Gartner: strong ethical culture is not enough to stop noncompliance

As it turns out, compliance culture is not the best way to address the most common situation leading to noncompliance, according to a study by Gartner, Inc.

This particular concern must be tackled by financial leaders as the technological research and consulting firm points out that most compliance leaders tend to focus on building an ethical culture in their organisations to boost employee behaviour, but it has a limited impact on addressing uncertainty about how to be compliant.

According to Gartner, there are three primary situations that lead to noncompliance:

• Situations of uncertainty, or not understanding how to comply
• Rationalisation, or thinking that noncompliance is not wrong in a certain context
• Malice, or not complying despite knowing it is wrong

A survey of 1,012 employees in December 2023 revealed that uncertainty is the most experienced situation leading to employee noncompliance.

In the study, 87% of respondents said they faced situations where they did not know how to comply in the last 12 months, followed by 77% of respondents who experienced situations of rationalisation and 40% experiencing situations of malice.

“Compliance culture is a valuable part of mitigating misconduct, but it isn’t the best way to address the most common situation leading to employee noncompliance: uncertainty,” says Chris Audet, Chief of Research in the Gartner for Legal, Risk & Compliance Leaders practice.

The study showed that improved quality standards – the design of policies, training, communications, and tools – has over double the impact of compliance culture on reducing uncertainty.

Gartner says compliance culture has a greater impact on reducing situations of rationalisation and malice, 1.5x and 1.4x respectively when compared to quality standards. Therefore, compliance culture remains an important part of efforts to improve employee behaviour.

Figure 1: Impact on Reducing Situations That Lead to Noncompliance

Source: Gartner (April 2024)

Given that many compliance functions already tend to prioritise compliance culture, however, and that situations of uncertainty are the most common driver of noncompliance, it is likely that focusing on quality standards will yield better overall improvements in employee compliance.