Promoting Ethics in Your Company
I am a little reluctant to raise this issue. I am sure the overwhelming response will be “Yes, of course.” I am prepared for that and for any criticism that I am only offering another profound grasp of the obvious.
Is there a distinction between a corporate compliance officer and a corporate ethics officer? I am a literal person, so I can easily say yes to that proposition.
Let’s start by defining terms – a chief compliance officer is responsible for ensuring the company’s compliance with its corporate policies and applicable federal, state and local (and international) law. An ethics officer has a broader mandate – of course, compliance with corporate policies and the law fall within the ambit of ethical behavior, but in my view, promoting ethical conduct is setting a standard above that of the compliance officer. It is the difference between complying with the company’s policies and applicable law (compliance program) and promoting ethical conduct by all company actors which exceeds “mere” compliance with the law.
In reality, this may be a distinction without much of a difference. But sometimes perception can become its own reality.
When a compliance program focuses on communications, the language used in such communications becomes important. To me, there is a difference between saying “we are a company that is committed to compliance.” and saying “we are a company which promotes and adheres to ethical conduct in all of our activities.”
The distinction between ethics and compliance has substantive meaning and can have an impact on overall corporate performance. Employees that perceive their organization to be an ethical company may have greater resistance to engaging in unethical conduct.
I like to analyze issues by using cost-benefit analyses. When it comes to ethics and compliance, how much additional cost will be created by a commitment to ethical conduct in addition to compliant conduct? What will be the benefit to the organization from creating a corporate brand of ethical conduct? I would expect in most cases, the benefits would far exceed the costs.
Aside from the cost-benefit calculation, the concepts of ethics and compliance go hand-in-hand. They are complementary concepts and when added together, they total more than the sum of their parts.
Instead of hand-wringing over the lines between compliance and ethics, companies need to recognize that every compliance program has a marketing element – one internal and one external. For managers and employees in the company, there is a need to establish a common compliance language and brand around being an ethical company with ethical employees. This same philosophy can be used as a management tool to build into all of the company’s operations a component which reflects the company’s commitment to ethics.
In the external context, promoting a company as committed to ethical conduct can enhance the company’s brand and its perception by potential customers and competitors. It is a way to differentiate itself in the marketplace and it can easily become a factor on which companies compete in the market.
Commitment to ethical conduct has both tangible and intangible benefits – some of which can easily be measured and some which can have a dramatic impact on the overall bottom line.