Thinking about how to make ethics and compliance part of a business’s decision-making can prove to be challenging. By nature, compliance professionals are often results-oriented, focusing on a binary end-result; either you are in compliance, or you are not. That focus is important, but emphasizing process is also vital, John Walsh, Partner at Eversheds Sutherland (US) LLP, told attendees at the recent CSS/Ascendant conference in San Diego.
In his keynote presentation, Walsh, a 23-year veteran of the SEC, addressed the topic of behavioral ethics and its importance to the compliance industry. A longtime advocate of ethics, Walsh has written many scholarly articles and presented to many audiences on the topic. He provided comprehensible guidance on how compliance officers can incorporate ethics into business decision-making.
Walsh discussed a behavioral survey related to ethics in compliance, which included several Thought Experiments (Case Studies) and practical guidance to use in everyday functions. The survey conducted by Tom Tyler and Jonathan Jackson, titled “Popular Legitimacy and the Exercise of Legal Authority: Motivating Compliance, Cooperation and Engagement” was published in Psychology, Public Policy and Law in August 2013. This national survey found distinctions between Compliance, Cooperation and Engagement.
The categories were defined as follows:
- Compliers – People who do not violate the rules because they feel an obligation to obey them
- Cooperators – People who actively and voluntarily cooperate with authorities because they understand the deeper context of the rules
- Engaged – People who identify with the shared goals and values of rules in a way that drives them to proactively help develop a viable community that polices itself
Mr. Walsh went on to correlate the study to the compliance industry, explaining that by categorizing people in this way, compliance professionals can then begin to leverage specific communication methods for the promotion of ethics and compliance into business decision-making.
How do you do this? Walsh indicated that you must first recognize your audience as either compliers, cooperators, or engaged. Then build your legitimacy as an ethics and compliance authority with each of these groups; you do this by being perceived as fair. You can demonstrate fairness through neutrality and sincerity, and whether you respect their dignity and give them an opportunity to explain. When you are able to consider all internal and external stakeholders, and assess if there are any stress-induced cognitive biases that you can leverage, you will be better armed to effectively campaign for ethics and compliance.
Subscribe to CSS Blog
CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.