Tone-at-the-Top revisited. Myth or Methodology
When Sarbanes-Oxley (SOX) implementation was at its
height, our consultants were in and out of boardrooms and executive meetings
and talked about The Tone-at-The-Top. When the tone went a bit musty we
introduced the concept of Talk-the walk that was swapped by one-size-does-not-fit-all.
No matter the superficial jargon the various paradigm changes, and compliance
convergence the concept of Tone-at-the Top has survived and revitalized,
probably due to the added responsibilities and liabilities of the board
of directors and management.
Let the framework and roadmap of Copenhagen
Compliance® achieve an increased the overall business performance by
leading (tone-at-the-top), Good corporate governance on its own cannot
make up for any toxic corporate culture or lack of culture or the right
tone at the top. Consultants and auditors will continue to experiment
with systems of checks and balances to ensure both good governance and
controls including the issues of corporate culture values and traditions
but continue to develop the checks and balances to create a new order
based on transparency and accountability.
Global CSR and Bribery, Fraud & Corruption reality
Be it as it may, depending on the-tone-at-the-top companies can start
by assessing the current CSR policies and processes and map these to the
UNGPs. However with an added focus on UNGP as an internationally endorsed
standard on CSR you end up being entangled in addressing a whole bunch
of human rights issues all over the world and the risk angle to CSR is
on the back burner.
- 57% believe that the low level of awareness across the organization
is equally true vertically: the importance of protecting information
has not been a tone-at-the-top issue and therefore has not filtered
down to lower levels of the business.
Transparency is never a bad thing for growth. It is normally affecting
those that have something to hide, or to those who do not want to face
the music when the going gets tough. When the papal tone-at-the-top is
to believe in transparency and accountability, it certainly helps to increase
the understanding and decreases the likelihood of corruption amongst the
subsidiaries in parts of Asia, South America and Africa.
- The Chairman of the board must face the music and determine the
tone-at-the-top
- What are entity level CSR risks and does the Risk committee have
the necessary authority to inspect key CSR transactions
- Increase public disclosure on benefit to high-paid executives, remuneration
principles for all employees, deferred element in incentive schemes
and related issues.
- Management faces tougher CSR scrutiny under the authorisation process
to monitor conformity
Having an active and effective framework and program that filters thru
the organization, and the rank and file employees is even more important
with the increasingly vigorous enforcement of regulations. Huge amount
of resources is placed in the GRC enforcement efforts over the past several
years after the financial crisis. In spite of that two-thirds of the top
20 largest criminal FCPA case resolutions have occurred in the last three
and one-half years, and three of the top five largest penalties ever issued
have been in the last year.
A clear indication of non-compliance with a price for violating global
bribery and fraud mandates to be very high, involving not only significant
fines and penalties, but also reputational damage, criminal prosecution
and investor lawsuits.
Among other things, the framework addresses are the cautions against a
"check the box" approach to GRC. The framework instead enhances and encourages
directors and executives to set the right tone at the top and prove a
commitment to a "culture of compliance" . The framework further provides
solutions to reinforce and implement the soft values throughout the organization.
Tone at the Top and Corporate Culture
The framework delivers actions that promotes and actively cultivate a
corporate culture. A monitoring and controls environment that understands
and implements enterprise-wide risk management. Comprehensive risk management
should not be viewed as a specialized corporate function, but instead
should be treated as an integral component that affects how the company
measures and rewards its success.
Running a company is an exercise in managing risk in exchange for potential
returns, and there can be a danger in excessive risk aversion, just as
there is a danger in excessive risk-taking. The right-tone-at-the-Top
framework will provide several answers and solutions.
The Tone-at-the-Top narrative is currently available in Danish. Reserve
you English copy when it is published next month.
