Episode 97: Creating a Culture of Compliance by Setting the Tone at the Top

On episode 97 of the CCO Buzz podcast, Sr. Compliance Consultant Janice Powell and Sr. Compliance Analyst Chris Hufty join us to discuss establishing a culture of compliance – starting at the top.


CCO Buzz: Hello and welcome back to the CCO Buzz! Can you believe it’s already May? Summer is so close and we can almost taste it. The sun is shining and we’re enjoying the spring into summer transition. With Q1 behind us, we are ready to take the rest of the year in stride. One method of compliance success for firms, is establishing a culture of compliance – starting at the top.

Today we are in for a convenient treat, as we are joined by not one, but two key members of the Core Compliance team. Listeners, today we are lucky to have both Core Compliance’s Senior Compliance Consultant Janice Powell and Senior Compliance Analyst Chris Hufty on the line. They’re here to discuss their latest article titled, “Setting the Tone from the Top: Getting Executive Buy-In” and to shed some light on a few best practices to start implementing at your firm.

With that, let’s begin…

Janice and Chris, why do you think it’s an essential component of compliance success to “set a tone from the top”, and what impacts does it have on the overall culture of compliance at the firm?

Chris Hufty: Well there are many benefits to establishing a culture of compliance throughout a firm but setting a tone from the top echoes the importance and value of compliance. When messaging comes from the “top” it creates a vision and path for the firm and its employees.

Janice Powell: I completely agree with Chris. When messaging comes from the leaders of any organization it has the power to establish and cement the ethical behavior and integral values of the overall brand. In a sense it’s the vehicle to change the narrative of “this is what you’re going to do for the client” into “this is what WE are going to do for the client.”

CCO Buzz: That’s a great concept, having that “we” in there makes it seem more like a company initiative versus an everyday employee task. This month’s Risk Management Update follows a different format and really breaks down questions CCOs may be asking themselves as they try to establish their culture of compliance, but more importantly getting buy-in from their CEO and top executives within their firms. In your opinion, what do you think is the biggest struggle and why do you think it is so important?

Chris Hufty: As a former State regulator, I can confidently say that we expected the culture to be established in some way, shape, or form because in the end – your client depends on adequate compliance protocols to be in place and regulators expect it to be established. The role of the CEO goes beyond just being the face of the organization; the CEO is also the powerhouse or figurehead that the entire team and company look to for guidance. They have the power to change the environment, simply based on their position. So, when management takes an active or proactive role or interest in developing a culture of compliance, the entire atmosphere around the organization can change.

CCO Buzz: Great. So… I’m going to ask a really silly question here, but I think it’s a question on everyone’s mind. How does one establish a tone from the top?

Janice Powell: You know it’s funny you say that, because it’s a question we pose and answer in our article. In some of the more successful efforts we’ve seen, it’s the execution and carry out of behavior that make the largest impact. Meaning they will talk the talk and walk the walk – they understand they are not above or the exception to the policies and procedures, but rather the example of, and will enforce or echo that any non-compliance with policies and procedures, applicable regulations, ethics, and the firm’s undivided loyalty to clients, will not be tolerated.
A best practice we offer in our article is that all senior management should attend and participate in required training for employees, alongside the employees. Being present and holding yourself, as well as your team, accountable will demonstrate not only the importance of compliance but your commitment to establishing the culture.

CCO Buzz: Thanks for the example – and I didn’t even have to ask for it! But you touched on a subject that I’d love to unpack further – establishing a culture of compliance. While setting the tone from the top is just the tip of the iceberg, – how would one go about building a culture of compliance at their firm.

Chris Hufty: Ironically, we cover this as well in our article. We provide five (5) essential steps to creating a strong culture of compliance. We cover Communication, Codes of Conduct and Ethics, Encouragement and Reporting of Wrongdoing, Rewarding Employees for Strong Moral Behavior, and Training.

Janice Powell: These aren’t the only steps to building a culture of compliance, as your business model, structure, and service offerings will completely drive the customization or the personalized approach to how your firm embraces compliance into its everyday operations. But having compliance integrated in the strategy, vision and values – on top of coming from the top, will further cement its importance at every level.

CCO Buzz: Wow, thank you both so much for joining us today. Before I let you go, is there anything else either of you would like to add?

Janice Powell: Yes, while we’re on the subject – setting a tone from the top is the most important step to creating a culture of compliance. Leading by example is key to helping ensure adherence to ethical behavior. While I’m sure we could discuss this further, both of us go into more detail and offer more insight in our article this month.

Chris Hufty: Yes, if you or your firm need help with your compliance program or training, the team at Core Compliance can help. For more information or to read our article you can find it on our website at www.corecls.com or reach out to one of our team members at (619) 278-0020 to schedule a consultation.


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