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General | November 4, 2020

How Your Company Culture Can Increase Your Propensity for Risk

Your company’s culture is very much a part of your ability to stay competitive. A toxic culture can not only hold you back and undercut productivity, it can actually increase your exposure to risk. At Wellfleet Strategies, we help companies develop a culture that not only limits your risk but actually guards against it. 

Vague Ethical Standards

Almost every company today has some kind of ethics program. The problem with most of these programs is that they deal only in generalities. Vague ethical standards make it easier for people to inadvertently engage in risk or look the other way when they witness unethical behavior. 

In order to be effective, you need an ethics program that applies general ethical principles to the real-world situations that your people face every day. It should provide clear guidance for your employees in difficult situations. To ensure that it is relevant to your industry and operations, your executive and management teams should review and update it regularly. 

Unapplied Ethics

Too many companies have ethics programs that sit on a shelf and collect dust. They may have invested a tremendous amount of effort in developing policies and procedures only to fail to implement them. Your ethics program should include routine workshops, regular training, and a strong ethical component to your on-boarding for new employees. 

Lack of Top-Down Commitment

Employees follow their leaders. Risk can flourish across every level of your company if your executives and management teams are looking the other way or are themselves engaged in unethical behavior. Ethics programs aren’t just for your employees – commitment from the top not only sets a good example but sends an important message. 

Unrealistic Expectations

One of the ways that company’s increase their risk is by imposing unrealistic expectations on their employees. This can take the form of high sales quotas, heavy billings requirements,  or unrealistic deadlines that can create a toxic environment that pushes people to cut corners or look for any advantage possible. 

Even if the baseline expectations are realistic, you also need to look at your incentive system or bonus programs. Are you inadvertently encouraging your employees to lie, commit fraud, or engage in other unethical behavior? 

Lack of Sound Internal Controls

Another common problem is lacking the necessary internal controls to guard against risk. Many businesses focus on their external risks – risks that they can’t control. Failing to guard against risk within your own organization will eventually lead to significant problems. You need a fully-developed system of checks and balances, routine audits, and clearly defined roles and responsibilities. 

No Reporting Mechanism

To guard against risk, you need to rely on your employees to be your eyes and ears. Understandably, many people are reluctant to report unethical or inappropriate behavior out of fear for their jobs. To avoid being blindsided by problems, you need to provide an open channel of communication that your employees can use without fear of negative consequences. 

Let Wellfleet Strategies Help You Manage Your Risk

With decades of experience, our network of lawyers, accountants, and other business professionals understand what it takes to cultivate a risk-resistant culture. To learn more about how we can help, call or email us today