The LRN ethics and compliance risk management practices report

LRN ETHICS AND COMPLIANCE MARKET MATURITY MODEL
efforts, building on basic structures and enlarging it to reach a widening area of influence in
all company operations. The time it takes to move from one phase to the next is dependent
on the company’s commitment to the process and its ability to learn and change. The graph
in Figure 2 illustrates the nature of the learning curve, as companies move from little “c” to
Big “E” characteristics which outline the characteristics of a company through the journey.
Journey of Significance
Figure 2
Responses were collected through both in-person interviews and online interactions using
the same survey tool. Survey data represent the perceptions of individual survey respondents
and have not been validated through direct observation. The survey tool consisted of a series
of seven questions which were scored using a system of weighted answers. The resulting
score for each of the questions were combined to provide an overall rating for an individual
respondent; the rating was compared against a range of scores corresponding to Little “c”
through Big “E” to produce the final designation of ethics and compliance program maturity.
The chart shows what percentage of respondents mapped to each stage.
Final Perspectives
If 2007 was a watershed year that challenged companies to boost their mastery of
ethics and compliance, the coming years will further test how well they’re preparing for
more floods. Today’s global business environment is only becoming more complex and
burdensome on organizations to comply with increased legal regulation over many areas of
business, as well as aggressive public scrutiny of their business conduct. It’s only going to get
worse, given recent events such as the sub-prime mortgage meltdown, the collapse of major
financial companies, and frequent regular product recalls. In today’s world of the Internet,
digital communications, Google, YouTube, Facebook and MySpace, nothing remains hidden
for long. The slightest missteps can embroil companies in costly lawsuits, claims, lost
reputation, and underperformance.
Companies can respond by trying to batten down the hatches of their ethics and compliance
programs, making sure they have themselves covered, rule by rule, regulation by regulation.
This response may be effective for a short-time and for some companies, it may be their only
choice given what they can afford time- and resource-wise. Forward-looking companies,
however, recognize that they must invest not just in the structures of ethics and compliance,
but more importantly in their culture. A different type of organization will compete by
outbehaving to out-perform their competitors.
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