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Ethics and Compliance: Culture Trumps Compliance
A decade after business scandals like Enron and Worldcom, have businesses become any more ethical?
Over the last decade many businesses have bulked up on the implementation of Ethics and Compliance (E&C) programs as a way to outwardly demonstrate that they are businesses which operate fairly and honestly. But a study by LRN finds that there is often little correlation between the size of the budget or per-capita costs that businesses spend on their E&C program and the effectiveness of those programs. LRN evaluated and ranked E&C programs based on how effectively employee behavior can be positively changed when viewed from the perspective of ethics.
The LRN report found that many businesses set up E&C programs and overly focus on meeting compliance requirements. Dov Seidman, founder and CEO of LRN, said that “traditional approaches to ethics and compliance have had a narrow focus on avoiding losses from litigation and punitive government action. Our survey shows the long-term economic value of building a culture animated by a mission and set of values that inspire workers to collaborate, innovate, and fully contribute their character and creativity at work day after day.”
The LRN report identifies five characteristics that typically distinguish companies that have the most effective ethics and compliance programs:
- Celebrates ethical leadership
- Adapts to changing business needs
- Focuses on employees as a key element of risk assessment
- Supported by senior management
- Applies and considers risk data when making decisions
What are the top ethics and compliance risks that businesses face today? The LRN report identified the top risks as data privacy (74 percent), conflicts of interest (70 percent), electronic data protection (68 percent), and bribery and corruption (62 percent), and social media (41 percent).
