The intersection of compliance and diversity: The interconnectedness of these two disciplines and the implications for the compliance profession

Abstract

This paper makes the argument that the disciplines of compliance and diversity not only share commonalities, but that they are also essential components in a firm’s overall ethical framework. Both have a close connection to the culture of an organisation and share a direct association with a firm’s desire to do the right thing. The demographics of the financial industry and the compliance profession are discussed, along with an illustration of the challenge of homogeneity. Firms need a diversity of viewpoints to foster innovative and creative ideas and solutions to problems, and in order to guard against the negative effects of groupthink. The concept of diversity of thought offers a solution. Diversity of thought is accomplished by hiring a diverse staff, representing the many permutations of diversity. Once a diverse team is assembled, the necessity of building trust among managers and direct reports is critical to creating an engaged workforce and encourage a culture where employees feel empowered to report unethical behaviours. Specific behaviours managers can engage in to foster trust are offered for consideration along with the necessity of reshaping the compliance profession to reflect the changes in the larger population. Finally, a series of action items compliance professionals can engage in is presented, including a focus on building a diverse compliance team as an addition to the pillars of an effective compliance programme.