Create a Compliance Culture 22:14, June 12, 2016

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Create a Compliance Culture

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After months of scandal, HR tech company Zenefits has learned the importance of compliance and implemented appropriate safeguards. Even companies like AirBnb, Google, and Adobe, who have been lauded for their strong company cultures, can learn something, too. Because along with that gourmet cafeteria food, many tech companies have been served a fair amount of something else: lawsuits.

After years of litigation, Uber is tentatively settling two lawsuits that alleged it violated wage and hour laws by misclassifying its drivers as independent contractors. Last year, LinkedIn settled a lawsuit that claimed it failed to provide promised data security of Premium members after its system was breached. Ellen Pao sued tech-focused venture capital firm Kleiner, Perkins, Caufield & Byers for gender discrimination—and though she lost the trial, the lawsuit was a lightning rod for larger questions of whether women in tech work on a level playing field with males. For example, two women who worked at Facebook and Twitter filed similar lawsuits shortly after Pao’s trial began.

Lawsuits happen in every industry and almost every field. Tech companies make a great case study because often there’s a culture of hyper-growth that, without an adequate foundation in compliance, allow things to go terribly wrong. There is much room for error when a strong compliance foundation is lacking. The foundation of compliance isn’t just checking boxes, it is in the culture of an organization. This article provides four steps on how to start constructing a compliance-based culture to better ourselves and our workplace environments.

  1. Cultivate Company Culture

“Perhaps it is about time that we take culture seriously,” says Rebecca Neufeld in her post The Benefits of a Strong Corporate Culture. A strong culture is a boon for business success that sometimes is not prioritized. Experts agree that a company should be actively cultivating, emphasizing, and prioritizing a strong business culture.

Harvard Business Review identifies six components of a great corporate culture, which include: vision (mission statement), values (what a company believes in), practices (investment in employees), people (smart recruiting), narrative (a unique story), and place (geography, architecture, design).

People go to school to study these components, so don’t expect to perk up your culture with a simple list of to-dos. Instead, start thinking about what your company does to build these components up (and how to avoid bringing them down).

  1. Avoid the Young and the Reckless

Generally speaking, a strong culture is a good thing in itself, but not all types of cultures are good things. A company based only on growth and fun can be dangerously intoxicating, but hardly the stuff of venerable, long-lasting success. Zenefits’s alleged past behavior showcases the paradigm. According to Buzzfeed, Zenefits was a “fast-growing” HR-compliance startup that sold insurance to small businesses, achieving a $4.5 billion valuation in a highly-regulated industry through an aggressive sales pipeline. It was the darling of Silicon Valley until it was lambasted for widespread failures of regulatory compliance, shaking up the company’s management (and then some).

If you’re interested in reading about a contrasting example, check out our case study on Namely, an HR-compliance startup that is able to successfully incorporate compliance, culture, and growth at the same time.

  1. Follow the Law

There are two types of compliance issues that a company should incorporate into its company culture: things it must do, and things it must not do.

Must Do

Governmental bodies—be it state legislatures or federal executive agencies—prescribe specific rules to employers. These can come in the form of privacy laws that obligate a business to protect financial or personal information of people, mandatory sexual harassment training for supervisors, or providing a safe workplace free from imminent injury.

When these kinds of compliance obligations clearly apply, there should be no question that companies must abide. Companies that don’t can irreparably damage not only their own reputation, but also that of their employees and customers.

Must Not Do

The law isn’t always as clear as most people would like. In theory, for example, it’s clear that bribing officials abroad to grease deal-making or discriminating against certain groups of people is wrong. In reality, it’s risk management. Companies can remain compliant and still maintain some leeway to discern, evaluate, and balance the organizational benefit of their actions against the risk of liability.

While companies that are unscrupulous about risky behavior can enjoy immense success, they should also be concerned about running into compliance problems. Incidentally, this doesn’t mean that squeaky clean, risk-averse companies are off the hook—problems can pop up if you’re not careful. Changing practices, beliefs, and attitudes about compliance should be intrinsic to a company. It pays off to be careful and aware.

  1. Do Your Research

Knowing is half the battle. The next step is doing something about it. Want to root out gender discrimination before it becomes a tangible problem at your workplace? Look into training. Do you question your company culture, but you’re not sure what needs to change? Ask a prescient coworker out to lunch and chat about whether company culture is aligned with business objectives. You owe it to yourself, your coworkers, and your company to take a step, even if it’s a little one.

Conclusion

It’s naive to think that laws are always meant to protect people, but they should get you thinking about how compliance can positively affect your workplace. Take a moment to think about whether you or your company is investing in a culture of compliance.

LawRoom provides online compliance training on sexual harassmentethics, FCPA and data security to thousands of companies and universities. To learn more, visit us here: LawRoom.com.

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Douglas Kelly
Douglas Kelly is EverFi's lead legal editor. He writes on corporate compliance and culture, analyzing new case law, legislation and regulations affecting US companies. Before joining EverFi, he litigated federal and state employment cases and wrote about legal trends. He earned his JD from Berkeley Law and BBA from Emory University.

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