(Part 3 of an ongoing series)
As a business ethics keynote speaker and business ethics consultant, I am pleased to see compliance departments recognize several key components of what a good program should entail.
Obviously, there must be a written code of conduct and policy, internal inquiries, continual assessments and monitoring. However, in my presentations in front of groups and associations representative of public and private entities, I see some major discrepancies between stated policy and even-handed practice.
I want to address four of those matters with this post, especially in the light of ESG or Environmental, Social, and Corporate Governance issues. For the gulf between practice and reality, is an ethical gulf often created by obvious, but missing elements in the governance discussion that have not been reinforced. It is in these actions where programs falter and fail, leading to fraud and scandal.
What actions should a compliance department take in encouraging ethical business practices?
- Who handles enforcement and is it equitable? An obvious component of governance must be enforcement however, it is often inequitable. Some executives and departments seem to be inviolate to scandal, while others do not. Unfortunately, I’ve seen examples of this behavior with sales-driven teams engaging in bribery and fraud and in more than one company where the leadership smacks of nepotism and/or the playing of favorites. Enforcement is also uneven where there is “selective oversite,” where long-term employees may escape scrutiny. Enforcement must be equitable – no exceptions.
- Disciplinary unevenness. As with the point above, discipline must be evenly applied, especially with the scrutiny given by the public. For example, charges of sexual harassment cannot be enforced at lower levels of the corporate structure while executive leadership commits numerous violations of policy and is unchallenged. Similarly, standards and policies put into place in regard to air pollution (a good thing) cannot be celebrated when other departments have been dumping waste materials or improperly mitigating asbestos. Policies on diversity and inclusion are only good so long as they are applicable throughout all of the branch offices of the organization, and not only for show at the main location. In all things, if there are ethical expectations, they cannot be selective. As a business ethics keynote speaker and business ethics consultant, I have witnessed entirely too many situations where there has been selective enforcement.
- Ethics training and communication of ethical policies. Any system of governance within an organization is only as good as the ethical awareness of that organization. Ethical policies are nice to read, and to appreciate from afar, but if there is no training and reinforcement of policy; if ethical behavior is no more than a catch-word, the governance of the company is little more than a joke. Again, ethical training must be evenly applied, and applicable to all, and if not, the organization will invariably face fraud or a scandal of some type. The cost of training is a pittance of the costs associated with fraud.
- Get better or fail. The initiation of governance is a great start, but either a program is committed to improvement or it too, will fail. Governance is a corporate mindset that cannot be allowed to languish. The question is one of how will the organization measure improvement? What set of analytics will be put into place to ensure proper compliance and commitment?
What actions should a compliance department take in encouraging ethical business practices? To properly answer that question, is to appreciate that good ethics is everyone’s task, and every day. Who is responsible for making good choices? The answer is again obvious; it is everyone within the organization.
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