How can a board or management best change a toxic culture or nurture a positive culture?
While the board has oversight of the alignment of the company’s culture with its strategic vision, it is difficult for a board to directly shape corporate culture. Management is in the best position to impact culture. The tone at the top and management’s visible support of a compliance and ethics program are crucial. For example, how management responds when its most beloved, top-performing employees misbehave sends an important cultural message as to what is tolerated and the collective values of the organization.
Is culture always to blame for misconduct?
While culture is frequently a significant factor when misconduct occurs, culture is not always the only culprit. Rogue employees can behave poorly, contrary to company culture, and create liability for companies. How a company reacts to misconduct by an employee or group of employees can say a great deal about the company’s culture and goes a long way toward cultivating the right tone. Leveraging information and resources from internal audit, human resources, finance, and legal helps keep a pulse on the culture.
Should boards be more proactive in identifying early signs of CEO and employee misconduct?
The board has oversight of the company's risk which include risks associated with CEO and employee misconduct. It is important for the board to cultivate open channels of communications among key members of management, including a company's chief compliance officer, to better evaluate the corporate culture and understand what an organization is doing to promote an ethical culture.