Culture

6 Tips for Building and Sustaining a Transparent Culture

By

Amy Double

| Feb 17, 2016

(This is the second part of a two-part series.)

Fraud. The word conjures images of large-scale scandals in which wrongdoing can be measured in the billions. But unfortunately, securities fraud can happen in any financial institution, public or private, no matter how big or small. And under the Dodd-Frank Act, employees are financially incentivized to blow the whistle when they see it occur.

The good news is that a transparent culture can motivate your employees to report internally first, alerting you to fraudulent practices from the get-go and allowing you to mitigate risk. Building and sustaining this sort of culture is a journey of a thousand steps, but the rewards are well worth the effort. Following the tips below can get you started:

  1. Gain buy-in with the almighty dollar. Do senior leaders know that by furnishing tipster hotlines, they can reduce fraud-related losses by 59 percent? Or that fraudulent activity can cost companies with weak internal controls an average of $3.2 million? If leadership has concerns about all that a transparent culture requires, it’s important to share information that ties it to a healthy bottom line to help them understand the financial benefit.
  2.  Create and communicate a code of ethics. Employees who clearly understand what unethical behavior looks like, and managers who easily can recognize a legitimate complaint, can improve the efficiency and efficacy of your reporting system.
  3.  Establish your reporting system and then explain how it works. Not only does this educate employees on how to report fraud, it educates managers on how to address complaints in a timely manner.A survey by the Ethics Resource Center reveals that most employees who first report internally are driven to report externally when they perceive the company has acted slowly in addressing their complaint. Ensuring that managers understand how they should handle or share information can help your organization quickly find problems and fix them.
  4. Don’t discourage external reporting. Ensure that your new reporting framework doesn’t explicitly, or implicitly, obstruct or hinder employees from reporting wrongdoing to an outside organization or agency. Not only is this unethical, it’s a practice the Security Exchange Commission’s Office of the Whistleblower strongly cautions against. One way to accomplish this goal is to institute a fraud hotline, managed by a third party. This provides employees, who may be intimidated by an internal reporting structure, an external forum where they can report anonymously. 
  5. Train. Do more than hang a poster; show your company’s commitment to transparency with employee education. Use a learning management tool to create training courses about your organization’s ethical code and reporting system, in addition to employees’ rights as whistleblowers under the Dodd-Frank Act. You also can provide managers with anti-retaliation training to ensure compliance.
  6. Work with managers to set responsible remuneration goals. Tying fat financial incentives to unrealistic expectations could tempt some employees into letting the ends justify the means. Performance management tools make it easy to design performance initiatives that reward ethical practices, discourage risky behavior and send the message to your workforce that it never pays to break the rules.

Performance and learning management technology makes it just that much easier to build that culture and reap its benefits.

About the Author

Amy Double

Amy, a tenured professional in sales and marketing with over 10 years of experience, is dedicated to creating content focused on helping organizations achieve their business goals. As an experienced writer, Amy is committed to researching and blogging about topics that affect businesses across multiple industries, including manufacturing, hospitality and more. Outside of work, Amy enjoys reading, entertaining and spending time with family.

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