Making the Connection with Compliance, Ethics, and Organizational Culture

By Deann M. Baker, CHC, CCEP, CHRC
From Y-Comply, a service of the Society of Corporate Compliance & Ethics.

Although ethics and compliance are different, they are related and both directly correlate to an organization’s culture. It’s been said that compliance and ethics are different sides of the same coin. A simplistic way to describe the difference is that compliance is about “remaining in accord with the laws” and ethics is about “doing the right thing.”

Chapter 8 of the U.S. Sentencing Commission’s Guidelines Manual explains the importance of both compliance and ethics within an organization. It states: “To have an effective compliance and ethics program, an organization shall (1) exercise due diligence to prevent and detect criminal conduct; and (2) otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.”

Businessdictionary.com describes ethical behavior as being good for business and that it involves demonstrating respect for key moral principles, including honesty, fairness, equality, dignity, diversity, and individual rights. Ultimately, that definition boils down to two important values that are impactful to our ethical and compliant culture—TRANSPARENCY (open/honest communication and behavior) and RESPECT (equality, dignity, diversity, and rights). When those values are missing, it tends to create a lack of enthusiasm and discipline (low morale) and a lack of trust and credibility. This may cause employees to disengage or feel powerless, resentful, and dissatisfied. Poor culture also often leads to high employee turnover, and that can further deteriorate an already low morale. It also becomes costly for the organization. Nobody wants to work in a bad culture, but we all contribute to culture in one way or another. A poor culture doesn’t necessarily mean the organization has a legal or compliance problem, but it may mean there is an ethics (values) issue. So who is responsible for addressing the organization’s culture?

Leadership is primarily responsible for the culture of the organization. Vivek Wadhwa said: “Corporate executives and business owners need to realize that there can be no compromise when it comes to ethics, and there are no easy shortcuts to success. Ethics need to be carefully sown into the fabric of their companies.” This has also been said of compliance.

Although leadership is ultimately responsible for an organization’s culture, there are things we can do as individuals to positively contribute to the culture, even when the tone at the top isn’t what it should be. We can impact our culture by showing respect toward others and remaining transparent within our areas of responsibility. We can also report identified concerns so issues are addressed in a timely manner. Everyone plays an important role in creating an ethical and compliant culture. Attitudes can be contagious and, chances are, if we are passionate about creating a right culture, we will inspire and influence other individuals’ choices and behaviors. The power of one can make a difference, and the power of some can do even more. Let’s all take responsibility for the kind of culture we influence within our organizations.

Y-Comply, a service of the Society of Corporate Compliance and Ethics, is a compliance-related article delivered quarterly to subscribers via email.

Y-Comply is intended to help communicate the value and purpose of compliance and ethics to the general workforce. You are free to copy this article to your organization’s website or electronically distribute it to your workforce; no attribution to either SCCE or the article’s original author is necessary.

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