The company I work for is making headlines in the national newspapers over the past couple of months and not all for the right reasons. A settlement to avoid legal procedures in a case about bribing Middle East government officials, signing off the annual report of companies that proved to have serious financial issues later on and lately the professional judgment of some of the board members is questioned because of their involvement in ‘private’ investment activities. I lack the details in each of these cases to have an informed opinion. But I am very much surprised about the response made by the company, both internally and externally.

What the cases have in common is that the integrity of the individuals involved is questioned and therefore the culture of the company. Without exception the reaction is a statement about compliance and each time additional measures are taken to further elaborate the compliance regime. In my opinion these topics are hardly related. It’s like when you ask someone for their cooking qualities and they respond by emphasizing they own a drivers license; and furthermore they stress their willingness to take additional lessons to keep their driving skills up to date. It’s probably a correct answer but in no way does it address the question asked.

When integrity is questioned, compliance is never the answer

Compliance has something to do with rules and regulations. Several business sectors created compliance frameworks to a serious level of complexity and the audit business is no exception. There is a place and a purpose for these frameworks and there is also added value in establishing whether an action of a person, a process or a company is either compliant or non-compliant to those frameworks. In a way compliance is easy: it can be clearly defined, measured, implemented and to some extent automated.

Integrity is something completely different. Integrity is about ethics and values. The English language does not have a specific adjective or adverb for it. You can state that someone is a person of integrity and if you need to state it differently someone’s actions are either right or wrong. Psychology tells us that the basic values and beliefs of a person are set at the age of four. By that age a person’s conscience has been created and is kind of fixed. For that reason you could argue integrity is easy as well: children have the relevant skills. But it proves to be hard to always do the right thing, even if you know what it is.

In the end it is about trust

A company that is perceived to have integrity issues is in serious trouble. And the only way to address these issues is to be fully transparent about its actions and to relate those to underlying values and beliefs. Be clear about what matters and act accordingly; it may be easier said than done but it is the only way.

Trust is hard to gain but easy to lose. And it will take significant time and effort to re-establish trust and convince the market that this is a company of integrity. Let’s hope the statements on compliance were just communication errors. Integrity in our line of business is vital and deserves proper attention and continuous focus.