One of the ways that Human Resources (HR) can help to operationalize compliance is to assist each level of an organization to have a proper tone. While the top of an organization rightly gets much of attention, the tone about doing business ethically and in in compliance is equally important in the middle of an organization.

A company must have more than simply a good ‘Tone-at-the-Top’; it must move it down through the organization from senior management to middle management and into its lower ranks. This means that one of the tasks of any company, including its compliance organization, is to get middle management to respect the stated ethics and values of a company, because if they do so, this will be communicated down through the organization.

Adam Bryant, in a NYT article, entitled “If Supervisors Respect The Values, So Will Everyone Else”, explored this topic when he interviewed Victoria Ransom, the Chief Executive of Wildfire, a company which provides social media marketing software. Ransom spoke about the role of senior management in communicating ethical values when she was quoted as saying “Another lesson I’ve learned as the company grows is that you’re only as good as the leaders you have underneath you. And that was sometimes a painful lesson. You might think that because you’re projecting our values, then the rest of the company is experiencing the values.” These senior managers communicate what the company’s ethics and values are to middle management. So while tone at the top is certainly important in setting a standard, she came to appreciate that it must move downward through the entire organization. Bryant wrote that Ransom came to realize “that the direct supervisors become the most important influence on people in the company. Therefore, a big part of leading becomes your ability to pick and guide the right people.”

Ransom said that when the company was young and small they tried to codify their company values but they did not get far in the process “because it felt forced.” As the company grew she realized that their values needed to be formalized and stated for a couple of reasons. The first was because they wanted to make it clear what was expected of everyone and “particularly because you want the new people who are also hiring to really know the values.” Another important reason was that they had to terminate “a few people because they didn’t live up to the values. If we’re going to be doing that, it’s really important to be clear about what the values are. I think that some of the biggest ways we showed that we lived up to our values were when we made tough decisions about people, especially when it was a high performer who somehow really violated our values, and we took action.” These actions to terminate had a very large effect on the workforce. Ransom said, “it made employees feel like, “Yeah, this company actually puts its money where its mouth is.””

Ransom sought to ensure that everyone knew what senior management considered when determining whether employees were “living up to the company culture.” The process started when she and her co-founder spent a weekend writing down what they believed the company’s values were. Then they sat down with the employees in small groups to elicit feedback. Her approach was to look for what they wanted in their employees. They came up with six.

  • Passion: Do you really have a thirst and appetite for your work?
  • Humility and Integrity: Treat your co-workers with respect and dignity.
  • Courage: Speak up – if you have a great idea, tell us, and if you disagree with people in the room, speak up.
  • Curiosity: They wanted folks who would constantly question and learn, not only about the company but about the industry.
  • Impact: Are you having an impact at the company?
  • Be outward-looking: Do good and do right by each other.

Ransom had an equally valuable insight when she talked about senior management and ethical values. She believes that “the best way to undermine a company’s values is to put people in leadership positions who are not adhering to the values. Then it completely starts to fall flat until you take action and move those people out, and then everyone gets faith in the values again. It can be restored so quickly. You just see that people are happier.”

What should the tone in the middle be? Put another way, what should middle management’s role be in the company’s compliance program? This role is critical because the majority of company employees work most directly with middle, rather than top management and, consequently, they will take their cues from how middle management will respond to a situation. Moreover, middle management must listen to the concerns of employees. Even if middle management cannot affect a direct change, it is important that employees need to have an outlet to express their concerns. Therefore your organization should train middle managers to enhance listening skills in the overall context of providing training for what she termed their ‘Manager’s Toolkit’. This can be particularly true if there is a compliance violation or other incident that requires some form of employee discipline. Ransom believes that most employees think it important that there be “organizational justice” so that people believe they will be treated fairly. Ransom further explained that without organization justice, employees typically do not understand outcomes but if there is perceived procedural fairness that an employee is more likely accept a decision that they may not like or disagree with.

So think about your lines of communication and your communication skills when conveying your message of compliance down from the top into the middle of your organization.

Three Key Takeaways

  1. While tone at the top is critical, the tone in the middle can actually work to more fully operationalize compliance.
  2. How do you train middle managers?
  3. What compliance tool kit do you provide to middle managers?

 

This month’s series is sponsored by Advanced Compliance Solutions and its new service offering the “Compliance Alliance” which is a three-step program that will provide you and your team a background into compliance and the FCPA so you can consider how your product or service fits into the needs of a compliance officer. It includes a FCPA and compliance boot camp, sponsorship of a one-month podcast series, and in-person training. Each section builds on the other and provides your customer service and sales teams with the knowledge they need to have intelligent conversations with compliance officers and decision makers. When the program is complete, your teams will be armed with the knowledge they need to sell and service every new client. Interested parties should contact Tom Fox.

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