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Institutional Integrity

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Institutional Integrity

Culture

Incentives

Accountability

Communication

Leadership

Dynamics

Operations

Institutional Integrity

Welcome to Mishcon's institutional integrity hub which explores the forces that shape true integrity, drawing on insight from across the firm and leading external specialists. Together, we examine how organisations can build trust, strengthen reputation and support long-term success.

Select each topic from the diagram to build a holistic picture of what an organisation needs to demonstrate in order to truly earn the title of ‘Institutional Integrity’.

Organisational culture

Embedding compliance through culture

Leadership compliance (or lack of it) will directly impact on the culture of an organisation. In organisations where leaders ignore legal and ethical obligations, the culture is often damaged, resulting in negative behaviour trickling down the organisation.

With the expansion of corporate liability through failure to prevent  ("FTP") offences ongoing, and with recent high-profile public inquiries in mind, businesses will (or should be) increasingly considering the role that organisational culture plays in allowing, or preventing, criminal offences from being committed by persons associated with it. To limit legal risk, it is essential that organisations implement a positive culture that is integrated into every part of their business.

Since the implementation of the failure to prevent bribery offence in 2011, and the publication of the corresponding "adequate procedures" guidance, organisations have been aware of the importance of "top-level commitment" in setting the anti-bribery agenda. 

Principle 2 of the guidance states that "The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable." The recently published FTP fraud guidance contains similar wording, noting that an organisation's board, partners, and senior management should "foster a culture within the organisation in which fraud is never acceptable and should reject profit based on, or assisted by, fraud." In a similar vein, corporates commit an offence if they fail to prevent criminal facilitation of tax evasion and also have a legal duty to prevent sexual harassment of their employees.

Increasingly, therefore, the onus is on businesses to demonstrate that they foster a culture that discourages misconduct and does not allow them to simply blame any misconduct that does occur on a few "bad apples".  

Incentives, rewards and institutional dishonesty: the role of UK SOx, malus and clawback

Poorly designed incentives can undermine ethical intentions and foster institutional dishonesty.

As English law expands corporate liability for failing to prevent offences, organisations are under increasing pressure to demonstrate a culture that actively discourages misconduct. While policies and leadership commitment are important, the structure of incentive and reward programmes – such as performance metrics, targets, compensation, and recognition – plays a critical role.

Incentives: shaping behaviour

Incentive schemes are intended to motivate employees and drive performance. However, if rewards are too closely linked to financial outcomes, or if ethical behaviour is not valued, employees may feel pressured to bend rules to meet targets. This risk is particularly acute in environments where success is measured solely by profit, rather than by the manner in which results are achieved.

The UK’s approach to corporate governance is evolving, with the anticipated UK SOx regime (modelled on the US Sarbanes-Oxley Act) placing greater emphasis on robust internal controls and accountability. UK SOx will require directors to attest to the effectiveness of financial controls, making it more difficult for organisations to ignore the cultural impact of their incentive structures.

Communication and information flow

Communicating in a crisis

How organisations communicate about, or in response to, a crisis situation can add another layer of risk – potentially deepening or extending the crisis. Honesty is not just about integrity, it is a strategic safeguard. By prioritising fact-based messaging, resisting the temptation to 'spin' reality, and maintaining discipline around the flow of statements and information, businesses can manage crises with confidence, without exacerbating reputational harm.

Desperate to get ahead of, or even try to kill a negative story, businesses can be tempted to rush or to be over-ambitious in how they respond, making claims that cannot be substantiated or later turn out to be wrong, exaggerating the positives or seeking to minimise or downplay the impact. Communications that are (or are considered to be) dishonest – whether by being evasive or including outright lies – can spark a backlash and further alienate employees, customers, and other key stakeholders and regulators.

Businesses and leaders need to ensure they have all the information they need in a crisis to make sound decisions, including information which is not communicated beyond those who need to know it. Prior thought must be given to how crisis teams and responses are set up to ensure that information flows are robust, both internally and externally, to protect sensitive data and to preserve legal privilege. Whether or not the crisis is triggered by internal or external events, including leaked or hacked data, it is crucial to consider who has ongoing access to sensitive data, and to have robust policies and protocols in place to respond to breaches of confidentiality, to control employees' use of social media, and to isolate and mitigate leaks.

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