Regulators say that effective corporate compliance begins at the top. They encourage company executives and directors to set an example in terms of a responsible culture built around ethics, morals, values, and a willingness to do the right thing.

There are overlaps between compliance and ethics that influence corporate cultures. When stakeholders demonstrate their capacity to operate in ethically responsible manners, the message is received by the rest of the corporation. Employees in the organizational hierarchy abide by the same ethical principles and, therefore, create a culture that upholds compliance.

What is the culture of compliance?

A culture of compliance is a set of attitudes, behaviours, and values that guide corporate workers to align with policies, procedures, and regulations. Essentially, a culture of compliance uses ethical principles to enforce legally binding protocols.

Some companies create diligent compliance culture programs that are shared with their employees. The Starbucks Standards of Business Conduct is one prime example, in which the corporation describes a series of ethics, values, and principles that all employees must adhere to as they conduct their day-to-day responsibilities.

Why is culture important in compliance?

Companies with strong organizational cultures empower employees to operate under both legal and ethical best practices. According to Gartner, strong compliance cultures produce both financial and non-financial benefits for the corporation. Specifically, they found that:

• Employees in strong cultures are 90% less likely to passively observe misconduct
• Employees in strong cultures are 1.5 times more likely to report misconduct
• Employees in strong cultures are 2 times as likely to be engaged with their companies
• Employees in strong cultures are 2.5 times more likely to voluntarily report misconduct

The commonality is a sense of trust. When people trust the corporate values; that they can safely live by those values, and that they can report misconduct without fear of reproach; they’re more likely to abide by those principles. As a result, any behaviour that could compromise compliance is dealt with before it becomes an issue for the business.

6 steps to achieve a culture of compliance

Creating an effective corporate compliance culture isn’t something that happens overnight. It takes time, patience, vigilance, and resources to implement the proper cultural protocols.

Here are six key steps recommended by Thomson Reuters that your compliance team should follow. Use these recommendations to achieve an effective culture of compliance.

Create an internal awareness initiative

Regulators are constantly changing compliance protocols, and employees won’t know how to abide by the proper protocols if they don’t know about them. Ensure your compliance managers have the resources to remain on top of these changes. Your compliance team is your first line of defence to uphold corporate compliance cultures.

Set the tone that the C-suite will communicate changes

Culture is set right from the top, and the C-suite executive team must communicate the cultural expectations to the rest of the organization. Expectations, policies, and procedures must be set by leadership, and there must be transparent communication of those expectations to shape the culture that develops from those guidelines.

Disseminate cultural protocols to employees

As your compliance team learns about changes that could impact corporate culture, they need the means to educate the rest of the company. Give your team the resources to produce educational content that can be disseminated to the rest of the company. Education is the best weapon against non-compliance activities.

Use the right technology to enforce compliance

Part of the educational effort is through the use of technology. Create e-learning programs like videos, modules, and quizzes that test employee awareness of compliance culture protocols.

You should also use technology like entity management software to create structured compliance programs. Entity management platforms have built-in compliance frameworks that are easy to use. Plus, they provide prompt updates to your team if any data is missing, filings are late, or anything that could trigger non-compliance.

Develop a rewards program for positive cultural behaviour

Incentives are the best motivator to prompt responsible actions. Leadership can use suitable compliance incentives as rewards for abiding by the compliance culture. Employees are far more likely to live by cultural values when they understand how they benefit from doing so.

Establish whistleblower programs that protect case reporting

Employees must feel safe coming forward when they witness unethical behaviour that amounts to misconduct. By creating a whistleblower program that protects employees, people will find the courage to report misconduct so that the compliance culture remains in effect.