Compliance executives are on a never-ending journey to build and maintain a culture of ethics and compliance. Poor compliance is frequently met with more compliance requirements, but this strategy is like trying to beat a smart virus by layering on more of the same elixir. The problem keeps mutating, and you never get ahead. We have ample evidence that when workers experience compliance as policing, they are increasingly reluctant to cooperate and they get better and better at work-arounds. By linking compliance efforts to shared values and purpose, creating a successful compliance culture becomes less of a battle and more of a team sport where the workforce becomes partners on a shared mission.
Successful organizations promote compliance by connecting people to purpose. In doing so, worker mental health is both protected and promoted. In fact, when you build a culture of compliance in tandem with building a culture that protects and promotes the mental health of the workforce, your compliance efforts go from policing to partnership; people and performance benefit.
LINKING COMPLIANCE AND MENTAL HEALTH
Building a genuine culture of compliance requires that workers feel aligned with the implicit values and stated purpose associated with the organizational compliance priorities. As compliance officers know all too well, numerous specific issues fall under the compliance umbrella. Conflict of interest. Data privacy. Corruption. The list goes on, and it is growing with new regulations emerging on a number of Environmental, Social & Governance (ESG) topics ranging from carbon emissions to labor rights to supply chain due diligence. Regardless of the compliance topic, human behavior is at the crux of compliance breakdowns that are too often caused by a lack of worker buy-in. Conversely, when you commit to protecting and promoting worker mental health and well-being, workers and organizational systems are less stressed and more resilient. Feeling seen, heard, and cared for, workers are more likely to be aligned with the organizational culture, which in turn, increases buy-in for compliance priorities.
Data from over 2,000,000 employees around the world released in the 2023 Ethisphere Ethical Culture Report indicate that of those employees reporting compliance misconduct, the top five behaviors are (ranked in order): 1) harassment or discrimination; 2) bullying; 3) retaliation; 4) fair employment practices; and 5) conflicts of interest. In all cases, these failures of compliance translate into an increased mental health burden on workers, which ensures a negative spiral within the organization from compliance to morale to performance. The performance impact occurs at the individual, team and organizational levels impacting productivity, efficiency and quality of work. We have good data documenting that harassment and bullying, for example, negatively impact mood, concentration, and anxiety,1 which translates into reduced job performance,2 and further, corrodes workplace culture and team output.3 The negative cascade is pernicious and costly at all levels.
Research shows that people, particularly Gen-Z, want to work for companies they can trust and that give them purpose. By 2025, Gen-Z is expected to comprise more than a quarter of the workforce, and a recent McKinsey study4 documents that purpose and mental health are top priorities for this generation. When workers are aligned with the organization’s values, they are more invested in complying with policies and practices to ensure success. Compliance evolves from being seen as a policing action to a purposeful culture-building activity and workers become partners. People become inspired to achieve shared goals, and this leads to higher performance for the individual, their teams, and the organization. The data from Ethisphere’s World’s Most Ethical Companies® recognition award has demonstrated that there is an Ethics Premium that is associated with a strong ethical culture, with the 2023 World’s Most Ethical companies outperforming a similar large cap index by 13.6% over the past five years.
DISCONNECT BETWEEN ATTITUDE AND ACTION: THE WORK-AROUND CULTURE
As every compliance officer knows, the willingness of employees to report concerns or misconduct is crucial to a compliance culture. Ethisphere’s 2023 Ethical Culture Report found that there is a big difference between what people say they will do and what they actually do related to ethics and compliance reporting. While 93.1% of employees say they would be willing to report misconduct if they saw it, in point of fact, of the 86.3% who actually observed misconduct, only 48.2% actually reported it. Among Millennials (age 26-41) and Gen-Z (age 25 and under) reporting was even lower at 44.6%.
This finding immediately brings three critical questions to mind. First, why do workers behave in ways that are inconsistent with their professed attitudes? Second, what is the mental health impact on the individuals who saw misconduct but did not report it? Third, what is the collective impact on the culture of the company when almost half the people that see colleagues doing something unethical or illegal don’t say anything?
According to the Ethisphere Culture Survey, the two most common root causes for why people do not report is they don’t think management will take appropriate action and they fear retaliation. These root causes have lingering implications for the individual and the organization. They reflect a low level of trust and further undermine trust, creating a negative spiral.
The mental health impact on the individual is clear. There is a direct link between employees’ willingness to report and their mental health. Fear of reporting, feeling that reporting doesn’t make a difference, or turning a blind eye to the misconduct are all associated with chronic psychological distress. Without appropriate interventions and/ or outlets, chronic distress negatively impacts worker’s health, including mental health. Taking this a step further, the performance of employees with chronic distress related health issues suffers. Chronic distress is associated with fatigue, loss of interest and energy, constant worry, and reduced creativity. These impacts translate into increased tardiness, absenteeism, turnover, and interpersonal conflict among team members and reduced quality of work. All of these effects negatively impact individual people and organizational productivity.5
Willingness to report is just one example of the direct link between mental health and compliance. Bullying. Harassment. Lack of equity and inclusion. The list goes on. Each of these issues must be viewed through the compliance lens and the mental health lens. Ultimately, leading companies will realize that they are interconnected and inseparable. As we saw from the willingness-to-report example, trust is an essential element of both. Employees need to trust the organization and feel connected to its values and purpose. The feeling of trust and inclusion fosters openness. It removes the roadblocks that prevent employees from reporting misconduct. The actions of senior leadership resonate through the organization in creating the culture. The Ethisphere Ethical Culture Report found that 92% of employees that believe senior leadership consistently demonstrates integrity in their behavior also trust that the organization will investigate reports of misconduct. Shockingly, this plummets to 27% if employees do not believe senior leadership’s behavior consistently demonstrates integrity. The data overwhelmingly show that workers who have a high level of trust in leadership also report high workplace satisfaction, and their companies outperform those where workers report lower trust and satisfaction.6
Think about what happens at the organizational level if almost half of the people that see something won’t say something. Think about what happens if employees don’t believe that leadership acts with integrity and won’t do anything about reports of misconduct. It directly spawns the dreaded “work-around culture;” a culture where people become conditioned to believe that the policies are only on paper. There is a disconnect between the paper and the behavior. The work-around culture has a negative impact on the mental health of all employees. Compliance turns into a check-the-box activity, too often seen as a business barrier and an irritant. One of the dangers of the work-around culture is that is spreads like a virus from department to department and from compliance topic to compliance topic. What starts as a data privacy work-around in the HR department will spread to become a gifts and entertainment work-around in the sales department.
Workplaces are facing skyrocketing rates of stress, anxiety, and depression. Left untreated, employee absenteeism and presenteeism increase, burnout sets in, and voluntary turnover rates rise. Employees experiencing mental health problems and burnout are at risk for being less productive in the workplace and less motivated to comply with organizational policies, let alone champion them.
MENTAL HEALTH AND COMPLIANCE: CONNECTING THE DOTS
Today organizations have systems to measure critical compliance program maturity and outcomes. However, this data is woefully lacking related to protecting and promoting mental health in the workplace. In extensive discussions with dozens of multi-national companies, it became clear that they were seeking a way to know what they should be doing beyond providing legally mandated mental health benefits.
The Mental Health at Work Index was developed by marrying the science on mental health with the science on the management systems used to build effective compliance programs. The Index defines what a good workplace mental health program looks like and allows organizations to correlate mental health program maturity to people performance metrics. It allows organizations to measure and benchmark how well they protect, promote, and provide services related to mental health.
ROLE OF THE COMPLIANCE OFFICER
Of course, compliance executives typically do not have responsibility for wellness programs and related HR functions. Cross-functional collaboration between legal, compliance, and HR will be required to make progress on integrating mental health and compliance programs. Cross-functional collaboration is one of the essential elements for creating a culture of compliance. When we analyze the compliance programs of companies around the world, the policies are typically sufficient on paper. However, for a policy to have its intended impact, workers need to follow the policy as specified. Most compliance failures, regardless of the topic, are related to human behavior. Cross-functional collaboration is needed to change human behavior, and linking mental health and compliance programs is a way to accelerate that linkage. Research Ethisphere conducted for Asia-Pacific Economic Cooperation (APEC) in 2021 found that cross-functional collaboration was the single most important indicator of a compliance program that resulted in improved economic performance for the organization.
Beyond cross-functional collaboration, there is a huge overlap between the elements of an effective compliance program and those of an effective mental health program. Just as leading compliance programs seek to embed compliance into how they operate, the same approach is needed for mental health in the workplace. In order to accomplish this, companies need to begin to measure the maturity of their current program and then prioritize areas for improvement.
Compliance and mental health both need to break out of any organizational silos and become part of the organization’s broader corporate strategy and enterprise risk management program. To do this, we recommend you systematically track three interrelated metrics and collect and correlate the data:
- Program maturity metrics
- Employee perception metrics
- Related business and people performance metrics
Every organization should identify key people performance metrics and correlate them to changes in mental health program maturity. For example, does the rate of voluntary employee departure decrease as mental health program maturity increases? Important correlations can also be made to support the compliance program. Does the willingness to report increase? These are the type of metrics that will get the attention of the C-suite and begin to build a business case.
The interests of the compliance officer and the HR/wellness officer clearly come together in the role of managers in building a culture. Employees are seven times more likely to report ethical or compliance concerns to their direct manager than to use the hotline. Similarly, managers are critical in spotting early signs of worker stress or burn-out or in reducing the stigma of mental health issues. Employees need to trust their managers, and managers need to be trained so they know how to respond. We advocate the use of Champion programs where certain managers are selected and trained to become the face of the issue in their sphere. Just as we recommend more cross-functional collaboration between senior levels of compliance and HR/wellness, we also recommend the establishment of Compliance and Mental Health Champions to bring the issues together throughout the organization.
The Mental Health Index provides a framework that assesses organizational capacity in addressing mental health across the continuum of the “3Ps”— Protection, Promotion and Provision–of resources and services in 10 critical interrelated categories (see next page).
The results to date from over 40 companies show that companies are strongest in the provision of benefits, with Mental Health Resources and Benefits being the most mature category. In part, this is because laws require mental health benefits to be equal to those provided for other health conditions.
There is a long way to go for companies to move beyond basic provision of care to integrate mental health protection and promotion into the company culture. The lowest maturity categories in mental health program are also categories that are critical to an effective compliance program that avoids the “work-around” culture.
- Strategy – are compliance and mental health considerations integrated into the core business strategy?
- Leadership – does leadership exhibit consistent behavior aligned with compliance and mental health communications?
- Worker Involvement – is feedback from the workforce considered in developing the strategy and defining the related policies?
- Work design – are compliance and mental health considerations taken into account, so it is practical to comply and do the core job effectively?
Compliance leaders and HR/wellness leaders need to understand that they are in this together and commit to taking action to integrate mental health in the workplace and compliance. To start the journey, you need to measure where you are now because you can’t improve what you don’t measure. The Mental Health at Work Index allows you to measure your current maturity and prioritize where to focus your efforts to achieve the greatest impact. Bringing mental health to the forefront has tremendous potential for compliance officers to innovate and improve the culture of compliance.
- Mental Health at Work, World Health Organization
- Making Work Less Stressful and More Engaging for Your Employees, Harvard Business Review
- Workplace Bullying, Anxiety, and Job Performance: Choosing Between “Passive Resistance” or “Swallowing the Insult”?, National Laboratory of Medicine
- ‘True Gen’: Generation Z and its implications for companies, McKinsey & Company
- Stress and Productivity: What the Numbers Say, com
- The Best Companies to Work For Are Beating the Market, Forbes
ABOUT THE EXPERTS
Craig Moss is the Executive Vice President of Measurement at Ethisphere and a leading expert on using management systems to improve compliance and risk management performance within companies and across supply chains.
Dr. Kathleen M. Pike leads the scientific and resource teams for the Mental Health at Work Index. Kathy has worked globally on the development and dissemination of evidence-based programs to address mental health needs in workplace, school, and clinical settings. She oversees The Mental Health at Work Design Lab at Columbia University.