Why Ethics Is More Than and Works Better Than Compliance Programs

 

Most corporate compliance programs consist of little more than cursory, general and uninspiring training not likely to inspire the conscience or ethical decision-making. Still, theseprograms can be useful by ensuring that employees have knowledge of the laws and regulations applying to their jobs. Such knowledge can prevent careless or inadvertent violations that subject the company to liability and loss of credibility. Unfortunately, such programs rarely deal effectively with intentional violations committed either for what is thought to be in the best interests of the company or, in some cases, for simply for personal gain. Thus, the compliance programs I’ve seen are little more than window dressing. They may allow the company to check the box to reduce penalties under the Federal Sentencing Guidelines but they don’t shield the company from reputation-damaging and resource-draining scandals and litigation.

Compliance is doing what you are required to do; ethics is about doing what you should do. An act is not ethical simply because it’s legal, nor is it proper simply because it’s permissible. In an ethical culture, people are expected to do more than ask what they have a right to do; they are expected to ask what is right to do. In an ethical culture, people are willing to do less than they are allowed to do and more than they are required to do. 

Compliance should be treated as a subset of ethics, a necessary but not sufficient factor to keep the company out of trouble, and even more important, to enhance and protect its credibility and build trust.

Trust is a critical corporate asset that requires more than lawfulness. It requires conscientious and consistent commitment to fundamental moral principles such as trustworthiness (integrity, honesty, promise-keeping, loyalty), respect, responsibility, fairness, caring and good citizenship (the Six Pillars of Character)

Employees are never inspired by invocations toward compliance. And, when they are otherwise motivated, not deterred by the prospect of punishment should they stray. Appeals to their moral nature, their inclination and desire to be and to be thought of as a good person, are far more likely to guide conduct in a manner that both enhances and protects a companies reputation and resources.

A good and graceful way to integrate meaningful ethical commitment into a corporate culture is to treat the stated values of the company as if they were laws that must be complied with. Corporate values should be more than rhetoric for posters and wallet cards. They should be treated as controlling guidelines for all internal  (recruiting, hiring, training, promotion, compensation and discipline) and external activities (production, marketing, public relations, customer service and, of course, compliance with the law.

Michael Josephson

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