Mujo Vilašević (mujo.vilasevic@gmail.com, linkedin.com/in/mujovilasevic) is a compliance professional working and living in Sarajevo, Bosnia and Herzegovina. He is a Head of Regulatory Compliance and Financial Crime Management at Raiffeisen Bank Bosnia, as well as a part-time teacher of business ethics at Burch International University Sarajevo.
Why is ethical leadership important, and where does it fit in terms of the organization, its employees, and their satisfaction? Can employee satisfaction be a measure of an organization’s ethicality?
This article aims to provide answers to these and a few more related questions on ethics and compliance.
Compliance and ethics program
To begin discussing ethical leadership, we should remind ourselves of key elements of any compliance and ethics program.
These essential elements are, by now, already common knowledge within the compliance and ethics industry. For each company to establish a proper compliance and ethics program, the following strategic elements should be implemented:
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Policies and procedures
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Chief compliance officer/compliance committee
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Education and training
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Reporting
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Monitoring and auditing
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Enforcement
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Responding to issues[1]
These elements refer to both large and small organizations, with the obvious rule that smaller organizations can apply these compliance elements with fewer resources and formality. Basically, one organization should first and foremost have proper policies and procedures to define what is and what is not allowed behavior within the organization. To this extent, the main focus is to have a proper code of ethics or code of conduct as a source document from which all other procedures and policies will derive. Then, the organization should name a chief compliance officer (CCO)—or even a compliance committee if it sees fit, depending on the organization’s needs. The CCO should oversee all matters regarding implementing and controlling an effective compliance and ethics program. Such a position must have resources, independence, a seat at the table for all major decisions, and a clear line of reporting to the highest authority within the organization. Besides this, the CCO should monitor and audit the organization’s activities to assess potential compliance and ethics risks and propose proper mitigation measures within the processes. To do so, the CCO must have tools of enforcement, which include both the award and punishment system. Finally, there should be a proper system for responding to issues, with secured protection of confidentiality and anonymity, so everyone within the organization feels comfortable raising suspicion on noncompliance or nonethical behavior (most common is the whistleblowing system). With all the previously mentioned, we get the full-circle picture of an effective ethics and compliance program. But what is ethical about all of this? Why would we include ethics in this topic in the first place?
There are many answers to these questions. However, if we want to start from the beginning, we need to talk about ethical leadership.
