Culture and Compliance: Building a Culture of Business Ethics

July 8, 2020
John F. Crowley|Patrik Florencio

Pharmaceutical Executive

Volume 40, Issue 7

Amid the limitations of traditional compliance programs that emphasize control measures, here are steps biopharma companies can implement in their own cultures to ensure they’re behaving and performing with integrity.

Amid the limitations of traditional compliance programs that emphasize  control measures, here are steps biopharma companies can implement in their own cultures to ensure they’re behaving and performing with integrity  

 

Amicus was one of six co-authors of the New Biotechnology and Pharmaceutical Industry Commitment to Patients and the Public, which was co-signed by 215 biopharma CEOs and industry leaders and published by STAT in January. The commitments are organized under two broad principles: ensuring access and acting with integrity and responsibility. In this article, we share the concrete action steps Amicus has taken to ensure it acts with integrity and responsibility by building and sustaining a culture of business ethics.

Since the late 1990s when the Department of Justice (DOJ) and Office of the Inspector General of HSS (OIG) began to closely scrutinize pharmaceutical activities, the focus has been on developing compliance programs replete with controls for all of pharma’s most common activities, such as its interactions with healthcare professionals. While these programs are necessary and required by the OIG for companies who settle with the DOJ, our focus in this article is not controls, but rather the action steps a company can take to foster a culture of business ethics.  

We focus on culture because we believe it has a far greater impact on behavior than do controls. Controls, by their nature, are designed to regulate very specific activities, and, hence, a huge network of such controls is needed to govern multiple activities-and there will always be gaps in the control network. Culture, on the other hand, affects every single activity undertaken at a company and reflects the very “intent” of the organization. It underlies and shapes the company’s collective behavior and is a manifestation of its level of integrity and business ethics. Most importantly, culture reflects the organization’s attitude toward compliance which, from an enterprise risk management perspective, is the greatest indicator of whether a company is likely to engage in significant or systemic compliance violations.  

Indeed, despite the ever-growing network of controls established by compliance programs since the late 1990s, there has been an even greater number of prosecutions and scandals involving pharmaceutical companies, with multiple such cases every year for the past two decades without interruption. The public has become so used to hearing about yearly pharma industry violations and “pharma greed” in the media that it’s no wonder that in the most recent Gallup Poll of industry reputations, pharma ranked last. According to the poll, the public had a more negative perception of pharma than it had of oil and gas, the federal government, and of all other assessed industries. That terrible ranking is not a reflection of our medical mission; it’s the public’s perception of how we carry out that mission. Their perception, in other words, of our industry’s lack of business ethics. 

Why then have there been so many scandals and prosecutions? While “pharma greed” may be part of the problem in some cases, so too is the pressure to continuously meet or beat targets derived from shareholder and Wall Street expectations, which, over time, builds and can be palpably felt by the entire organization until it seeps into its culture and manifests itself in unwanted ways. At its core, the pressure is no one’s fault, but is rather a byproduct of the interdependency between medical innovation and the financial markets in

which such innovation operates. Nor is the pressure unique to pharma, existing as it does throughout the corporate world, but its societal impact and visibility is heightened in highly regulated industries. From the perspective of business ethics and regaining the trust of patients and the public, the issue is how best to recognize and appropriately manage this pressure, so it doesn’t push employees toward unforeseen and undesired violations.  

Having voiced its commitment to doing things right, senior leadership is often unaware of how deeply the pressure has infiltrated the organization. When this happens, controls will likely be insufficient on their own to prevent violations from transpiring. That’s why we believe a strong focus on building and sustaining a culture of business ethics is vital. Culture is what employees feel, see, and experience all around them every day at work. When pressures mount and employees face decisions regarding which actions take, they are more likely to base their decisions on the cues all around them in corporate culture than they are to base their decisions on words in a code of conduct or policy. They will model their behavior on what people around and above them actually do, think, and say, and they will easily distinguish between what has been said out of political correctness and what is real.  

Thus, if our goal is to prevent future prosecutions and scandals and to rebuild trust with patients and the public, then as an industry we must go beyond controls and put in the time, energy, and incentives needed to build and sustain a true culture of business ethics; a culture in which the cues seen, heard, and experienced by employees encourages and rewards them for doing the right things. Importantly, this culture needs to be built and continuously reinforced during the good times. If it isn’t, then by the time it’s most needed, when the pressure is on and market conditions have deteriorated, it will be too late. The question is: how does one build and sustain such a culture? Though Amicus clearly doesn’t have all the answers, and though we are on our own journey aimed at continuous improvement, we share in this article the culture-driving program we’ve developed to date, called Integrity Leadership, and the principles that have guided our thinking.

Integrity Leadership Program  

At the outset, our goal was to develop a thoughtfully constructed program that visibly and consistently counterbalanced and appropriately addressed workplace pressures and activities while encouraging business ethics. We believed that while the program should be guided by the chief compliance and risk officer, it would never be successful or fully embed itself within the global business unless embraced, led, and role modeled, first and foremost, by the senior leadership team and ultimately by all of management. To be clear, we already had a compliance program composed of controls, such as a code of conduct, policies, training, and monitoring and auditing, so our goal wasn’t to add more controls but rather to try to think innovatively about culture. A misconception we wanted to avoid is the idea that there’s no need to reinforce the importance of performing with integrity because that’s simply part of an employee’s job. In our experience, something that isn’t reinforced never becomes a strong component of culture.

Two of our guiding lights, therefore, were that the drivers we would select to build and sustain our culture of business ethics needed to be as visibly and consistently reinforced within our culture as possible, and that these drivers needed to go well beyond occasional tone-from-the-top messages from our senior leadership. After much brainstorming, we centered our Integrity Leadership Program around the seven building blocks set forth ahead and in Figure 1.

1. Select a small number of prioritized values. Though many companies select corporate values, one of our foundational decisions was to make our Integrity Leadership Program one of only four key prioritized values so that our company-wide focus on it would be meaningful and so it wouldn’t get washed out by a long list of other values. Our three other values include performance, innovation, and mission, which is our prioritized focus on continuing to build and sustain a patient-centric culture.

2. Incentivize values through the bonus. Having selected our four values, we then made behaviors consistent with those values worth 50% of the bonus. Another advantage of having a smaller number of values is that each value becomes substantially connected to the bonus.

3. Deeply define integrity leadership. This is a building block on which we spent a fair amount of time. In order to truly be the architects of our culture of business ethics, we didn’t want to simply throw the word integrity into a list of other values. Rather, we wanted to deeply define the specific integrity leadership behaviors we desired to visibly and consistently see in the workplace. A foundational concept was that we weren’t measuring and rewarding, through the bonus, a person’s level of integrity, which is of course unmeasurable, but were instead measuring and rewarding a person’s integrity leadership-the proactive, visible, and consistent behaviors they undertook throughout the year to foster and sustain a culture of

business ethics. To help structure our thoughts, we organized integrity leadership behaviors into the following three buckets, which are also set forth in Figure 2.

Talent decisions. We quickly zeroed-in on the fact that who we hired, promoted, and selected as successors through succession planning, would have a big impact on our culture. We wanted to favor people with the right attitude toward business ethics and weed out people with the wrong attitude. When it comes to hiring, we have, for example, developed behavioral interview guides to assess candidate attitudes during interviews. When it comes to promotions and succession planning, we’re in the process of developing metrics on how employees perform on integrity leadership throughout the year as measured through mid/end-year reviews, skip-level data, and cross-functional data to ensure employees have a proven track of integrity leadership before being promoted or selected as a successor. These data are further described ahead in subsection 6.

  • Mindset. Employees with the right mindset toward business ethics realize they’re only successful if they hit targets and timelines compliantly. Such employees are thus motivated to understand and mitigate the risks tied to their activities. Examples of integrity leadership from such employees include proactively requesting audits of their area, seeking advice from compliance and legal in advance of undertaking activities, and building risk mitigation activities into their timelines and strategies.

  • Role modeling and coaching. Integrity leaders set the right tone through their words and actions, are aware of their “integrity leadership shadow,” and teach and inspire their teams to, themselves, role-model integrity leadership. Examples of this type of integrity leadership include ensuring business ethics is a periodic but recurring topic on the agenda during team and off-site meetings and inviting discussion of workplace pressures that could result in deviations and then modifying or reprioritizing work, targets, and/or timelines, if needed, to ensure compliance. 

As CEO, I will be asking my senior leadership team to periodically provide me with their integrity leadership success stories-things they’ve done well to promote or role model integrity leadership. I will then share the best of these success stories with our entire company during our town halls. This will allow these success stories to be celebrated in much the same way as performance is celebrated and will teach and inspire the workforce to be integrity leaders.

 

 

 4. Embed integrity leadership into all aspects of management. For business ethics to be robust and sustained over time, even during moments of heightened pressure, integrity leadership must be embedded within all aspects of management, including not only in talent decisions, as noted earlier, but also in: (i) onboarding, during which expectations regarding business ethics and integrity leadership should be made clear, (ii) leadership and other management courses during which business ethics and integrity leadership should be integrated and further taught, (iii) other awards programs beyond the bonus so that business ethics is equally celebrated along with other important values like performance and patient-centricity, and in (iv) performance management discussions during which the integrity leadership of employees is measured and discussed.

At Amicus, a recent example of integrity leadership is an initiative proactively led by the head of our international business. Partnering with his International Leadership Team, he launched a new governance framework in which he incorporated compliance, financial, quality, and other predefined checkpoints and deliverables into the routine business reviews held with his general managers (GMs). This conveys to GMs that he genuinely cares about good governance and business ethics, further allows integrity leadership to be measured and tied to the bonus, and incentivizes GMs to do the same with their teams.

5. Continuously coach the leadership team. Since leaders set the tone and are a company’s most important group of role models, we wanted to have a special focus on continuously coaching the leadership team on (i) how they can be great integrity leaders themselves by, for example, providing periodic training on what good integrity leadership looks like and, by contrast, what the lack of such leadership looks like, and on (ii) how they can assess the integrity leadership of their teams.

6. Continuously measure integrity leadership. One of the difficulties companies have had when trying to link values such as business ethics to the bonus is how to measure the “ethical performance” of their employees. Typical metrics used are things like on-time completion of legal training, successful audits covering the employee’s area of responsibility, and even the absence of legal violations.  

We wanted to enhance our measurement capabilities by also linking ethical performance to proactive leadership activities that build and sustain a culture of business ethics. As with other forms of leadership, integrity leadership lends itself to measurement because the performance of leaders can be compared and contrasted. 

Individuals who embrace and role model the behaviors set forth in our Integrity Leadership Program, supplement this with their own innovative methods of ensuring business ethics within their area of responsibility; those that do so foregoing visibly and in a manner that is sustained over time, will stick out as integrity leaders.  

We also wanted to provide our managers with metrics to aid their assessment of the integrity leadership of their teams. In addition to considering what they themselves observe throughout the year, along with what their direct reports tell them during mid- and end-year evaluations, we will soon also be providing managers with skip-level data received from the employees who work for their direct reports and cross-functional data received from those in other departments working with their direct reports.

7. Audit bonus rationales. The goal of tying integrity leadership to the bonus is to incentivize behaviors that build and sustain a culture of business ethics. This will only work, however, if true integrity leaders are properly identified through performance management and rewarded through the bonus. Because this element

is so important to the ultimate success of the program, we will audit a cross-section of the bonus ratings, and rationales to ensure the company’s best integrity leaders are being properly identified and recognized through performance management and to gain insights on whether more training is needed to help managers properly assess integrity leadership.

Cultural alignment

While culture has traditionally been the means through which to drive performance (culture of performance vs. culture of business ethics), and controls the means through which to prevent violations, the deep slide in pharma’s reputation over the past two decades makes it clear that controls alone are not enough to prevent scandals and prosecutions. By truly placing patients and business ethics at the center of our cultures, we will fulfill our important missions for patients, and we will also have built stronger and more enduring businesses.

 

John F. Crowley, Chairman and CEO; Patrik Florencio, Chief Compliance and Risk Officer; both with Amicus Therapeutics

 

 

 

References

1. John F Crowley and Patrik Florencio, “Culture Eats Controls for Breakfast” PharmaTech Outlook. May, 2020.

2. Patrik Florencio, Samuele Butera, and Erik Ramanathan, “Compliance and Business Success, Part 1: The Dark Side of Performance Pressure.” January 2014. Compliance and Ethics Professional (64).  See also Patrik Florencio, Samuele Butera, and Erik Ramanathan, “Compliance and Business Success, Part 2: Counterbalancing Performance Pressure Through Integrity Leadership.” February 2014. Compliance and Ethics Professional (50). 

 

 

 

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