How Irish organisations can accelerate their integrity agenda

How Irish organisations can accelerate their integrity agenda

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EY Ireland

Multidisciplinary professional services organisation

10 minute read 14 Feb 2022
Related topics
Forensics
Risk
Assurance

The new normal and hybrid working models are making it imperative for organisations to build a culture where integrity becomes the expected norm.

In brief

  • The shift to remote and hybrid working makes it more challenging to undertake effective compliance monitoring.
  • There is a need to create an integrity culture and the right tone for that should be set from the top.
  • 66% of the Irish respondents either agree or strongly agree that compliance with regulation is always taken into account when making important decisions.


The disruptions caused by the outbreak of COVID-19 and the subsequent emergence of hybrid working models have underpinned the importance of corporate integrity and made Irish organisations rethink compliance strategies and models. For purpose-led organisations this is an opportunity to look at how they are doing business, focussing on ethical behaviour, integrity, and higher compliance standards.

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Chapter 1

Creating a fabric for long-term value

Organisations ahead of the curve understand that integrity is about driving sustainable value that protects assets and reputation.

The EY 2022 Global Integrity Report reveals that more companies than ever value corporate integrity. Nearly every Irish respondent (98%) believes it is important an organisation demonstrates that it operates with integrity. In seeking to understand what this means survey respondents identified:

  • Complying with laws and regulations (44%)
  • Trusting people to do the right thing versus controlling them (42%)
  • Behaving with ethical standards (40%)

Organisations ahead of the curve understand that integrity is about more than simply ticking the right compliance boxes, it is about driving long-term sustainable value by protecting the organisation, its reputation, and its assets.

While 90% of Irish respondents indicated that their organisation had measures in place to promote integrity and ethical behaviour, some of the details indicate there is more work to do.

“While there is clearly some work to do on individual measures to promote integrity and ethical behaviours in Irish organisations, this should also be seen as an opportunity,” said Julie Fenton, EY Ireland Head of Forensics & Integrity Services and Global Operations and Talent Leader Forensic & Integrity Services.

In an encouraging finding, the EY Global Integrity Report reveals that 88% of Irish respondents believe standards of integrity have either risen or remained the same in the previous 18 months, indicating that this remains an important aspect of corporate culture.

There is also an appreciation for the fact that businesses are being held to higher ethical standards than ever before. 80% of Irish respondents noted they either frequently or occasionally hear their management speak about the importance of behaving with integrity. In addition, 84% said the general public in Ireland has higher expectations than before when it comes to how people should behave at work.

Standards of behaviour
Said the standards of behaviour that employees expect from management have increased significantly in recent years.

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    Again, this emphasises the need for organisations to be able to demonstrate how they are maintaining these standards.

    However, the impact of the pandemic has changed the corporate landscape and created challenges for organisations when it comes to maintaining high standards of integrity. The unprecedented change to the way people work is a particular case in point. With a large proportion of the employee base working remotely it is easy for them to become disconnected from the core culture of the organisation and fall into poor working habits. Similarly, there may also be a risk that distance from the organisation could result in a disinclination to report perceived integrity issues.

    Remote working also presents challenges when it comes to monitoring employee behaviour and performance.

    Increased digitisation, which has been accelerated by the pandemic, has seen more and more functions and operations shift to the cloud. The pace of this change has naturally placed a strain on risk management processes designed for a very different operating model.

     

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    Chapter 2

    Unleash the power of data

    In the post-pandemic normal, organisations can leverage data to identify issues before they arise.

    Businesses faced with growing integrity challenges created by pandemic-related disruptions have a powerful resource at their disposal in the form of the data held within the organisation. Correctly applied, data analytics technology can uncover anomalous behaviours and events that may otherwise go undetected by manual means.

    That capability becomes particularly important in light of the issues created by the shift to remote and hybrid working. Hybrid working makes it more challenging to undertake effective compliance monitoring. This could potentially reduce the likelihood of the employees noticing unusual behaviours or events or of speaking up when they have a concern.

    Working remotely could also potentially increase chances of an organisation’s data security to be compromised. Quite alarmingly given the number of people now using personal and remote devices for both work and personal use, our survey found that just over 25% of respondents knew little or nothing about polices on using personal devices work purposes in their organisation. The risk that arises whether from accidental leaking or theft of data is heightened in a remote environment.

    This already difficult situation is exacerbated by the financial pressures facing many organisations which, in turn, can increase the potential for fraudulent behaviour. In that context, it is worthy of note that 10% of Irish companies reported they had experienced what they described as a significant fraud they deemed significant during the previous 18 months.

    Workplace education to increase awareness of fraud and data security risks is, therefore, an essential requirement in the new normal. So too is the leveraging of data to identify issues before they arise.

    The General Data Protection Regulation (GDPR) and its potentially massive fines and other serious consequences for organisations which suffer data breaches has served to alert organisations to the importance of data security. But it is heartening to note that it is largely viewed as a positive development for business.

    Data protection and privacy legislation
    Of the Irish respondents either agree or strongly agree that current data protection and privacy legislation has been beneficial for their businesses.

    In our survey, 80% of the Irish respondents said they agree or strongly agree that the level of activity by authorities around the enforcement of data protection and privacy legislation will increase in future.

    “It can also identify risks before they crystallise into losses for the business. Furthermore, the increased transparency delivered by advanced data analytics can help identify opportunities for efficiency gains within the business,” Julie Fenton added.

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    Chapter 3

    Drive consistency with artificial intelligence

    Advanced AI can help identify unusual behaviour in real time and predict the most likely consequences.

    Digitisation and automation have brought many benefits to businesses in recent years. Those benefits include reduced costs, enhanced customer experience, and reduced environmental impact to name but a few. However, increased reliance on automation and digital platforms also creates significant risks. Systems that were previously part of the support infrastructure of the business have now become mission critical, meaning that issues relating to their operation are no longer exclusively the responsibility of IT departments to manage and resolve.

    Artificial intelligence (AI) will have a very significant role to play in future. Organisations will have access to ever-increasing volumes of data, and manual processes will not be wholly adequate when it comes to the task of unlocking its value.

    Organisations will be able to utilise the power of AI to monitor
    and process data to pre-emptively identify gaps in the
    organisation’s behaviour and the high standards of integrity it
    aims for.

    Advanced AI can pinpoint examples of unusual behaviour in real time and predict where their most likely consequences are with a high degree of accuracy. It can be used to provide early warning signs of falling standards of integrity in any area of the organisation.

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    Chapter 4

    Focus on culture shift

    To nurture a culture of integrity, Irish organisations are investing more in communications and training.

    As with almost every other aspect of business, culture trumps strategy every time. When it comes to integrity this means that having processes in place to monitor and enforce behaviours and standards will go so far. It is, therefore, also necessary to nurture a culture of integrity which pervades the organisation at every level.

    Our survey reveals that companies are making a start in that regard by investing more in communications and training. However, there is still room for improvement. Only 44% of Irish organisations surveyed provide regular training on relevant legal, regulatory, or professional requirements while only 30% offer training on ethics and integrity in business or professional life.

    “Although organisations are investing more in communication and training programs, this is not enough. There is a worrying divide between investment in action and genuine change. A strong culture of integrity is vital, and businesses must review what is working and where there are issues to address,” Julie Fenton observed.

    There is also strong buy-in for the need for integrity to underpin business decisions. 66% of the Irish respondents either agree or strongly agree that compliance with regulation is always taken into account when making important decisions.

    There is, however, a crucial difference between training and
    education. Employees must be educated to understand why
    integrity is important and necessary for the organisation. It is not
    merely a question of the “how”, everyone must understand the
    “why” as well.

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      That will help build a culture where integrity becomes the expected norm and poor behaviours are not tolerated by any employee or member of management. This will require companies to reshape their organisational models to bring management and staff closer together to bridge any gaps in understanding that may currently exist.

      “Successful compliance programmes are no ‘one size fits all’; they are cognisant of the cultures and business environment where activities take place. A progressive integrity agenda goes beyond frameworks and policy – businesses must look beyond box ticking and focus on creating an integrity culture at all levels within their organisations. Leaders should be under no illusion that integrity is an easy fix. However, the first step is setting the right tone from the top,” said Julie Fenton.

      There is also a requirement for more effective communication and education not only in relation to expected behaviours but also on how to report matters of concern. This will become increasingly important in light of the EU Whistleblowing Protection Directive, which was to pass into law in all member states by December 2021. It requires every company to provide safe channels for reporting any breach of EU law in a work-related context. It also offers protection for whistle-blowers against retaliation and provides for penalties set by member states for companies found to be in breach of the terms of the Directive.

      The cultural shift cannot happen overnight, but organisations do need to make a start. Strong communication can help by informing people how to report and who to report to. In addition, clear guidance on what will happen when a report is made will help alleviate concerns over potential inaction.
       

      About the survey

      Between June and September 2021, there were 4,762 surveys conducted with board members, senior managers, managers, and employees in a sample of the largest organisations and public bodies in 54 countries and territories worldwide. 50 interviews were conducted in Ireland.

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      Summary

      Remote working presents challenges when it comes to monitoring employee behaviour and performance. Now more than ever, Irish businesses need to rethink compliance strategies, reshape their organisational models to bring management and staff closer together to bridge any gaps in understanding that may exist.

      About this article

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      EY Ireland
      Multidisciplinary professional services organisation
      EY Ireland, a leading global professional services organisation providing assurance, tax, audit, strategy and transactions and consulting services.
      Related topics
      Forensics
      Risk
      Assurance

      EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.