The Ethics & Compliance Initiative (ECI) has released a draft report that defines principles and practices of high-quality ethics and compliance programs (HQPs).  ECI is seeking public comment through January 8, 2016, and the final report will be issued later this month. For a link to the report, see the ECI press release at www.ethics.org/blogs/eci-connector/2015/12/02/eci-releases-blue-ribbon-panel-report-on-high-quality-ethics-compliance-programs.

As ECI states in its press release:

Organizations seeking guidance in building an ethics and compliance program have typically looked to regulatory and judicial frameworks to provide suggestions for an “effective” effort. But the panel says these guidelines articulate only minimum requirements and that programs based solely on these frameworks are limited in scope and often struggle to maintain relevance. “It is clear that organizations following the minimum standard can and should do more.”

While acknowledging that ethics and compliance programs in small organizations will vary significantly in size, scope, and structure from those in large organizations, the report identifies features that hold true for all types of effective programs.

Purpose

The fundamental purpose of ethics and compliance (E&C) programs is almost universal, says the report. Such programs:

• Ensure and sustain integrity in the organization’s performance and its reputation as a responsible business;
• Reduce the risk of wrongdoing by parties employed by or aligned with the organization;
• Increase the likelihood that, when it occurs, wrongdoing will be made known to management within the organization;
• Increase the likelihood that the organization will responsibly handle suspected and substantiated wrongdoing; and
• Mitigate penalties imposed by regulatory and governmental authorities for violations, if they occur.

Approach

Effective E&C programs achieve their purpose in two primary ways:

• Continuously assess and abate the organization’s legal, ethics, and other compliance risks; and
• Establish and perpetuate an organizational culture that prizes ethical decision-making and the raising of concerns without fear of retaliation.

High-quality programs go further. According to the report, they:

• Make every effort to comply with all relevant legal and regulatory expectations and integrate E&C thinking and practice into everyday operation of the organization;
• Are not satisfied with a mere “check the box” effort;
• Assess and mitigate risk and prioritize the creation of a culture where concerns can be raised and where retaliation is not only prohibited but prevented;
• Hold themselves accountable – both internally and externally – for prompt, responsible action when misconduct occurs; and
• Implement strategies that are continually documented, objectively measured, evaluated, and improved.

Principles

The report expands on five principles common to all organizations with high-quality ethics and compliance programs. These principles are summarized below.

• Ethics and compliance is central to business strategy.
• Ethics and compliance risks are owned, managed, and mitigated.
• Leaders across the organization build and sustain a culture of integrity.
• The organization protects, values, and encourages the reporting of concerns and suspected wrongdoing.
• The organization takes action and holds itself accountable when wrongdoing occurs.

The full report identifies supporting objectives, leading practices, examples from HQPs, and common pitfalls for each of these principles, providing a blueprint for how your organization can “do more” to build and sustain a high-quality ethics and compliance program. You may want to add this report to your reading list!

Ethical Advocate wishes you and your staff a joyous 2016 and we look forward to supporting your ethics and compliance initiatives in the New Year.

Resource:

Ethics & Compliance Initiative. Principles and Practices of High-Quality Ethics &Compliance Programs (discussion draft), December 2015.