The Tribune

Businesses must have a solid corporate culture to gain a competitive advantage. For a thriving business, it enhances employee performance, increases engagement and forms the backbone of a compliance programme. Conversely, a poor corporate culture, or total absence of one, restricts access to elite talent as well as leading to non-compliance with business norms, laws and societal expectations.

This writer believes corporate culture is a barometer of a company’s risk and compliance strength. Enhancements in cultural facets, especially ethics, naturally lead to reduced risks and improved compliance. To achieve this, firms must deliberately shape a corporate culture conducive to compliance. This article now reviews three strategies to craft a robust corporate culture.

Pinpoint crucial cultural elements for compliance

In order for leaders to succeed, they must identify the cultural components that are vital to them and ensure they are widely adopted. It is crucial to define core values. Having them communicated and understood guides organisational behaviour. As an example, let us look at the importance of integrity. It is essential for employees to understand what this means and the expected behaviours associated with it. A company with a culture of open communication strengthens its ability to fight malpractice. It is imperative that speak-up mechanisms are transparent and retaliation-free. Additionally, corporate values and laws must be included in comprehensive training. A successful training programme reinforces culture as well as prevents future problems.

Foster human resources and compliance team synergy

A so-called ‘game changer’ is merging human resources and compliance efforts. Having a documented ethical culture ticks the compliance box, but the goal should be to cultivate a culture of voluntary integrity. A good example is the Nasdaq Stock Exchange’s directive, endorsed by the Securities & Exchange Commission (SEC), mandating that companies have at least two diverse board members. Diversity should not be merely a legal requirement. According to McKinsey, diverse companies are more profitable than their less diverse counterparts. In a similar vein, non-profit Catalyst notes that diversity boosts employee retention and innovation while curbing ‘group think’. A diverse workforce can be highlighted by compliance, while human resources can capitalise on this talent pool. A system for tracking cultural goals, which are directly related to compliance goals, is crucial.

Champion culture from the helm

Culture building is a collective responsibility, with leadership and boards playing a crucial role. Corporate leaders should be the primary architects of this culture, while human resources facilitates it. Their goal should be to define the ethos of the company and the desired environment for it. Leadership that epitomises a robust culture adds long-term value and reduces risk. When leaders show respect and transparency to their employees, they foster an environment in which employees reciprocate in their duties, which minimises undesirable behaviours.

Creating a vibrant workplace is not the only aspect of cultivating corporate culture. A culture based on business values holds more outstanding merit than camaraderie. Such a culture invariably reduces risk, augments compliance and magnetises top-tier talent, clients and stakeholders.

• 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.