“Standards of business ethics are changing rapidly,” stated Marie-Chantal Dréau. She believes that ethics should play a part in all of an organization’s actions and decisions. From her perspective, the COVID-19 pandemic has increased the risk of cybercrime and unethical behaviour, due in large part to the switch to virtual practices, higher absenteeism, labour shortages and outdated technological systems.
Amid the crisis, organizations have still managed to develop a strong ethical culture by leaning on their values. “We’ve long recognized the importance of workplace culture in this regard,” said Dréau. She says the unwavering support of management is a fundamental requirement for there to be a real change, asserting that executives need to lead by example in order to encourage ethical behaviour at every level of their organization.
In her forensic accounting work with various clients, Dréau has come to the conclusion that any employee is capable of good and bad. She suggests implementing processes that motivate every individual to make the right choices, holding up her firm as an example. PwC Canada’s performance reviews include assessments on ethics training and compliance with internal policies. “We can guide people toward being as ethical as they are capable of being,” she noted. She considers that a management-supported program created to encourage and reward ethical behaviour motivates staff members to flag improper practices and consequently lessens the potential for misconduct.
Structure is key
“In Europe, more and more organizations are assessing their third-party partners to evaluate their compliance and business ethics,” indicated Caroline Leblanc in her remarks. Leblanc originally hails from Quebec but now lives and works in France. She explained there are laws in place in her adopted country to govern corporate compliance. The General Data Protection Regulation (GDPR), which came into effect in 2018 and applies to organizations of all sizes, is just one example.
Since December 2016, France has enforced a law that requires businesses with over 500 employees and revenue exceeding $100 million to implement measures to prevent and detect corruption, including a third-party evaluation process. According to a survey of 1,336 senior decision-makers in 17 countries, carried out by Kroll in March 2021, 46% of organizations reported a lack of visibility over third parties as their primary concern with regard to corruption risk.
Leblanc also noted that digital transformation poses its own set of challenges for the compliance function. “We need to embrace this shift to become more efficient and reap the full benefits of a compliance program,” she said, stressing that automating these processes will leave compliance teams with more time for strategic tasks. She nevertheless warns that technology is not the answer to everything. “There is ultimately a human being behind every decision,” indicated Leblanc. “For this transition to work, there needs to be a solid structure in place. Everyone has to follow best practices and speak the same language (or languages). It takes technological accountability and re-engineered business processes. Every business unit needs to be involved, because compliance is definitely something that cuts across the entire organization.”
The reputational stakes are high
During the webinar, Tommy Tremblay pointed out that society is increasingly intolerant of inappropriate behaviour. As a result, businesses can no longer afford to overlook or turn a blind eye to wrongdoing.
“Traditionally, for example, incidents of sexual misconduct were treated with kid gloves,” said Tremblay, “because they were seen as one person’s word against another’s. It was difficult to prove who was right or wrong, especially without witnesses. The #MeToo movement has since changed the mindset altogether and driven home the importance of believing the victim, albeit without automatically condemning the accused. We need to take these kinds of allegations seriously to show that we are working toward an unbiased evaluation and to prevent situations like these from happening again.”
The major reputational risk associated with cases of sexual harassment has also been brought to light. Organizations now have no choice but to develop prevention and response strategies, especially given that many victims turn to social media to be heard. “This is what has made businesses that have otherwise tended to take care of these matters in-house really sit up and take notice,” said Tremblay.
“When someone sticks a microphone in your face, it’s extremely difficult to claim that harassment isn’t a problem in your organization without coming off as oblivious or dishonest,” he said. “This has to be factored into our thought processes.”
Tremblay added that boards need to ensure that policies, procedures and internal controls for addressing sexual misconduct are not only in place, but also executed properly and consistently.