How Organizations Can Achieve the 'Compliance Trifecta': The E&C Pulse - November 6th, 2019


Nov. 6, 2019

How Organizations Can Achieve the 'Compliance Trifecta'


The goal of any robust ethics and compliance culture is to create a values-based program that achieves what LRN Founder and Chairman Dov Seidman calls the “compliance trifecta” of less misconduct, more reporting, and a lack of retaliation.


“That’s everything we are trying to get from our compliance programs,” Seidman said during a keynote session in October at the National Society of Compliance Professionals annual conference in Baltimore. “That’s why LRN has been promoting values-based approaches to ethics and compliance for the past 25 years.” 


During a conversation with Bruce Karpati, chief compliance officer for KKR, Seidman spoke about how compliance is about being in the human-elevation business, in that “what makes us human is our capacity for ethics.”


This approach is supported by the updated U.S. Department of Justice guidance for compliance programs, which asks if a company’s program really impacts behavior. LRN’s research illustrates the benefits to organizations of a values-based approach.


A strong culture can’t be achieved without trust, which is the glue that binds together a culture. One of the characteristics of a values-based culture is a high-trust environment, said Seidman. 


“We tend to trust people who are transparent, forthcoming, open, and honest; who share credit and opportunity with us; and who communicate fully, build strong interpersonal synapses, and keep their promises. In short, people with integrity,” Seidman told Karpati.


“They collaborate, they embrace, and they engage. If you want trust, you need to find people and companies that create circles of trust around themselves.”


Today people are less concerned with individual bad apples, and seek to take a deeper look at the “trees”--the culture, companies, institutions, leadership mindsets, and programs--that produce those apples, said Seidman. To shape culture, focus on and measure internal patterns, leader sentiments and behaviors, relationships, policies.


“Culture is the animating ethos of an organization. It influences the way decisions are made, emails are composed, promotions are earned, and affects how people are treated every day,” said Seidman. “And increasingly, companies are becoming deliberate about shaping culture.”


Technology is bringing strangers into intimate proximity at an accelerated pace, affording us richer experiences, but also demanding new levels of empathy and understanding. All of this has huge implications on the ethics and compliance office, said Seidman.


To cope with it all, he suggests what may seem counterintuitive in this fast-paced, always-on world: pause. With a machine, hitting the pause button stops the action, but if you’re a human being, that’s when you start, he said. 


“You pause to make sense of your situation and to reconnect with your deepest belief. You pause to consider the fundamental issues that led your company down its current path and to its present challenges,” said Seidman. “Imagine how many of our mistakes could have been avoided, or how many missed opportunities we could have seized, if we had paused before springing to action. 


“For ethics and compliance officers, if there is one word that symbolizes what you are trying to inspire in your organization, it’s the importance of the pause.”


                                                                                                            BEN DIPIETRO




In this week's episode, LRN's Ben DiPietro speaks with Lisa Beth Lentini Walker about her new company, Lumen, which focuses on the mindfulness and wellness of E&C professionals. 





What does it mean to make a sincere and authentic apology. One component? Pausing and conducting some form of a moral audit, including asking very deep questions.






PWC's 2019 Annual Corporate Directors Survey found 56% of board members say investors are paying too much attention to environmental, social, and governance issues, up from 29% in 2018. Sixty-three percent say their boards devote too much attention to board gender diversity. 



A record number of big U.S. companies are separating the top roles of chief executive and board chair, WSJ reports. Maybe because, as Bloomberg reports, more CEOs were removed for ethical lapses last year than any other reason.


Researchers found attractive female bosses are less likely to be considered trustworthy and more worthy of termination, even though highly attractive people are considered better leaders, Harvard Business Review reports.


A U.S. Department of Defense advisory board issued recommendations for the ethical use of artificial intelligence during warfare, Washington Post reports. Harvard Business Review discusses how to use AI to remove bias from hiring.


MasterCard CEO Ajay Banga talks to Fast Company about the "decency quotient" and the need for a more inclusive form of capitalism.


Deutsche Bank's U.S. reputational risk team advised against the bank approving a  California land sale to a Russian businessman, but was overruled, WSJ reports.  


McDonalds CEO Steve Easterbrook was fired for having a consensual relationship with an employee, a violation of company policy, CNBC reports. 


Beverly Kracher, executive director of the Business Ethics Alliance, writes in the Omaha World-Herald about how a trip to the zoo taught her a lesson about building trust in an organization.


The ACLU is going to court to get records from the FBI, DOJ, and DEA for how they use surveillance technology, Washington Post reports. Axios: Companies want to hire data privacy officers, but not enough people have the needed expertise.


Kathleen Hogan, Microsoft's chief people officer, shares tips with Ron Carucci in Forbes on how to improve corporate culture.


A report from the Association of Certified Fraud Examiners found 58% of organizations have inadequate staffing and resources to fight fraud.


Forbes shares an article on how CEOs can stop good people from acting badly.

and one on how CEOs can lead change after a scandal.



"The good you do today will often be forgotten. Do good anyway."

- Mother Teresa



This is Corporate Compliance & Ethics Week, one of the designated times when organizations put a spotlight on E&C, and why it matters. While these efforts can help to propel a program forward, and puts a focus on E&C issues, the truth is a program is not going to have much of an impact unless every week is E&C week.


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