{"id":2158,"date":"2018-11-16T19:48:03","date_gmt":"2018-11-17T01:48:03","guid":{"rendered":"http:\/\/blogs.luc.edu\/compliance\/?p=2158"},"modified":"2018-11-16T19:48:03","modified_gmt":"2018-11-17T01:48:03","slug":"ethics-and-compliance-two-sides-of-the-same-coin","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=2158","title":{"rendered":"Ethics and Compliance: Two Sides of the Same Coin"},"content":{"rendered":"

Shelly McGough<\/em><\/p>\n

Associate Editor<\/em><\/p>\n

Loyola University Chicago School of Law, JD 2019<\/em><\/p>\n

Most major American corporations develop and implement an ethics and compliance (E&C) program.\u00a0 However, too often, the ethics division of these programs falls to the wayside, with companies putting more focus on legal compliance rather than creating an ethical corporate culture.\u00a0 While it is true that compliance can technically function without an ethics component, a robust ethics program can be an extremely efficient way for a company to promote legal compliance, as well as consumer trust and loyalty.<\/p>\n

<\/p>\n

Ethics Takes Center Stage<\/strong><\/p>\n

Corporate ethical codes<\/a> have been under intense scrutiny in the past few years, perhaps beginning with the 2008 financial crisis.\u00a0Consumer fears of corporate scandal have only grown since then, and every year, more consumers demand transparency and ethical business practices from those businesses they choose to support.<\/p>\n

And yet, it seems that there is a new corporate scandal unraveling every day.\u00a0Just to name a few: Volkswagen<\/a> engineers devised software intended to defeat carbon emission rules in the USA and the European Union; retail bankers at Wells Fargo<\/a> fraudulently opened multiple accounts for retail customers without their knowledge or permission; and pharmaceutical manufacturer Mylan<\/a>, with a monopoly on the EpiPen, increased the price by 450% with no regard to the ability of vulnerable consumers to purchase the life-saving drug.<\/p>\n

These companies no doubt had well-implemented compliance programs.\u00a0However, without a complementary ethics program to encourage good behavior in employees, scandals will likely continue to plague corporate America.<\/p>\n

Distinctions between Compliance and Ethics<\/strong><\/p>\n

It is very important to note the distinctions<\/a> between ethics and compliance, because the two are often treated as synonymous (hence \u201cethics and<\/em>compliance\u201d programs).\u00a0 Compliance is actually a much simpler concept to understand than ethics.\u00a0Compliance means following the law, whether that be statutes, rules, or policies.\u00a0 The government requires corporate compliance; it is the responsibility of upper management to get all employees to comply.<\/p>\n

Ethics<\/a>, on the other hand, are moral values that direct a person to make a conscious choice between right and wrong.\u00a0 Interestingly enough, it is entirely possible to be ethical without being compliant.\u00a0 For instance, during the course of employment, an employee may have ethical objections to certain federal regulations pertaining to his work, and thus chooses not to comply.\u00a0 In the end, this may have been the \u201cright\u201d thing to do, but that employee may be held responsible for the company being non-compliant.\u00a0 More likely, however, a strong sense of personal ethics will often result in legal compliance.<\/p>\n

Consequences of Unethical Business Practices<\/strong><\/p>\n

Despite the fact that ethics result from personal moral values, unethical business practice<\/a> cannot typically be laid at the feet of a single individual.\u00a0 Such misconduct often involves tacit, if not explicit, cooperation of others and reflects the values, attitudes, beliefs, and behavioral patterns that define an organization\u2019s operating culture.\u00a0 Ethics, then, can be organizational as well as personal.\u00a0Corporate leaders who fail to provide ethical leadership and to institute systems that facilitate ethical conduct share responsibility with those who conceive, execute, and benefit from corporate misconduct.<\/p>\n

Implementing Ethics Programs<\/strong><\/p>\n

Thus, if they are not already doing so, companies need to work on implementing ethics programs to prevent, detect, and punish ethical misconduct.\u00a0 The Federal Sentencing Guidelines<\/a> are just another reason to enact such a program.\u00a0 Under these standards, which Federal judges use in sentencing, a company that is convicted of a federal crime will face extraordinarily large fines.\u00a0But if a company self-reports, cooperates with the government, and has an effective E&C program, it receives a 95% reduction in fines.<\/p>\n

A successful ethics program does more than just outline concepts of good behavior.\u00a0 It also communicates expectations and requirements, has buy-in from all levels of management (including the board of directors), and develops measurements to determine if ethics are being maintained and yielding the desired results.<\/p>\n

Ethics and Compliance Together<\/strong><\/p>\n

There is no question about the necessity for a strategy of legal compliance in an organization.\u00a0 After all, employees, and even managers, can become frustrated by the complexity of today\u2019s legal environment.\u00a0 A legal compliance program can eliminate a lot of this frustration and uncertainty by providing strict guidelines for employees to follow.<\/p>\n

But compliance is by no means an adequate solution<\/a> to ethical issues that arise during the course of business.\u00a0 Just as conduct that is ethical is not necessarily legally compliant, conduct that is legal may be extremely problematic from an ethical point of view.\u00a0\u00a0The goal for an efficient E&C program, then, is for ethics and compliance to work together so that ethical conduct is legal, and vice versa.<\/p>\n","protected":false},"excerpt":{"rendered":"

Most major American corporations develop and implement an ethics and compliance (E&C) program.\u00a0 However, too often, the ethics division of these programs falls to the wayside, with companies putting more focus on legal compliance rather than creating an ethical corporate culture.\u00a0 While it is true that compliance can technically function without an ethics component, a robust ethics program can be an extremely efficient way for a company to promote legal compliance, as well as consumer trust and loyalty.<\/p>\n","protected":false},"author":19,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[51],"tags":[517,674,762,763],"class_list":["post-2158","post","type-post","status-publish","format-standard","hentry","category-compliance-the-law","tag-corporate-compliance","tag-ec","tag-ethics","tag-ethics-and-compliance"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/2158","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2158"}],"version-history":[{"count":0,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/2158\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2158"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2158"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2158"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}