Compliance + Ethics = one or two?

“Ethics is knowing the difference between what you have a right to do and what is right to do.” This quotation, attributed to U.S. Supreme Court Justice Potter Stewart, succinctly illustrates the difference between compliance (what you do—and do not—have a right to do) and ethics (what is right to do). Both concepts are important; they overlap and support one another.

Should compliance and ethics be combined as one function? Ben DiPietro of the Wall Street Journal asks this question in a May 17 blog post—the opening sentence in his piece about a recently published report that explores the benefits and drawbacks of combining the two functions.

He writes “while both ethics and compliance share the goal of explaining to people why they need to behave a certain way, the report states they differ in approach, with ethics focused on embedding a set of common values and letting workers exercise their own personal judgment and compliance spelling out what can and can’t be done. While the two roles overlap, the report states each function has its own required set of skills, ‘making it difficult to find an individual that can successfully lead both ethics and compliance.’”

The report, by Liezl Groenewald of the Ethics Institute (South Africa) and Guendalina Dondé of the Institute of Business Ethics (U.K.), introduces its description of the respective responsibilities of ethics and compliance practitioners with a quotation:

Ethics and compliance are two separate functions. Compliance is not an art form—it’s about rules, policies, and regulations. Ethics is an art form, and to practice it you have to understand the business you’re in and how best to communicate its values to employees and other stakeholders.”

Patrick Gnazzo

The ethics practitioner, as described in the report, ensures that an organization conducts its business in a manner that is aligned with the organizational values and standards of behavior as espoused it its code of ethics. The compliance practitioner ensures that an organization conducts its business in full compliance with all national laws and regulations that pertain to its particular industry, as well as professional standards, accepted business practices, and internal standards.

Both functions and sets of responsibilities are important. But they require different skill sets. After exploring the similarities, dissimilarities, shared challenges, and opportunities for collaboration in some detail, the authors conclude that “organizations must address ethics separately from compliance; setting up two different functions is the most effective way to achieve this.”

But, where setting up separate functions is not possible or is not desired, “such a separation needs to emerge at least at a conceptual and managerial level by making sure that employees understand the differences between the two and that both skill sets are available.”

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DiPietro, Ben. “The Risks of Marrying Ethics to Compliance.” Morning Risk Report (Wall Street Journal blog), May 17, 2017.

Groenewald, Liezl and Dondé, Guendalina. Ethics & Compliance Handbook, 2017.