A Guide to Compliance-Based Ethics Codes

March 21, 2024

Your Guide to Compliance-Based Ethics Codes

Ethics codes based on compliance with regulations are crucial for managing risk. Decision makers at financial services companies and enterprises in other highly regulated sectors can benefit from understanding how to develop, adopt and implement compliance based ethics codes. Learn more about how codes of ethics can promote conformity and find out how a continuous monitoring solution can be helpful for policy management.

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3 Pillars for a Culture of Compliance

The best examples of compliance cultures build from three foundational pillars: leadership commitment, clear and accessible knowledge, and ongoing training and engagement. You cannot plow your way through cultural development; it takes time and trust. The most effective compliance cultures are those embedded in everyday practices and organizational values.

1. Leadership Commitment

The culture begins with leadership. Business owners and executives should openly discuss the importance of compliance at all levels, take part in training, and hold themselves accountable for upholding ethical standards. They should strive to integrate compliance into all business objectives, even link it to performance reviews, rewards, and recognition programs.

Leaders set the standard for ethical behavior and compliance with their actions, and good leadership influences worker participation. According to Gallop,up to 70%of employee engagement depends on management; therefore, inconsistency between leadership pronouncements and actions can foster confusion, affect participation, and erode trust, weakening the compliance culture.

2. Clear and Accessible Knowledge

A resilient culture of compliance must adopt knowledge-sharing techniques to prevent mistakes, encourage innovation, and foster ethical standards and practices. For cultural compliance to take hold, everyone in the organization must understand their obligations, which means they must have and maintain access to relevant and organized information.

An organization should establish a compliance and knowledge-sharing environment with well-organized and comprehensive policies and procedures. It should ensure all policies use clear and concise language, avoiding legal jargon as much as possible. The policies should cover relevant issues, including:

  • Data privacy
  • Industry-specific regulations
  • Risk awareness

Also, the knowledge-sharing environment should use diverse communication channels to make information as accessible as possible. Some examples may include:

  • Infographics
  • Videos
  • Multilingual resources
  • Searchable knowledge bases with FAQs.

3. Ongoing Training and Engagement

Developing a compliance culture is an ongoing process that requires training and continued engagement. Employee empowerment is a significant factor in creating, maintaining, and sustaining a value-driven culture where everyone feels responsible for acting ethically and complying with regulations. Your organization can foster employee empowerment and ethical fortitude through ongoing training and engagement.

A culture of compliance uses foundational training on policies and regulations combined with modules on ethical decision-making. Companies must also perform regular risk assessments to identify vulnerabilities and develop training tailored to those weaknesses.

Training can include simulations and case studies, interactive online modules, role-playing activities, group discussions, and peer learning. Your company should also promote and invite continuous communication and engagement beyond training; some strategies might include:

  • Fostering an environment of open dialogue
  • Creating multiple communication channels
  • Integrating compliance into daily activities
  • Recognizing and rewarding ethical behavior

Public recognition  can promote and improve positive behaviors. While private feedback is an excellent form of positive reinforcement, public appreciation and praise are more impactful and can bolster motivation among other team members.

4 Steps for Implementing a Compliance Culture

The indicators of a compliance culture include clear communication, training, reporting, policies and procedures, and routine monitoring. A company can build a culture of compliance in four steps.

1. Conduct a Compliance Assessment

Before adopting a compliance culture in your organization, you must assess the current state of your compliance program. A compliance assessment evaluates an organization’s compliance with laws, regulations, and internal policies. It reviews and documents the current state of compliance oversight, management, and related risks.

The assessment also investigates communication and reporting mechanisms, evaluating the effectiveness of internal communication channels. It should weed out potential concerns or violations and gather anonymous employee feedback. Finally, assessments should analyze external sources, such as industry reports and regulatory updates, to identify emerging risks and best practices. The assessment result should provide a benchmark for current compliance practices and highlight areas of improvement.

2. Develop a Compliance Action Plan and Team

A culture of compliance requires an action plan, which is essential for transforming compliance aspirations — revealed in the assessment — into actionable goals. A compliance team is usually responsible for developing and implementing an action plan. A team typically comprises a compliance officer, analysts, training specialist, and communications specialist. Some organizations may require more positions, including an ethics officer, legal counsel, internal audit professional, information security specialist, and other industry-specific specialists.

The team’s action plan should prioritize actions based on the severity of risks, potential impact, and feasibility. Each item should define clear objectives that establish specific, measurable, achievable, relevant, and time-bound goals (SMART). Compliance teams must also assess the allocation and budgeting for each action item, including the financial, human, and technological assets required to achieve the goal.

3. Implement Key Initiatives

With the action plan in place, the organization and compliance team must implement key initiatives, transforming the plan into concrete actions that build the culture of compliance. There are several strategies for effective implementation, but they all stem from the compliance team’s ability to outline specific activities, define roles, develop timelines, establish accountability mechanisms, and set milestones.

Project management software and tools can help track progress and define individual responsibilities. The programs and techniques use specific management methodologies and tools to track progress, manage resources, and identify potential roadblocks during implementation.

Regular meetings and updates can also help promote and track compliance initiatives. The meetings provide opportunities to pinpoint areas of concern or celebration vital to sustained morale and motivation.

4. Monitor and Evaluate

Checking off items on your company’s compliance action plan is not enough. To measure the effectiveness and success of your company’s progress towards a compliance culture, you must monitor and evaluate it regularly. Organizations can conduct annual surveys or independent audits of their programs. They can also reassess internally with periodic compliance assessments.

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The Primary Reason To Use Compyl To Create a Culture of Compliance

Compyl is an end-to-end security and compliance platform. It helps streamline information security and compliance programs, guiding organizations toward a culture of compliance. To learn more about how Compyl empowers organizational compliance,  request a demo  from our team.


How can small businesses without a formal compliance department foster a culture of compliance?

Small businesses can foster a culture of compliance by integrating compliance principles into everyday business operations, offering regular training sessions, and making compliance resources easily accessible to all employees. Leadership should model compliance in their actions and decisions, emphasizing its value to the business’s success.

What are the key indicators to measure the effectiveness of a compliance culture within an organization?

The effectiveness of a compliance culture can be measured by examining employee engagement in compliance activities, the frequency of compliance issues or violations, feedback from staff, and the results of internal audits. Regular surveys and open forums for discussion can also provide insights into the culture’s impact.

How do you address resistance from employees who view compliance as bureaucratic or hindering their work?

Addressing resistance involves demonstrating the value of compliance in protecting the business and its employees. Education on the consequences of non-compliance and using real-world examples can help. Engaging employees in the development of compliance processes and making compliance easier through clear guidelines and tools can also reduce perceived bureaucracy.

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