Advancing Corporate Integrity

Benefits of a strong and sustainable culture of integrity

Minimizing reputational risks is critical

More than 60% of compliance executives say corporate culture is a top risk to the organization. Yet, less than a third of compliance executives feel confident in their ability to improve their organization’s culture.

And for good reason — without clear links to business outcomes, keeping culture initiatives front and center is hard.

 

A positive culture benefits business

While measuring culture can be challenging, companies with strong cultures of integrity outperform those with weak cultures on both financial and nonfinancial metrics.

Our research indicates that the most effective way to improve culture is by building stronger climates, or local environments that reinforce broader cultural values and beliefs. This decreases employee-observed misconduct and improves reporting rates, as well as overall business performance.

Most reports of misconduct don’t reach compliance teams

Nearly 30% of employees have observed at least one case of misconduct in the past year. 59% of observed misconduct is never reported by employees. Even more alarming is that only 14% of the information about potential misconduct will make its way to the compliance department. So, how do you get employees to speak up?

Manager preparedness is also a key barrier. In fact, 35% of all managers tell us they are not prepared to address employees’ ethical concerns. Failing to address these systemic issues significantly lowers the value of culture improvement initiatives.

Your board is worried, too

Cultural tone is more important now than ever. With corporate scandals dominating news headlines, it’s hard not to think: “What if we’re next?”

Misconduct is too costly to ignore. A single FCPA violation costs $11.5 million. A single data privacy breach costs $3.4 million. And a single instance of fraud can cost 5% of a company’s annual revenue.

 

For most, progress has been slow. We can help.

Leading companies improve culture through the local processes that employees follow, and the signals employees receive from their peers and leaders to ensure that employees are operating in ethical climates.

Focus on these three areas:

1. Help employees exhibit good behaviors in their work

2. Ensure managers send consistent messages

3. Make colleagues’ positive behaviors more visible

Gartner can help you identify gaps in misconduct reporting, as well as improve compliance training and communications to promote a superior culture of integrity within your organization.

Download our guide to building stronger climates

Learn what a strong climate is and how you can create one at your organization.

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