How to Get the Budget you Need for Your Compliance Program
If your Board of Directors just doesn’t understand, getting the budget you need to implement a strong ethics and compliance program can be an uphill battle. You know why you need to pay attention to ethics and compliance, you know the risks of non-compliance and you’ve seen the scattered remains of those who have chosen to ignore the signs. But getting your BOD on your side may take some strategic thinking and smart talking.
Sometimes board members see compliance as an expense without a whole lot of return. They may see it as an exercise in checking boxes that comes with a big bill. So how do you get your board to come around to your way of thinking?
Return on Ethics
One great tool for showing the possible return on ethics is Ethisphere’s list of the World’s Most Ethical Companies,” says Tom Tropp, Vice President Corporate Ethics at Arthur J Gallagher & Co, which made Ethisphere’s list.
"A strong ethical foundation is a competitive advantage, and Arthur J. Gallagher & Co. recognizes the important role corporate responsibility plays in improving its bottom line," said Alex Brigham, executive director of the Ethisphere Institute, in a press release.
In fact, the companies on Ethisphere’s list perform above the level of Standard & Poor’s 500 Index, more evidence that it pays to be ethical.
“Boards are interested in return,” says Tropp. And so pointing out the obvious return on ethics may be the best way to convince the BOD to invest in an ethics and compliance program.
Return on Trust
“We’re in a trust-based business,” says Tropp. “We’re designing and implementing insurance programs for major companies. If they don’t trust us, if they don’t understand that we have values and that we really believe in them, they’re not going to do business with us. We have clients we’ve had for 50, 60, 75 years, because they understand that our beliefs are not only what we say. We really do practice them,” he says.
Having a strong ethics and compliance program and the fortitude to back it up with action, is one way to start building the kind of trust that fosters relationships for the long haul, a fact that board members might find very compelling.
Another easy argument, says Tropp, is that board members probably don’t want to sit on the board of a company that isn’t highly ethical.
“You might think it’s a nice challenge to be asked to sit on the board of a company that’s in desperate condition and needs to be turned around,” says Tropp. “But that’s what you hire consultants for. As a board member you want to be with a company that’s highly respected.”
And the ethics and compliance program is the vehicle through which the company can maintain its respect and reputation, he says.
Champion Your Ethics
While there have always been companies that operate at a high level of ethics, Tropp sees the Enron and Worldcom events as catalysts in bringing ethics to the forefront in business. Companies not only realized that they had to be ethical, but also that they had to let people know that they were ethical, he says.
Respect, trust and reputation are the building blocks of a successful company, and a strong ethics and compliance program, backed by the Board of Directors, is a solid foundation.