Strategies for architects to strengthen compliance culture

A. Overview

B. Introduction

255. This chapter explores strategies for architects and architectural firms to strengthen compliance culture.
256. The primary purpose of this chapter is to empower architects and architectural firms to take practical, tailored and targeted action to strengthen compliance culture.
257. Adopting the strategies in this chapter will help architects and architectural firms to align their practices with their professional responsibilities and the associated public expectations.

C. Factors affecting the development of a strong compliance culture

258. This section outlines factors that can affect the development of a strong compliance culture and highlights those may support or undermine the establishment of a strong compliance culture. Understanding these factors is essential to designing effective strategies to embed compliance into everyday practice.

Compliance culture is the product of a mix of internal and external factors and, therefore, will be unique to each architectural practice

259. There is no such thing as a single type of compliance culture within an organisation.[56] Culture is typically the product of a complex interplay of a range of internal and external factors affecting an organisation. This means that compliance culture will be unique to each architectural practice.
260. Understanding the unique culture that exists within a practice – including the internal and external factors that shape the culture – is an important step in determining whether the culture needs to change to enhance compliance outcomes and, if so, how.
261. Notably, culture is not static, but may dynamically change over time.[57] For example, loss of business revenue may mean that compliance is de-prioritised. In contrast, a change in personal values or the management team could help ensure that compliance and ethical behaviour is prioritised in practice.

Sole practitioners and small firms will need to rely on personal commitment to build and maintain a strong compliance culture, while leadership, governance and training will be important for larger firms

262. The key difference between internal factors affecting compliance culture for sole practitioners and small firms compared to larger firms lies in the way responsibility for compliance is assigned and organised.
263. For sole practitioners and small firms:

• Compliance culture is primarily shaped by the personal values, knowledge, and decisions of one or a few individuals.
• There is often limited formal infrastructure, so compliance depends heavily on self-discipline, awareness, and the ability to balance competing demands without oversight or the ability to delegate.

264. In contrast, for large firms:

• Organisational structures, leadership systems, and collective behaviour will be important in shaping compliance culture.
• In the case of these architectural practices, compliance is influenced by how well the firm integrates clear policies, communicates expectations, provides training, and ensures accountability across departments or teams.

Large firms may face external scrutiny regarding their compliance culture, while sole practitioners and small practices are likely to be dependent on external networks to support them to comply

265. Regarding external factors for sole practitioners and small firms:

• They may be particularly vulnerable to market pressures, including intense competition, which can impact compliance decisions, especially when profit margins are tight.
• In addition, clients can prioritise speed or cost over compliance and quality, which can challenge an architect’s commitment to compliance.
• They may need to rely on external networks such as CPD programs run by regulatory and industry bodies for guidance, support and updates about relevant regulatory developments.

266. As for large firms:

• They face greater visibility among regulators, clients, and the public, which may affect the commitment to compliance. Compliance failures may result in significant reputational damage that is widely publicised.
• They may also be subject to more demanding clients and other stakeholders, who may impose compliance and reporting obligations.
• Competitive pressures may further encourage large firms to meet or exceed best practice standards in areas such as sustainability, governance, and ethical conduct.
• Additionally, the contractual arrangements entered into by large firms may be complex, requiring robust and comprehensive systems to manage external expectations effectively and mitigate risk, including compliance risk.

Culture also exists at the project and sectoral levels, but will likely be influenced by culture at the individual or organisational levels

267. Culture can exist at various levels[58], including the organisational, project and sectoral levels. At each level, compliance culture will be shaped by a mix of internal and external factors, although the types of factors and their impact are likely to differ at each level.
268. Culture at the project level will likely emerge from the interaction between the following main factors:

• factors that are specific to each project participant (e.g. the culture within each participant as well as the working relationship between the participants);
• project-specific factors (e.g. project goals and priorities, procurement processes, contractual requirements, and on-site conditions); and
• external factors that may be different from external factors affecting culture at the organisational level (e.g. public perception of the particular project).

269. Project culture will influence a range of matters, including participants’ approach to communicating, problem-solving, and decision-making and may have a significant impact on the approach to compliance.[59]
270. Tensions can arise between project participants in relation to the way compliance and ethical issues are managed and be affected by the particular procurement method used for the project.[60] In fact, conflict between project participants has been identified as one of the principal causes of poor performance in the context of construction projects.[61]
271. Sector-wide culture refers to the collective values, behaviours, and practices that shape how an entire industry operates.
272. At this level, industry wide standards, approaches and conditions will likely play a significant role in the emergent culture. The broader economic and political climate will also have an impact.
273. As noted in the ARBV and NSW ARB’s report on Systemic Risks in the Australian Architecture Sector, the current state of the construction sector in Australia, in which architects and architectural firms participate, will have impacts for all sectoral participants.[62] While work has been done to understand and improve some aspects of culture in the Australian construction sector – such as workplace safety, wellbeing, and diversity and inclusion[63] – an analysis of the sector’s general attitude towards compliance has not yet been undertaken.
274. The key takeaway from the above discussion is that even though an architect or architectural firm may have a strong compliance culture at a personal or organisational level, non-compliance could still occur at the project level given the different cultural factors at play at that level as well as in the broader sector.
275. The above observation does not excuse architects from committing to compliance but, rather, seeks to contextualise cases where non-compliance occurs in a project, notwithstanding a strong commitment to compliance that may exist on the part of the relevant architect or architectural firm involved in the project.

D. How can a strong compliance culture be established?

276. Previously, in Chapter 4 dealing with architects’ overarching duties, the case studies identified specific initiatives that could be undertaken to avoid breach of those duties in the context of particular scenarios that could arise. This section complements that discussion with a consideration of the foundational elements that are needed to establish a strong compliance culture.

The foundation for a strong compliance culture is a shared understanding and agreement about why compliance is important

277. In order to drive a strong compliance culture, it is important to engage both the heart (in terms of values) as well as the head (in terms of rational action).
278. For the architecture profession, this implies a collective commitment to upholding the values and responsibilities that define the profession. It relies on architects and architecture firms genuinely caring about the quality, safety and social impact of their work. There must be a shared desire among members of the profession to foster and protect the brand and reputation of architecture as a profession that contributes actively to the creation of public value.
279. There must also be a recognition among members of the profession that the regulatory framework does not exist to restrict creativity or business operations. Rather, it is designed to protect clients and the public from harm, to ensure the quality of architectural services and built outcomes, and to support ethical practice.
280. When architects share a sense of pride in the profession and understand that the rationale for the regulatory framework is designed to support the maintenance of professional standards, they are more likely to internalise compliance as a professional duty, rather than a box-ticking exercise that focuses on avoiding regulatory sanction. This mindset fosters a culture where compliance is seen as integral to professional practice.

Owners and senior managers set the tone about the commitment to compliance, but everyone is involved in implementation

281. A commitment to compliance is led from the top. Practice owners, architect directors, and/or senior management must set the tone about compliance as this will inevitably affect the behaviour of their staff. For simplicity, leadership positions are simply referred to collectively as “senior management” in this section, even if the role is undertaken by an individual, such as a sole practitioner.
282. A tokenistic, checkbox approach to compliance which focuses on staying out of trouble, rather than doing the right thing, is unlikely to be effective.[64] Rather, an approach that focuses on compliance with the “letter and spirit” of compliance requirements is more likely to result in a strong and sustainable compliance culture.[65]
283. Clear, consistent, and periodic communication by senior management to staff about the importance of compliance will also help to embed compliance.[66]
284. In addition, senior managers should lead by example by consistently and effectively managing instances of non-compliance. Among other things, this should involve identifying and addressing the root cause of non-compliance in each case so that non-compliance is not repeated.[67]
285. Notwithstanding the important role of senior management in driving a strong compliance culture, the responsibility for compliance rests with everyone in an organisation. Staff throughout the organisation must be aware of compliance risks and be equipped to monitor and manage them.[68]

A compliance management system can be used to support a strong compliance culture, but is likely to be most relevant for larger firms

286. For some architectural firms, a compliance management system (CMS) will be an important mechanism to support a strong compliance culture.
287. A CMS is a structured framework to manage compliance risk – that is, the risk that an organisation could face consequences for failing to comply with applicable laws, regulations, industry standards as well as internal policies and procedures.
288. A CMS typically includes:

• a compliance policy to express an organisation’s expectations in relation to compliance;
• a compliance register to summarise compliance risks and the controls to manage them;
• a program to educate and train staff about compliance risk;
• a procedure toescalate significant compliance risks; and
• a mechanism to ensure continuous improvement of the CMS.

289. In larger firms, a CMS may also include the establishment of a compliance committee or officers to oversee implementation of the compliance policy; [69] IT systems and software to track compliance with obligations and to record compliance issues; and a whistleblower mechanism to encourage reporting of compliance issues.
290. In this context, formal policies, documented procedures, and established systems may be necessary to maintain oversight and consistency towards compliance across the organisation.
291. Nevertheless, there will still be diversity among larger firms, so the CMS should be tailored to the particular internal and external factors affecting each organisation. The key to a CMS’ impact on compliance will be the impact it has on everyday operations and the unwritten rules of how things are done in practice.[70]

Smaller practices are likely to be best supported through the use of simple tools to manage compliance risk

292. Notably, a formal CMS may not be relevant or appropriate for sole practitioners or small firms due to the scale, simplicity, and resource constraints of their operations.
293. The approach to managing compliance risk by these practices should be practical and proportionate. It should be effective in integrating compliance into routine workflows, such as through the use of checklists of key compliance obligations or compliance issues that could arise in typical types of projects.
294. The use of these tools should be guided by strong professional values, sound judgement and good business practices. This means proactively keeping informed about regulatory obligations through CPD, maintaining clear documentation to demonstrate compliance and accountability, and seeking external advice and help to address compliance issues when necessary.
295. Ultimately, the approach adopted by sole practitioners and small firms should reflect a strong personal commitment to ethical and professional standards. Compliance should be clearly embedded into everyday practices and decision-making.

Staff are supported to comply through regular education and training

296. Comprehensive education and training programs, which are tailored to an organisation’s specific needs and risks, are crucial to ensure that employees understand compliance expectations and are able to identify and manage compliance risk in practice.[71] Ideally, the programs would illustrate how compliance issues are addressed using real-world contexts and scenarios.
297. Compliance management objectives and outcomes could be reflected in performance metrics to further incentivise staff to comply and would serve as an accountability mechanism when non-compliance occurs.[72]

Staff are encouraged to be open and transparent about compliance issues

298. A mechanism to escalate non-compliance is essential. In larger firms, this mechanism may be documented in a written procedure, whereas in small firms the mechanism may be reflected in a simple compliance checklist.
299. The compliance culture should promote openness and transparency about compliance issues. Staff should be encouraged to discuss compliance issues in a supportive environment that focuses on understanding the root cause of non-compliance so that it can be addressed.[73]
300. Regular, clear reporting on compliance should also be standard practice, as this will provide a mechanism to obtain insights about the organisation’s compliance culture and to identify aspects that require improvement. A whistleblower mechanism that enables employees to raise compliance concerns confidentially and anonymously could also be helpful.[74]
301. Other mechanisms to recognise and reward employees who consistently demonstrate compliant behaviour could also be considered. Equally, breaches of compliance obligations should be addressed promptly and fairly to reinforce the importance of compliance.

There is a commitment to continuous improvement of the approach to compliance management

302. Organisations should regularly monitor and evaluate their various compliance management initiatives so that their CMS remains fit for purpose and effective.
303. Continuous improvement could be achieved through periodic compliance risk assessments to ensure that they are up-to-date.
304. Ongoing education and training programs will provide an opportunity to convey information about changes to the compliance environment and changes that may be needed to the way compliance risks are managed.
305. An analysis of historical compliance issues could be used to detect patterns and causes of non-compliance so that practices and decision-making can be improved.
306. Policies and procedures to implement an organisation’s compliance management system should be periodically reviewed and amended as necessary so that they reflect any learnings from the various continuous improvement initiatives.

E. Concluding remarks

307. In conclusion, a strong compliance culture is a vital foundation for lawful, ethical and professional practice by architects and architectural firms.
308. Importantly, the development of a strong compliance culture is shaped by both internal and external factors, and will necessarily differ between practices.
309. While sole practitioners and small firms may rely heavily on personal commitment to compliance and external networks for compliance support, larger firms must lead through governance, training, and systems to manage compliance risk across many staff.
310. Ultimately, establishing and maintaining a strong compliance culture depends on shared values, visible leadership, practical tools, ongoing education, and a willingness to be transparent and continuously improve. It is a collective effort that can elevate the standing not only of individual architects and architectural firms, but also the standing of the profession as a whole.