As the headlines show, having the components of an ethics and compliance program in place, such as a hotline, code, training, or policies, doesn’t guarantee effectiveness. The central lesson that we have learned—from our ongoing research and our experience with hundreds of organizations over the decades—is that a values-based approach to governance, culture, and leadership correlates strongly with greater business outcomes and reduced risk. These organizations produce better financial results and boast greater innovation, stronger customer satisfaction, higher levels of employee engagement and, critically, reduced levels of misconduct—plus a willingness to report wrongdoing when observed. Moreover, our research consistently shows that these organizations are significantly more successful at operationalizing ethics and compliance into their day-to-day.
Our research demonstrates conclusively that "operationalizing" ethics and compliance in all aspects of the business enables leaders and employees to think and act based on shared values rather than on short-term expediency or minimum legal requirements. That means evaluating E&C programs should be based on how they impact their organizations' operations and workplace behavior—not whether they satisfy a checklist of criteria.
Consistent with this perspective, we created a Program Effectiveness Index (PEI). This proprietary framework analyzes not only the components of corporate E&C programs, but also the impact these programs have on workplace behavior. You can learn more about PEI in our 2022 E&C Program Effectiveness Report.
One common obstacle that E&C officers face in implementing an effective program is the perceived trade-off between ethical business practices and profit margins. Our research shows that the two aren’t mutually exclusive. In fact, 97% of values-based organizations display better performance than their competitors, compared to 80% and 30% (respectively) for more traditional command-and-control or rules-based organizations. Furthermore, the risks posed by lack of moral leadership are costly. The 2020 State of Moral Leadership in Business found that 67% of senior leaders said they’d be willing to leave their organization if their CEO didn’t act on a moral issue, and that employees were 12 times more likely to leave if a direct manager didn’t exhibit moral leadership.
Our 2022 Ethics & Compliance Program Effectiveness Report provides definitive support that following a values-based approach substantially benefits organizations when operationalizing E&C in a manner that is consistent with the DOJ guidance. If you’re ready to begin building an E&C framework that operationalizes your values throughout your organization, our Advisory Services practice has the experience and tools to guide you through this process.