Dollars to Donuts: The Value of Compliance to Corporate Reputation

Dollars to Donuts: The Value of Compliance to Corporate Reputation

Trust, integrity, balance.  These are the terms that come to mind when weighing the impact of compliance failures on company reputation.  Abraham Lincoln once said, “[i]t takes many good deeds to build a good reputation, and only one bad one to lose it.” Too many companies fail to grasp the connection between profitability and reputation when weighing their compliance goals and plan implementation. Indeed, those companies often wind up on the front page of newspapers and the subject of countless blog posts like this one.

In recent years we have seen compliance blunders from Volkswagon, Johnson Controls, FoxNews, Valeant, and a host of other large companies and leaders. The trust lost in their brands cannot be understated. When surveyed as to the qualities they look for most in a company beyond financial compensation; employees without question most commonly answer “trust” and “integrity.” Good employees want to work for organizations that are less likely to stain their personal reputations and resumes with compliance failures.

Good People Make Good Parents

It is well settled that compliance starts from the highest levels of leadership within a company and trickles down to the rest of the members of the organization. The adage about good people making good parents applies to corporate leadership and compliance as well. The leaders are the parents, tasked with guiding and nurturing not just the organization but all of its employees as well. When corporate leaders are engaged in educating themselves about compliance, there is a greater degree of engagement within the company.  Some leaders have even chosen to speak about the importance of compliance to the enterprise as a whole, either by webinar or at a corporate function.

A commitment to compliance requires time and attention, just as does raising a child. When corporate leaders and senior executives fail to understand the importance of compliance to the workforce and corporate reputation as a whole, the rest of the organization begins taking shortcuts. This concept may seem subjective, but significant research has shown that it is not. It boils down to the question “who would you want to be working for?”

Closing the Quantitative Gap

Goodwill and public trust are admittedly difficult to quantify. Subjectively, many have attempted to answer the question vaguely, by stating “a company is worthless without its reputation.” That may be true, to some extent, but recent studies have shown that taking the overall stock valuation of the company and subtracting the value of compliance errors leads to a 20% to 30% premium in overall valuation based on company reputation. This is a very significant number and one that begs greater attention from companies spending far too little on compliance initiatives.

Strengthening trust and brand value has an impact on the way the workforce and consumers view the product and/or services companies provide as well. When a corporate leader is truly invested and believes in the compliance goals the company espouses, the employees have proven more engaged in training and are more likely to report suspected violations.  The key is grasping the value of compliance at the highest levels and imparting this knowledge upon mid-managers and lower level employees.  The next time you see a company on the front page of a newspaper for a compliance gaffe, you’ll be glad you did!

Syntrio is a leader in both the ethics and compliance field, as well as human resources and employment law. Syntrio takes an innovative philosophy towards compliance program design and strives to engineer engaging, entertaining, and thought-provoking content. Contact www.syntrio.com for more information about our ethics and code of conduct online courses and remember to follow us on Facebook, TwitterGoogle Plus and LinkedIn for daily updates on employment law and compliance that impact your company!

 

Written by Jonathan Gonzalez, Chief Counsel for Syntrio.

Posted in Code of Conduct, Compliance Training, Custom Courses, Managing Within the Law and tagged , , , , , , , , , , , , , .