Tag: leadership at the top

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31 Days to More Effective Compliance Programs

Day 3 – Leadership’s Conduct at the Top

DAG Lisa Monaco’s speech in September 2022 announcing the Monaco Memo as articulated in the Monaco Doctrine laid out the very basics of compliance; that the key to every company is culture. She stated, “corporate culture matters. A corporate culture that fails to hold individuals accountable or invest in compliance — or worse that thumbs its nose at compliance — leads to bad results.”

From the enforcement perspective, the DOJ will assess companies for their ethical cultures. From the compliance perspective, the ethical tone of a company and accountability all start at the top and, most specifically, senior management. This requirement is more than simply the ubiquitous “tone-at-the-top,” as it focuses on the conduct of senior management. The DOJ wants to see a company’s senior leadership doing compliance. The DOJ asks if company leadership has, through their words and concrete actions, brought the right message of doing business ethically and in compliance to the organization. How does senior management model its behavior on a company’s values, and how is such conduct monitored in an organization?

I once had a Chief Executive Officer (CEO) observe the following, “You want me to be the ambassador for compliance.” I immediately said yes, that is exactly what I need you to do. As an “Ambassador of Compliance,” a CEO can fully model the conduct that senior management engages in going forward. Another area a CEO can forcefully engage an entire company is through a powerful video message about doing business the right way and in compliance. A great example was a CenterPoint Energy video put out in 2015 after the Volkswagen (VW) emissions-testing scandal became public. The video featured Scott Prochazka, CenterPoint Energy President, and CEO. He used the VW scandal to address the culture and values at the company proactively and used the entire scenario as an opportunity to promote integrity in the workplace. But more than simply a one-time video, the company followed up with an additional resource, entitled, Manager’s Toolkit—What does Integrity mean to you? that managers used to facilitate discussions and ongoing communications with employees around the company’s ethics and compliance programs. Finally, the cost for the video was quite reasonable as it was produced internally.

 Three key takeaways:

1. Senior management must do compliance; not simply talk-the-talk of compliance but also walk-the-walk.

2. Use your CEO to talk about current events and how those ethical failures are lessons to be learned for your organization.

3. Your CEO as Compliance Ambassador.

Categories
31 Days to More Effective Compliance Programs

Day 3 | Leadership’s conduct at the top

Obviously, in every compliance program, the ethical tone of a company and accountability all starts at the top and most specifically senior management. The Evaluation of Corporate Compliance Programs – Guidance Document (2019 Guidance) stated, “The company’s top leaders – the board of directors and executives – set the tone for the rest of the company. Prosecutors should examine the extent to which senior management have clearly articulated the company’s ethical standards, conveyed and disseminated them in clear and unambiguous terms, and demonstrated rigorous adherence by example. Prosecutors should also examine how middle management, in turn, have reinforced those standards and encouraged employees to abide by them.” To assist companies in understanding this requirement the 2019 Guidance sets out the following inquiries.

Conduct at the Top – How have senior leaders, through their words and actions, encouraged or discouraged compliance, including the type of misconduct involved in the investigation? What concrete actions have they taken to demonstrate leadership in the company’s compliance and remediation efforts? How have they modelled proper behavior to subordinates? Have managers tolerated greater compliance risks in pursuit of new business or greater revenues? Have managers encouraged employees to act unethically to achieve a business objective, or impeded compliance personnel from effectively implementing their duties?
This requirement is more than simply the ubiquitous “tone-at-the-top,” as it focuses on the conduct of senior management. The DOJ wants to see a company’s senior leadership actually doing compliance. The DOJ asks if company leadership has, through their words and concrete actions, brought the right message of doing business ethically and in compliance to the organization. How does senior management model its behavior on a company’s values and finally, how is such conduct monitored in an organization?
Three key takeaways:

  1. Senior management must actually do compliance; walk-the-walk, not simply talk-the-talk.
  2. Use your CEO to talk about current events and how those ethical failures are lessons to be learned for your organization.
  3. CEO as Compliance Ambassador.