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Everything Compliance

Everything Compliance: DEI Backlash, Executive Orders, and When “Tone at the Top” Needs Resources

Welcome to a revamped Everything Compliance. Host Adam Turteltaub and panelists Karen Moore, Matt Kelly, Rebecca Walker, and Jonathan Armstrong discuss compliance issues spanning DEI, executive orders, leadership support, and new EU sustainability rules.

  • Karen Moore reviews rapid corporate reversals on DEI and cites a Stanford/UC Berkeley study, “Markets Do Not Punish Firms for Maintaining DEI.”
  • Matt Kelly uses the “Lake Ontario to Lake America” renaming to argue executive orders aren’t laws binding companies and that choosing to comply reflects corporate values and policy-override decisions.
  • Rebecca Walker argues “tone at the top” is insufficient without resources and real trade-offs, citing NAVEX data on gaps between encouraging, modeling, and persisting in ethics under pressure.
  • Jonathan Armstrong outlines a new EU law limiting the destruction of unsold apparel and footwear, along with practical compliance steps.

The members of Everything Compliance are:

The award-winning Everything Compliance is a part of the Compliance Podcast Network.

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Blog

Odyssey Week: Leadership – Odysseus the Brilliant Problem: Tone at the Top

Ed. Note: I was finally able to see the movie The Odyssey. To say it blew me away was an understatement. Even though it didn’t follow Homer’s work precisely or use ancient Greek, I still thought it was great cinema. Anytime you get people talking about the Greek classics, that is a win in my book. So check out the movie and enjoy it. Matt Damon was great as Odysseus.

Odysseus is the kind of leader every board says it wants. He is brave, strategic, persuasive, resilient, creative under pressure, and very good at producing results when the situation looks impossible. He wins wars. He escapes monsters. He talks his way out of death more than once. He is the executive you send into the room when the deal is collapsing, the market is hostile, and everyone else has run out of slides.

He is also, on occasion, his own biggest compliance risk. That is what makes Odysseus so useful for business leaders and compliance professionals. He is not a cartoon villain. He is not reckless in the simple sense. He is brilliant. And brilliance can be dangerous when no one is willing to challenge it.

Odysseus reminds us that tone at the top is not only about what leaders say in polished town halls. It is about how leaders behave when the pressure is real, the stakes are high, and the rules feel inconvenient. The corporate lesson is straightforward: high-performing leaders can create high-performing risk. The organization must be able to challenge its stars.

The Corporate Translation

Every company has an Odysseus. Sometimes he is the rainmaking sales leader who always makes the number. Sometimes she is the visionary founder who can charm investors, customers, regulators, and the board in a single afternoon. Sometimes it is the regional head who delivers growth in difficult markets. Sometimes it is the product leader who moves faster than the control functions can process. The organization loves this person because they win. And that is precisely the problem.

Success can become a shield. Results can become a permission structure. A leader who delivers extraordinary outcomes may slowly become exempt from ordinary scrutiny. Questions that would be asked of anyone else are softened, delayed, or skipped entirely.

  • “How did we win that deal? ”
  • “Why was that third party necessary? ”
  • “Who approved that discount? ”
  • “Why was Legal brought in so late? ”
  • “Why are employees afraid to challenge this person? ”
  • “Why does Internal Audit keep finding exceptions in this business unit? ”

In a healthy culture, these questions are routine governance. In a weak culture, they sound like betrayal. That is the Odysseus problem. He saves the quarter, dazzles the board, and leaves Internal Audit wondering why no one asked how he did it.

Tone at the Top Is Conduct, Not Content

Companies are very good at producing leadership messages. The CEO video. The annual ethics letter. The opening paragraph of the Code of Conduct. The carefully scripted statement that “integrity is our highest value” usually releases the same week everyone is being told to accelerate growth, reduce costs, launch faster, and stop bringing problems without solutions.

Leadership messaging isn’t wrong. It matters. Employees do take cues from senior leaders. The FCPA Resource Guide states that compliance begins with the board and senior executives setting the proper tone and that managers and employees take cues from corporate leaders. It also emphasizes that senior management should clearly articulate standards, communicate them unambiguously, adhere to them, and disseminate them throughout the organization.

Indeed, the Evaluation of Corporate Compliance Programs (ECCP) asks some specific questions. Regarding Conduct at the Top, these questions include: How have they modeled ethical 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?

But employees are sophisticated. They listen to the speech, then watch the calendar, the budget, the promotions, the exceptions, and the discipline decisions. They notice who gets praised. They notice who gets protected. They notice whether compliance concerns change decisions or merely create additional paperwork. They notice whether the high performer who bullies employees, ignores controls, or plays games with approvals is treated as a problem or as “complicated.” Tone at the top is not what leadership says when the cameras are on. Tone at the top is what leadership tolerates when the revenue is attractive.

The Danger of the Heroic Exception

Odysseus lives by exception. That is part of his greatness. He survives because he improvises. He adapts. He reads the room, the monster, the god, the storm, and the weakness in every opponent. He does not always follow the obvious path because the obvious path often leads directly into the sea. Unfortunately, exceptions, not properly managed, are what get companies into hot water.

Business needs leaders who can adapt. Compliance should not become a shrine to rigidity. A company that cannot make decisions, approve thoughtful exceptions, or move with commercial urgency will not be admired for its purity. It will simply become irrelevant. But there is a difference between disciplined exception management and heroic exception culture.

Disciplined exception management asks, “What is the risk?” Who owns it? Who approves it? Is the exception documented? Is it time-limited? Are there compensating controls? Will we monitor it? What precedent does it create? Heroic exception culture says, “Odysseus has it handled.” That is not governance. That is mythology with a travel budget. The ECCP asks, “What exceptions to these policies has an organization permitted?”

When organizations build around heroic exceptions, they become dependent on personality rather than process. The leader’s instincts replace controls. Their confidence replaces documentation. Their track record replaces scrutiny. Their urgency replaces escalation.

Eventually, the organization is no longer asking whether the decision is right. It is asking whether it trusts the hero. That is a dangerous way to run a company. Always remember: trust, but verify.

Pressure to Perform Changes the Ethical Weather

Tone at the top is inseparable from pressure. Leaders may say all the right things about ethics and compliance, but if every business conversation ends with “just get it done,” employees hear the real message. If compensation rewards only revenue, employees hear the real message. If managers who raise concerns are labeled as blockers, employees hear the real message. If compliance is praised in public and bypassed in private, employees hear the real message.

The ECCP asks how senior leaders, through words and actions, have encouraged or discouraged compliance, how they have modeled ethical behavior, and whether managers have tolerated greater compliance risks in pursuit of new business or greater revenues. It also asks whether managers encouraged employees to act unethically to achieve a business objective or impeded compliance personnel from doing their jobs.

That is an excellent test for any leadership team. Not, “Did we say integrity matters? But did our conduct make integrity practical? “A leader who sets impossible targets and then expresses surprise when employees cut corners has not created a compliance culture. He has created plausible deniability. Odysseus often survives impossible pressure. Companies should be careful about asking employees to do the same.

Challenging the Star Performer

The true test of tone at the top is whether the organization can challenge its stars. Can compliance question the top sales executive? Can internal audit review the founder’s favorite business unit? Can Legal slow down the CEO’s preferred acquisition? Can HR investigate a high-performing manager accused of retaliation or harassment? Can Finance reject revenue recognition pressure from a powerful regional leader?

Or does the organization quietly apply one standard to ordinary employees and another to those who deliver? Employees do not need a formal policy memo to understand a double standard. They see it immediately. If a junior employee is disciplined for a policy violation while a senior leader is “coached” for comparable conduct, the culture learns. If a high-performing executive is allowed to mistreat people because “the business is too important,” the culture learns that compliance matters only when it doesn’t affect the powerful. If compliance concerns disappear when they involve influential leaders, the culture learns that compliance matters only when it doesn’t affect the powerful.

The ECCP looks at whether compliance is enforced consistently and whether consequences apply regardless of an employee’s position or title. It also asks whether managers are held accountable for misconduct that occurred under their supervision and for supervisory failures. That is not just enforcement logic. It is cultural logic. A company cannot claim integrity as a value while treating performance as immunity.

What a Better Program Does

A better compliance program does not try to eliminate Odysseus. That would be both impossible and unwise. Organizations need bold leaders. They need commercial courage, strategic imagination, persuasive ability, and the confidence to act in uncertainty. The goal is not to make leaders timid. The goal is to make leadership accountable.

A better program builds controls around high-risk authority. It monitors exceptions. It reviews pressure points. It includes compliance in strategic decisions early. It gives the board visibility into recurring overrides, hotline trends, audit findings, employee turnover, and control failures in high-performing units. It trains senior leaders not only on rules but also on how their behavior shapes risk. It also asks uncomfortable questions about success.

Where are results unusually good? Where are margins unusually high? Where are approvals unusually fast? Where are complaints unusually low? Where do people say, “That is just how that leader operates”? Where does the company rely on one person’s relationships, instincts, or influence more than on process? Those are Odysseus questions. The point is not to assume misconduct. The point is to understand that extraordinary performance deserves thoughtful scrutiny, not blind applause.

The Compliance Takeaway

Odysseus is brilliant. That is why he is dangerous. He shows us that leadership risk does not always arrive as laziness, incompetence, or obvious corruption. Sometimes it arrives as charisma. Confidence. Commercial success. Strategic genius. The leader who always finds a way.

Tone at the top means ensuring that even the most successful leaders operate within the company’s values, controls, and accountability structures. It means the Board of Directors and senior executives must model ethical conduct not only in speeches but also in decisions. (Talk the Talk but also Walk the Walk.) It means performance is celebrated but not worshiped. It means the organization can ask its heroes hard questions before the journey turns into an investigation. Every company needs leaders who can win. But no company should become so dazzled by Odysseus that it forgets to check the map, inspect the ship, and ask what happened to the crew.

Join Us Tomorrow

Odysseus reminds us that brilliance can become risk when success turns into a shield, exceptions become heroic, and no one is willing to challenge the leader who always finds a way. But even the most brilliant leader eventually leaves the room, and that is when the next compliance test begins: whether governance survives without the hero. Telemachus inherits the house Odysseus left behind, where authority is uncertain, informal power has filled the gaps, and bad actors have grown comfortable at the table. If Odysseus asks whether top performers are held to the same standards as everyone else, Telemachus asks the follow-up question every board should fear: when the indispensable leader is gone, does the compliance program still work, or was it only working because Odysseus was there?

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Blog

The Muppet C-Suite: A Compliance Professional’s Guide to Culture, Controls, and Chaos: Part 1 – Kermit the Frog as CEO: Tone at the Top in a Theater of Chaos

Early this year, Disney released The Muppet Show. It is a revival of the original Muppet Show series (1976–1981) created by Jim Henson, featuring recurring sketches and musical numbers interspersed with ongoing plotlines, with backstage gags and other running gags throughout the venue. The special features include Special Guest singer and actress Sabrina Carpenter, with additional guest appearances by actress and comedian Maya Rudolph, backstage gags, and other running gags throughout, and comedian Seth Rogen. In 2026, The Muppet Show revived the original show’s tone with slapstick, absurdist, and surreal humor. Within its context, Kermit the Frog acts as the showrunner and host, who tries to maintain control of the overwhelming antics of the other Muppet characters and appease the guest stars.

The Muppets may appear chaotic, but beneath the comedy lies a surprisingly sophisticated lesson in organizational leadership. Every compliance professional has worked with a Kermit, managed a Piggy, worried about a Gonzo, or tried to contain an Animal. This series uses the Muppet executive team as a framework to explore leadership, governance, innovation, operational risk, and corporate compliance through the lens of the DOJ’s Evaluation of Corporate Compliance Programs (ECCP) and modern governance expectations.

There may never have been a more realistic fictional CEO than Kermit the Frog. He is not flashy. He is not domineering. He rarely appears fully in control. In fact, most episodes of The Muppet Show depict Kermit managing a workplace that appears one step away from complete operational collapse. Explosions happen backstage. Talent refuses direction. The animal breaks containment regularly. Miss Piggy ignores authority whenever it conflicts with her personal brand strategy. Gonzo treats safety protocols as optional suggestions. And yet somehow, the show goes on.

That is leadership. More specifically, leadership in a modern corporation involves competing incentives, operational pressures, innovation demands, and cultural personalities that collide every day. For compliance professionals, Kermit offers a remarkably useful framework for understanding tone at the top and why effective governance is less about command-and-control and more about maintaining organizational coherence under stress.

Tone at the Top Is Not About Perfection

One of the more damaging myths in corporate governance is that strong leadership means projecting certainty and total control at all times. Kermit disproves this theory in nearly every episode. He is frequently overwhelmed. He becomes frustrated. He occasionally loses patience. But he continues to communicate expectations, reinforce standards, and keep the organization focused on its mission despite persistent disruption.

This matters because the DOJ’s ECCP does not ask whether leadership is perfect. It asks whether leadership demonstrates commitment to ethics and compliance through words, actions, decisions, and resource allocation. Kermit consistently demonstrates this commitment.

He tries to resolve disputes fairly. He intervenes when behavior becomes destructive. He supports the enterprise even when individual performers create personal headaches. Most importantly, he never allows the organization’s chaos to become its identity. That is the tone at the top. The lesson for compliance professionals is straightforward: employees do not expect leadership perfection. They expect leadership consistency.

Kermit Understands Culture Is Operational

Many executives treat culture as an abstract concept discussed at annual retreats or included in (what was previously called) ESG reports. Kermit understands culture differently. For him, culture is operational reality. Culture determines:

  • whether people cooperate,
  • whether concerns are escalated,
  • whether misconduct is tolerated,
  • and whether organizational dysfunction becomes normalized.

Kermit spends much of his time managing interpersonal conflict because he understands something many executives miss: operational breakdowns often begin as cultural breakdowns. Consider the dynamics of the Muppet theater:

  • Miss Piggy demands attention and exceptions.
  • Gonzo constantly pushes boundaries.
  • Fozzie requires emotional reassurance.
  • An animal creates pure operational volatility.

A weaker CEO would either overreact with authoritarian control or surrender entirely. Kermit does neither. Instead, he continually recalibrates the organization back toward functional alignment. That is exactly what compliance professionals attempt to do every day.

Under the ECCP, prosecutors are instructed to assess whether a company’s culture encourages ethical conduct and commitment to compliance. Posters or slogans do not measure culture. It is measured by behavior under pressure. Kermit’s theater is always under pressure. That is precisely why it works as a governance analogy.

Leadership Visibility Matters

Kermit is not a remote executive. He is constantly present:

  • backstage,
  • during rehearsals,
  • during crises,
  • and during failures.

This visibility creates credibility.

Employees tend to distrust leaders who appear only during earnings calls, investigations, or public relations crises. Kermit’s team knows he is engaged because they see him actively trying to keep the organization functioning every single day. Modern compliance programs increasingly recognize this principle. Tone at the top alone is insufficient. Organizations also need visible engagement from leadership and reinforced accountability from middle management.

The ECCP repeatedly emphasizes this point through its focus on:

  • commitment by senior leadership,
  • middle-management reinforcement,
  • and operational integration.

Kermit succeeds because he is operationally embedded in the business. He does not lead from a memo.

Kermit as a Crisis Manager

Every episode of The Muppet Show is essentially a live operational-risk exercise. Unexpected events occur constantly:

  • technical failures,
  • talent disruptions,
  • emotional meltdowns,
  • physical destruction,
  • and reputational threats.

Kermit’s real strength as CEO emerges during these moments. He does not freeze. He does not catastrophize. He does not blame others publicly. He focuses on containment, continuity, and getting the production across the finish line. This is a critical lesson for modern compliance professionals, as organizational resilience increasingly depends on leadership behavior during disruptions. The most sophisticated compliance program in the world can still fail if leadership collapses during a crisis.

Kermit demonstrates several best practices repeatedly:

  • maintain calm visibility,
  • prioritize continuity,
  • avoid emotional escalation,
  • focus on immediate stabilization,
  • Then return later for remediation.

That sequence matters.

Too many organizations focus exclusively on assigning blame during a crisis while neglecting operational stabilization. Kermit instinctively understands that you first keep the theater standing. Then you investigate why the cannon exploded backstage.

Compliance Cannot Function Without Cross-Functional Coordination

Kermit also demonstrates another overlooked governance truth: no single department can manage organizational risk alone.

He constantly coordinates:

  • creative personalities,
  • operational functions,
  • technical failures,
  • audience expectations,
  • and financial realities.

That mirrors the reality of corporate compliance. Compliance programs fail when they become isolated from business operations. Effective governance requires coordination between:

  • legal,
  • HR,
  • finance,
  • operations,
  • marketing,
  • innovation,
  • and leadership.

Kermit’s greatest leadership skill may be his ability to keep highly divergent personalities moving in roughly the same direction. Importantly, he accomplishes this without destroying individuality. That balance matters because mature compliance programs should not eliminate creativity or innovation. They should channel them responsibly.

Kermit does not try to turn Gonzo into Rolf. He tries to prevent Gonzo from setting the building on fire. Many compliance professionals would recognize that as success.

Why Kermit Matters Right Now

Kermit is especially relevant in today’s governance environment because modern corporations increasingly operate in a permanent state of volatility. Executives face:

  • AI disruption,
  • geopolitical instability,
  • reputational acceleration through social media,
  • regulatory expansion,
  • activist stakeholders,
  • and heightened board expectations.

Under these conditions, leadership style matters more than ever.

The organizations most likely to survive are not necessarily the most rigidly controlled. They are the ones capable of maintaining ethical alignment, operational coordination, and cultural stability during sustained uncertainty. That is Kermit’s real genius. He keeps the enterprise functioning without pretending chaos does not exist. For compliance professionals, that may be the most important lesson of all.

5 Key Takeaways for the Compliance Professional

1. Tone at the top is measured during pressure, not during presentations.

Leadership credibility is built through behavior during operational stress and organizational disruption.

2. Culture is operational.

Culture directly affects escalation, accountability, cooperation, and ethical decision-making.

3. Visible leadership engagement matters.

Employees trust leaders who are operationally present and consistently engaged with the business.

4. Compliance requires cross-functional coordination.

Effective governance depends on alignment between leadership, operations, legal, HR, finance, and compliance.

5. The goal is not to eliminate chaos.

The goal is to manage risk, maintain alignment, and preserve organizational integrity while operating in an environment of uncertainty.

Looking Ahead to Miss Piggy

If Kermit represents leadership stability, Miss Piggy represents a very different governance challenge: visibility, incentives, and reputational pressure. Because tone at the top is only the beginning. Eventually, every organization faces the same question: What happens when brand, growth, and public attention begin pushing harder than governance systems can comfortably manage?

In Part 2, we will examine Miss Piggy as Chief Marketing Officer and what she teaches compliance professionals about reputation risk, marketing pressure, incentives, and the governance challenges created by high-performing executives.

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31 Days to More Effective Compliance Programs

31 Days to a More Effective Compliance Program: Day 10 – Leadership’s Role in Shaping Corporate Culture and Compliance

Welcome to 31 Days to a More Effective Compliance Program. Over this 31-day series in January 2026, Tom Fox will post a key component of a best-practice compliance program each day. By the end of January, you will have enough information to create, design, or enhance a compliance program. Each podcast will be short, at 6-8 minutes, with three key takeaways that you can implement at little or no cost to help update your compliance program. I hope you will join each day in January for this exploration of best practices in compliance. In today’s episode, Day 10, we dive into the critical role of senior management in fostering a strong corporate culture of compliance.

Key highlights:

  • The Importance of Corporate Culture
  • DOJ’s Expectations for Senior Management
  • Five Factors for Effective Leadership

Resources:

Listeners to this podcast can receive a 20% discount on The Compliance Handbook, 6th edition, by clicking here.

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Blog

Top 10 Prompts for Improving Tone at the Top

Today, we continue our series on the top 10 prompts for compliance professionals to use to improve their compliance program. Today, we focus on the Top 10 Prompts for Compliance Professionals on “Tone at the Top,” each followed by a detailed explanation highlighting its critical importance. Each prompt should begin with a description of who the author is, who the audience is, and information on your organization. Something like “You are a Chief Compliance Officer for a company in the energy industry. You want a list of things your senior executives can do to help improve your compliance program, based on their list and one or more of the specific prompts below.

1. “What strategies can senior leadership use to effectively set and communicate a strong ethical tone? ”

Explanation:

The “Tone at the Top” is foundational to an effective compliance program, reflecting the ethical values and integrity promoted by an organization’s leadership. This prompt helps compliance professionals outline actionable strategies for senior leaders, including clear messaging, personal accountability, regular ethical communication, and visible actions demonstrating integrity. Such methods ensure employees clearly understand and trust leadership’s ethical commitments. Regulators, especially the DOJ, frequently assess the authenticity of the leadership’s tone as a key indicator of an effective compliance program. Robust leadership strategies help embed compliance deeply into organizational culture, ensuring long-term adherence to ethical standards.

2. “Draft a communication from the CEO emphasizing the organization’s commitment to compliance and ethics.”

Explanation:

Direct and clear communication from the CEO significantly impacts employees’ perception of compliance as a core corporate value. This prompt allows compliance professionals to draft powerful, meaningful messages that reflect a genuine commitment from leadership. Such communications affirm the organization’s ethical stance, reinforce expectations, and provide reassurance that ethical concerns will be addressed seriously. Regulators often view direct communications from top executives as strong evidence of organizational commitment, making this prompt critical for maintaining credibility with employees and regulatory bodies alike.

3. “Explain best practices for integrating the tone at the top into compliance training programs.”

Explanation:

Effective compliance training programs must align closely with the ethical tone set by senior management. This prompt guides compliance professionals in developing training content that incorporates clear messages from leadership, examples of ethical decision-making by executives, and practical scenarios reflecting top-level expectations. Integrating the “Tone at the Top” into training underscores the authenticity and seriousness of compliance messages, significantly increasing employee awareness and internalization of ethical standards. Regulators assess the integration of leadership’s ethical messaging in training as evidence of a genuine commitment to compliance, rendering this practice essential.

4. “Identify metrics or indicators to measure the effectiveness of the tone set by senior leadership.”

Explanation:

Establishing measurable metrics to evaluate leadership’s ethical influence is critical for compliance accountability. This prompt helps compliance professionals determine practical indicators such as employee survey responses, whistleblower report frequency, internal reporting trends, and leadership communications frequency and clarity. Measuring effectiveness validates leadership’s ethical influence and provides essential data for regulatory reviews and internal audits. Organizations using these metrics demonstrate proactive compliance management and continuous improvement. Moreover, metrics provide leaders with clear feedback, helping them reinforce, adjust, or amplify their ethical messaging and behaviors, thus enhancing overall compliance.

5. “Provide examples of effective and ineffective leadership behaviors influencing compliance culture.”

Explanation:

Compliance professionals require concrete examples to illustrate how leadership behaviors shape organizational compliance culture. This prompt supports clear distinctions between positive behaviors—such as transparency, accountability, and active ethical advocacy—and negative behaviors—such as inconsistent messaging, tolerance of unethical actions, or retaliation against whistleblowers. Effective examples educate senior leadership about desirable behaviors while highlighting the compliance risks of ineffective conduct. Identifying behavioral examples helps senior executives avoid unintentional undermining of compliance initiatives and significantly strengthens the credibility and authenticity of the “Tone at the Top.”

6. “Develop an action plan for senior management to demonstrate their commitment to compliance and ethics visibly.”

Explanation:

A tangible, actionable plan ensures that senior executives visibly demonstrate their commitment to ethical practices. This prompt enables compliance professionals to suggest specific actions such as regular town hall meetings, ethical roundtables, personal involvement in compliance events, and transparent communication on ethical issues. Visible commitment reassures employees that compliance is genuinely valued, thereby fostering greater organizational trust and cooperation. Regulators strongly emphasize tangible evidence of top-level commitment, and documented action plans provide essential records for demonstrating sustained ethical leadership, regulatory compliance, and internal alignment with compliance objectives.

7. “Suggest methods for senior leadership to encourage ethical reporting and protect whistleblowers actively.”

Explanation:

Leadership’s role in whistleblower protection significantly impacts an organization’s compliance culture. This prompt guides compliance professionals in outlining best practices for senior leadership, including public support for whistleblower programs, transparent whistleblower policy communications, visible zero-tolerance policies against retaliation, and proactive engagement with ethical reporting mechanisms. Encouraging ethical reporting at the highest levels demonstrates a commitment to transparency, accountability, and continuous improvement. Regulators such as the DOJ explicitly assess leadership’s commitment to whistleblower protection as crucial evidence of an effective compliance program, making this prompt critical.

8. “Explain how senior management can reinforce the tone at the top during crises or significant compliance incidents.”

Explanation:

Leadership’s response during crises significantly shapes organizational perceptions of ethical integrity. This prompt allows compliance professionals to prepare senior leaders to handle compliance incidents transparently, responsibly, and decisively, maintaining consistency with the stated “Tone at the Top.” Effective crisis management involves clear communication, timely acknowledgment, thorough root cause analyses, and visible accountability measures. Reinforcing ethical commitments during difficult times strengthens internal trust, enhances external credibility, and fulfills regulatory expectations for transparent crisis responses. Compliance programs that maintain consistent ethical messaging during crises demonstrate resilience, integrity, and maturity in the compliance framework.

9. “Outline techniques senior management can use to evaluate and refresh the organization’s ethical tone regularly.”

Explanation:

The ethical tone from leadership should remain dynamic, reflective of evolving organizational needs, risks, and regulatory expectations. This prompt equips compliance professionals with techniques such as annual reviews, employee focus groups, ethical climate surveys, and executive ethics workshops. Regular evaluation and periodic refreshment of ethical messaging ensure ongoing alignment between leadership’s stated values and actual organizational culture. Demonstrating regular evaluations and responsive adjustments shows regulators an active commitment to maintaining a relevant, meaningful “Tone at the Top,” enhancing compliance credibility, operational effectiveness, and overall organizational resilience in ethics and compliance matters.

10. “Draft board of director communications emphasizing oversight responsibilities related to the tone at the top and compliance culture.”

Explanation:

Boards play a vital role in overseeing senior management’s ethical leadership. This prompt enables compliance professionals to communicate board-level responsibilities, regulatory expectations, and specific oversight tasks such as ethical audits, regular interactions with compliance leaders, and scrutiny of senior management’s ethical performance. Effective board oversight reinforces the accountability of senior leaders, provides critical external validation of ethical messaging, and ensures alignment with regulatory guidelines from bodies such as the SEC and DOJ. Clear board communications underscore a top-down commitment to compliance, further embedding ethics throughout organizational culture.

Effectively establishing, reinforcing, and communicating the “Tone at the Top” remains a cornerstone of compliance excellence. Leveraging these prompts enables compliance professionals to proactively equip senior leaders, executives, and boards with actionable tools, clear communication strategies, and visible demonstration opportunities. Successfully executing these prompts not only strengthens an organization’s compliance culture but also significantly mitigates compliance risks, reinforces internal trust, and provides compelling evidence of ethical rigor and commitment to external regulators.

If you have some favorite prompts you utilize in the area of Tone at the Top, please send them to me, and I will start a Prompt List to share with all compliance professionals.

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Innovation in Compliance

Operationalizing Trust at Scale: A Conversation with Amanda Carty on Compliance and AI

Innovation comes in many areas, and compliance professionals must be ready for and embrace it. Join Tom Fox, the Voice of Compliance, as he visits with top innovative minds, thinkers, and creators in the award-winning Innovation in Compliance podcast. Today, we begin a 3-part podcast series sponsored by Diligent with Jessica Czeczuga, Amanda Carty, and Neta Meidav. In Part 2, Tom is joined by Amanda Carty, GM Compliance Solutions at Diligent.

Carty shares insights from her decade-long experience in the GRC field and offers detailed perspectives on how leaders can model ethical behavior within their organizations. The conversation dives into how Diligent helps companies assess and document leadership effectiveness and the role of AI in enhancing compliance initiatives. Carty emphasizes the necessity of leaders acting as ambassadors of culture and the impact of measurable outcomes in compliance programs. The episode also explores the integration of AI and chatbots to provide real-time compliance support to employees, ensuring efficiency and ease of access to crucial information.

Key highlights:

  • Importance of Tone at the Top
  • Leadership and Ethical Culture
  • AI in Compliance
  • Employee Engagement and Technology
  • Actionable Takeaways for Compliance Professionals 

Resources:

Amanda Carty on LinkedIn

⁠Diligent⁠

Tom Fox

⁠Instagram⁠

⁠Facebook⁠

⁠YouTube⁠

⁠Twitter⁠

⁠LinkedIn

Categories
Blog

Setting the Tone: Why Top-Level Commitment Is the Heart of Fraud Prevention

In today’s rapidly evolving compliance landscape, one principle has become abundantly clear: effective fraud prevention starts at the top. The Economic Crime and Corporate Transparency Act 2023, with its new offense of failure to prevent fraud, has elevated the expectations for senior leadership and boards across large organizations. Fortunately, the UK government has put out a document entitled “Economic Crime and Corporate Transparency Act 2023: Guidance to organizations on the offense of failure to prevent fraud” (The Guidance). Section 3.1 of the official guidance, titled “Top Level Commitment,” should be required reading for every compliance professional seeking to build a credible, defensible, and sustainable anti-fraud culture. Today, we take a deep dive into what a top-level commitment is.

The Imperative: Leadership’s Role in Preventing Fraud

Section 3.1 places the responsibility for preventing and detecting fraud squarely on those charged with governance, including the Board of Directors, partners, and senior management. This is not simply a perfunctory statement. The Guidance makes it clear: without authentic buy-in and leadership from the very top, even the best-written policies and controls will falter.

A culture of zero tolerance for fraud must be more than a slogan. The board and senior management must actively foster an environment where fraud is not only discouraged but also considered unthinkable, where profit derived from or assisted by fraud is unequivocally rejected.

Visible Commitment: Not Just Words, But Deeds

What does genuine top-level commitment look like? The Guidance offers a clear framework. It is about visible, consistent action that resonates throughout the organization. This includes:

  • Publicly rejecting fraud, even at the cost of lost business opportunities. Boards and executives must demonstrate that they will walk away from deals if the price compromises their integrity and values.
  • Explaining the business benefits of a strong anti-fraud posture. Protecting the company’s reputation, building trust with customers and business partners, and ensuring long-term sustainability are tangible, valuable outcomes.
  • Backing policies and codes of conduct with consequences. There must be clarity about what happens if someone breaches anti-fraud policies—up to and including contractual and disciplinary action.
  • Acknowledging and endorsing collective anti-fraud efforts. Participation in industry initiatives or trade body actions against fraud demonstrates seriousness of intent.

A leadership statement is only credible if real accountability, named roles, and continuous communication back it.

Governance: Structuring Responsibility for Real Results

Clear governance is the backbone of any fraud prevention framework. Section 3.1 stresses that organizations should define, document, and communicate who is responsible for every aspect of fraud prevention, from risk assessment to whistleblowing, and from detection to disciplinary actions.

Best practice governance includes:

  • Designated responsibility for horizon scanning, risk assessment, policy development, disciplinary action, whistleblowing, investigation, and ongoing review.
  • Direct access for compliance leadership to the board or CEO, even if day-to-day reporting is elsewhere. This ensures critical issues don’t get buried in middle management.
  • Documentation of decisions and actions. Board minutes should capture key compliance decisions, risk reviews, and follow-up actions.
  • Succession planning for compliance leadership. Governance should account for staff turnover and ensure continuity in anti-fraud efforts, even when key personnel are absent or leave the organization.

In some organizations, the board or senior executives will be personally involved in designing fraud prevention measures; in others, they will delegate this responsibility to the Head of Ethics and Compliance while retaining ultimate accountability. The key is active engagement and oversight.

Commitment to Resources: Funding and Training

Fraud prevention is not a costless endeavor. The guidance is explicit: senior management must allocate a reasonable and proportionate budget for compliance leadership, fraud prevention staff, training, and technology, including due diligence tools and platforms. This budget commitment must be sustained for the long term, not just as a one-off initiative.

Training is equally crucial. Senior management must champion not only initial training but also ongoing refreshers and updates, ensuring that all staff, especially those in high-risk roles, are equipped to identify and prevent fraud. Resilience is key: anti-fraud practices must be maintained even when staff are on vacation or sick leave or when there is turnover.

Leading by Example: The Tone at the Top

The “tone at the top” is more than a catchphrase; it is the bedrock of ethical culture. Senior managers must embody the standards they expect from the rest of the organization. This means:

  • Openly challenging rationalizations for fraud. Whether it’s “everyone does it,” “it’s not material,” or “it’s for the good of the business,” these are dangerous myths that must be confronted.
  • Encouraging early reporting of concerns. Leadership should foster an open culture where staff feel empowered to speak up, no matter how minor the issue may seem. The earlier a problem is raised, the less likely it will snowball into a major scandal.
  • Making ethics a daily practice, not a quarterly campaign. Whether through regular reminders, integration into performance evaluations, or simply modeling the right behaviors, leaders set the ethical weather for the company.

Communication: Reinforcing the Anti-Fraud Message

Top-level commitment must be consistently and credibly communicated to all key audiences, including employees, contractors, agents, suppliers, and business partners. The guidance recommends tailoring the message for different stakeholders; what resonates with employees may differ from what is relevant for contractors or vendors.

Effective anti-fraud communication should:

  • Highlight the organization’s commitment to integrity over short-term gains.
  • Reinforce the real-world consequences of violating anti-fraud policies.
  • Regularly spotlight examples of ethical leadership, transparency, and collective action against fraud.

The Importance of Whistleblowing

Section 3.1 places significant emphasis on whistleblowing—not only establishing clear channels but also creating a culture where speaking up is encouraged and protected. Senior management should ensure:

  • There are safe, independent channels for reporting concerns.
  • Whistleblowers are protected from retaliation.
  • Reports are acted on quickly and transparently.

A strong whistleblowing culture indicates that leadership is committed to identifying and addressing problems before they become systemic.

The “Why” Behind Top-Level Commitment

Why is all of this so critical? Because fraud is adaptive. It thrives in ambiguity, and it flourishes when leadership is distracted, disinterested, or inconsistent. The Economic Crime and Corporate Transparency Act 2023 raises the stakes: organizations now face not just reputational and commercial damage but also criminal liability if they cannot show that their prevention procedures were reasonable and implemented with real top-level commitment.

The regulators and prosecutors will look for evidence of this commitment. Are senior managers personally invested? Do they walk the talk? Can they demonstrate, with documentation, that anti-fraud policies are embedded in the organization’s DNA?

Practical Steps for Compliance Professionals

What should compliance professionals do today?

  1. Engage with your board and C-suite. Make sure they understand their personal and collective responsibilities under the Act.
  2. Audit your current governance structures. Identify gaps in accountability, communication, or resource allocation.
  3. Refresh your anti-fraud messaging and training. Ensure it is regular, targeted, and endorsed by top management.
  4. Enhance your whistleblowing framework. Benchmark it against best practices and ensure visible support from leadership.
  5. Document everything. If it’s not written down, it didn’t happen. Ensure that minutes, decisions, and compliance actions are accurately recorded.

Conclusion: Leadership Sets the Standard

Section 3.1 is clear: fraud prevention is not just the job of compliance or internal audit. It is the duty of those at the top. Authentic leadership means investing in people, systems, and culture; communicating a vision of integrity; and never wavering, even when the pressure to bend the rules is immense.

For the modern compliance professional, this is both a challenge and an opportunity. With exemplary leadership, organizations can move beyond reactive compliance and build an enduring culture where ethical conduct is the norm and fraud has no place to hide.

Join us tomorrow, where we will consider a fraud risk assessment.

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Compliance Tip of the Day

Compliance Tip of the Day – Using AI to Build ‘Tone at the Top’

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, we aim to provide 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.

Today, we review how AI can help to establish and maintain an appropriate tone at the top for a best practices compliance program.

For more information on the Ethico Toolkit for Middle Managers, available at no charge, click here.

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31 Days to More Effective Compliance Programs

31 Days to a More Effective Compliance Program: Day 10 – Leadership’s Role in Shaping Corporate Culture and Compliance

Welcome to a special podcast series on the Compliance Podcast Network, 31 Days to a More Effective Compliance Program. Over these 31 days of the series in January 2025, Tom Fox will post a key part of a best practices compliance program daily. By the end of January, you will have enough information to create, design, or enhance a compliance program. Each podcast will be short, at 6-8 minutes, and will include three key takeaways you can implement at little or no cost to help update your compliance program. I hope you will join us each day in January for this exploration of best practices in compliance.

In today’s episode, we dive into the critical role of senior management in fostering a strong corporate culture of compliance, as highlighted by the 2022 Monaco Memo and the 2020 FCPA Resource Guide, 2nd edition. Emphasizing that corporate culture is vital to a company’s success, we discuss how the DOJ assesses ethical cultures and the importance of senior management’s active participation in compliance efforts. The episode outlines five key factors to guide senior leadership in setting, modeling, and monitoring the right tone at the top. These include clear communication of values, personal commitment to those values, supportive systems, integration into decision-making, and empowering managers to make ethically sound decisions. We conclude with three takeaways: senior management must engage in compliance, the DOJ evaluates corporate culture during investigations, and CEOs should be seen as chief compliance ambassadors.

Key highlights:

  • The Importance of Corporate Culture
  • DOJ’s Expectations for Senior Management
  • Five Factors for Effective Leadership

Resources:

Listeners to this podcast can receive a 20% discount on The Compliance Handbook, 5th edition, by clicking here.

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Creativity and Compliance

Creativity and Compliance: Transforming Toxic Cultures

Where does creativity fit into compliance? In more places than you think. Problem-solving, accountability, communication, and connection—all require creativity. Join Tom Fox and Ronnie Feldman on Creativity and Compliance, part of the award-winning Compliance Podcast Network.

Ronnie’s company, Learnings and Entertainment, uses the entertainment platforms that people engage with in their everyday, non-work lives and applies them to important topics related to compliance and ethics. It’s not just about being funny; it’s about changing the tone of compliance communications and messaging to make compliance programs, policies, and resources more accessible. In this episode of Creativity and Compliance, hosts Tom Fox and Ronnie Feldman discuss the concept of nudges in compliance.

In this episode, Tom and Ronnie take a deep dive into the complexities of transforming a broken and toxic corporate culture, using Boeing’s recent challenges as a case study. Feldman addresses the pitfalls of traditional compliance training and emphasizes the need for fostering a supportive culture where employees feel psychologically safe and empowered to speak up. He highlights the importance of rebranding compliance departments to create a more positive and approachable image. They also stress the crucial role of leadership in driving cultural change and the value of authentic communication and creativity in compliance initiatives. The episode underscores the necessity of addressing cultural issues openly and authentically to build trust and facilitate meaningful change within organizations.

Key Highlights:

  • Addressing a Toxic Culture
  • The Importance of Authenticity
  • Starting from Scratch

Resources:

Ronnie

  • Learnings & Entertainments (Website)
  • Compliance Confessions – inspired by “Mean Tweets” these 90-second commercials address misconceptions and excuses to promote speak up culture and the E&C team as positive and helpful.
  • E&C Training Jams – a soulful singer banters with ethics & compliance explaining policies, sharing examples and debunking excuses. 
  • Tales from the Hotline – Real speak up-themed stories about workplace behavior gone wrong.
  • Workplace Tonight Show! – E&C meets SNL Weekend Update explaining corporate risk topics and why employees should care.
  • 60-Second Communication & Awareness Shorts – A variety of short, customizable, music and multimedia, quick-hitter “commercials” promoting integrity, compliance, speaking up and the E&C team as helpful advisors and coaches.
  • Custom Live & Digital Programing – Custom creative programming that balances the seriousness of the subject matter with a more engaging delivery. After all, you can’t bore people into learning.

Tom

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