3 Steps to Ensure Corporate Compliance of Curtailing Unethical Behavior

Corporate non-compliance is a significant issue on a global scale. Major companies have been engaged in well-publicized examples that show how erroneous the typical justifications for why staff engage in criminal behavior are.

No compliance program can completely halt a small percentage of employees’ unwelcome conduct. The elimination of unethical and unlawful conduct inside the firm, however, is the fundamental goal of Compliance, and behaviorally aware systems have the ability to accomplish this goal.

To do this, it is essential to be knowledgeable about employee behavior, of which decision-making is the most important component. Humans have two options when making decisions:

Intuitive judgment, often referred to as System 1 in psychology, generates decisions via associative memory and habit, which makes it hard to regulate or alter. The mind makes fast connections, allowing ideas to flow into one another with ease.

Judgment based on Reasoning, also known as System 2 in psychology, entails employing ordered thinking to address difficult issues, such as resolving mathematical issues, composing paragraphs, or making complex decisions.

People often lean more heavily on System 1 when making judgments, since System 2 involves more mental work and processing. The problem with it is that individuals usually use System 2 to defend judgments made using System 1, rather than utilizing System 2 to analyze their decisions made using System 1 thinking.

Behavioral ethics research is used to study System 2’s incapacity to curtail unethical conduct, although it does not completely account for it. Criminology assists us in expanding on this.

Criminologists assert that in order for an immoral conduct to occur, three conditions must be satisfied:

· The problem ought to be non-communicable.

· To find a solution, trust must be breached.

· Verbalization is required.

Effective compliance initiatives put employees — the actual users — in the spotlight rather than how the government will respond to compliance efforts.

Behavioral Science in combination with insights from criminology suggests the following 3 cost-effective steps that organizations may adopt to avoid the ingrained habit of serving self-interest, which leads to compliance infractions:

1. Recruit a behavioral expert

2. Use best practices to get rid of the underlying issue

3. Use inducements to manage behavior

These steps support behavioral compliance programs by preventing employee justifications for behavioral violations.

Let’s look more closely at the details of the 3 steps.

This stage aims to apply many theories — some of which have been around for a while — to the company holistically, focusing in particular on compliance-related issues. The dual system of thought, rationalization, and behavioral ethics are some of these notions. Only recently have businesses started to realize the value and effectiveness of this method.

Hiring a specialist from outside or educating someone in-house to stay informed of the many fields and their developing insights into ethical business decision-making is the first step in ensuring adherence to ethical behavior.

Utilizing best practices to eliminate the root causes of unethical conduct is the next step. The foundation of criminology and behavioral ethics is behavioral science, which serves as the driving force behind both approaches. As an example, consider how early announcements, regulated employee dialogues, and success stories might reduce the probability of a violation occurring. Compliance procedures should work to eliminate justifications if they are shown to be the primary cause of employee wrongdoing.

The last step is putting in place appropriate compensation and incentive structures — financial, non-financial, or a mix of both — to positively influence how employees inside an organization approach compliance.

According to studies, dysfunctional, incompatible, or inconsistent organizational functions or systems are more often than not to blame for significant company trust breaches than a bad actor.

Interested in learning more about Ending Non-compliance and Unethical Behavior in companies? You can download an editable PowerPoint on Corporate Compliance: Ending Unethical Behavior here on the Flevy documents marketplace.

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Mark Bridges

I blog about various management frameworks, from Strategic Planning to Digital Transformation to Change Management. https://flevy.com