A Culture of Compliance—Building It Within an Organization When Procedures Prove Insufficient

Currently, most companies have implemented compliance procedures, such as a code of ethics, an anti-corruption policy, reporting guidelines, and periodic training conducted through e-learning platforms. Despite these measures, organizations still experience misconduct that these procedures were intended to eliminate. The main cause of these failures stems not from inappropriate messaging by leaders, but from the fact that well-intentioned declarations do not translate into the development of a genuine culture of compliance.

Differences Between a Compliance Culture and a Compliance System

A compliance system consists of a set of documents, procedures, and formal control mechanisms. Compliance culture, on the other hand, refers to employees’ tacit understanding of what is actually acceptable within the organization, regardless of the provisions of official documents. It is possible to have a comprehensive, formally sound compliance system while simultaneously having an organizational culture in which reporting irregularities is viewed as disloyalty, and bending procedures “for the sake of results” is considered a sign of resourcefulness rather than a violation.

Why “tone from the top” is a starting point, not an end in itself

The concept of “tone from the top”—that is, the tone set by top management—remains a fundamental element in building a culture of compliance. However, it must be linked to measurable accountability and actual data, not just declarations. A CEO’s mere mention of compliance during a quarterly meeting is meaningless if day-to-day decisions contradict it. The right tone begins with actions, not words. Employees naturally emulate the behaviors they observe in their leaders, driven by admiration, loyalty, or fear—regardless of those leaders’ public statements.

In practice, this means that specific, observable behaviors must be implemented at the management and supervisory board levels: treating compliance as a standing item on the agenda, rather than a topic discussed only when time permits; regularly requesting and analyzing data regarding reports from whistleblowers; and protecting the compliance budget even during periods of cost-cutting, when the temptation to reduce it is greatest.

Ten Key Elements of a Compliance Culture

Building a genuine culture of compliance requires the implementation of many interrelated elements, not just a single training program. Among the most important are:

• A tone reinforced by actions, not just words—leaders who model behavior consistent with their own statements.
• Implementing ethics from the moment of onboarding, rather than only after an incident occurs—organizational values should be communicated from the first day of employment, not just in response to problems that arise.
• The involvement of middle management—line managers, rather than the executive board—has the greatest direct impact on employees’ day-to-day decisions.
• A sense of security when raising concerns—employees must be confident that raising concerns will not result in negative professional consequences for them.
• Accountability at every level of the organization,from interns to board members—inconsistent enforcement of rules undermines the credibility of the entire system more quickly than the absence of rules.
• Linking values to the compensation and promotion system—if bonuses and promotions reward results alone, regardless of how they were achieved, the culture of compliance is undermined by the incentive system.

The Impact of Remote and Hybrid Work on Building a Culture of Compliance

A geographically dispersed work environment poses additional challenges to building a culture of compliance, such as limited direct supervision, difficulties in fostering an organizational culture without the support of face-to-face interactions, and technological barriers that hinder the informal communication of values. Organizations that effectively address these challenges combine scenario-based training, policy management tailored to a hybrid environment, and a variety of communication methods that keep employees engaged, rather than relying solely on annual e-learning training.

Warning signs indicating that a compliance culture exists only on paper

• The compliance officer does not report directly to the supervisory board, but communicates information exclusively through other individuals,
• Employees who raise concerns are viewed as “difficult” rather than as a source of valuable information about risks,
• Compliance training is evaluated solely based on the completion rate, rather than on actual behavioral change,
• The compliance budget is the first to be cut during difficult financial periods for the company.

Practical Steps for Implementing a Culture of Compliance

• The Chief Compliance Officer should be given the opportunity to engage in direct, regular discussions with management or the supervisory board, rather than being limited solely to submitting written reports.
• Data on whistleblower reports should be a regular item on the agenda at the management level, not just at the operational level.
• It is important to verify whether the company’s bonus system and promotion paths actually reward behavior that aligns with its stated values.
• It is recommended to invest in training for mid-level managers, because they—not senior management—have the greatest day-to-day impact on team culture.

FAQ

Is an annual compliance training session enough to build a culture of compliance?No. A culture of compliance is shaped by the daily, observable behaviors of leaders and the consistent enforcement of rules, not by a single training event.

Who has a greater influence on the compliance culture—the board of directors or line managers?Both groups have a significant influence, but for different reasons. The board sets the strategic tone, while middle managers translate it into the day-to-day decisions of the teams with whom they have direct contact.

How can you tell if a compliance culture exists only on paper?A common sign is when the compliance officer does not have direct access to management or the board of directors, and employee reports are viewed as a public relations issue rather than a source of information about risk.

Sources

1. Diligent,Compliance Culture: 10 Essential Building Blocks–diligent.com
2. Core Compliance,Setting the Tone from the Top: Getting Executive Buy-In–corecls.com
3. The Compliance Digest, "Building a Sustainable and Thorough Compliance Culture: Why Tone from the Top Isn’t Enough" –thecompliancedigest.com
4. Learning Pool,Why a Culture of Compliance Starts at the Top–learningpool.com
5. Financial Crime Academy,Risk Management Terms Explained: Tone at the Top–financialcrimeacademy.org

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