Top 4 Secrets of a Successful Ethics and Compliance Program

Jim brennan

by Jim Brennan

Jim Brennan has been in the ethics & compliance space for 25 years and for the last 15 years has led the program of a global company with over 33,000 employees.

  1. The Single Most Important Component of an Ethical Culture
  2. It Isn’t Enough to Listen. People Must Perceive That They Are Heard.
  3. Run Out Every Grounder. 
  4. Ethics Officers are from Mars, Boards Are from Venus.

1. The Single Most Important Component of Building and Maintaining an Ethical Culture

What is the single most important component of having and maintaining an ethical culture? Is it:

a.) Policies and procedures, including the Code of Conduct;

b.) Training;

c.) Incentives;

d.) Monitoring and auditing;

e.) Risk assessments; or,

f.) Other.

Each of ‘a’ through ‘e’ is a necessary and important part of an effective ethics and compliance program, as are all the elements of the Sentencing Guidelines. But the answer to the above question is ‘Other.’ The single most important component in building and maintaining an ethical culture — by far — is a culture of open communications.

With apologies to St. Paul, if a company has a Code of Conduct so well-written that Shakespeare himself would be jealous; if it has the slickest online training ever; if it has a risk assessment process that is Nobel Prize-worthy; if it has all of this and more but does not have a culture of open communication, then all it has are noisy gongs and clanging cymbals. To change the metaphor, the ethics program at such a company would be all hat and no cattle.

Most corporate scandals are preceded by a chilling of communication. Once upon a time the water of open communications flowed smoothly, but more and more there appear stagnant eddies of stifled communication: “Let’s keep this one between us”; “Corporate doesn’t need to know”; “Don’t tell the Legal Department; they’ll just say no.” Here’s a pro tip for corporate leaders regardless of function: if you ever hear comments such as the above, then ‘ding ding ding’: alarm bells should be blaring in your head, warning you that the company is heading down the wrong track.

In Outliers, Malcolm Gladwell reviewed data from numerous airline accidents. “The kinds of errors that cause plane crashes,” he wrote, “are invariably errors of teamwork and communication.” “One pilot knows something important and somehow doesn’t tell the other pilot.” Pilots need to “communicate not just in the sense of issuing commands but also in the sense of…sharing information in the clearest and most transparent manner possible.” Same thing applies to the corporate world. The kinds of errors that cause ethical crashes are almost invariably rooted in errors of teamwork and communications. Where communications are good, good things (like a strong ethical culture) happen. When communications are bad, bad things happen. Still doubt that? Then watch this:

2. It Isn’t Enough to Listen. People Need to Perceive That They Are Heard.

Okay, so if a culture of open communications is so important, how do you, as an ethics officer, foster that? There are, of course, many vital ingredients, including but not limited to:

  • Incentives;
  • An empowered and independent CECO;
  • Support for the program from the most senior levels of the company;
  • Consistent, material and visible enforcement of non-retaliation.

One other vital ingredient, though, one which is frequently overlooked, is to repeatedly train company leaders on the paramount importance of making their people feel heard

When people feel heard by their boss, they will trust her. (And, interestingly, this makes them trust the company.[1]) And when people trust their boss — and thus trust the company — they will speak up about issues that concern them, including possible wrongdoing. On the other hand, if employees do not feel heard by their boss, they will not trust her and will not trust the company. And as a result they will not speak up. Well, maybe they’ll speak up to a government regulator or to a plaintiff’s attorney, but they won’t speak up within the company.

In my experience, the best way to impress upon leaders the vital importance of making sure their people feel heard is through face-to-face workshops. These sessions are frequently eye-opening for the participants, as they often find that they have significant room for improvement. Scenarios, including role play exercises, can be particularly helpful in this regard. In one role-play scenario, one participant plays a harried, multitasking boss, while another portrays an employee who fervently wishes to talk to the boss about something. The ‘boss’ makes a show of trying to multitask, what with juggling email, a phone call, and an Excel report, all while the employee is trying to bend her ear. 

Participants often have an ‘aha’ moment when they see that, even if the boss listened to every word that the employee was saying, still, the employee may not perceive that he is being heard. The multitasking boss is inadvertently sending out a vibe to the employee that “You are not that important.” That perception can be catastrophic to not only morale and productivity but also to a culture of communication. There goes trust, and with it the likelihood of future communication. The ethical fabric of the company has been damaged. And here’s the kicker: the boss didn’t even do anything unethical!

We reinforce with participants that this does not mean they have to drop everything whenever an employee wishes to pull them from what they are doing. Too busy at this very second? That’s okay. Use the magic phrase “Give me 5 and I’ll give you 100.” That is, “Give me 5 minutes and I’ll give you 100% of my attention.” The important thing to bosses: be attentive to the vibes you are sending out. You are always sending out vibes to your team whether you intend to or not. Make sure that those vibes are consonant with showing your team that you hear and value them. That is perhaps the very best way that leaders help to reinforce a culture of communications, i.e., an ethical culture.

3. Run Out Every Grounder.

Another key component of an effective ethics & compliance program is to run out every grounder. That is, ensure that there is appropriate follow-up, by competent and independent investigators, each and every time someone raises a concern or allegation. No prejudging the merits of a claim; no assuming it’s true or false based on the players involved or other factors; no taking a claim less seriously because the claimant “is always saying that the sky is falling”; no thinking about consequences if it should turn out that a claim is true (or not true). Just put your head down and find out the facts.

When thinking of what constitutes an appropriate and sufficient investigation, it can be a helpful exercise for ethics & compliance departments to think of the “skeptical outsider.” That is, for each internal investigation, think of how your investigation would look if things went south and a plaintiff’s attorney or government regulator (i.e., “skeptical outsider”) got hold of your file. The skeptical outsider is not on your side. The skeptical outsider does not have your company’s best interests in mind. The skeptical outsider parses the file and eagerly looks for weaknesses in the investigation. Were the investigators competent and independent, or did they have some conflict? Was the investigation appropriately thorough, or were there any signs that the investigation was cursory (e.g., key witnesses were blown off, or shortcuts appear to have been taken)? Does the investigation have earmarks of prejudgment or “looking for a desired conclusion”?; Are there signs that employee A received light treatment in this investigation because she is a star performer? Investigations need to be effective and professional, but they also need to be externally defensible: “I am comfortable that we could defend this investigation if it was attacked by a skeptical outsider.”

Investigations vary tremendously. So much so that, in my opinion, they are best not reduced to a cookie-cutter standard operating procedure. After all, what might be an appropriate approach in one scenario may be wildly misguided in another. But all investigations must follow solid principles of investigations, including independence, fairness, promptness, appropriate thoroughness, and appropriate confidentiality. Shorthand for the above is to say that every investigation must meet the criterion of defensibility. We help keep the company’s ethical backbone straight (and, vitally, front-line employees see that the backbone stays straight) when we make sure that every single claim is followed by an inquiry that is defensible to a ‘skeptical outsider.’

4. Ethics Officers are from Mars, Board Directors Are From Venus.

A perennial question for ethics officers is “What do boards of directors, to whom I regularly report, want?” (And, what don’t they want?)

It is perhaps easier to address the latter question first. What boards do not want is droning on about statistics. As scintillating as it seems to us to give a half hour recap of where things stand on annual online training — “East Region is up to 79% completion, whereas West is at 54% but we still have three weeks to go” — rare is the director who is a compliance nerd like you and me. They don’t want to go too deeply into the weeds, fascinating though we may find such botanical pursuits to be. When preparing reports for the Board, remember their perspective, which can include the following:

  1. They want reassurance that they have one less thing to worry about. They want to know enough details to know that the company is in good hands from an ethics and compliance perspective. Obviously, this is not to say that our reports should be in any way incomplete or misleading, or that we should avoid bad news. We of course have an obligation to be entirely truthful, accurate and complete. It is to say, though, that when preparing presentations to Directors, “reassurance” — and not a walk through weeds — is something that they are hopeful for.
  2. Similar but not identical to # 1, they want reassurance that, if the mud hits the fan and there is outside scrutiny of the company’s ethics & compliance program, the company — and the Board — would pass muster.
  3. One area where directors do want to get into the weeds, though, is investigations. Directors often want to know details of salient investigations. (Not ALL investigations!) It is not hard to understand this impulse. Directors view the company from 100,000 feet. Almost everything they hear has been filtered numerous times, has been aggregated and then aggregated again, and has (often) been sanitized. It is relatively rarely that they get to hear “what is really going on at the front lines.” And guess what? That is what we deal with on a daily basis, whether it is a fistfight on the floor, or a supervisor who short-circuited the disciplinary process of a disfavored employee, or an unscrupulous purchasing employee who found work-arounds on controls.

Directors, being human, like to know “the dirt.” But it is not just prurient interest that makes them to want to know the details about investigations. Hearing details of investigations allows them to better understand not only ‘what is really happening’ but also provides insights into how we as a company are dealing with the inevitable issues that arise.

Yeah, sure, we can give them just data on investigations, but humans learn best through stories, and if we exemplify data analysis with stories about a few recent investigations, our message to the Board will have way more punch.

The more we prepare our messages to the board while remembering their perspective, the more engaged we will find our audience, and the more supportive they will be of our initiatives. And board engagement and support is an absolute necessity for an effective program.


As stated above, all elements of an ethics and compliance program — policies, incentives, training, auditing and monitoring, etc. — are necessary and important. But having a rock-solid program on paper is not enough for a program to be effective, for it to be alive. The vivifying factor is cultural – a culture of communications. Thus, focusing on the ingredients that create and maintain open communications – including an ingredient that is often overlooked, making sure employees feel heard – is essential for an effective program. Also key to an effective program is making sure that every single internal investigation is defensible. And, lastly, remembering the Board’s perspective (while still of course upholding our responsibilities) is invaluable for helping you and your team fulfill your mission.

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