Cultural Program: How Do You Lay the Foundation for Compliance?

Do you remember our last blog post about compliance? We used that post to explain that you can offer your employees excellent training on compliant behavior. Nonetheless, the compliance culture or in other words, an employee’s values and their willingness to follow rules, is just as important as knowledge of codes of conducts and laws”. According to Audit Standard 980 of the Institute of Public Auditors in Germany, this is one of seven fundamental pillars of a compliance management system. Some experts view compliance culture as the “core of a successful compliance management system”[i].

The more complex the company, the more it works in international contexts, and the more dynamically its business fields develop, the more difficult it is to control the behavior of employees [ii]. It is near impossible to achieve compliance through policy alone under these circumstances. Instead, attitudes and values can offer a framework, provide orientation for decisions, and thereby reduce the level of complexity[iii]. So, what do you have to consider when designing a compliance culture?

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Avoid creating an atmosphere of fear

A compliance management strategy based on strict policies and threats of zero tolerance can have a rather intimidating effect. It may help prevent violations, but you will lose basic motivating conditions such as room to maneuver and individual responsibility. Moreover, it is possible that an atmosphere of fear will spread, whereby employees constantly take extra precautions and no longer trust themselves to make decisions [iv].What’s more, compliance should not lead to a cumbersome, paralyzing bureaucracy.

Open communication

As a result, it is advisable to achieve a balance between control and sanctions on the one hand and trust on the other [v]. To this end, coherent communication about rules and compliance is a must. Employees are more likely to address critical situations and seek advice in a culture of open communication with short reporting processes and easy-to-approach compliance managers and superiors [vi].

Leadership

The leadership factor is essential. All types of behavior particularly that of management, affect the values and culture of a company. Middle management should also be included in order to achieve a broad effect. When direct superiors stand behind compliance and behave accordingly, it reaches more employees and nurtures acceptance [vii].

Continuity

Compliance should not be a topic only discussed once a year as part of a training seminar; rather, it should be an issue that is continuously addressed across various channels in the company. To do so, it is possible to use electronic media such as the Internet and newsletters as well as traditional employee magazines or posters at highly frequented areas in the company. Videos of interviews with managers and participants reporting on the value of compliance training are also helpful.

What’s more, compliance guidelines are documented in a code of conduct and reflected in incentive systems and agreements on targets. Previous compliant behavior is reviewed when it comes to making decisions on promotions and new hires. Violations have visible consequences, depending on the individual and the position. Furthermore, employee and management attitudes and knowledge of compliance are reviewed regularly [viii].

Summary

It is clear that it takes more than training seminars and the establishment of a compliance department to embolden a compliance mindset. Corporate culture forms the foundation. It is shaped by the liability of each individual employee, regardless of hierarchical level and department. It is possible to design a culture like this by trusting the reliability of employees, open communication, the exemplary role of the management, and by bearing compliance in mind in all company processes. Computer-based compliance training helps to continuously raise awareness of the boundaries between compliant and non-compliant behavior.

What are your experiences with compliance training? Are you planning to introduce a program? Come and talk to us! Visit us at Booth D40 at LEARNTEC 2015 in Karlsruhe from January 27th to 29th. We are set to use the event to present our new compliance platform, which we are developing together with Schönherr Rechtsanwälte .


Sources

Digital Spirit. ‘Problems Implementing Compliance.’

Eckert, Tilman. Practical Knowledge of Compliance: Successful Implementation in Companies. Freiburg: Haufe, 2014.

Gnändiger, Jan-Hendrik and Antonia Steßl. ‘Focal Point: Acceptance of Compliance Management Systems at Employee Level.’

Gößwein, Georg and Olaf Hohmann. ‘Models of Compliance Organization in Companies – Against the Chief Compliance Officer as the Chief Responsibility Taker.’ Betriebs-Berater 66.16 (2011). 963–968.

Haack, Lutz-Ulrich und Martin C. Reimann. ‘Compliance Framing – Framing Compliance.’ Working Paper 6 (2012). Otto-von-Guericke University Magdeburg, Germany.

Inderst, Cornelia, Britta Bannenberg, and Sina Poppe (ed.). Compliance: Structure – Management – Risk Areas. 2nd edition. Heidelberg: C.F. Müller, 2013.

Compliance Information Bank. ‘Guidance on the Compliance Culture.’

PWC. ‘Audit Standard 980 Provides Orientation to Compliance Managers and Opens Up Opportunities.’

[i] Gößwein/Hohmann, quotation in Haack/Reimann 6; see PWC

[ii] Haack/Reimann 5

[iii] Haack/Reimann 9

[iv] Haack/Reimann 13

[v] Haack/Reimann 11

[vi] Eckert 25, Compliance Information Bank

[vii] Haack/Reimann 17, Gnändiger/Steßl VII

[viii] Inderst et al. 168

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