How to Build a Culture of Compliance

Success leaves clues. So does business failure. The difference between thriving companies and failing ones? Implementing transformation in the wrong sequence. Leaders who struggle with a dysfunctional workplace often miss a fundamental truth: cultural transformation can follow a specific, predictable process. The 4 D's of Cultural Change are a game-changer: 1. DEMONSTRATE Culture change begins with what you DO, not what you SAY. Your team watches every move you make, especially during stress and conflict. I've coached founders with toxic cultures who transformed their companies by starting with their own behavior. One founder began openly acknowledging when he was wrong - within weeks, his team followed suit. No mandate needed. Your actions broadcast priorities louder than words. Want psychological safety? Publicly thank someone for challenging your idea. 2. DEFINE Only after consistently demonstrating behaviors should you name the behavior as a desired cultural value. You're not inventing culture – you're articulating what's already emerging. Founders I've coached only formalize values after weeks of modeling those behaviors. By then, the team understands what the words mean through experience. Words create powerful shortcuts once behaviors are established. 3. DEMAND This is where most leaders mistakenly start – with demands before demonstration. And this is why so many leaders get frustrated trying to change culture. I've seen countless founders demand "intellectual honesty" before modeling it themselves. They get compliance but not commitment. After months of sharing their own errors, demanding the same behavior actually sticks. Your demands gain moral authority when they match your behavior. 4. DELEGATE The final step is building systems that maintain culture without your constant presence. Culture becomes truly embedded when it runs without you. The most successful founders I coach implement: • "Learning from Failure" sessions in team meetings • Peer recognition systems tied to values • Performance evaluations based on cultural alignment, not just results The most powerful cultural systems allow team members to hold each other accountable. Most leaders want culture change without personal change. They follow frameworks without doing the inner work. Through coaching dozens of founders, I've observed this consistently: The leaders who create lasting culture embody the transformation first. This requires uncomfortable self-awareness: Seeing your own patterns clearly. Understanding how your behavior creates ripple effects. Being willing to change first. At Inside-Out Leadership, we help founders combine leadership development with deep inner work. The result? Leaders who transform their cultures sustainably by transforming themselves first. When you demonstrate change, define it clearly, set expectations, and build systems... You don't just change culture. You transform your company from the inside out.

You're not building a culture of ethics. You're building a culture of people who know the right answers on quizzes. Here's a counterintuitive workplace tip: Optimize your culture for skills, not compliance. Because when you create a skills-based approach to workplace behavior, compliance happens naturally. Most organizations approach workplace culture backward. They start with compliance requirements, create training to check regulatory boxes, and wonder why behavior doesn't change. It's like focusing on passing a driving test without teaching anyone how to actually drive the car. After years of seeing this pattern as an employment lawyer and founder of a compliance training company, I've found a more effective approach: focus on developing practical workplace skills first, and compliance will follow naturally. Think about it this way: • Traditional approach: "Here are 15 examples of sexual harassment. Don't do these things or you'll be fired and possibly sued." • Skills-based approach: "Here's how to recognize when someone is uncomfortable with your comments, read non-verbal cues, and maintain appropriate professional boundaries." The skills-based approach doesn't just avoid problematic behavior—it builds the fundamental capabilities that prevent issues from arising in the first place. This isn't a theory. Our data shows that organizations focusing on skills development in areas like relationship building, managing power dynamics, and demonstrating integrity see fewer workplace claims and stronger cultural indicators. The best part? When you pulse employees on their experience of these skills within the organization, you create a heat map of potential issues before they become compliance problems. It's preventative rather than reactive. One client using this approach saw ethics and respect scores rise by 18 percentage points in less than two years, with corresponding decreases in workplace claims. Next time you're reviewing your compliance training program, ask yourself: "Are we teaching rules, or are we building skills?" The answer makes all the difference. What's one workplace skill you believe would dramatically reduce potential issues if everyone mastered it?

Compliance often gets dismissed as just a box checking exercise. Like any criticism, it's important to get curious about where that critique comes from. When the employee experience is an afterthought; when training campaigns are haphazard and disjointed; when an employee has to log into six different tools, all of which are glitchy; when a speak up hotline is about as intuitive as a fax machine, I can see why employees feel like they're just box checking. The employee is (or should be) Compliance's customer and the customer experience often isn't great. But I've watched the most innovative companies tackle compliance – companies like Pinterest, Figma, Noom, and Notion – and they do it differently. The best compliance programs have realized that yes, you have to meet various regulations and that's crucial. But if you are *just* meeting those regulations, you're missing the opportunity to use requirements to build culture. The best companies realize that: 📚 If employees have to sit through hours of training, it should be a genuine learning experience with good, nuanced, relevant content. 🙋♀️ If they're required to have a hotline, they might as well have one that builds a speak up culture. ⚖️ If they need a code of conduct, it should signal just how important ethics and inclusion are. When companies flip compliance from a requirement to an opportunity, they don't just get a bunch of checked boxes. They get to define and safeguard their culture. (And thank you, Kelli Dragovich for asking a question that got me waxing poetic about compliance and culture!)