By Adelle Elia, Chief Integrity Officer, Louis Berger
Session DG3: Engaging Your Board – The Importance of Relevance
September 16, 2019, 11:30 AM – 12:30 PM
It’s exciting to see in our industry surveys that Ethics and Compliance professionals are making strides in getting the Board of Directors’ attention. It is becoming more and more likely that the leader of an organization’s Ethics and Compliance efforts gets at least a little face time with the full Board or Audit Committee every quarter or so, and is not just sending a slide or two through the General Counsel.
However, Boards are getting more and more to do, and that time will not increase unless we show we have a lot to offer in tackling the same issues that the rest of the management team is handling, whatever they may be. The word of the day is “relevance”.
Unfortunately, or perhaps fortunately in an odd way, there is an opportunity that has emerged from some of the latest challenges that Boards are hearing about. More than one Board member is pondering the Wells Fargo or Volkswagen issues (and others only becoming public now) and wondering how a practice, seemingly so obviously unethical to an outside observer, managed to exist for so long. The introspective Board member asks, “Could that happen here?” Board members are fully aware that there were plenty of controls at those other companies, and yet…
This is where the Ethics and Compliance leader has an opportunity. We are well versed in the fact that employee decisions are not fully bounded by even sophisticated internal controls. Those are necessary and valuable, but not enough. We know that decisions are influenced by the corporate culture surrounding an employee, and the actual “way we do things” values that they see and hear other employees apply.
We can support the Board by showing that connection. In order to have confidence that all parts of the organization will self-detect and self-suppress unwanted behaviors, we must actively oversee our corporate cultures and sub-cultures. Our Ethics and Compliance update, whatever it is, must express this relationship between culture and behavior. So, in the spirit of continuous improvement, take this quick relevance self-test:
In our last Board presentation, did we:
- Explicitly provide the Board any insight into how corporate culture, with respect to ethics and compliance, varies between different locations/functions in our organization?
- Identify where in the business our employees are most likely to take risks or deviate from controls?
- Offer any initiatives for assessing corporate culture in a deeper way?
If you’ve already made these connections, fantastic. However, if there are opportunities for your next Board presentation, perhaps including these ideas will inspire your Board to ask for more!