More compliance in the executive chair!

Communication, exemplary homogeneous management work and a good corporate culture are the be-all and end-all for bringing the topic of compliance to life in companies.

Despite the corruption scandals of the last decade, the topic of compliance is still often neglected. However, expectations towards companies have changed permanently as a result of the tightening of national and international legal frameworks. Corrupt and dishonest behavior is no longer tolerated by legislators and the public. Many companies are therefore responding by implementing compliance management systems (CMS) in order to provide their Employees with guidelines for compliant and ethically correct behavior.

However, a widespread problem is that many CMS are not structured in a practical and employee-oriented manner. Predefined rules, principles and values are not practiced. Employees do not follow the CMS guidelines in critical situations. One reason: they do not want to stand out by breaking out of their usual behavior patterns. The CMS misses its purpose and lives on as an unheeded internal catalog of rules.

The question now is: What does the:the boss and his:her chair have to do with this? After all, every employee makes their own decisions and the:the boss doesn't want to play the moralizer. What role does management play here? To clarify this, it helps to take a look at the duties of company management, the influence it has on compliance decisions and the ways in which it can improve them. There is not yet a direct legal obligation to set up a CMS. However, the need for a CMS may arise from the diverse and far-reaching legal obligations for management.

Duties of the management

• § Section 25a of the German Banking Act (KWG), for example, obliges the banking industry to establish a proper business organization to comply with legal obligations.
• § Section 33 I sentence 1 WpHG even obliges companies to set up a permanent and effective independent compliance function.
• General duties of care and loyalty arise from §§ 93 I sentence 1 AktG, 43 I GmbHG.
• A further necessity also arises from the law on administrative offenses. Pursuant to Section 130 OWiG, the owner of a business or company commits an administrative offense if he or she fails to take supervisory measures that are necessary to prevent violations of obligations subject to penalties or fines in the business or company.
• Not forgetting the German Corporate Governance Code (GCGC), which is a self-imposed obligation and contains risk and control obligations as well as obligations under company law.

This list of obligations alone and the associated derivation of "best practice measures" in practice - for all company sizes and sectors - should arouse the interest and sensitivity of every top management in setting up or improving their compliance organization.

More responsibility

The task and challenge of managing a company is becoming increasingly multi-layered and complex. This applies in particular to the handling of and responsibility for compliance. In addition, a paradigm shift away from conservative to modern management methods can be observed. Giving up control - retaining leadership. Trust in Employees as the basis of leadership competence is in demand. How is compliance compatible with this? Managers should place trust in their Employees and give them more decision-making authority. Let Employees become entrepreneurs. This is because more responsibility can lead to more conscientious decisions. Compliance is improved. This approach can be a deterrent. Accordingly, it is the task of management to provide Employees with the right tools for this.

Be a role model - show attitude

"Compliance is a question of attitude. There is no alternative to this," says Oliver Burkhard, member of the Executive Board of Thyssen-Krupp.

It is important to create a corporate culture in which compliance is part of the big picture - compliance awareness. Compliance thus becomes a strategic success factor. Who is responsible for this? The management. As a role model, it is the linchpin of functioning compliance. Compliance as a mindset, firmly anchored in the corporate culture, must be exemplified and the "tone from the top" must be internalized. This is the only way for all Employees to recognize compliance as their personal responsibility for the sustainable success of the company and to turn a sales brake into a sales driver.

Compliance is the guidepost for legally compliant behavior and thus becomes a competitive advantage. Managers must be aware of this special role and responsibility. Or would you follow the signpost to the left if your mountain guide marched to the right?

Using modern approaches

The science of behavioral economics can be used to create the right attitude and therefore the right decisions among Employees . Behavioral economics is based on the real or natural behavior of people. It is well known that people think rationally to a limited extent. Due to their limited ability to absorb and process new information, they resort to so-called heuristics, i.e. simple and familiar problem-solving mechanisms. An illustrative example is the Gordian knot. If it cannot be opened, the rope is simply cut. A complex problem has been solved simply, but with serious consequences. Accordingly, Employees must be prepared and trained for explosive cases and typical situations.

From the rule to implementation

Compliance awareness is increased through proactive internal corporate communication and training on the relevant topics. Seminars or new forms of learning such as e-learning or webinars are suitable for this purpose. Such education and training measures should be flanked by a Compliance Awareness Day, which is mandatory for Employees and managers, with exciting and interactive contributions from experts. The aim is to make Employees more aware of critical situations. The seriousness, but also the reasons for and benefits of a compliance policy should be understood.

The often dry compliance basis of the company, usually a code of conduct, can thus be usefully supplemented and filled with life. It increases understanding of issues such as corruption, conflicts of interest, money laundering and fraud. It is also important to consider the so-called "forgetting curve". The human brain tends to forget. Once learned, it quickly fades. It is not enough to carry out e-training every two years. Especially in the age of digital change, compliance must be anchored in the minds of all Employees . This can be supported in a practical way by an IT-supported CMS with digitalized processes and solutions. The compliance officer can thus see who has read rules or completed training. At the same time, compliance with essential documentation obligations is also made easier.

Conclusion

There is no ready-made compliance solution. The cornerstone is a good corporate culture that is built through communication work, homogeneous teamwork and, above all, exemplary leadership. It is essential to initiate a sustainable cultural change at management level, to perceive Employees as co-entrepreneurs and to provide a user-friendly compliance platform. After all, no matter how good a CMS is, it is worth nothing if it is not lived and implemented by the entire company.