By Shelley C. Koltnow, JD, MBA, FACHE




An organization’s culture is the demonstration of its character and personality.  While the goal of any compliance program is to foster an ethical and compliant culture, influencing the culture may be very difficult.  Here are some signs of an ethical culture and some hacks to improve culture where necessary.

An Ethical Culture fosters reporting of concerns and incidents without fear of retaliation.  In an organization that values doing the right thing, everyone is invited to share concerns about misconduct or non-compliance.  Reporting has a good faith basis in such organizations, because the purpose is to identify, assess, and correct problems as soon as possible.  Such organizations prohibit retaliation (and understand all the forms it can take), so they institute education, training, and monitoring systems to assure everyone feels free to communicate their concerns.

An Ethical Culture has a Code of Conduct that is communicated to and acknowledged by all employees, contractors, volunteers, and vendors.  This Code is more than words on paper.  It reflects the organization’s expectations and standards for individual conduct in their relationship to the organization.  When the Board of Directors believes in and lives the Code of Conduct, the entire organization grows more ethical and compliant as the Code becomes a living part of the culture. 

An Ethical Culture provides examples of the organization’s focus on its Mission and Core Values.  Core Values speak to the culture.  As the organization’s leaders endeavor to live its Core Values in strategic and every day business practices, the organization’s employees will follow and absorb these Values in their daily work.  This builds an ethical and compliant culture.

An Ethical Culture makes it difficult to behave unethically or in a non-compliant manner.  In an organization that follows its Code of Conduct when doing business, no one is an island.  There is a general recognition that an unethical or non-compliant behavior cannot be tolerated.  Far from being “self-righteous,” an organization that truly embeds ethical and compliant thinking into its business practices will self-regulate toward more acceptable behavior across the board. 

Culture Hacks can help an organization with a true intent to improve its culture accelerate its progress.  First, examine the Code of Conduct.  Does it truly reflect the organization’s expectations to be ethical, compliant and to build a strong culture?  Has the Board of Directors endorsed it?  Is it up to date? Has everyone acknowledged receipt and training about it?  Keeping the Code of Conduct current and relevant and assuring that the organization’s many constituents have acknowledged their understanding of the purpose and content of the Code of Conduct both go far to building an ethical and compliant culture.

Managing the reporting process well gives an organization the opportunity to enhance an ethical and compliant culture.  Education and training about reporting plays a significant role in assuring that reports are helpful and relevant, as well as in good faith.  Reporting allows all involved to be the organization’s eyes and ears, so that problems, misconduct, and concerns are addressed quickly and completely.  A reliable reporting process supported and encouraged by the Board and C-Suite will enable the organization to understand its culture as well as helping to identify risks. These data, when managed and analyzed, give the organization a roadmap toward its goal of an ethical and compliant culture.

The Compliance Officer and their team are critical to building and maintaining a strong culture that supports ethical and compliant business practices and behavior.  The reporting function through the compliance hotline or report line helps to encourage reporting and discourages bad-faith or false reporting.  Through a well-structured and reliable hotline and incident tracking process, the compliance department can recognize weaknesses in internal controls, process defects, trends, potential misconduct, and opportunities for improvement.  The Compliance data collected from the hotline and incident reporting systems under the Compliance Program signify that the organization has established open lines of communication with assurances of no retaliation.  The Board can then rely upon the data gained through effective reporting for assurance that the organization is being attentive to its culture.

Senior executives must send strong and consistent reinforcement to the organization regarding expectations for ethical and compliant conduct, and leaders across the organization must relay such messages to the staff and associates.  Disciplinary action must be in place for failure to meet these expectations.  Disciplinary action must be fair and just – and must reflect the organization’s core values.  A fair, just, and consistent disciplinary policy, aligned with the Code of Conduct,  supports the organization’s Code of Conduct and reinforces its importance as the organization’s cultural guide.

When an organization takes the time and makes the effort to foster ethical and compliant business practices at all levels and at every turn, from the Board, Chairman/Chairwoman, CEO, and C-Suite through leadership ranks to the associates, the organization has the best opportunity to live and breathe its Code of Conduct every day.  In this cultural environment, where a culture is not only ethical and compliant but also just and fair, the Compliance Program plays a key role with effectively sustaining open, honest, good faith reporting and data for evidence-based actions and responses.