The Tribune

In today’s business environment, brands must deliver first-class services in an agile and flexible manner that is relevant to all consumer demographics, regardless of the threat of disruptions. However, during this pursuit, corporate greed, employee exploitation and ethical violations can become commonplace. Classic examples include Enron and several of the financial firms that played leading roles in the 2008 sub-prime mortgage lending debacle. Just last month, it was reported that one of the so-called ‘Big Four’ accounting firms, EY (Ernst & Young), was fined $100m by US regulators after some of its employees cheated on ethics tests they were required to take to get or maintain their professional licences.

In this article, I will discuss two points: The ‘top down’ promotion of an ethical and transparent culture, and the collaboration of human resources and a company’s risk and compliance functions.

Top-down promotion of an ethical and transparent culture

The creation of a strong culture by a company’s executive team will translate into long-term value creation and risk mitigation. The Board of Directors and top executives must lead by example. Leadership, for instance, should exhibit courteous and respectful behaviour towards employees to demonstrate what type of conduct is expected. You may do this by showing genuine interest in the team’s achievements or by gaining insight on upcoming company operations. During meetings, for example, leaders should behave in a courteous and respectful way towards workers to show what kind of professional behaviour is expected. This can include anything from showing genuine interest in employee accomplishments and milestones to gaining staff input on existing and future company operations. As a result of adopting this level of respect and transparency, employees are motivated to follow suit in their roles and responsibilities. This assists in preventing inappropriate behaviour and reduces potential risk in the long run.

Human resources, risk and compliance collaboration

Compliance and human resources should work together, as both are integral to ensuring a compliant, safe and inclusive workplace. It is true that having an ethical culture on paper allows a business to comply with regulations, but companies should move one step further and create an environment where people behave ethically since they desire to - not because they are required to. A significant difference exists between these motivations; a difference that workers feel throughout the company.

It is in this context that human resources and compliance teams can strategically collaborate to educate the business on the benefits of a more diverse workforce, while ensuring compliance with relevant laws. This helps the human resources team source more “fit over form” qualified candidates.

Conclusion

Leaders today require a higher degree of ethical guidance than they did in the past. It is imperative that you rethink the way you do business in a strategic and holistic manner. When leaders set an example versus simply being compliant on paper, and encourage functional strategic collaborations, they will not only benefit their company, their team and their profitability, but will also benefit the public.

NB: About Derek Smith Jr

Derek Smith Jr. has been a governance, risk and compliance professional for more than 20 years. He has held positions at a TerraLex member law firm, a Wolfsburg Group member bank and a ‘big four’ accounting firm. Mr Smith is a certified anti-money laundering specialist (CAMS), and the compliance officer and money laundering reporting officer (MLRO) for CG Atlantic’s family of companies (member of Coralisle Group) for The Bahamas and Turks & Caicos.