The goal for corporate compliance programs—the dream, really—is to build a solid corporate culture, on a foundation of ethical values, where all employees are clear on the company’s expectations for good conduct. Where doing business, and doing business ethically, are one and the same. Leading an ethics-based company requires a conscious culture approach.
The term conscious culture was made popular foremost by the nonprofit Conscious Capitalism, although others have espoused similar ideas about corporate culture for years. A nifty idea, to be sure. So how can an organization bring that about? For that matter, how can we even define that idea precisely, so compliance officers can construct a plan to achieve it?
What is Conscious Culture?
Conscious culture connects an organization’s stakeholders—its employees, customers, investors, business partners, and others—to the mission and ethical values the business claims to hold dear.
I say “values the business claims to hold dear” because plenty of businesses claim to hold certain ethical values dear, when in practice they don’t. Perhaps employees get conflicting messages from senior management. Maybe business processes aren’t robust enough to prevent misconduct. Policies might be flawed, or incentive compensation programs misaligned.
The result, far too often, is a mission statement or code of conduct that looks great in writing, but has no relation to the actual corporate culture of the organization. The elements you need to tie those two things together aren’t in alignment.
That’s what conscious culture aims to do: keep all those elements in alignment, so everyone in the organization can trust that they are working with the same common purpose. It’s a way to keep everyone focused on “what the company is about.”
Why is Building a Conscious Culture Important?
Building a conscious culture is important because it allows businesses to forge stronger bonds with their employees.
Let’s remember that most people want to work at businesses with strong, clear ethical priorities; and they want to help their employers achieve that. For example, according to one Ethisphere survey from 2019, 92 percent of employees want to report misconduct when they see it, and 84 percent of them want to report specifically because “it’s the right thing to do.” That is, ethical behavior is an innate impulse for most people—when they believe they’ll be supported for doing so.
Moreover, the importance of workplace ethics is especially important for Millennials and Generation Z. For example, in one Deloitte demographics survey, 77 percent of Generation Z workers said working at an organization that aligns with their ethical values is important to them. Millennials and Generation Z accounted for 40 percent of the workforce in 2018; they’ll be the majority any day now if they aren’t already.
Second, a conscious culture also allows your business to forge closer ties with other stakeholders, too. People want to support the businesses that they perceive as ethical; that’s been demonstrated time and again in social science research. The crucial point is that for people to perceive your organization as ethically aligned with them, they need to see your ethical values in action.
And then there are those other benefits like, ya know, avoiding regulatory enforcement actions and their attendant monetary penalties. We’ve dissected that often enough that we’ll skip it today. Suffice to say that conscious culture reaps benefits for the compliance program specifically, and for the business overall.
How Can You Nurture Conscious Culture?
1. Define a clear purpose
This first step might sound self-evident, but plenty of organizations don’t define a clear purpose. For example, they might start with a great idea from a visionary founder; but nobody puts that vision into writing, and 10 years later the founder is gone and the organizational culture has evolved into something quite different.
Or management assumes employees know what the corporate values and priorities are, because those things seem obvious to the 10 or 12 bosses who meet weekly in a conference room (or Zoom meeting). Meanwhile, the hundreds or thousands of employees out in the field are filling that vacuum with their own ideas of what the purpose and culture should be.
The board, the CEO, and senior leaders should take the time to clarify the organization’s purpose, business objectives, mission statement, and values. Put them in writing. Communicate them to everyone. (If you’re not comfortable doing that, reconsider whether you reached the right purpose and values.)
2. Align your actions to that purpose
Employees and other stakeholders will want to see that the business acts according to the mission and core values it articulated in our first step. That means consistency in how policies and procedures are implemented is paramount.
For example, if the company says it values diversity and inclusion, that means drafting policies and procedures to foster diversity and inclusion. Which means policies and procedures specifically to encourage diversity in hiring and promotions; and procedures to collect data about who gets what jobs or promotions (and for what amount of compensation).
Whether you value environmental stewardship, or high-quality customer service, or sales tactics above reproach—identify how the policies and procedures that govern the activity in your business support those goals. Develop mechanisms to measure how well your operations support those goals, and where you could improve.
3. Support transparency and fairness
Transparency is what builds trust. People can see the organization’s actions, and decide for themselves how well the organization is or isn’t upholding its values and purpose. If senior leaders have been thoughtful about those efforts so far, transparency won’t be anything to fear.
In practical terms for compliance officers, that means sharing more of the data and reports you generate to monitor internal progress. For example, your diversity and inclusion metrics could go into a “D&I Report” that you might share with employees or even post publicly. Your company intranet or newsletter could include examples of internal misconduct (masking some details as necessary for privacy) and how they were disciplined.
This also means attention to documentation and metrics are important, because they’re the means to generate transparency into your operations.
4. Aim for humble, dedicated leadership
We discussed this idea in a previous post about ethical leadership: that the best leaders might be ambitious and driven and tenacious, but foremost they tend to be humble. They put devotion to the organization’s purpose and success ahead of their own power and reward. When others see that commitment, it inspires them to focus on the organization’s purpose too.
The CEO is the most important person to embody this ideal, but other senior executives and managers play a crucial role here too. So as you develop ethics and compliance training, consider how your materials could emphasize that connection between ethics, leadership, and business success. For example, another finding from Ethisphere research is that employees are more likely to keep ethics in mind when their managers simply talk about the importance of ethical conduct, even absent any specific curriculum or example in the news.
5. Keep reassessing your culture
A conscious culture needs tending and oversight. This means soliciting feedback from employees and business partners about how they perceive the corporate culture to be and then comparing that feedback against industry benchmarks and even your own internal metrics. For example, when employees say their complaints are never addressed, compare that sentiment against key performance metrics you have for following up on, and closing, internal hotline allegations.
Also remember to consider external forces working on your corporate culture, the pandemic being one such example. Forces that affect the well-being of your employees or customers (pandemics, recession, political divisions) can prompt them to perceive your corporate culture differently—perhaps negatively—if your corporate priorities, policies, and procedures don’t change along with the larger world.
Matt Kelly is an independent compliance consultant and the founder of Radical Compliance, which offers consulting and commentary on corporate compliance, audit, governance, and risk management. Radical Compliance also hosts Matt’s personal blog, where he discusses compliance and governance issues, and the Compliance Jobs Report, covering industry moves and news. Kelly was formerly the editor of Compliance Week. from 2006 to 2015. He was recognized as a "Rising Star of Corporate Governance" by the Millstein Center in 2008 and was listed among Ethisphere’s "Most Influential in Business Ethics" in 2011 (no. 91) and 2013 (no. 77). He resides in Boston, Mass.