‘I long for E&C leaders to appreciate the power of their role’

Last week I talked with Ron Carucci, author of nine books, including To Be Honest: Lead with the Power of Truth, Justice & Purpose. Our topic was how Ethics and Compliance leaders can communicate more effectively within their teams and organizations.

Q: Ron, issues such as honesty and purpose are part of the remit of an Ethics and Compliance team. How can your new book help them in their work and roles?

Ron Carucci: Many E&C officers are looking for practical ways to shift their work from policy and rule-based compliance to shaping cultures of integrity and purpose. They’ve had enough exposure to behavioral science and social psychology to know that their greatest remit to their organizations won’t come from policy and regulation. It will come from shaping cultures that naturally encourage people telling the truth, behaving fairly and serving a greater good.

To Be Honest, based on a 15-year study, is a guidebook for how to shape an organization that does just that. E&C officers can rely on it to help them design their programs, and partner with key cross-functional collaborators like HR, Finance, and Strategy.

Q: Having an actionable feedback loop is one your new book’s main themes. How can E&C leaders solicit constructive and actionable feedback from their business peers without putting anyone on the defensive and perhaps creating a source of resentment?

Ron Carucci: I think any service organization like E&C needs a built in calibration process for getting feedback from those they serve and partner with. The challenge is that from where most are starting, those partnerships aren’t well established. E&C’s reputation is either one of mystery, one of resentment, or one of the “cops who say no.”  So the ability to get a helpful read on contribution will be tainted by those perceptions. The work won’t get evaluated, the distorted perception will.

So E&C functions need to invest heavily in building deep, trust-based partnerships with key functions that are their “distribution channels” – like HR (DEI, leadership development, L&D, rewards/incentives), finance (budgeting, resource allocation), Strategy (target setting, priority setting) – these are the functions that hold the levers that fundamentally shape the norms and culture of an organization. Working closely with them, E&C can amplify their impact in ways they could never on their own. Having embedded their impact in places where it really matters, they will be ready to implement a calibration mechanism that will provide them ongoing and helpful feedback about their work, including the quality of their partnerships.

Q: How can E&C leaders make sure “critical silences” don’t permeate the organization on matters of ethics, integrity, and compliance?

Ron Carucci: Creating an environment where people feel free to speak their minds is, as most realize, a multi-year and multi-lever endeavor. But it starts with an examination of organizational governance. The rooms that convene leaders to solve problems, make important decisions, allocate resources, and make tough tradeoffs are the rooms where voices are most needed. If leaders haven’t signaled to people that their voice matters, that it’s safe to raise tough issues, even expected, and build that muscle as a matter of practice, when the crap hits the fan, people will reflexively resort to what they know – withdrawing in silence and colluding with others in the hallway.

Building a culture of voice is a long game, and E&C officers would do well to help managers understand the pillars of creating psychological safety, of practicing healthy dissent, of teaching the power of differing views when it comes to innovation and problem solving, and ultimately, how to create a workplace people feel proud to be in and bring their best.

If you focus exclusively on raising misconduct as the reason to use your voice, it feels like your giving people “tools to tattle.” We should be intervening much further upstream in the environment, long before the need to raise issues of ethical breaches. Because the seeds for ethical failure are sewn long (years!) before we see them come to light.

Q: A major theme of  your book, To Be Honest, is the importance of cross-functional cooperation. Can you elaborate a bit?

Ron Carucci: Well, first I think we need to distinguish from among the many forms of collaboration.  Collaboration overload is certainly a reality, and collaboration isn’t a panacea for every form of work. When misapplied, it can be exhausting. This is especially true when you have limited resources as many compliance departments do.

That said, I think if we dig underneath some of the stories of E&C collaboration overload, we wouldn’t find the kinds of cross-functional partnerships I’m referring to – we’d find the classic territoriality between HR and E&C. We’d find the typical “whose more marginalized here” dynamic between E&C and finance. That isn’t collaboration, and should make people boomerang back to their tribalistic instincts.

Genuine collaboration is built on trust and mutual understanding of the value multiple functions create together at their seams. It creates synergy – an “assembly bonus” – for truly integrating the efforts of two functions, you get extra benefit and impact on top of their respective efforts. The reality is that across our enterprises, there are fractures between key functions whose value is undermined because of those broken seams. The classics – sales and marketing, operations and supply chain, manufacturing and R&D. The capabilities of innovation, customer service, product logistics – capabilities on which companies have to compete -are formed at the intersections of these functions, not within them.

When you fragment those seams, you create “dueling truths.” You get nemeses instead of allies.  The inevitable “We can’t get our job done because you people suck at yours.” We now know that fragmentation has a much higher cost than just being annoying. It’s raising the risk of misconduct because once I believe I’m right and your wrong, my mission will be to prove that at any cost. This was the largest single factor predicting dishonesty in our research, and that’s why it’s so important to make sure you have the needed cohesion at these critical seams. And it’s especially important for E&C to role model what it looks like by making sure their own seams are tightly stitched and setting the example of genuine collaboration.

Q: You’ve said that admitting you “don’t know something reveals your humanity, which is your greatest source of credibility.” How does that apply to E&C leaders?

Ron Carucci: Being honest about the complexity of a situation, or even your own limitations in dealing with that situation, won’t convey confusion, as some might fear. People can tolerate uncertainty when the stakes are high, especially in a messy, gray-area situation. What people can’t tolerate is an E&C officer needing to look like they know something and speaking with declarative authority when they really aren’t sure. People will see right through that and credibility is undermined (plus, it’s modeling the very behavior you’re confronting and trying to change).

Empathy, vulnerability and transparency are some of the most potent tools and E&C officer has because they establish trust. They will get teams to open up. And they help build greater ownership for the solution once its discovered – people feel more committed to direction they helped create than answers handed to them by others in “authority.”

Q: Thank you for your time and insights, Ron. Do you have a parting word of counsel to readers of the FCPA Blog?

Ron Carucci: There’s so much at stake in our organizations. These are the places where people discover what it means to be their best, or race to the bottom of their worst. I long for E&C leaders to appreciate the power of their role, and to believe the impact they can have is mission critical, and to elevate their roles to places where they are shaping organizations of honesty, justice, and purpose.

Ron Carucci can be contacted here.