Leadership, Written Standards, Organizational Culture And Incentives

I had fun this past week briefly attending Ethisphere‘s Global Ethics Summit in Atlanta and speaking on a panel about how to use incentives as part of an effective ethics and compliance program. Incentives – like any other feature of an ethics and compliance program – don’t exist in isolation and need to be considered in terms of how they will impact, and be impacted by, other aspects of how an organization operates. Organizations need to consider the interplay and alignment between four key areas (including incentives) to ensure there is an organizational commitment to integrity:

1. Leadership (including the direction set by leaders, managers and supervisors throughout an organization and what they permit in terms of behavior),

2. An organization’s written standards and controls,

3. Organizational culture/pressure, and

4. Incentives.

If all four areas are aligned and pointing in the same direction of an organizational commitment to integrity, then employees will have clarity on what is expected of them (the written standards), the actual standards will be consistent with the written standards, employees will supported and held accountable by leadership and others to do the right thing, and employees will be financially and socially rewarded for doing the right thing.

If these four key areas are not aligned or not aligned to support an organizational commitment to integrity then that should be a cause for concern. Remember, it was (in the words of the Department of Justice) “a complete failure of leadership at multiple levels” and “pressuring employees to meet unrealistic sales goals that led thousands of employees” at Wells Fargo to open millions of accounts without customer authorization. Leadership, organizational culture/pressure and incentives were clearly not aligned with the written/stated standards of their ethics and compliance program, as a result there was no organizational commitment to integrity.

It is not enough to have written standards that are not supported and put into practice by leadership, the organizational culture and incentives. All of them need to be aligned to build and sustain an organizational commitment to integrity.