Building an ethical and compliance culture

This feature on Compliance has been drafted by Kgori Capital Compliance Manager, Elizabeth Ferguson, and forms part of a series of awareness material on this subject. Elizabeth has over 14 years’ experience in various Audit, Advisory and Assurance senior roles. Elizabeth has a Bachelor’s degree in Accounting and is a fellow member of the Association of Chartered Accountants (ACCA) and Botswana Institute of Accountants (BICA). She also holds a post graduate qualification in Enterprise Risk Management.
The importance of ethics in good corporate governance cannot be overemphasised. Ethics is often viewed as the foundation of compliance and aims to ensure that those it regulates, behave in a manner that reflects the ethical values of responsibility, accountability and transparency.
Best practice provides that it is the responsibility of top management to implement appropriate governance structures and to provide ethical leadership. Although this may be true and widely accepted, to truly establish an appropriate ethical culture of compliance, commitment is required from all levels across the organisation, but how then does an organisation achieve this?
To start with, clearly communicate to employees their compliance responsibilities, encourage ethical behaviour by linking their business objectives with that of compliance and ethics objectives, performance appraisal systems should include an assessment of compliance behaviour.
Employee training should be carried out on a periodic basis with respect to specific regulatory requirements but also to promote the desired organisational culture, values and beliefs.
Ensure that management is consistent in their messages and actions. The process in which management addresses and resolves issues should be openly communicated and the process applied consistently and in a fair manner. Demonstrating procedural fairness in the office can promote and improve employee trust in management and therefore strengthen commitment to compliance.
Develop Open Lines of Communication: Communication is key, discussions are better than one way directives. Providing employees and stakeholders with a safe way to report issues is essential for a strong organizational culture. Fear of retaliation is one of the most common reasons that staff refuse to speak up about cases of misconduct.
Many employees exhibit positive compliance and ethics behaviour, however, they are often not shared broadly enough. By encouraging employees to share ethical principles with one another, leaders can ensure positive behaviours are visible to employees at all levels.
Foster a respectful environment. Employers should work towards creating a workplace environment that encourages managers and employees to take pride in their work and regularly identify with the values that drive the organization as a whole.
Promoting an appropriate compliance culture takes time and requires an ongoing and effectively planned and implemented change management programme, when all levels of an organisation are party to the change process, the organization, as a whole, will become more inclined to act and work together to build a culture that fosters both compliance and ethics.