REUTERS | Henry Romero

Keeping It Simple at the April 2017 Ethics & Compliance Initiative Conference

Has your ethics and compliance program become a coral reef? That was one of the questions posed to attendees at the ECI annual conference in Washington DC last week at LRN’s session on program effectiveness.

As ethics and compliance programs mature they can easily turn into layers upon layers of policies and procedures rather than a set of integrated ways of working. If so, these provide little or no practical guidance to employees and most importantly can mean that the programs have lost touch with the values that underlie them.

Compliance programs usually consist of rules to encourage certain behaviors from employees, managers and executives. LRN’s recently published Program Effectiveness Report found that often programs with fewer rules – provided they are the right ones – can be even more effective.

The research found that the number of rules or elements in a company’s compliance program – such as requirements to provide annual certifications or report gifts – is not the best measure of the program’s effectiveness. What really matters is whether or not those rules actually promote ethical behaviors that reflect the company’s core values.

The research also showed that too few companies are shifting their focus toward corporate values and culture, and away from layers of rules. In an LRN survey of over 550 ethics, compliance and legal experts around the world, only 14% said that their ethics & compliance programs are increasingly focused on values and less on rules. Less than half have confidence that their policies meet the new emphasis on accessibility by regulators.

Department of Justice (DOJ):  Policies Must Be Accessible

DOJ’s recently published Corporate Compliance Guidelines underscores the need to have the right rules – not just any rules – in place.

The DOJ asks compliance officers to

“determine whether policies/procedures/practices make sense for particular business segments/subsidiaries.”

They also place an emphasis on whether

“policies and procedures have been effectively implemented,”

and whether

“employees understand the policies.”

Break Through the Layers by Focusing on Behaviors

One way ethics and compliance officers can continue to improve the effectiveness of their programs is to be clear about the behavior they want to see. About 80% of compliance officers in the LRN survey agreed that expressing core company values in behavioral terms is an important part of the ethics & compliance process.

Managers and executives also have the power to foster ethical culture and behavior throughout an organization. The vast majority (90%) of compliance officers at companies that LRN determined have the most ethical cultures said their middle managers are enabled to help communicate the firm’s code of conduct throughout the organization. And, overall, more than 70% of ethics officers said their C-suite holds leaders accountable for ethical behavior.

Ultimately, the key to an effective compliance program is first to define the company’s core values, and to then translate those values into specific behaviors that employees, managers and executives can emulate. Reducing that mountain of policies and procedures to focus on behavior and values is worth the investment.


LRN Susan Divers

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