I recently came across a couple of seemingly related items
that I thought might be of interest to our readers:

Awrey, Blair & Kershaw on the “Role for Culture and
Ethics in Financial Regulation”

Dan Awrey, William Blair, and David Kershaw have posted “Between
Law and Markets: Is There a Role for Culture and Ethics in Financial
Regulation?” on SSRN.  Here is a portion
of the abstract:

The limits of markets as mechanisms for constraining
socially suboptimal behavior are well documented. Simultaneously, conventional
approaches toward the law and regulation are often crude and ineffective
mechanisms for containing the social costs of market failure. So where do we
turn when both law and markets fail to live up to their social promise? Two
possible answers are culture and ethics. In theory, both can help constrain
socially undesirable behavior in the vacuum between law and markets. In
practice, however, both exhibit manifest shortcomings.

To many, this analysis may portend the end of the story.
From our perspective, however, it represents a useful point of departure. While
neither law nor markets may be particularly well suited to serving as "the
conscience of the Square Mile," it may nevertheless be possible to harness
the power of these institutions to carve out a space within which culture and
ethics — or, combining the two, a more ethical culture — can play a meaningful
role in constraining socially undesirable behavior within the financial
services industry. The objective of this article is to explore some of the ways
which, in our view, this might be achieved.

Jones & Mendenhall on Board “Oversight Responsibility
for Workplace Culture”

Earl “Chip” Jones and Amy Mendenhall have posted “Do
Directors Have an Oversight Responsibility for Workplace Culture?” on
Boardmember.com.  Here is an excerpt:

Recent legislative, enforcement and compliance trends all
suggest that corporate directors should focus on workplace culture and
corporate compliance. Shareholder activists have shown increasing willingness
to pursue actions to hold directors responsible when corporate scandal and
executive misconduct impair shareholder value. Further, with the Dodd-Frank
Wall Street Reform and Consumer Protection Act’s bounty program promising
million-dollar incentives for whistleblowers who report corporate misconduct to
the SEC and employee mistrust of management at an all-time high, those charged
with steering the corporate ship cannot afford to ignore employee perceptions
and on-the-ground effectiveness of compliance resources.

It is widely accepted that directors oversee the
organization’s strategy. To do so, directors must understand how corporate
culture and strategy interact in ways that affect organizational performance.
To illustrate, Bain & Company’s 2011 Great Repeatable Model Study
highlighted one way in which culture can impact the implementation of strategic
goals: executives charge that managers are too risk averse. Yet, the executives
do not know or appreciate that the managers’ risk aversion is often born of
mistrust or the perception that support is lacking from those very executives.
As part of their responsibility to oversee the CEO and organizational strategy,
directors must address such impediments to achieving corporate goals.