Focus on integrity in business

As part of increasing compliance requirements worldwide, a matter that has brought attention in recent years is how legal and compliance departments can contribute to creating an integrity culture within their organisations. It seems that markets and consumers are every day more demanding in terms of which behaviors are acceptable at corporations, and certainly, these demands go far beyond just complying with sanctioned laws. Consumers that were traditionally expecting good products or services at low prices from corporations, now also expect the satisfaction of post-material expectations such us: sustainability, transparency, inclusion and of course, integrity. This will intensify, as the new generations become decision takers in the markets.

In this context, the legal and compliance functions are a key piece in developing corporate structures and business’ cultures that discourage unethical behavior and practices that are incompatible with a modern understanding of the way to do business. These functions should work together in deactivating illegal and unethical circuits within the organisations, which can become breeding ground for practices that are against the interest of stakeholders.

For this objective, the creation of a healthy integrity culture becomes a pre-condition, but also it is important that these positions spend some time reflecting around some tough questions: are the incentives of our executives correctly balanced? Do we have an excessive risk-driven culture? Are we willing to make a profit at any cost? Which are the red lines we are not willing to trespass? Is the business’ language we use appropriate? Is the focus on long run and short run objectives reasonable? Do we have leaders that encourage integrity culture? Is our corporate governance well calibrated to detect and deter transgressions?

Certainly, early integrity transgressions could become, after some time, in significant breaches of formal laws and regulations. Thus, a comprehensive view of the legal and compliance functions, should integrate cultural aspects which in many cases are the root cause of future illegal conducts. Every second and minute dedicated to analysing the culture of the company can become time saved in terms of regulatory processes, fines, trials and every other sort of legal issues. If we intercept conduct deviations early on time, we will be more effective in preventing and making corrections. Thus, we are walking to an era where legality and integrity should be considered as two different sides of the same coin.

In the company I work for, we are very aware of this. That is why we invest a good portion of our time and resources in working over the cultural dimension. One of the most astonishing results of it is that, when the culture is well tuned, every member of the organization becomes somehow a member of the legal and compliance team. It could be argued that cultural work has a multiplier effect, because when it is in the self-interest of each member of the organization to pursue integrity and compliance, they will spontaneously control, monitor and prevent transgressions. This opens the way to a new kind of organisation where compliance and integrity are at the core.