What defines a strong culture of compliance?
It’s more than policies and procedures—it’s about leadership setting the tone. A truly effective compliance culture ensures:
- Leadership actively models ethical behavior.
- Compliance is embedded in decision-making, not just a legal requirement.
- Employees feel safe reporting concerns without fear of retaliation.
- Accountability applies at all levels, from interns to executives.
When the C-suite embraces compliance as a core business priority, employees follow. But when leadership treats compliance as a box to check, that mindset trickles down, increasing risk across the organization.
When the C-suite embraces compliance as a core business priority, employees follow. But when leadership treats compliance as a box to check, that mindset trickles down, increasing risk across the organization.The cost of leadership inaction
Leadership’s actions—or inaction—send a clear message. Consider when New York State enacted sweeping sexual harassment training requirements, only for the state Senate to miss its own training deadline. If the very leaders who champion a policy fail to uphold it, what message does that send to employees?
The same holds true in corporate compliance. If executives disregard cybersecurity protocols, turn a blind eye to conflicts of interest, or overlook policy violations, employees take note. A strong compliance culture is built when leadership leads by example, consistently demonstrating that ethical behavior is a business imperative—not an afterthought.
Eliminating the culture of fear
Fear is one of the biggest obstacles to a strong compliance culture—fear of retaliation, fear of speaking up, and fear of challenging unethical behavior. Ethisphere’s 2024 Ethical Culture Report highlights this troubling reality:
- 48% of employees don’t report misconduct due to fear of retaliation, even though 83% know their employer has a non-retaliation policy.
- 77% of employees trust their organization to uphold its non-retaliation policy, yet only 50% actually report misconduct when they witness it.
The result? For every 1,000 employees, 75 acts of misconduct go unreported each year.
When employees don’t feel safe reporting misconduct, risks go unaddressed, morale declines, and unethical behavior festers. Leadership must actively foster psychological safety by:
- Encouraging open dialogue about compliance concerns.
- Taking swift, visible action against misconduct.
- Holding everyone accountable—regardless of seniority.
When employees see leadership protecting those who speak up instead of punishing them, trust in the compliance program grows.
The 'Mood in the Middle' matters
While leadership sets the tone, mid-level managers determine how compliance is received at the employee level. They translate policies into daily actions, reinforce expectations, and influence whether employees feel comfortable raising concerns. If managers are disengaged from compliance efforts, the workforce will be too.
In fact, employees whose managers frequently discuss ethics and compliance are 90% more likely to trust their company’s commitment to non-retaliation. On the other hand, when managers never engage in these discussions, employees are 89% less likely to believe their company will support them if they report misconduct.
To strengthen compliance culture, organizations must ensure that middle management is engaged and equipped to reinforce ethical decision-making. This means:
- Providing managers with clear expectations on their role in compliance.
- Equipping them with toolkits and training to discuss compliance confidently.
- Encouraging two-way conversations so employees feel heard.
A strong compliance culture doesn’t just start at the top—it thrives in the middle.
Compliance can't be just lip service
Many organizations have beautifully written policies, codes of conduct, and mission statements about ethics and integrity. But words alone don’t build a compliance culture—actions do.
When organizations make headlines for regulatory violations, data breaches, or ethical failures, it’s rarely because they lacked policies. It’s because those policies weren’t followed, enforced, or taken seriously by leadership.
Building a culture of compliance means going beyond check-the-box efforts. The C-suite must:
- Champion compliance initiatives publicly and often
- Proactively address gaps before they turn into crises.
- Lead by example in daily decision-making.
- Recognize and reward ethical behavior—not just business performance.
Without active leadership support, compliance initiatives will always struggle to gain traction.
Leadership's role in a culture of compliance
A strong compliance culture doesn’t happen by accident—it happens when leadership makes it a priority.
Executives who actively engage in compliance efforts create an environment where ethical behavior thrives.
When leaders lead by example, employees follow suit.
By prioritizing compliance at every level, organizations build trust, reduce risk, and create a stronger foundation for long-term success.
Compliance isn’t just about avoiding penalties—it’s about building a business that employees, customers, and stakeholders can trust. And that starts at the top.
This post was updated on 6 March 2025 to reflect new insights and industry updates.
Harper Wells is a governance, risk, and compliance leader with over 20 years' experience in developing enterprise-wide ethics and compliance programs.
As Chief Compliance Officer at Learning Pool, she leverages data-driven insights and innovative training strategies to foster ethical, high-performing workplace cultures.
