When economic pressures build, ethics and compliance leaders often find themselves under the microscope. For ethics and compliance leaders, this creates a familiar tension: pressure to justify budgets while leadership expects the function to do more with less. The way through that tension is to tell a clearer, stronger story about how E&C manages risk and builds strategic value, and to run the program in a way that reinforces that story every day.
This article explores three connected questions: why E&C budgeting faces intense scrutiny, how leaders can better socialize their program’s value, and how to keep the program effective when resources tighten.
Why E&C Budgeting Faces So Much Scrutiny
Ethics and compliance budgets live at the intersection of several competing pressures. As companies face ongoing geopolitical instability, shifting trade rules, cyber threats, rapid advances in artificial intelligence, and a constant stream of new or revised regulations, they must also respond to uneven performance, investor expectations, and pressure to show quick results.
In that environment, some executives still view compliance primarily as a regulatory shield, but that view misses the real point. E&C certainly manages regulatory risk, but more importantly, it manages people risk. The function helps employees and third parties understand how to act in the name of the organization. It connects policy, training, and culture to the real decisions that people make every day.
Once leaders understand ethics and compliance as people risk management, they can see how directly it links to performance. Ethisphere’s own culture data shows that companies with culture scores one standard deviation above their peers tend to deliver significantly higher return on assets, mainly because stronger cultures lead to better judgment, fewer serious issues, and better long term outcomes.
Case in point: how people speak up. When employees feel safe raising concerns, they do more than report potential misconduct. They flag client problems, raise control gaps, surface product ideas, and warn about emerging risks. High performing organizations want that environment because it strengthens both resilience and innovation.
Cutting the ethics and compliance budget, however, tells employees that the company is defunding the function that most visibly represents its stated values. Employees notice that signal, which over time erodes trust, increases unwanted attrition, and changes who chooses to join the organization in the first place.
For even deeper insights, watch our webcast, Holding the Line: Making the Case for Compliance When Budgets Tighten, now available on demand.
Socializing the Value of Ethics and Compliance
To protect or grow their budgets, ethics and compliance leaders need to tell a sharper, more concrete story about the value they create. That story should start outside the E&C function, in places where the program influences outcomes that leadership already cares about.
Consider a few practical entry points:
- Directors and Officers insurance. Partner with the team that manages D&O coverage. A strong ethics and compliance program can support better premiums or terms at renewal. That link to hard cost savings speaks clearly to finance and the board.
- Sales enablement. Engage the head of sales, especially in business-to-business markets where trust is a differentiator. A credible program can shorten diligence cycles, remove friction from contract negotiations, and help win competitive deals. Sales leaders can often point to specific instances where strong controls and a clear ethical reputation made the difference.
- Investor relations and ESG. Public companies already answer investor questions about how they operate, not only how they perform financially. Ratings agencies and index providers evaluate governance and culture as part of nonfinancial risk. A well-run E&C program can improve those scores and strengthen investor confidence.
- Credit and lending. Lenders look for signs that a borrower manages risk well. When a company can demonstrate robust governance, including ethics and compliance, it can influence perceptions of creditworthiness and, over time, the terms it receives.
Inside the organization, E&C leaders should review how they present to executives and the board. Many dashboards still focus mainly on activity counts such as training completions or hotline volumes. Those metrics matter, but they do not fully answer the question, “Is the program working, and is it getting better?”
A stronger approach highlights trends, decisions, and improvements. Leaders can show how they integrate data from across the program into a coherent picture by way of speak-up data, culture survey results, root cause analysis from investigations, and outcomes from discipline and remediation. When they demonstrate how that information leads to specific actions, they move the conversation from activity to impact.
E&C can also draw powerful insights from the employee lifecycle. Recruiters may hear candidates cite values, integrity, or the absence of negative headlines as reasons they want to join. Employees may rate fairness and ethical leadership in annual surveys. Exit interviews may reveal whether people believe the company acts consistently with what it says. Ethics and compliance does not own all of this data, but it can synthesize and explain it in a way that shows how culture links to performance and risk.
The relationship with Legal plays a crucial role here. In many organizations, E&C reports through Legal, and an informal divide emerges, where Legal focuses on statutes and enforcement and E&C focuses on training, policies, and the hotline. That split can obscure the reality that every serious regulatory failure is also a program and culture failure.
Ethics and compliance leaders should bridge that gap. When they speak with general counsel and the board, they can position the program as an essential tool to prevent and detect the very problems legal worries about. That narrative frames E&C as a strategic partner that reduces the likelihood and impact of regulatory events, rather than as a support function that simply runs processes.
Keeping the Program Strong When Resources Shrink
Even with a compelling story and strong data, ethics and compliance leaders may still face cuts. When that happens, they need a plan that protects the core of the program while also showing that they take efficiency seriously.
Travel usually goes first. That decision hits E&C hard, because on-site visits build trust, surface local realities, and create space for candid questions. When travel budgets shrink, leaders need substitutes that still keep them close to the business.
They can work with Internal Audit or other functions that continue to travel and equip those teams with specific questions to ask or messages to deliver. They can strengthen local ambassador networks or site level ethics committees that connect employees with the central program. And they can host regular virtual forums that leaders in local markets treat as real conversations, not one-way broadcasts. The goal is simple: remain visible, available, and relevant, even when in person visits slow down.
For even deeper insights, watch our webcast, Holding the Line: Making the Case for Compliance When Budgets Tighten, now available on demand.
Technology and third-party tools often come under scrutiny next. That review can feel threatening if the program relies on multiple point solutions. Treated as an opportunity, however, it can lead to a cleaner, more integrated environment. E&C leaders can map where data lives, which tools drive real value, and which ones duplicate effort. Consolidating systems can simplify user experience, improve analytics, and strengthen the story about disciplined resource use.
Headcount reductions create the most difficult choices. Ethics and compliance may be the only function that can prevent some catastrophic risks, yet it often operates with a lean team. When headcount comes under pressure, E&C leaders need a clear picture of what the program looks like at smaller sizes and which activities remain nonnegotiable.
Scenario planning helps here. Leaders can outline what changes at a ten percent reduction, a twenty percent reduction, or more. They can identify which responsibilities shift to partners, which activities pause, and which activities must stay inside E&C. They can also identify quick efficiency gains, such as standardizing templates, simplifying approval flows, or retiring legacy practices that add little value. Entering budget meetings with specific options, rather than general resistance, builds credibility with finance and senior leadership.
Across any period of contraction, communication remains vital. Times of disruption rarely reduce misconduct risk. Layoffs, restructurings, acquisitions, and divestitures all increase stress and uncertainty. During those periods, employees see more potential issues and often feel less secure about speaking up.
E&C must counter that dynamic. The function should keep speak-up channels visible, reinforce nonretaliation commitments, and remind managers how to handle concerns. Case management should capture issues raised through managers as well as through hotlines, since many employees prefer local escalation. Communication can also spotlight examples of the company acting on concerns, which shows employees that raising a hand leads to real outcomes.
Ethics and compliance does not need a large standalone communications budget if it works closely with corporate communications, human resources, privacy, security, and operations. Joint campaigns, shared intranet real estate, and coordinated messaging can extend reach without duplicating effort. Strong relationships across these functions form the backbone of a resilient program and become even more important when budgets tighten.
If leaders must defend one element of the program above all others, they should protect the combination of speak up and communication. The organization needs to hear from employees and talk with them clearly about expectations, risks, and decisions. Without that loop, the rest of the program loses much of its power.
Ethics Is Never a Bad Investment
When boards look for cost savings, compliance can resemble the safety equipment in a race car. It does not make the car faster, so some people question its value. But in reality, victories do not matter if the driver does not survive the race.
Modern companies hold most of their value in intangible assets such as data, intellectual property, people, and reputation. Those assets are difficult to insure and extremely hard to rebuild once damaged. Ethics and compliance protects those assets by guiding behavior, surfacing problems early, and supporting a culture that prizes integrity.
That is the case E&C leaders need to make when budgets tighten. Show how the program manages people risk, strengthens culture, supports performance, and protects what the organization values most. Prepare thoughtful scenarios for leaner times, streamline tools where possible, and deepen partnerships across the business.
For even deeper insights, watch our webcast, Holding the Line: Making the Case for Compliance When Budgets Tighten, now available on demand.
Erica Salmon Byrne, J.D. | Chief Strategy Officer and Executive Chair, Ethisphere
As Chief Strategy Officer and Executive Chair, Erica Salmon Byrne is responsible for ensuring continuous and strong growth for the company while maintaining Ethisphere’s founding ethos that good businesses do better.
Laura Jacobus | Vice President, Strategic Advisory Services, Mitratech, Guest Contributor
As the leader of the Strategic Advisory Services team at Mitratech, I leverage my diverse high-tech background to help clients build resilient compliance and risk programs. My unique expertise, developed through legal and business leadership roles, allows me to deliver innovative and impactful solutions tailored to each client's needs.
