This article was updated on July 18, 2018.

The regulatory complexity inherent in complying with laws such as the Affordable Care Act (ACA) and the Fair Labor Standards Act (FLSA) makes HCM-related compliance a year-round concern for leadership. Your compliance efforts, therefore, need to be driven by a lot more than a fear of repercussions. Promoting a culture of compliance and integrity can be among the best ways to help protect your organization against this level of regulatory risk. According to Thomson Reuters, 58 percent of businesses view "promoting a corporate culture of integrity to be the ultimate goal of their compliance and ethics programs."

A Culture of Integrity

A culture of integrity sends a powerful, consistent message to your employees. While compliance is often mainly HR's responsibility, it must be an enterprise-wide effort. Gallup found, based on analysis of noncompliant organizations and other factors, that employee compliance behavior is the "sum of all messages employees receive." If they're under supervisory pressure to behave differently than they were taught in onboarding, chances are they'll take the path of least resistance.

A research paper on the Social Science Research Network by the University of Chicago Booth School of Business found that job seekers see "positive correlation between integrity and desirability" in an employer. Those employers are also less likely to be unionized, which could be a sign that employees are more satisfied with their employers and more trusting of management.

If you want your compliance and ethics programs to drive your culture, HCM leaders should play a key role in communicating and educating employees on compliance.

What Does a Compliance-Fueled Culture Look Like?

A true culture of compliance starts at the top. In addition to the ACA and the FLSA, hundreds of tasks must be performed by companies, outside their core product or service, to comply with various laws and regulations related to: employment tax, wage payments and garnishments, unemployment claims, tax credits, employment verification and others. While HR, compliance teams and chief ethics officers play a crucial role in disseminating information, full managerial acceptance is necessary to enforce your values.

Deloitte reveals that organizations driven by integrity are likely to have the following characteristics:

  • Clear and consistent communication. Your internal communications on ethics and compliance should be in transparent alignment with your policies and procedures. For some global organizations, this could require establishing a cross-cultural communications committee to evaluate and assess the impact of communication.
  • Managers who buy in. Your management and supervisory staff are critical daily champions of ethics and compliance. Without their reinforcement and support in messaging, your organization could develop a disconnect between executive leadership and employees. Supervisors and middle management who encourage "work-arounds" to policy are an extreme barrier to this goal.
  • See something, say something. Employees at any level should have access to channels for questions and concerns regarding your ethical code, compliance requirements or related topics. They should also feel empowered and safe to speak their minds and report any suspicious activity. The Health Care Compliance Association recommends establishing multiple channels for reporting issues, to maximize convenience and comfort factors for employees.
  • Fair policies and procedures. Policies for employees who do not adhere to ethical standards and compliance-sensitive behaviors should be applied equally at every level of operations. In addition, organizations may find it beneficial to actively and visibly reward employees with a strong record of ethical behavior. Corporate Compliance Insights writes that some organizations have chosen to fight corruption risks very directly by tying ethical behavior to executive compensation and rewarding employees for innovation in compliance.

Why Communication Is Critical

One of the more dangerous recipes for an ethically poor culture includes a lack of employee knowledge and empowerment. Psychology Today writes that "clear expectations for behavior among all members of an organization" is crucial, and this responsibility starts with leadership. Leaders should look beyond the bare minimum when it comes to communicating expectations on compliance to employees. Deloitte explains that those messages should be "explicit and repeated" to become internalized and recognized as an organic part of the organizational framework.

HCM leaders should work to help ensure their compliance messaging is accessible to all employees. Information that seems explicit to HR may not make sense to other employees, especially if generational, educational, cross-cultural or other barriers exist. In addition, HR leaders should collaborate specifically with leadership at all levels of the organization to help ensure communications are widely accessible and consistent. By working to win buy-in from members of the C-suite and providing rich compliance training to all levels of leadership, organizations can work to build the right culture.

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