic and entertaining but not empowering.

Making ethics and compliance training fun and playful can transform an organization’s approach to ethical behavior. Organizations can create engaging, meaningful, practical training experiences by integrating playfulness into learning. This approach enhances individual skills and fosters a supportive and moral culture.

To implement playful learning in your organization, consider the following steps:

  1. Incorporate Game-Based Learning: Use games like “The Ethics Kit” to create interactive and engaging learning experiences.
  2. Leverage Multimedia Elements: Enhance training with animation, music, and graphic designs to make the content more engaging.
  3. Focus on Meaningful Learning: Ensure the content is relevant and meaningful to the learners, recognizing them as ethical agents.
  4. Build a Supportive Culture: Foster a culture of ethics by encouraging continuous dialogue and support among employees.

By taking these steps, compliance professionals can create a robust and engaging ethics training program that empowers employees to act ethically and supports a culture of integrity within the organization.

We concluded by summarizing key points from our five-part series. First, the user experience (UX) is crucial. Ethics can only be practical if it is engaging. Recipients must feel that the content speaks to them and is meaningful. The importance of UX, which is well-established in product design and design thinking, should be applied to ethics and compliance training.

Second, conventional compliance training often should be included in education and learning. Many compliance training programs need to move the needle on behavior change because they need insight from behavioral sciences, philosophy, psychology, and learning professionals. Integrating these perspectives can enhance training effectiveness.

Third, the four-game changers we have discussed—strength-based learning, experiential learning, social learning, and playful learning—are well-supported by research. These strategies are not new; they have been discussed and validated for over a century. Compliance professionals can benefit from incorporating these proven methods into their programs.

We hope you will consider one or more concepts in this podcast and blog post series. Please feel free to reach out if you have any questions or want to explore these topics further.

Tom Fox can be reached at tfox@tfoxlaw.com

Carsten Tams can be reached at carsten.tams@emagence.com

Categories
Compliance Tip of the Day

Compliance Tip of the Day: Enhancing Compliance Through Automation

Welcome to “Compliance Tip of the Day,” the podcast where we bring you daily insights and practical advice on navigating the ever-evolving landscape of compliance and regulatory requirements.

Whether you’re a seasoned compliance professional or just starting your journey, our aim is to provide you with bite-sized, actionable tips to help you stay on top of your compliance game.

Join us as we explore the latest industry trends, share best practices, and demystify complex compliance issues to keep your organization on the right side of the law.

Tune in daily for your dose of compliance wisdom, and let’s make compliance a little less daunting, one tip at a time.

In today’s episode, we explore how, by using data-driven solutions, CCOs and compliance professionals can automate compliance programs.

For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.

Categories
Innovation in Compliance

Making Compliance Training Memorable: Gamechanger 1 – Focus on Strengths

There is not much Tom Fox enjoys more than sitting down with one of the most innovative thinkers in compliance, Carsten Tams, to find out what is on his mind regarding compliance. Tom Fox recently had the opportunity to do so on the topic of making compliance training memorable. Over this short, five-part series, we will introduce the problem and challenges and then provide you with four game-changing strategies you can employ for success in your compliance training.

In this Episode 2, we discuss the concept of focusing on strengths within compliance and ethics training as opposed to traditional deficit-based methods that highlight potential misconduct.

When we instruct people about prohibited behaviors and how the company detects and disciplines misconduct, employees often feel mistrusted and alienated. They tune out. This is deficit-based learning. It approaches the learner as a risk factor or potential delinquent. It aims to constrain unwanted behaviour.

When employees can learn how to effectively shape and safeguard the ethical workplace they aspire to, they feel inspired and tune in. This is strength-based training. It approaches the learner as a valued partner in maintaining integrity.

It assumes that people have capabilities, It aims at eliciting and strengthening the positive ethical faculties already present in most people.

Tom and Carsten urge a shift in perspective so that learners are viewed as valued partners, drawing upon the principles of self-affirmation theory and strength-based approaches found in various sectors like healthcare and education. This approach aims to engage learners by acknowledging and enhancing their capabilities, ethical values, and problem-solving skills, thus fostering a sustainable ethical culture within organizations. Examples of successful applications of this approach, including innovative training methods and programs like UNESCO’s card game and the ‘Giving Voice to Values’ curriculum, are highlighted. The conversation underscores the importance of designing training that not only prevents misconduct but also supports and develops employees’ strengths, thereby enhancing overall company culture.

 Highlights and Key Issues Discussed:

  • The Problem with Deficit-Based Training Approaches
  • The Power of a Strength-Based Approach
  • Real-World Applications and Success Stories
  • Practical Steps Towards Strength-Based Training
  • Building a Sustainable Ethical Culture

Resources:

Carsten Tams on LinkedIn

Emagence Consulting

Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

Categories
Blog

Culture Week: Part 5 – A Listening Tour to Improve Culture

We conclude our focus on culture this week by returning to some of our long-time compliance roots for improving culture, such as the listening tour. In 2022, returning Starbucks Chief Executive Officer (CEO) Howard Schultz began engaging in a “listening tour” of Starbucks stores literally across America. In an article by Justin Bariso, he said Schultz told employees, “We are traveling the country, trying to, with great sensitivity, understand from you how can we do better.” What are employees telling him? Bariso wrote, “he listens intently to one Starbucks employee after another; a pained look comes over Schultz’s face. Employees lament the lack of training, increased turnover, and extreme pressure they’ve endured as company profits soared, but worker conditions plummeted.”

This listening tour has several goals for Schultz. The first is that even though the company has sustained record profits, morale at the company is at an all-time low. Witness the unionizing efforts that have been successful. Employees are simply fed up with not being listened to. This has eroded employee trust and management and driven down the once vibrant culture at the iconic institution. To rebuild that trust, Starbucks, as their CEO, “must first listen.” However, it is more than simply listening to rebuild trust; it is rebuilding employee engagement by making them and their ideas part of the solution.

There is still much work for Starbucks and Schultz to do. Yet these initial steps can lead to real change. Schultz is doing more than saying “We Care”; he is modeling that language in his behavior. This is action at the top. It also communicates to other senior management that they must listen to re-engage and build employee trust. What if a Chief Compliance Officer took that same approach to culture? I believe that a Schulz-inspired listening tour can improve your corporate culture. Below are three keys for the compliance officer to conduct a practical listening tour.

A. Engagement

Start by meeting as many compliance stakeholders as possible. You can use town hall settings or go smaller, meeting with key employee leaders, key stakeholders, and employees identified as high-risk who you can meet with individually or in smaller groups. Listen to their compliance concerns and take their compliance ideas back to the home office. After returning to your office, winnow down their ideas and suggestions to form the basis of enhancements to your culture. This employee engagement will lead to greater stakeholder buy-in for your culture.

B. Education

During the town hall meetings and the smaller, more informal group meetings, you can do more than simply listen—you can also train. This training is on ethics and how the employees could use compliance as a business tool. Most business’s ethical standards are not found in an existing compliance program. They are found in the general anti-discrimination guidelines and ethical business practices such as anti-competitiveness and prohibition of using confidential information. Often, these general concepts can be found in a company’s overall Code of Conduct or similar statement of business ethics. Workplace anti-discrimination and anti-harassment guidelines can be found in Human Resource policies and procedures. Concepts such as anti-competitiveness and the use of customers’ and competitors’ illegally obtained confidential information may be found in antitrust or other business practice-focused guidelines.

This gets your employees and other stakeholders thinking about doing business ethically. It is ethical concept-based training, in contrast to a rules-based approach. Moreover, this lays the groundwork for enhancing your culture and the training that will occur as the enhancement is rolled out.

C. Risk Assessment

Now, think about this same approach from the risk assessment perspective. Listen to your employees’ concerns and compliance issues. From there, you can ask questions about what was done and why. This approach is not adversarial or interrogation, but it is ferreting out the employees’ concerns while having the employees educate your compliance team on the actual procedures that are used. By listening and gently questioning, you should garner enough information to create a risk assessment profile that can inform and even become the basis of compliance program enhancements.

Bariso concluded his article by stating, “People lose motivation when they sense you don’t care. But the simple act of listening creates goodwill. When your people feel understood, they’ll be motivated to contribute and can help you discover insights you wouldn’t otherwise. So, when it comes to solving your company’s biggest problems, don’t ignore your most helpful resource: your people.” It all starts with listening. Let your employees and other stakeholders have the “chance to share their problems, as well as to propose solutions. Meetings like these will reveal key insights and transform your people from employees to partners.”

I hope you have enjoyed and, more importantly, found this week’s blog posts on helpful culture. I also hope you will join the conversation by commenting or posting on LinkedIn about your experiences around corporate culture.

Categories
Blog

Culture Week: Part 2 – Attributes of a Toxic Corporate Culture

We continue our exploration of aspects of corporate culture. Today, we turn to the dark side by reviewing some of the characteristics of a toxic corporate culture. An article in the MIT Sloan Management Review provided some guidance. In Why Every Leader Needs to Worry About Toxic Culture, Donald Sull, Charles Sull, William Cipolli, and Caio Brighenti posited that, by pinpointing the elements of toxic culture in a company, its leaders focus on addressing the issues that lead employees to disengage and quit. These ideas are essential for compliance as they navigate corporate culture and assess and improve it.

Moreover, the Chief Compliance Officer and corporate compliance function were again identified in the 2023 Evaluation of Corporate Compliance Programs (ECCP) as the institutional justice and fairness keepers. This means recognizing and preventing a toxic culture from spreading and infecting your entire organization, which is squarely in the compliance wheelhouse. The article lays out vital red flags for every CCO and compliance professional to look for in assessing culture. Last but not least, for any company with a toxic culture, the likelihood that its employees will commit fraud or bribe and corrupt others by breaking laws like the Foreign Corrupt Practices Act (FCPA) is much higher.

The authors identify behaviors they call “the Toxic Five attributes,” which are being “disrespectful, non-inclusive, unethical, cutthroat, and abusive—poison corporate culture in employees’ eyes. While organizational culture can disappoint employees in many ways, these five elements have by far the largest negative impact on how employees rate their corporate culture and have contributed most to employee attrition throughout the Great Resignation.” As a CCO or compliance professional, you must be on the lookout for them and take steps to remedy them if you see or hear about them.

Disrespectful Behavior

The authors found that “feeling disrespected at work has the largest negative impact on an employee’s overall rating of their corporate culture of any single topic.” Lack of respect can occur in many areas. The most obvious is the lack of a “speak up” culture where employees understand it is useless to raise issues with management, whether serious matters such as FCPA violations or more straightforward ideas such as process improvement. It can also be as simple as whether to return to the office full-time and whether management listens to employees about their desires to continue working from home or to utilize some hybrid working arrangement. The authors noted, “Whether you analyze culture at the level of the individual employee or aggregate to the organization as a whole, respect toward employees rises to the top of the list of cultural elements that matter most.“

Non-inclusive Behavior

This concerns whether your employees are “treated fairly, made to feel welcome, and included in key decisions.” It is “the most powerful predictor of whether employees view their organization’s culture as toxic. It applies to all demographic groups: “gender, race, sexual identity and orientation, disability, and age.” It can be outright discrimination against the equally invidious but more subtle conflicts of interests of nepotism and playing favorites. The topic of non-inclusiveness includes “terms like ‘cliques,’ ‘clubby,‘ or ‘in crowd‘ that indicate that some employees are being excluded without specifying why.“

Ethical Behavior

The authors believe ethics “is a fundamental aspect of culture that matters at both the organizational and individual levels.“ Interestingly, there are several different aspects of “ethics“ that every CCO needs to consider. Unethical behavior is “about integrity and ethics within an organization.“ It also includes dishonesty. “Employees described dishonest behavior in many ways,“ from outright lying to making false promises to shading the truth to simply “sugarcoating.“ Under regulatory compliance, employees talked about failure to comply with applicable regulations, including failure to meet safety standards.

Cutthroat Behavior

I found this category fascinating as it included both uncooperative coworkers and the lack of harmonization across organizational silos. This was not simply “friction in coordination,“ but situations in which “employees talked about colleagues actively undermining one another.“ It included what the authors termed as a “vivid lexicon to describe their workplace, including ‘dog-eat-dog‘ and ‘Darwinian‘ and talked about coworkers who ‘throw one another under the bus,‘ ‘stab each other in the back,‘ or ‘sabotage one another.'”

Abusive Behavior

Having worked in law firms long ago, I understand abusive behavior. The authors called it “sustained hostile behavior toward employees,“ including “bullying, yelling, or shouting at employees, belittling or demeaning subordinates, verbally abusing people, and condescending or talking down to employees.“ While one would hope such behaviors do not exist in the 21st century, they still do. The article’s authors reported that only 0.8% of the employees surveyed described their manager as abusive. However, when employees did mention abusive managers, it significantly depressed the corporate culture.

What CCOs and compliance professionals should try to drive forward is a “culture that is inclusive, respectful, ethical, collaborative, and free from abuse by those in positions of power.“ However, the authors caution that these are the “baseline elements of a healthy corporate culture.“ Employees want more than the basics; other organizational stakeholders want companies to have official, solid core values. In an interview with LRN’s Susan Divers, she called this emphasis on core values the “value in values.” From the compliance professional’s perspective, it means values like integrity, collaboration, respect, and DEI.