You can always count on LRN. LRN continues to publish the highest quality, most meaningful research and guidance on ethics and compliance programs. LRN digs deep to ask the hard questions, measure key trends, and consistently provide support and guidance on the importance of corporate governance. LRN is a must read in these areas.
Now that we’re done with the blurbs, let’s turn to the latest papers from LRN and the Tapestry Network. Assessing Company Culture: A Practical Guide to Improving Board OversightFor more detailed discussions, listen to the latest podcasts on the theme of interviewing Ty Francis, the highest advisory officer of LRN who derived this recent project.
LRN’s latest report was the result of an effort involving 40 directors and executives from 60 public companies, including McKesson, Coca-Cola and Sony. The group is entitled The Ethics, Culture and Compliance Network (ECCN).
LRN’s report reflects an important understanding of a company’s ethical culture. As I have said for years, corporate ethics culture is the most important internal control. If it is effectively advertised, companies that have penetrated ethics culture will improve employees’ morale, improve employee productivity, decline in employees, and are most important. Experience a significant decrease in fraudulent acts. The combination of all of these is supported by one important conclusion. It means that ethical companies are doing better in the market than companies that do not ignore or pay attention to ethical culture.
I apologize for sounding like a broken record, but analyzing this issue is frustrating. Think about this. If you told a company it could improve revenue performance by 40% if it maintained an effective culture of ethics, would senior management approve such an investment? I know this is rhetorical, but the link between culture and financial performance is so clear it is puzzling that business leaders and corporate committees fail to understand this.
The truth is that corporate boards and CEOs do not know how to implement plans or oversee programs to promote a corporate culture of ethics. No one will admit it, but I’ve seen this disconnect too often.
This is where LRN’s latest report comes into play. LRN’s report provides a practical guide to how companies’ boards and senior management can address issues. As Donna Boehme always says, “This is a document worthy of bioart.” Every board member and CEO should read.
The main point of the LRN report is that the directors of the company will improve the surveillance of corporate culture and cooperate with senior managers to achieve positive results in business satisfaction, employee loyalty, innovation and growth. As an important step towards achieving this, we need to pay attention to this issue. LRN’s report provides direction on how senior management and boards can define and improve a company’s ethical culture.
Corporate boards should focus on five distinct objectives:
(1) Priority to the culture of the agenda of the Board of Directors so that members of the Board of Directors can continue to obtain necessary information to continue to analyze and evaluate corporate culture.
(2) fostering a speech-up culture throughout the organization, including senior management communications with the Board and Board members;
(3) Measure and monitor company culture using established data sets to maintain robust benchmarking and trend analysis;
(4) define the company’s culture in practical terms defined so that direction, measurements and goals are easily identifiable;When
(5) Specify the person in charge of the company’s culture (the maximum ethics officer or the highest ethics officer, the ethics officer, and the person in charge of the compliance), and secure direct reports to the Board of Directors and senior managers.
There are important objectives within this framework that need to be addressed on an ongoing basis. These include:
- Spend enough time defining the company’s culture, values, and purpose.
- Ensure that the board has sufficient time to oversee, monitor and promote the company’s ethical culture.
- Encourage senior management and company committees to communicate in an honest discussion of positive and negative results and issues.When
- Establish meaningful ethical and cultural measures and report regularly on performance against these measures.