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Corporate Compliance Insights
Home Ethics

Fixing a Company’s Ethics and Compliance Culture

by Michael Volkov
June 20, 2014
in Ethics
Fixing a Company’s Ethics and Compliance Culture

This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.

“There is nothing more difficult to take in hand, more perilous to conduct or more uncertain in its success, than to take the lead in the introduction of a new order of things.” — Niccolo Machiavelli, The Prince (1532)

We all have been following the “turn around” projects at some of the big companies — Wal-Mart, Morgan Stanley and SNC-Lavalin, just to name a few.

Changing a corporate culture, even under the Sword of Damocles, can be a daunting task. In fact, in some situations, it may be impossible.

Some may question the realistic ability of a company to “change” its culture.

For example, even after Siemens suffered the largest FCPA fine and remediation program required in FCPA enforcement, there were some who questioned whether or not Siemens’ new culture of compliance was actually effective. Some whistleblowers claimed that Siemens was continuing to engage in corruption in various regions.

Whatever you may believe as to the ability of a company to “reform” itself, there is no question that fixing a company’s culture takes time and most importantly, requires leadership.

A company’s ability to enact meaningful change depends on the innate desire of its leadership to execute real change.   It is too easy to say that such change depends on the CEO. Instead, a change in culture requires the dedication of two important players – the CEO and the Board of Directors.

One without the other is a recipe for disaster. If the CEO and the Board are not on the same page, it is hard to imagine how real and substantive change could come to pass.

Too often, we hear that a company is enacting change by bringing in a new Chief Compliance Officer. Again, you should take such claims with a proverbial grain of salt. A Chief Compliance Officer can only move the ball as far as the CEO or the Board empowers the CCO to do.

A CEO needs the imprimatur of the Board, and in the end, the Board needs to support of the CEO to lead and carry out its intent. Too often companies get tripped up on the willingness of “senior” management to embrace a mandate for change. That is a mistake.

Not that I am in favor of totalitarianism or dictatorships, but when it comes down to it, the CEO is the lead corporate actor for change. No one else has the ability or the mandate to carry out such change.

A CEO-Board alliance for change depends on three basic principles: (1) direction, (2) communication and (3) action.

First, the CEO-Board plan to act requires a vision, direction or end product on which everyone agrees. That means that the Board and the CEO have to define what culture they want, what it will look like and how they will get to that point.

Second, a new culture requires communications. We have all seen how symbolic actions, clear statements and definition can provide direction to people in an organization. The same has to be done in a company – officers, managers and employees need to understand what the plan for change is and how it is going to be accomplished. Internal communications and clear messaging is a must.

Third, corporate constituencies have to see that the plan is for real – that actions are being taken to enact change. This does not mean that additional resources are being assigned to a problem – instead, corporate change depends on specific actions taken to send a message that reinforces the overall vision for corporate change.


Tags: anti-corruptionthird party risk management
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Michael Volkov

Michael-Volkov-leclairryan Michael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services.  He can be reached at mvolkov@volkovlaw.com. Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues. Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for five years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice. Michael also maintains a well-known blog: Corruption Crime & Compliance, which is frequently cited by anti-corruption professionals and professionals in the compliance industry.

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