Making values a constant reference point when discussing business opportunities sends message to employees, says new survey
When it comes to ethics and compliance training, it’s all about company values. A new survey from LRN, a provider of ethics and compliance advisory services and education, finds that the majority (57 percent) of pharmaceutical E&C professionals believe that clarity on company values is by far the most important component of ethics and compliance training programs.
Compliance with Food & Drug Administration (FDA) and Department of Justice regulations, cited by 22 percent of respondents, ranked second, followed by clarity on legal rules, mentioned by 16 percent, and understanding of the PhRMA code, which governs interactions between members of the Pharmaceutical Research and Manufacturers of America and healthcare professionals -- at 5 percent.
‘Understandably, compliance departments in highly regulated industries have to be laser-focused on managing risk, which they have traditionally done through more oversight and rules,’ said Jean-Marc Levy, president, ethics & compliance solutions at LRN, in an email interview. ‘The idea that you can achieve greater compliance – and at the same time improve other areas of the business – by focusing on the values-based behaviors is a fundamental shift in perspective,’
Striving to build a values and ethics-based culture, rather than just a ‘compliant’ organization can inspire employees to work hard, think big and do the right thing, says Levy. It’s hard not to see the benefit of a work environment where compliance is just a natural outcome of living the company’s values.
While the pharmaceutical industry should be proud of its recognition of the need for value-based solutions, ‘companies now need to do the hard work necessary to encourage values-based behavior,’ Levy says.
Making those values a constant reference point in discussions with business planning teams about business opportunities sends the message that the company sees them as ‘alive’ rather than merely theoretical. ‘Following that up by rewarding employees for values-based behavior makes it clear that doing the right thing trumps short-term situational benefits,’ says Levy.
It’s not only senior executives at drug companies who have to step up their game, but also boards of directors. ‘They have to bet on culture and resist short-term thinking. The drivers of long-term sustainable success are employee buy-in and public trust. On the whole, rewards go to companies that get their cultures right,’ he says. He points to an article published last week in Fortune citing a study by the Russell Investment Group, which shows that the stock prices of this year’s designated 100 best companies to work for, in aggregate, have outperformed the S&P 500 Index by a ratio of nearly 2 to 1 since 1998.
‘It’s important for boards to start thinking of ethics and compliance as a long-term value driver, in addition to a risk management and loss prevention tool. While doing the right thing is to a large extent its own reward, it will ultimately bring greater return to shareholders,’ says Levy.
While values-based solutions are front and center, that doesn’t mean that regulatory obligations aren’t on the radar of the pharmaceutical industry.
More than 75 percent of respondents believe that regulations in their own industry are achieving better results in fostering ethical outcomes and protecting the public than regulations in other industries.
Levy expects the elevated attention that pharma companies pay to rules regarding off-label use of FDA-approved drugs to boost consumer trust in the future. ‘In our survey, pharmaceutical E&C executives felt that these rules had the most impact in creating ethical employees, more than rules governing inappropriate payments and health effect reporting,’ he said. ‘We read this as support for the idea that Pharma employees are animated by their desire to keep the public safe.’
Trust is a fundamental driver of success across all industries, but it is arguably most critical for healthcare-related firms, he adds.
Levy believes the long-term implications of the survey’s findings bode well for the industry.
LRN plans to conduct similar surveys of E&C professionals in other highly regulated industries such as financial services and energy. ‘I think that the old rules-based approach to compliance is finally starting to erode in the financial sector, alongside the growing realization that despite best efforts and intentions, traditional E&C programs are still failing at many institutions.”
Levy emphasizes the need ‘to address the underlying drivers of bad behavior – misaligned rewards, lip-service to values and a situational approach to ethics and behavior,’ in which ethics and values are seen as malleable depending on the circumstances. ‘I’m confident we’ll see some interesting results in the financial and energy industries as well.’
