31 Days to a More Effective Compliance Program

Day 3 | Leadership’s Conduct At The Top

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Obviously, in every compliance program, the ethical tone of a company and accountability all starts at the top and, most specifically, senior management. The 2020 Guidance stated, “Beyond compliance structures, policies, and procedures, it is important for a company to create and foster a culture of ethics and compliance with the law at all levels of the company. The effectiveness of a compliance program requires a high-level commitment by company leadership to implement a culture of compliance from the middle and the top.” This requirement is more than simply the ubiquitous “tone-at-the-top,” as it focuses on the conduct of senior management. The DOJ wants to see a company’s senior leadership actually doing compliance. The DOJ asks if company leadership has, through their words and concrete actions, brought the right message of doing business ethically and in compliance to the organization. How does senior management model its behavior on a company’s values and finally, how is such conduct monitored in an organization?

Senior management must share these same values through operationalizing compliance going forward. Lynn Paine, in her seminal article “Managing for Organizational Integrity”, laid out five factors, which can be used as guideposts to not only to set the right tone from senior management on doing business ethically and in compliance, it can lay the groundwork for senior management to model appropriate behavior and then have it monitored by the company going forward.

  1. The guiding values of a company must make sense and be clearly communicated by senior management in a variety of settings, to the entire company workforce.
  2. The company’s leader must be personally committed and willing to take action on the values. This means that management must not simply ‘overlook’ the transgressions of top producers.
  3. A company’s systems and structures must support its guiding principles and these internal systems and structures cannot be over-ridden by senior management without both justification and Board approval.
  4. A company’s values must be integrated into normal channels of management decision-making and reflected in the company’s critical decisions. Sometimes a company must turn down business if there are too many red flags present or by engaging in such behavior the company’s value and ethics will be violated.
  5. Managers must be empowered to make ethically sound decisions on a day-to-day basis. This means senior management must fully support and back-up such decisions.

    6. I once had a Chief Executive Officer (CEO), observe the following, “You want me to be the ambassador for compliance.” I immediately said yes, that is exactly what I need you to do. A CEO, as an “Ambassador of Compliance”, can fully model the conduct that senior management engage in going forward. Another area a CEO can forcefully engage an entire company is through a powerful video message about doing business the right way and in compliance. A great example was a CenterPoint Energy video put out in 2015 after the Volkswagen (VW) emissions-testing scandal became public. The video featured Scott Prochazka, CenterPoint Energy President and CEO. He used the VW scandal to proactively address culture and values at the company and used the entire scenario as an opportunity to promote integrity in the workplace. But more than simply a one-time video, the company followed up with an additional resource, entitled “Manager’s Toolkit - What does Integrity mean to you?”, which managers used to facilitate discussions and ongoing communications with employees around the company’s ethics and compliance programs. Finally, the cost for the video was quite reasonable as it was produced internally.

    Three key takeaways:

    1. Senior management must actually do compliance; walk-the-walk, not simply talk-the-talk.
    2. Use your CEO to talk about current events and how those ethical failures are lessons to be learned for your organization.
    3. CEO as Compliance Ambassador.


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      31 Days to a More Effective Compliance ProgramBy Thomas Fox
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