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Why tone at the top is not enough

John Hughes (jhughes@dragados-usa.com) is a Regional Ethics and Compliance Manager for Dragados USA in New York, NY, USA.

We have all heard the term “tone at the top” in reference to an effective compliance program, but where does that term come from, and is that really the benchmark we should rely on? The term has been used in reference to scandals since the early 2000s, appearing in audit reports from large corporate incidents.[1] In those corporate scandals, it was clear that leadership was failing to set a positive tone at the top, and as a result, the corporate attitude toward compliance was lax. If leadership was not engaged in a compliance program, could lower-level employees be expected to exhibit a compliance culture? The fall of major influential corporations (e.g., Enron) and individuals (e.g., Bernie Madoff) made it clear that a focus was needed on leadership setting the tone and communicating the compliance goals. Compliance shifted, and leadership was engaged, but noncompliance did not stop, and major corporations continued to fail (e.g., Volkswagen, Wells Fargo, Airbus). Setting a tone is not enough if individuals continue to avoid accountability.

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