Ethics or Compliance?

ETHICS AND COMPLIANCE…Two sides of the same coin, or different coins?

One topic that drew a surprising response with a recent social media posting related to the difference with regard to compliance and ethics. Many organizations have compliance officers and ethics officers, and often they are the same person, but both functions are not the same. Compliance officers are usually attorneys, and this is because they are concerned with the legal aspects of the organization’s actions, as well as the actions of individuals representing the organization. Keeping things on the right track compliance wise is a relatively new job classification and growing over the past 10 years.

The same is true for ethics officers—a position that has grown in numbers over the past decade. I view both of these positions as operating in concentric circles. While the compliance officer is concerned with rules and regulations and operating within those bounds, the ethics officer is likely to be concerned with how certain behaviors on the part of the organization, and its employees can do harm even if no actual law has been broken.

To explore this further I questioned a respected compliance/ethics officer in a company that I had the pleasure of working with a few months back; I asked him if he would offer his views on compliance and ethics and his response follows:

“Simply stated, ethics is the internal intangible that drives us. It’s the value system, or lack thereof, that guides us when we make decisions in our day to day actions. Compliance is much more clear cut. Compliance is about following the rules, the policies, the regulations that are articulated in laws and internally drafted documents. There are consequences for violating those policies and regulations that can result in discipline up to and including termination. Often there’s no analysis related to intent. If you violate the rules, there will be consequences. Ethics is more about your personal values. I heard an expert say, either you have ethics or you don’t. Maybe the rules and regs are for those that don’t have guiding principles they live by. Employees that will do anything to get where they need to go, need a structure in place to stop them from crossing the line. Companies that incorporate a culture of ethical behavior, get employees to follow the rules, n ot just because they have to, but because it’s the right thing to do.”

The March/April 2010 ETHIKOS and Corporate Conduct Quarterly article by Andrew Singer INSURER USAA LIKES ITS ETHICS STRAIGHT offers an interesting view of how USAA, a large mutual insurance company, handles ethics and compliance. The article begins with the observation that “A convergence of ethics and compliance has occurred over the last decade. The two functions are increasingly managed from the same corporate office; they often have the same director or vice president in charge.”

I found it interesting to learn in this article however, that USAA “… still separates ethics and compliance. USAA’s compliance officer reports to the company’s general counsel. Ethics director (Ernie) Broughton reports to the company’s CEO.” (This entire article is a worthwhile read for the in-depth view it provides about how seriously this company takes their ethics and ethics training, and what this looks like in practical application.) http://tinyurl.com/39ek7hr

The goal, I believe, for successful organizations today is maintaining a workplace where ethical behavior is the norm, where employees are supported when they act with integrity, and where compliance problems become relatively rare. One balancing act, as I see it, when both functions are handled from the same office—is to keep up with enforcement but not shortchange things like the ongoing ethics training that empowers employees to make good decisions. After all– the ethically empowered workforce should result in fewer headaches for the compliance department!