As I prepare for my upcoming presentation "Who’s to Blame: The Bad Apple or the Barrel?" at the 2019 Ethics & Compliance Virtual Conference, I am investigating how compliance systems integrate into the realities of corporate environments. This includes collective misconduct, corruptive organizational routines, the power of context and group dynamics. And more specifically, exploring the question: Do compliance-informed individuals come together to create compliance-aligned organizations. The growing research on the topic is telling us "Yes, but if."
What Creates Compliance-Aligned Organizations?
As we know, compliance sets the boundaries and expectations of the organization with codes of conduct, policies and procedures, training, and whistleblower hotlines. These systems rely heavily on individual engagement – the individual reads the policy, attests to the training, reports through the hotline, and ultimately faces the ethical dilemma. What is often overlooked, however, are the motivating factors between these points – the cultural influences that color our messages. Yes, the employee knows what to report; yes, they know how to report; yet they don’t always report when there is a need to do so.
This is because the systems of compliance need to sit within a context of compliance for programs to go from effective in process to effective in practice.
It is not surprising that the field of compliance is focused primarily on individuals. Scholars in the field have adopted what is known as the “normative” approach, which assumes that individuals are rational, self-interested beings who are aware of the ethical dilemmas they face and understand the implications of unethical conduct. This is an intuitive approach in which people understand the rules, and if they break them, they do so knowingly, fully understanding the implications. However, there are certain shortcomings of this approach as we are reminded of with every news headline of the latest scheme or scandal.
We must ask ourselves then: Are we as rational as we think? Well, yes and no.
Are We as Rational as We Think?
People as individuals may be normative; it’s when we get into groups that we struggle. Research has consistently shown that groups are not only more dishonest than individuals, but also harbor less guilt about dishonest behavior. For risk and compliance officers who manage the most prevalent modern group environment – the workplace – this means we must be technicians of compliance technology, architects for resilient risk systems, and – just as important – masters of the group dynamic environment.
The environments in which we operate play a disproportionate role in shaping our decisions and choices. Many times, this influence is far more subtle than we appreciate. In the workplace, employees will look for cues in the environment for guidance on how to behave, especially when facing an ambiguous or uncertain situation. While our corporate codes of conduct might tell us to act with integrity, our boss, peers and adjacent departments will actually be the ones who define what integrity looks like in practice.
A normative mindset also tends to focus our efforts on identifying “bad apples” and assigning responsibility to these individuals. But realities are never as normal as we would like. Any explanation of unethical behaviour must consider the environment in which the "bad apples" operate, recognizing that it can have a profound effect on behavior. When exploring the origins of unethical behaviour, the “barrel” must be given as much (if not more) attention as the “bad apples” themselves.
This is just the beginning. As I finalize my presentation, I look forward to discussing more about building better corporate "barrels," truly influencing workplace cultures, and maximizing the impact of our compliance systems by supporting them with complementary compliance context.
Join me for my session: "Who’s to Blame: The Bad Apple or the Barrel?"