“Advanced tone at the top” and the role of behavioral ethics and compliance

Many years ago a CEO at a client organization was called on to respond to a case of employee misuse of T&E expenses at his company.   The CEO was, as best I could tell, an honest individual, and he used the occasion to tell managers in no uncertain terms that he expected them to be that way too.  What he didn’t do was to use the occasion to tighten the loose procedures in the T&E area, let alone to consider enhancing risk assessment, monitoring or other C&E measures or improving the company’s culture.

Through employee surveys, board of director reviews and compliance/ethics program assessments, the “tone at the top” at many companies is being measured to an extent never before seen.  But what exactly is being measured – and is it all the “right stuff”?

Personal honesty is, of course, foundational to a good tone at the top.  So is communicating regularly and sincerely the importance to one’s company about the need to act in an ethical and law abiding way.

But CEOs should, in my view, also aim for something higher than these basics.

An “advanced tone at the top” should include not only maintaining a culture of honesty but also one of care.  The importance of a culture of care to promoting ethical and compliant behavior is discussed in this prior post.

More broadly, an advanced tone at the top entails senior management truly understanding why companies need to have strong C&E programs.  And while that understanding can come from many sources – including the history of compliance failures and writings about the economics-based phenomenon of “moral hazard” – leaders should be particularly inclined to respond to the psychology-based field of behavioral ethics.

This is indeed a growing field and I won’t try to summarize in this post all the ways that behavioral ethics can strengthen corporate compliance programs.  For that I commend you to this index of several dozen behavioral C&E posts  and particularly  to  Scott Killingsworth’s important paper “’C’ Is for Crucible: Behavioral Ethics, Culture, and the Board’s Role in C-suite Compliance.”

Why do I think that senior leaders are likely to respond to this approach?  Because behavioral science has become very mainstream in fields such as finance and medicine, and seems to have a lot of momentum behind it generally.  Catching that wave could well be attractive to business leaders, as could the idea of advancing to a higher level of performance in an area – C&E – that is increasingly seen as integral to leading a business.


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