corporate non-compliance - Blog - Global Risk Community2024-03-28T22:22:10Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/corporate+non-complianceEnding Unethical Behavior Through Corporate Compliancehttps://globalriskcommunity.com/profiles/blogs/ending-unethical-behavior-through-corporate-compliance2022-07-22T09:00:00.000Z2022-07-22T09:00:00.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p class="MsoNormal"><span style="font-size:12pt;"><a href="{{#staticFileLink}}10654445874,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}10654445874,RESIZE_400x{{/staticFileLink}}" alt="10654445874?profile=RESIZE_400x" width="200" /></a>Globally, corporate non-compliance is a serious problem. Major firms have been involved in well publicized cases that demonstrate how misguided the common explanations are for why employees indulge in illegal acts. </span></p>
<p class="MsoNormal"><span style="font-size:12pt;">No compliance program can totally stop undesirable behavior by a small number of workers. However, <a href="https://flevy.com/business-toolkit/compliance" target="_blank">behaviorally aware programs have the potential to achieve primary objective of Compliance</a>, namely the reduction of unethical and illegal behavior within the organization. </span></p>
<p class="MsoNormal"><span style="font-size:12pt;">To do this, <a href="https://flevy.com/business-toolkit/decision-making" target="_blank">it is crucial to be aware of employee behavior, of which decision-making is the most crucial aspect</a>. Humans can decide in 2 different ways: </span></p>
<p class="MsoNormal"><span style="font-size:12pt;">Intuitive, also known in psychology as System 1, makes decisions through associative memory and habit, which makes it difficult to control or change. The mind offers quick associations, idea after idea connecting with ease. </span></p>
<p class="MsoNormal"><span style="font-size:12pt;">Reasoning, which psychologists also refer to as System 2. It involves using organized thought to solve complex situations such as mathematical problems, or writing paragraphs, or taking decisions that are compound in nature. </span></p>
<p class="MsoNormal"><span style="font-size:12pt;">Because System 2 requires more mental effort, people typically rely more on System 1 when making decisions. The issue with that is, instead of using System 2 to evaluate their decisions made through System 1, people frequently use System 2 to defend decisions made using System 1. </span></p>
<p class="MsoNormal"><span style="font-size:12pt;">System 2's inability to stop unethical behavior is studied on the basis of Behavioral Ethics Research, but it does not fully explain it. Criminology aids us in developing this further. </span></p>
<p class="MsoNormal"><span style="font-size:12pt;">According to criminologists, for an unethical act to take place, 3 requirements must be met:</span></p>
<p class="MsoNormal" style="text-align:left;"><span style="font-size:12pt;"> 1. The issue should be a non-communicable issue.</span></p>
<p class="MsoNormal" style="text-align:left;"><span style="font-size:12pt;"> 2.<span style="font-style:normal;font-variant:normal;font-weight:normal;line-height:normal;font-family:'Times New Roman';"> </span>Trust must be betrayed in order to solve the problem.</span></p>
<p class="MsoNormal" style="text-align:left;"><span style="font-size:12pt;"> 3.<span style="font-style:normal;font-variant:normal;font-weight:normal;line-height:normal;font-family:'Times New Roman';"> </span>Verbalization has to take place.</span></p>
<p class="MsoNormal"><span style="font-size:12pt;">Effective compliance strategies focus on how employees—the real users—would be impacted rather than how government authorities will react to compliance activities. </span></p>
<p class="MsoNormal"><span style="font-size:12pt;">The following 3 cost-effective measures, that businesses may take to stay clear of the ingrained behavior of serving self-interest which leads to compliance infractions, are suggested by <a href="https://flevy.com/business-toolkit/behavioral-strategy" target="_blank">Behavioral Strategy</a> in conjunction with Criminological insights:</span></p>
<p class="MsoNormal"><span style="font-size:12pt;"><strong> 1.<span style="font-style:normal;font-variant:normal;line-height:normal;font-family:'Times New Roman';"> </span>Bring a Behavioral Expert onboard.</strong></span></p>
<p class="MsoNormal"><span style="font-size:12pt;"><strong> 2.<span style="font-style:normal;font-variant:normal;line-height:normal;font-family:'Times New Roman';"> </span>Utilize best practices to eliminate the root cause.</strong></span></p>
<p class="MsoNormal"><span style="font-size:12pt;"><strong> 3. Utilize inducements to control conduct.</strong></span></p>
<p class="MsoNormal"><span style="font-size:12pt;"><a href="https://flevy.com/browse/flevypro/corporate-compliance-ending-unethical-behavior-6284" target="_blank"><img class="align-center" src="{{#staticFileLink}}10654444056,RESIZE_710x{{/staticFileLink}}" alt="10654444056?profile=RESIZE_710x" width="710" /></a></span></p>
<p class="MsoNormal"><span style="font-size:12pt;">These 3 easy measures help the Compliance Program's behavioral effects by defeating employee rationalizations that lead to infractions.</span></p>
<p class="MsoNormal"><span style="font-size:12pt;">Let's examine the 3 phases' specifics in more depth.</span></p>
<p class="MsoNormal"><span style="font-size:12pt;"><strong>Bring a Behavioral Expert onboard</strong></span></p>
<p class="MsoNormal"><span style="font-size:12pt;">The goal of this stage is to holistically apply various theories—some of which have been around for a while—to the business, particularly to compliance-related difficulties. These theories include the dual system of thinking, rationalization, and behavioral ethics. Companies are just now beginning to understand the importance and efficacy of this technique.</span></p>
<p class="MsoNormal"><span style="font-size:12pt;">The 1st step in assuring adherence to ethical conduct is hiring an expert externally or training someone within to keep aware of the many areas and their emerging insights into <a href="https://flevy.com/business-toolkit/business-ethics" target="_blank">ethical business decision-making.</a></span></p>
<p class="MsoNormal"><span style="font-size:12pt;"><strong>Utilize best practices to eliminate the root cause</strong></span></p>
<p class="MsoNormal"><span style="font-size:12pt;">The next step entails using best practices to eradicate the underlying causes of unethical behavior. These practices are motivated by behavioral science, which is at the core of criminology and behavioral ethics. Examples include preventing violation risk through early declarations, having moderated conversations among employees, and sharing success stories. If rationalizations are shown to be the main factor contributing to employee misconduct, compliance programs should aim to eradicate them.</span></p>
<p class="MsoNormal"><span style="font-size:12pt;"><strong>Utilize inducements to control conduct</strong></span></p>
<p class="MsoNormal"><span style="font-size:12pt;">The last phase comprises implementing suitable reward and incentive structures—financial, non-financial, or a combination of both—to favorably affect how individuals inside a company approach compliance.</span></p>
<p class="MsoNormal"><span style="font-size:12pt;">According to research, the major cause of substantial corporate trust violations typically has less to do with a rogue individual and more to do with organizational segments that are dysfunctional, incompatible, or inconsistent.</span></p>
<p class="MsoNormal"><span style="font-size:12pt;">Interested in learning more about Ending Non-compliance and Unethical Behavior in companies? You can download <u>an editable PowerPoint on </u><a href="https://flevy.com/browse/flevypro/corporate-compliance-ending-unethical-behavior-6284"><strong>Corporate Compliance: Ending Unethical Behavior</strong></a><u> here </u>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</span></p>
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