Compliance – Plus Ethics
There is a difference between a compliance program and an ethics program, according to Michael Josephson of the Josephson Institute. During his keynote address* at the 2014 Compliance Institute of the Health Care Compliance Association (HCCA), he contended that if organizations solve ethical problems they will also solve all or most compliance problems, but the reverse is not true. Ethics is bigger than compliance, he said. Organizations need both, but the focus should be on ethics.
The continuum from compliance to ethics can be illustrated by a pyramid, as adapted above from one that Josephson presented in his talk. Organizations often focus on compliance-related outcomes near the base of the pyramid (prevent criminal conduct, prevent regulatory violations, and prevent civil liability). When focused on compliance, organizations develop training, education, and communication mechanisms to ensure employees know the laws. They also establish detection and reporting processes to increase the likelihood that those who break the law will be caught.
Josephson acknowledges that such steps constitute a “major, major” undertaking. Addressing those compliance-focused issues does not, however, address other more ethics-based outcomes (prevent unethical (“lawful but awful”) conduct, prevent ethically questionable (skating close to the edge) conduct, and promote ethical culture). The behaviors those outcomes are linked to are not unlawful behaviors, but they are undesirable.
He says that internal control programs that focus almost entirely on compliance haven’t and won’t protect organizations from reputation-damaging, resource-draining scandals. “Compliance is about doing what you must do (or not doing what you’re not allowed to do) while ethics is doing what you should do. We must continually stress compliance is a minimum baseline but that many things that are permissible are not proper and that many things that are legal are not ethical.” (Josephson, 2012)
Both compliance and ethics are needed, but, Josephson asserts, the place for organizations to start and sustain their efforts is at the top of the pyramid, striving to create and promote an ethical culture. “If we create a positive ethical culture that nurtures and demands a high level of integrity, respect, fairness and kindness, the likelihood of major incidents damaging your institution’s reputation and draining its resources is sharply reduced.”
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*To hear the talk, go to https://www.youtube.com/watch?v=26lm7yrnaZE&feature=player_embedded
Compliance Plus: Creating an Effective Compliance Program Using an Ethics Framework – 2014 CI. YouTube video. Published February 24, 2015.
Josephson, Michael. “Business Ethics Insight: Compliance Plus.” Business Ethics and Leadership blog post, October 27, 2012. http://josephsoninstitute.org/business/blog/