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What’s the Best Way to Encourage Business Integrity?

2016-04-06T00:00:00+00:006th April 2016|

To achieve accountability, businesses need to foster a culture of integrity.

In recent years, significant efforts have been made to create global rules to prevent businesses from taking part in corruption, from the US Foreign Corrupt Practices Act and the UK’s Bribery Act to the UN Convention Against Corruption. This is continuing to gain interest among policy makers, including the G8 and G20, while additional frameworks are being put in place to prevent tax evasion and related activities through which corporate interests can undermine the public good. This is as it should be —corruption and a lack of integrity exacerbate inequalities, sap trust and undermine shared prosperity.

Meanwhile, most businesses — particularly multinationals — have developed robust anti-corruption compliance programs that encompass everything from risk-identification measures to mitigating activities to internal control mechanisms. Of late, these kinds of programs have allowed a number of companies to identify and report wrong-doings, such as Louis Berger and Merrill Lynch.

The problem with these efforts, however, is that while they might fight corruption, they are not building a culture of corporate integrity. Laws are seen by many as expensive and tiresome to enforce, while compliance programs are often “check-the-box” exercises to fulfill requirements without truly changing behaviors. Competition is intense, and the profit-motive is often overwhelming. If you think of the largest corporate corruption scandals of the past decade —Siemens, Walmart, Volkswagen— these companies all had large compliance programs that were clearly ineffective. The problem is not a lack of rules and regulations — it is the lack of shared, accepted values of integrity that underpin honest business practices.

So how can we ensure that corporations avoid corruption and encourage accountability? We have to move beyond compliance motives centered on preventing business risk, reputational damage or criminal and civil charges — and instead build a values-driven, self-sustaining culture of integrity. Here are a few key steps:

1. Companies need to generate an environment of trust. Employees must feel encouragement and support — rather than fear, retaliation or embarrassment — for mistakes, wrong-doing or whistle-blowing. This starts at the top — leaders should embody trustworthiness and indicate that integrity is a quality that is prized above all else. It can then be reinforced and shared within the organization at all levels through highly visible, frequently articulated and well-integrated corporate values. Codes of ethics should be regularly reviewed and updated with inputs from employees, not just when there is a violation or a change in leadership. Integrity is not a static concept, but a dynamic reflection of collective aspirations.

2. Businesses must make integrity practical and fun through tools that move well-beyond “off-the-shelf” briefings and trainings. Ethics roundtables, integrity newsletters and targeted in-house campaigns can all spread awareness and build engagement. Arcelor Mittal hosts an Ethics and Compliance Day every year the day after International Anti-Corruption Day—complete with quizzes, surveys and feedback sessions. Lockheed Martin uses Ethical Minute role-play videos to highlight ethical dilemmas. Other companies have put up accountability scoreboards or even printed company values on candy left as snacks around the office. The more creative the approach, the more a community can be built around integrity.

3. Hotlines to anonymously report violations are necessary — but mechanisms that also allow employees to highlight good behaviors or examples of accountability are a useful addition. Companies have run “compliance champions” competitions through which employees demonstrating integrity can be recognized publicly. At the Accountability Lab, we’ve been running a TV show called Integrity Idol, where citizens can nominate and vote for honest government officials—the same would work for large corporations. Through efforts like these, we can move towards “naming and faming” people with integrity, rather than “naming and shaming” the law-breakers.

Finally, this is no longer about singular, internal efforts around values and ethics. It is essential in a globalized marketplace that businesses demonstrate their ethical values through the organizations and clients with which they chose to work. Due diligence and relevant contractual monitoring within supply chains and partnerships are essential to understand whether third parties conduct business with integrity. Apple took a huge hit after poor labor practices were exposed at its Chinese supplier Foxconn, for example; while Castrol, Continental and Johnson & Johnson are no longer associating themselves with FIFA after the recent corruption scandals.

Building a culture of integrity is not easy, nor are there quick fixes. But in the long run, efforts along these lines are absolutely essential if we are to fight corruption and avert unethical business practices. Laws and rules to enforce accountability are important, but if they are not based upon a global corporate culture that values integrity, compliance is impossible.

(Top image: Courtesy of Thinkstock)