Companies Need Culture of Integrity.

• Author: Priest, Steve
• Position: Ethics Corner

* Compliance is not working; or at the very least, it is not working nearly as well as it should.

Here's one piece of evidence: Around the same time the U.S. Sentencing Guidelines for Organizations were enacted in response to pervasive wrongdoing by corporations, 22 percent of Americans had a "great deal" or "quite a lot" of confidence in big business, according to a 1991 Gallup poll. By 1999, just before the major scandals that led to Sarbanes-Oxley legislation, that trust increased to 30 percent. This year, a Gallup poll shows it to be down to 23 percent.

A related question was asked about the honesty and integrity of business executives. In 1991, 21 percent of poll respondents rated executives highly or very highly; in 1999, 23 percent; in 2018, just 17 percent.

The public doesn't trust corporations any more now than they did at the dawn of the compliance profession. I started my first business ethics consulting firm in 1993, and we had close to zero competitors.

Defense industry leaders who read this should do a gut check: Do government customers trust contractors more now than in decades past, after contractors have invested hundreds of millions of dollars in compliance?

Why such a large gap between good intentions and trusted outcomes? One reason compliance fails is that the majority of training and communications is at a junior high school level of moral development. It's about rule following rather than doing the right thing. This is not the way to get adult employees aligned with a company's purpose or standards.

Most importantly, compliance fails because it suppresses attitudes and behaviors that make great companies great. Compliance is critical to safety and quality, two attributes every defense contractor must demonstrate faithfully and consistently. However, innovation and service are also critical attributes. Sustained innovation requires out-of-the-box thinking, loose hierarchies and reporting channels, and a certain amount of "asking forgiveness rather than permission" to get things done. Service requires a pro-social employee mindset which is strikingly different from a culture of obedience.

Reflect for a moment on one way employees have historically demonstrated dissatisfaction with management: They simply work to the rule. Every rule, exactly. And when they do this, operations grind to a halt. Complete compliance is a business preventative!

Compliance fails unless it is grounded in ethics. Many employees ignore...