Values have the power to guide behavior, shape culture, and strengthen businesses—empowering them to outperform. But what exactly does it mean to take a “values-based approach” to ethics and compliance? In this episode of the Principled Podcast, Emily Miner, Senior Ethics & Compliance Advisor, speaks with fellow LRN colleague Susan Divers, Director of Thought Leadership and Best Practices, about the difference between rules and values in the context of E&C. Listen in as the two discuss how companies can leverage core values to build effective ethics and compliance practices that drive better business outcomes.
[1:47] What are rules vs. values and which is better?
[4:40] Real world examples of values being the more positive and effective enforcement.
[8:38] The catalysis of the shift of compliance in company values, culture and ethics.
[12:48] Susan’s recognition of a value based approach to ethics compliance.
[16:42] The various ways a value based approach can look in practice.
[20:15] What does the data show about the prevalence of value based approaches and their effectiveness?
[22:51] Susan’s advice for organizations starting to build their own ethics and compliance foundation.
[26:50] Steps organizations should take to keep their established ethics compliance program on the right track.
Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.
Emily Miner: Rules are good, but values are better. Values have the power to guide behavior, shape culture and strengthen businesses, empowering them to outperform. But, what exactly does it mean to take a values-based approach to ethics and compliance?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Emily Miner, senior ethics and compliance advisor. Today, I'm joined by my colleague Susan Divers, director of thought leadership and best practices. We're going to be talking about how companies can leverage core values to build effective ethics and compliance practices that drive better business outcomes.
Susan brings more than 30 years experience in both the legal and ENC spaces to this topic area. With subject matter expertise in anti-corruption, export controls, sanctions and other key areas of compliance.
Susan, thanks for joining me on the Principled Podcast.
Susan Divers: It's my pleasure, Emily. It's always so nice to talk to you.
Emily Miner: Yeah. So Susan, your background has given you a unique perspective on this topic of rules versus values. You're a former chief ethics and compliance officer, a member of the DC bar and you're a qualified solicitor to the High Court of England and Wales.
Having sat on both the legal and ethics and compliance sides of the table, can you break down the idea of rules are good, values are better for our listeners? What does that really mean? What are values and why are they "better?"
Susan Divers: Well, that's a great place to start, Emily. There are a couple of really key points to make in this area.
The first is that it's not an either or choice. It's not like you have values but you don't have rules, and you should never have rules without values. One way to think about it is that rules provide the structure for an organization in its compliance area, but values provide the motivation and are what actually lead people to do the right thing, even if it's not required.
Values are positive and aspirational. If, in our dealings with each other, we think about treating each other with respect, then there's not a rule for every occasion where we interact but there is a value, which is respect. Even if I disagree with you or you disagree with me, we're going to accord each other that basic respect.
It's a really fundamental difference. Another way to think about it that I like as an analogy is that rules are the skeleton, if you will, but values are the blood and the heart in our own natural systems. So, why are values better? Values ask people to live their values, in a sense, and make them real. They ask people to consider much more than whether they're breaking a rule or going to break a law, because that's a pretty minimal standard. When you do that, you're encouraging people to do the minimum, but we can talk about that a little bit later.
Does that make sense?
Emily Miner: Yeah, it does. Maybe to put it another way too, what I'm hearing from you, rules are what you can and can't do, whereas values might be what you should and shouldn't do, so to your point about there not being a rule for every occasion. Although, I do appreciate your skeleton analogy, as we're coming into the Halloween season, so apropos.
Susan Divers: Great.
Emily Miner: Following up on that, can you share some real world examples where you've seen this, as you put it, it's not an either or, it's a both and, but where you've seen the rules are good, values are better premise play out?
Susan Divers: Sure. Well, I'm going to start with actually a family example and then give one or two corporation, organization examples.
When I talk about this in front of compliance conferences and all, I usually ask people in the audience to raise their hand if they've ever raised teenagers and a large number of people do. To just take that example, if you say to teenagers, "You can't do this. You can't have people over if we're not home. You can't have an unauthorized party. You can't do this, you can't do that," it tends to sound like blah, blah, blah. And then, they think about ways to get around that, in my experience.
But if you say to them, "This is our family and we're all in this together. We all depend on each other's behavior to make it work. If you do things behind our back that could trigger bad consequences for all of us, that affects the family as a whole. And, it also means we can't trust you. We're asking you not to do these risky things." That's a much more motivating and respectful way to approach it.
In companies and organizations, approaching people with respect and saying, "The rules are there as guidance, but we don't want you to meet the minimum. We want you to think of the organization as a whole, and to think of our brand and what we're trying to do, our mission and our purpose, and tailor your behavior to that. Not to arguing about whether it's not okay to spend $1000 a person on an elaborate dinner but it is okay to spend $1000 on an elaborate golf outing." It's really a very profound difference in focus.
Emily Miner: Yeah. That idea of leading with your values and that being a demonstration of respect and an extension of trust to employees, I think is really powerful.
As you know, a lot of my work at LRN centers around understanding organizational culture and what motivates employee behavior. When I have conversations, focus groups and interviews with people in our client-partner walls, that's such a big theme, always. This idea of feeling respected and feeling trusted, "Treat me like an adult," so going back to your example of the teenagers. Just being real and talking about it openly, there's no smoke and mirrors behind it.
Yeah. Thanks for sharing that. Good tips as well, for when my children become teenagers.
Susan Divers: Yeah, fasten your seatbelt.
Emily Miner: Yeah. We're talking about ethics and compliance. The global regulators are obviously key stakeholders in the design and implementation of an ethics and compliance program. Regulators being the ones that set out the policy requirements, IE the rules for organizations. But, we're seeing now that regulators around the world are also talking about the "culture of compliance," to quote the Department of Justice, and they're talking about the role of values. Which is really a shift from the language that was used, even just a few years ago.
When did you notice that shift? And, what do you think catalyzed it?
Susan Divers: It definitely started happening as early as 2012. I think it was Mary Jo White, when she was the Chairwoman of the SEC, gave a speech and she said, "You have to focus on your culture." That was shocking at the time, because up to that point ... There's some very interesting things written in this area. There's a BSR white paper from 2017, for example, that talks about how, up until around then, compliance and ethics had been criminalized in the sense that there was a criminal justice approach. "This is the rule, you can't break it. If you do, you can go to jail and get fired."
Okay, but that doesn't encourage me to do the right thing, if there's no rule. Or, to err on the side of doing the right thing, even if it's legitimately gray. And as I mentioned before, it encourages gaming the system, arguing, "Well, I didn't actually breach that rule. My behavior may have been bad, it may have been terrible even, but it didn't actually breach a rule so you can't do anything to me."
So regulators finally caught up with that idea, because even though Sarbanes-Oxley, which was put in place after the Enron scandal largely, and other very detailed laws ... I think Sarbanes-Oxley, I saw somewhere, weighs 30 pounds if you put it all in one place, in terms of printed pages.
Emily Miner: Wow.
Susan Divers: Yeah, it's kind of scary. Sarbanes-Oxley didn't really change behavior. We then had the financial crisis and regulators started realizing that the answer to better behavior, preventing misconduct and generally being more effective might not be just layering on more rules and more rules. Ethics and compliance officers realized that the more effective approach might not be always getting up and screaming about penalties and all the bad things that could happen.
But again, taking a much more positive approach and saying, again, "We're all in this together. We're going to trust you to do the right thing, even if it costs you and the company an opportunity. We're not going to rely strictly on your having to look up pages and pages of complex policies to try to figure out what you're actually supposed to do. We're going to encourage you to seek guidance, and we're going to have a welcoming attitude towards questions. We're not going to say, 'What did you do, why are you asking that?'"
As a former senior executive at AECOM once put it, it's a shift from being a cop to a coach.
Emily Miner: I love that, a cop to a coach. One of the other trends or shifts in the regulator space has been around accessibility. I'm coming back to that, in listening to what you were just saying, because values, when shared and understood across an organization, allow for a more simplified, accessible approach to how we govern our behavior. To your point, not having to look up pages and pages, and parse out whether this crosses that line versus this other line. But really, just more fundamentally, is this aligned with who we are, what we believe in, what we stand for, so it's a powerful tool from an accessibility and simplification standpoint, too.
Susan Divers: Yeah. It's your North Star. It's a lot easier to look up and see the North Star than it is to read a policy on Foreign Corrupt Practices Act.
Emily Miner: You mentioned AECOM. You were in-house for a long time, as a chief ethics and compliance officer, starting up two ethics and compliance programs including at AECOM. Were you always oriented towards this idea of rules and values? Or, were there certain experiences in your professional career, or your personal life with your teenage sons, that impressed upon you the value, the benefit of a values-based approach?
Susan Divers: Well, I was really lucky when I started at AECOM because I had amazing colleagues. It was a perfect storm of goodness. The head of corporate communications, who later went on to win every imaginable award including having his picture up in Times Square because he won the Arthur Page Award. And then, the head of internal audit who came on, the three of us really worked together. We quickly got it, that making good ethics part of our brand and our mission was very feasible at AECOM. Our mission was to enhance the world's natural built and social environments in which we operate, and that was back in the early 2000s before people were even thinking about ESG.
The company really lived up to that. They did a lot of very creative and very far-seeing work on a pro bono basis of what does a sustainable look like. We said, rather than, again, make this the cop shop, let's make it part and parcel of what we do. We did, in terms of communication and in terms of the way we ran the program. And then as a result, we won, unexpectedly, World's Most Ethical Company on our first year of trying. I think we got it five years thereafter. That became part of our brand. We had a little toolkit that you could put into a bid, an RFP response, that said, "This is what we've won and this is what our program looks like," and we really walked the walk as well as talked the talk.
That really resonated at AECOM, people liked that. And we had a great ethics and compliance web page, if I do say so myself. It was interactive, it was engaging, it was kind of fun. We'd have quizzes, we'd do profiles of people who did the right thing, even if was difficult. That kind of momentum tends to breed more momentum in that direction. Occasionally, I found myself talking people out of abandoning a bid or something. I'd say, "Well, there's a way to mitigate that risk effectively."
That was a nice place to be. It really was a good illustration of how values can be the life, and the blood and the heart of an organization's program.
Emily Miner: Yeah. Thank you for sharing that. I think, just when you were talking about the ethics and compliance web page and the interactivity, and quizzes and stories, those are all such powerful engagement techniques. You're right, it's catalytic, where there's a spark and then it leads more rippled effect, if you will. People want to be highlighted for doing the right thing. How great to say, "My company is globally recognized as one of the most ethical companies. I've got to make sure that I help us live up to that standard." Thank you for those specific examples.
Getting into specific examples, we encourage our client partners to take a values-based approach to ethics and compliance. What are some of the other ways that that looks like in practice?
Susan Divers: As you know, every year we publish a Program Effectiveness Report, which is really our flagship piece of research every year. Last year, we highlighted stories of companies really using values to keep it together during the pandemic crisis that unfolded last year. The stories are very inspiring. I'd urge everyone listening to go download our most recent Program Effectiveness Report 2021 off our website.
But, one in particular really struck me and that was Braskem. Wherein they needed to keep plants operating in order to keep the electrical grid in the United States healthy and fully operating. There's no law or rule in the world that would allow you to compel employees in those circumstances to self-isolate at a plant for 30 days at a time. But, what they did is ask employees if they would do that and people volunteered. They went and slept, ate at the plants, for 30 days at a time. Of course, the company paid them extra and ensured that they had facilities, and lodging and food.
But, they're very proud of that experience and it was something that brought the company together. And again, just as we were talking about AECOM, people were proud of the fact that they had an ethical company. At Braskem, the same thing happened. There wasn't a rule that says, "You must do this," because then people would have resisted it, most likely. But, it was a value that this is what we do, this is consistent with our mission and this is consistent with doing the right thing by the social environments in which we operate in our communities. It's really a great example.
I could go on and on, there are many other examples, too. But generally, during the pandemic people really rose to the occasion. Used values such as making programs much more people centered. In the past, it's part of the legacy of a very legalistic approach, programs have been way too legalistic. There's not been that much regard for the impact on people, or as you were talking about, simplicity.
So for example, Dell moved big chunk of its program onto our Catalyst app and is even moving more onto Catalyst app because employees had limited bandwidth. They needed to be able to take training, if they were standing in a grocery line with a mask on, rather than be chained to a desktop.
Again, it's the most powerful way to really motivate people and to change behavior for the better.
Emily Miner: Yeah. The Braskem example, it's so inspiring. I know that there are so many other examples out there, of organizations and people that really rose to the occasion and demonstrated the best of humanity as the COVID crisis was first unfolding, and still today.
You also talked about our flagship research. I think we can probably put a link to the report in this podcast page so that people can access it. But, as director of thought leadership for advisory, you lead this research and have for many years. What does the data tell us about the prevalence of values, or values orientation, or values-based approach in ethics and compliance, or the impact of such an orientation?
Susan Divers: Good question and that's something we look at every year as you know, Emily. What it shows is that the most effective programs, there's a very strong correlation between having an effective ethics and compliance program and being values-based, it just works better. If you look at our report, and we ask questions about organizational justice, which is just a key plank of having an effective ethics and compliance program, having a values-based approach is just much more effective than relying simply on rules.
It's also, as we've talked about, much more consistent with the epiphany that regulators had, I guess almost 10 years ago, where they realized that the regulation heavy approach had its limitations. We see this all the time in our research, that a values-based approach simply works better.
Emily Miner: Yeah. I think one of the data points that was really compelling for me in our research that we did this year was how the percentage of organizations who said that they relied on their values to help them navigate the COVID crisis. I don't know that I was necessarily expecting it to be such an overwhelming percentage. It was incredibly gratifying to see that.
I think it's one of those situations where we could have all gone in one direction or another, and it's really encouraging that so many organizations, COVID has been a catalyst for them to really connect more deeply with their values. I know that you've already talked about how it seems as if this is shaping how ethics and compliance programs are evolving, beyond just the crisis response. But really, what is a new normal moving forward, such as the example of Dell bringing so much of their program onto a mobile app. That way, it's accessible to employees any time, anywhere.
Susan Divers: Yeah. And interestingly, I just looked at our report last year, and 79% of all of our respondents, who were about 600 respondents worldwide, said that their ethical culture got stronger as a result of their response to the pandemic. I don't think we're respecting that really, but it's very encouraging and very heartening because people came together and helped each other through the crisis. Our data shows that boards rose to the occasion, senior leaders rose to the occasion and largely, managers rose to the occasion.
And again, it was an effort to pull together and help each other. It's really an inspiring story.
Emily Miner: Yeah, absolutely. So Susan, for our listeners who might be just starting to build out an ethics and compliance function in their organizations, what key steps would you recommend they take to ensure their program leads with core values? What's square one?
Susan Divers: Well, square one is to realize that you can do it, that it's not an either or choice.
I think the first thing is to avoid what I would call blind benchmarking, where a lot of times, I think people when they start out, they want a compliance program in a box, so that means a checklist. The regulators are pretty adamant that that's the wrong approach because every company has different needs and different risks. You can be small and high risk, you can be large and be relatively low risk. You can have data privacy risks but other companies don't. You can have corruption risks but other companies don't.
So what you need to do first start with your risks. And then say, "Okay, what are the values-based approaches we can take to mitigate those risks?" And then, you still have your infrastructure but you gear your training towards encouraging people to act with integrity in every circumstance that they encounter. We recommend, in our policy simplification work, that you make that very explicit, very simple. You can say, "We act with integrity everywhere, every time, in every circumstance."
Instead of parsing through to see if you can offer a grease payment to jump the queue at customs, you rely on that principle. And that actually is easier for new programs, in some ways. Because if you get that right, you've got a really good basis to build on. And then, you incorporate those values in the infrastructure that you build out, whether it's communications, whether it's training, and even audit and assurance can be infused with values as well as policies.
So you're starting from the right place, you're not building up some elaborate scaffolding. I saw one of the airlines bragging about a five page rule book, but they're also the airline that's had major scandals with people following procedures blindly and dragging people off of airplanes. So get it right from the very beginning and first, you'll be more effective. And then secondly, you'll save yourself a lot of grief down the line.
Emily Miner: Yeah, absolutely. It's a gift, in some sense. Maybe this is a tougher question. For those organizations that have more mature ethics and compliance programs, that might already have that scaffolding in place, what steps should they think? Or, what would you recommend they take to keep their program on the right track and centering their values?
Susan Divers: Well, to go back to the old maxim, "What gets measured, gets done," and really looking at your ethical culture. You just can't leave it on autopilot. You can't leave your risk analysis on autopilot, either. Your ethical culture and your risks are very inter-related.
So spend time, of course, you work in that area and I do too, to some degree, of looking at ethical culture and saying, "What are the levels of trust and respect in the various business units or areas of the world? Are there hot spots? Are there places where there are lagging indicators that we can delve deeper into and really understand what some of the dynamics are?" Places where organizational justice isn't strong or retaliation is high. You have to spend time on it. It's like watering the roots of the plant.
And then, you have to be willing to really talk about values. Again, a lot of companies, they get it right in the code of conduct. And, they put the code of conduct out there but they don't really talk about values. I know you did some work a couple of years ago in this area, with a values jam for the UN Global Compact, which was able to be done online. People appreciate that. People across the company like it when they're asked meaningful questions about values and whether the company's living up to that. I think that's absolutely fundamental to keeping it going, and keeping it real and keeping it alive.
Emily Miner: Yeah. It creates more ownership too, when people are involved in the process and their perspective is invited, or their invited to share their perspective. So that it's not this top down talking point mandate, but really is something that is discussed and explored at all levels of the organization.
Susan Divers: I couldn't agree more.
Emily Miner: Well, Susan, it is always such a pleasure to talk to you about these topics. Thank you for joining me on this episode.
Susan Divers: It was my pleasure, Emily. I feel the same way, it's always nice for us to get a chance to talk about important issues.
Emily Miner: To all of you listening, thank you. My name is Emily Miner and we will see you next time on the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And, if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts or wherever you listen. And, don't forget to leave us a review.
Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.