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Role of Ethics and Compliance in the Workplace | PowerDMS

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Role of Ethics and Compliance in Corporate Culture

Compliance Management //

Business

Role of Ethics and Compliance in Corporate Culture

In light of their intertwined meaning, take a look at how ethics and compliance play a pivotal role in creating a positive workplace at PowerDMS.

December 29, 2020

Article highlights

The difference between ethics and compliance.

The importance of ethics in corporate culture.

Creating a culture of ethics and compliance.

The terms “ethics” and “compliance” get tossed out a lot these days, often used interchangeably when talking about businesses doing the right thing.

While they certainly both strive to achieve similar goals, they are not quite the same thing.

If you want to enhance your corporate culture, it helps to understand the connection between the two, as well as the subtle nuances that set them apart.

Difference Between Ethics and Compliance

It’s important to draw some distinctions between the terms “ethics” and “compliance.” Certainly, they are related, but they are not the same thing. Take a look at these ethics and compliance definitions to gain some clarity.

Ethics is “the decisions, choices, and actions (behaviors) we make that reflect and enact our values,” says the Ethics and Compliance Initiative.

But ECI also points out that ethics encompasses other nuances, such as this definition from Stephen D. Potts, author The Ethics of Non-profit Management: “A set of standards of conduct that guide decisions and actions based on duties derived from core values.”

Compliance is “conforming or adapting one’s actions to another’s wishes, to a rule or to necessity,” says ECI. So, while you might be meeting compliance standards, your motivation to do so might be to stay within the law rather than because you think it’s morally the correct action to take.

To bring this to a simplistic level, think of how a child acts when no one is looking. Does he refrain from stealing a candy bar because he might get caught by the store manager or yelled at by his parents (compliance with rules and expectations)? Or does he simply not steal because, in his heart, he knows it is wrong to take something that is not his (guided by an inner moral compass)?

Ethics, then, takes a proactive approach, as it guides you to moral thinking and behavior based on the internal motivation of your own character, values, and principles. On the other hand, compliance takes a more reactive approach, as it forces you to make a mindful decision to follow a rule or law that someone else created. As Ethisphere notes, “compliance is letter of the law and ethics is spirit of the law.”

In light of their intertwined meaning, take a look at how ethics and compliance play a pivotal role in creating a positive corporate culture.

Importance of Ethics in Corporate Culture

Assuming you are more interested in creating a good culture as opposed to avoiding a negative culture (bad ethics = bad culture), what are the benefits of ethics influencing corporate culture?

Boosts morale. Employees want to work for a boss they can trust. Ditto for working alongside fellow employees who are both honest and honorable. Employees want to feel safe, secure, encouraged, valued, and respected. We all want that. Fostering an ethical compliance culture enhances all of these elements of a positive, thriving corporate environment and thus improves employee morale.

Misconduct declines. When you establish a code of conduct that outlines expectations of fair treatment and ethical behavior, you provide employees with the standards they can use to conduct themselves in a professional manner. This written code often goes beyond what the law requires, and it provides a solid foundation for building a culture of respect, trust, transparency, and accountability.

Increases productivity. Research shows that “upholding ethical practices in the offices enhances better performance of the office manager,” especially when the code of conduct aligns with employees’ personal values.

Improves compliance. While an action or behavior might be legal, it is not always ethical. A focus on business ethics is at the underpinning of legal compliance. You need both to build and sustain a culture of ethical compliance, as they go hand in hand. The more you communicate your values and principles, provide training to reflect them, and hold every employee accountable, the more you decrease your risks and increase your compliance.

Creating a Culture of Ethics and Compliance

Corruption is certainly nothing new, but as a society, we’re more aware of it and more likely to take allegations seriously.

Rather than sweeping accusations under the rug or dismissing complaints, companies are increasingly giving a voice to those who step forward with concerns.

But you might be wondering what you can do to prevent corruption and unethical behavior from occurring in your business in the first place. In other words, how can you encourage business ethics and foster a culture of corporate compliance?

1. Put your expectations in writing

For starters, you need a detailed policy manual, and more specifically, a written code of conduct and/or code of ethics policy. Employees need to know they can look to a reference for understanding what the business expects of them. This needs to be done in an official, trackable policy; otherwise, your ethics and compliance efforts will have no teeth.

2. Have a dedicated compliance officer

Once you have tackled the first step of creating written policies, you need a person responsible for overseeing your company’s ethics and compliance initiatives. This makes your entire ethics and compliance process run smoother. The key to an effective compliance program? Putting a Corporate Compliance Officer (CCO) at the helm rather than just a figurehead with no real power. In this designated role, the CCO serves as a champion of corporate integrity, ethics, and accountability—the cornerstone of a compliance culture.

3. Hold employees accountable

Accountability within your business is all about setting common expectations and holding all employees to these standards. By clearly defining the company’s mission, values, and goals – and developing policies such as a written code of conduct to reflect the mission, values, and goals – you are creating an ethical compliance culture.

Underscoring the importance of accountability in your business will help drive a proactive atmosphere of responsibility among employees at all levels, from the part-time hourly worker to the C-suite executive. When you promote organizational accountability, you build trust, improve performance, strengthen corporate culture, increase morale, and boost compliance.

The bottom line: you need to monitor how people are doing compared to what the expectation is.

4. Communicate clearly and consistently

The next step involves communicating your ethics and compliance efforts thus far to your employees. You might approach this in a variety of ways, from one-on-one and small group meetings to mass email distribution and phone conferences. Regardless of your communication methods, the goal is to convey your ethics policies clearly and consistently and make sure employees understand how these policies impact their jobs.

Workplace communication can be tricky, for sure, especially when you are trying to convey intangible “ethics culture” messages. But if you create a safe space for communicating, set clear norms (in terms of channel, frequency, and expectations), and do it consistently, you are boosting your chance for successful top-down, bottom-up, side-to-side communication throughout your company.

5. Implement ethics training

Just because you write a code of ethics policy, set expectations around it, and communicate all this to employees doesn’t always mean they get it. That’s where the training component comes into play.

It is vitally important that you train to your ethics policies. Just like “book learning” isn’t the same as “hands-on application of knowledge,” you need to provide training in a meaningful way. Sharing the policy with employees and telling them the why’s and how’s of ethics and compliance certainly lays a good base of understanding. But training employees on how each element of the policy specifically applies to the day-to-day jobs they carry out provides the real-world connection they need.

Furthermore, when you cover a topic regularly in training, you drive home its critical importance. Repeated conversations and training about ethics and compliance reinforces that your company takes them both seriously. Plus, the more you talk about ethics and compliance and train to their related policies, you are regularly equipping employees with the tools they need to act in specific situations.

The Ethics and Compliance Key

If you are truly interested in changing your corporate culture, your ethics and compliance efforts in the workplace should not be a one-and-done approach. It certainly won’t happen with just a memo or written directive. And, perhaps most importantly, your motivation for change needs to be about more than covering your bases or reducing liability. It needs to spring from your desire to create a positive ethics and compliance culture that reflects your company’s mission, vision, and values. Start with your “why” to effect true, lasting change.

What's The Difference Between Compliance And Ethics?

's The Difference Between Compliance And Ethics?Subscribe To NewslettersSign InBETAThis is a BETA experience. You may opt-out by clicking hereMore From ForbesMar 12, 2024,03:07pm EDTThe Mature Leader’s Guide To Thriving In The Startup WorldMar 12, 2024,01:03pm EDTThe Critical Need For Foundation Succession: 7 Cautionary TalesMar 12, 2024,12:06pm EDTStepping Outside Your Comfort ZoneMar 12, 2024,10:00am EDTUse These 6 Principles Of Embedded Commands For Influential LeadershipMar 12, 2024,09:51am EDT4 Strategies Leaders Use To Manage Conflict EffectivelyMar 12, 2024,09:45am EDTMeet America’s Best Management Consulting Firms 2024Mar 12, 2024,09:02am EDTHow To Get Employees To Never Talk To You Again About Their ProblemsMar 12, 2024,08:56am EDTWhy There’s Reason To Be Optimistic About The Freelance EconomyEdit StoryLeadershipLeadership StrategyWhat's The Difference Between Compliance And Ethics?Bruce Weinstein, Ph.D.ContributorOpinions expressed by Forbes Contributors are their own.Customized ethics keynotes, training, and online courses for CE creditFollowingMay 9, 2019,01:19pm EDTThis article is more than 4 years old.Tweet This High-character leaders ask, "What is required of me?" but they don't leave it at that. Ethical leaders also ask, "What is the right thing to do? How would an honorable person behave in this situation?"Share to FacebookShare to TwitterShare to Linkedin

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I've noticed some confusion about the roles that ethics and compliance play in organizations. This confusion arises, in part, from the way these two fields are identified. Some companies have only a compliance department. Others have a compliance and ethics (or ethics and compliance) department. Some companies have a Chief Ethics Officer separate from compliance.

To get some clarity on these crucial roles, I asked seven leaders who are involved in both ethics and compliance to explain the similarities and differences as they saw them. I'll present their views, offer my own analysis and then consider what this means for your career and your organization.

What Is Compliance?

There was close to a consensus when it came to defining compliance.

For Cindy Morrison, Director of Compliance for Post Holdings, Inc., "Compliance is the act of conforming to company policies and procedures as required by laws and regulations."

"Compliance is table stakes. It involves following the laws and rules that apply to your company's business," says Carol Tate, Director, Ethics and Legal Compliance for the Intel Corporation.

"Compliance is a framework for ensuring an organization and its people comply with laws and regulations that are applicable to it and minimizing the risk of noncompliance," notes Gerry Zack, CEO of both the Society for Corporate Compliance and Ethics (SCCE) and the Health Care Compliance Association (HCAA). "One of the many facets of a compliance program is ethics."

"Compliance is an independent function to identify and manage risks such as sanctions and fines, financial losses and reputational risks," holds Dr. Annamária Nádai, Compliance Officer at CIB Group. "It is a fundamental pillar of any corporate operation and culture, and it should be based upon the principles of transparency, impartiality, responsibility, integrity, professionalism and ethics."

"Corporate compliance is the effort to prevent, find, and fix legal and ethical issues in the organization," says Kortney Nordrum, Regulatory and Compliance Counsel for the Deluxe Corporation.

"Compliance is abiding by all the rules, all the time," maintains Terri Civitello, Associate Director, Ethics and Compliance for Otis Elevator.

It is when we turn to the subject of ethics that these leaders' views diverged somewhat.

What Is Ethics?

"Ethics is the opportunity to contribute, influence and lead through the discipline of doing what is right." -Cindy Morrison, Post Holdings

"Ethics goes beyond what the law requires. It involves doing the right thing and following both the spirit and not just the letter of the law." -Carol Tate, Intel

"Ethics is harder to define than compliance because it involves abiding by one's personal code of conduct. Everyone has their own ethics. There isn't a universal rule, if you will, for ethics. But ethics, in essence, is about doing the right thing." -Gerry Zack, SCCE and HCCA

"Ethics is high-level values and standards of behavior for choosing the right thing to do." -Dr. Annamária Nadai, CIB Group

"Ethics is what we teach to help others make good choices, both inside and outside the bounds of the official rules." -Kortney Nordrum, Deluxe

"Ethics is behaving in a manner that aligns with values such as respect, trust, integrity." -Terri Civitello, Otis Elevator

Broadly speaking, all of the above definitions hold that ethics is about right and wrong conduct. There are some differences in the building blocks of those definitions. Tate, for example, contrasts ethics with the law. Nordrum discusses teachability. Zack speaks of a personal code of conduct.

It is where they discuss the relationship between ethics and compliance that we see some significant distinctions.

Does One Field Hold Us To A Higher Standard Than The Other? "Yes. I believe ethics holds us to a higher standard. Compliance should be well-defined in codes of conduct and company policies. Acting ethically takes courage. Ethical individuals often find themselves as a party of one. " -Morrison, Post Holdings

"Rules matter, but culture and ethics matter more. Companies may have written, accessible policies, processes and tools all of which their employees are trained on. However, if the company has a poor culture, none of its controls, policies or procedures will matter. Instead, in companies with poor cultures, employees tend to act in ways that harm the company's reputation, increase the risk of compliance failures and act in ways that can lead to illegal and/or fraudulent conduct." -Tate, Intel

"No, they're very different standards. It's like comparing sports statistics from one era to another era. The two really aren't comparable. They work hand-in-hand. I don't think that either one has a higher standard than the other." -Zack, SCCE and HCCA

"No. Ethics and compliance standards are complementary, but ethics and compliance are not interchangeable. Ethics should be an integral part of compliance." -Nadai, CIB Group

"Yes and no, and it depends on the situation. It's easy to say that ethics holds us to a higher standard than 'just the rules,' but I don't believe that is always the case. While ethics is tied to personal and company values, which tend to be more overarching than laws and regulations, there are times when the laws and regulations demand more than what is ethically required." -Nordrum, Deluxe

"Tough one. Yes. Compliance holds us to high standards because violations can result in fines, but the field of ethics in my mind is the higher standard. If we behave according to the standards of ethics - truth, respect, and integrity - compliance naturally follows." -Vitelli, Otis

Commentary As important as both compliance and ethics are, ethics holds us to a higher standard, in my view. It's crucial to respect your institution's rules and policies, as well as the relevant laws and regulations, but your duties don't stop there.

High-character leaders ask, "What is required of me?" but they don't leave it at that. Ethical leaders also ask, "What is the right thing to do? How would an honorable person behave in this situation?"

The views in this portion of the article are mine only, although they are consistent with some of the above perspectives.

The Takeaways

What does all of this mean for you?

If you're in compliance and/or ethics, it's worth having a clear understanding of what each department or program is about, how they're similar and how they differ. Then make sure that everyone in the organization understands these similarities and differences and what this means for their own roles.

If you're not in compliance or ethics, find out how the company defines each area and what this means for you. Whether you want to move up in the organization or simply remain gainfully employed there, you will put yourself in good stead if you know the difference between ethics and compliance as your company defines them.

No matter how your company views compliance and ethics, what its code of conduct is or whether you work within or outside of the compliance and ethics programs, it's not enough to ask, "What do laws, regulations or policies require of me?" The follow-up question should always be, "What is the right thing to do?"

A View From The Trenches

The last word comes from Deborah Skinner, Chief Administration Officer, F&M Bank of Central California and Chair of the Western Bankers Association:

You can be compliant without being ethical. We strive for both. We want to do the right thing because it's the right thing to do. By doing the right thing and hitting all the rules for compliance, then not only are you doing right by your customers and the consumers, but you're also not going to get hit with some kind of enforcement action that's going to prevent you from doing what you want to do with your business. If banks are found to be not in compliance with the various laws and regulations, then they can face penalties.

Some of those penalities can be: if you want to open another branch, you're not able to, and if you want to acquire another entity, you can't until you've cleaned up whatever your compliance issues are. We don't want to find ourselves in that situation, so the easiest way to not find yourself in that situation is to be compliant."

Some of the comments have been edited and condensed for clarity. Full disclosure: I serve on the Editorial Blog of the Corporate Compliance and Ethics Blog of the Society for Corporate Compliance and Ethics.

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here. Bruce Weinstein, Ph.D.Editorial StandardsPrintReprints & Permissi

Ethics vs. Compliance: Is There a Notable Difference? | BoardEffect

ics vs. Compliance: Is There a Notable Difference? | BoardEffect skip to Main ContentPRODUCTBOARD PORTAL SOFTWARESECURITYPRICINGHOW IT WORKSBOARD MEETING CYCLEANNUAL MEETING CYCLEBOARD DEVELOPMENT CYCLETESTIMONIALSRESOURCESBLOGWHITEPAPERSBOARD PORTAL BUYER’S GUIDEWEBINARSREQUEST A DEMO June 15, 2018Ethics vs. Compliance: Is There a Notable Difference? Written by Nick Price In the business world, it’s common to hear the word ethics accompanied by the word compliance and vice versa. Business people sometimes incorrectly use the terms interchangeably. Ethics and compliance have different meanings; yet, they often go hand in hand. Corporations have different ways of addressing ethics and compliance issues within their companies.Some corporations enlist the help of a Chief Ethics Officer or Chief Compliance Officer. Other corporations combine the two titles and give the position the title Chief Ethics and Compliance Officer. Regardless of what companies label the position, most corporate boards know that ethics and compliance have a strong influence on corporate culture. Ethical culture can lead to corporate success or failure. Perhaps what is a bit more challenging is how to bring a strong ethics and compliance program into the workplace in order to prevent misconduct.Defining ComplianceCompliance has a surprisingly simple definition. It merely means following laws, rules or policies to the letter of the law. The government requires corporate compliance, and it’s up to boards and corporate directors to get all employees to comply. Compliance is a reactive word that forces people to make a conscious choice.Defining EthicsEthics means doing what is right regardless of what the law says. It’s also a conscious choice that is a personal one. It’s entirely possible to be ethical without being compliant. Ethics is proactive, rather than reactive as compliance is. Our personal values system, including our character, values and core principles, guide us when we make decisions. Most people feel a sense of deep personal satisfaction when they make ethical actions and decisions.Impact of Ethics on Corporate CultureIn a corporate setting, strong ethics leads to improving employee morale. Corporations with strong ethics and compliance programs discourage employee misconduct and encourage employees to report misconduct by others. Improving a corporation’s ethical culture requires planning, commitment and follow-through. Doing so has several benefits.Strengthening the corporate ethical culture promotes feelings of self-worth across the company. It creates an environment where managers and employees want to come to work. The net result of a strong corporate ethical culture combined with integrity-filled employees is a profitable company with strong prospects for operational sustainability.While developing a strong ethical culture takes a strong commitment of time, it has minimal impact on the corporate budget.Cost of Creating an Ethical Corporate CultureThe best news about having an ethics and compliance program and strengthening workplace ethics is that it costs very little in comparison to the benefits that corporations receive from it.Creating a robust ethics and compliance program won’t drain or strain the corporate budget and doesn’t require significant resources for implementation.Ethics and Compliance and Preventing Misconduct in the WorkplaceNow that the differences between ethics and compliance are clear, the question becomes how corporations can use the relationship between them to develop a strong ethics and compliance program to prevent misconduct in the workplace.It’s obviously not possible to get into each employee’s head and force them to make the right decisions and do the right thing. Nonetheless, it is possible for companies to create an environment that resounds of strong ethics and legal compliance.Donald Cressey was a leading penologist, sociologist and criminologist. He spent his career educating others about the issues that lead to misconduct. Cressey created a well-known Venn diagram that shows how the overlap between opportunity, rationalization and pressure creates the perfect storm for fraud.Compliance Policies Discourage Opportunities for Rule-BreakingRules are generally designed to discourage opportunities for employees to violate the law. In viewing Cressey’s theory on fraud, we can easily equate opportunity with compliance.Without question, all companies should have a strong and effective compliance program. Ethics and compliance departments must work to combine rules with corporate systems and processes that reduce opportunities for employee misconduct.Much of the focus for compliance relies on instruction and the corporation’s definition of appropriate procedures. Ethics and compliance teams should also be examining business systems, internal controls and approval procedures that are designed to prevent misconduct.Some specific ways that corporations manage compliance is by setting limits on gift-giving and by tracking employee travel expenses, as well as other spending and reimbursement.Ethics Policies Promote the Rationalization for Values and IntegrityCressey’s Venn diagram equates the idea of rationalization to ethics. Corporations that teach their employees about ethical behavior find that most people can learn it and accept it.Companies can train their employees to uphold their companies’ values by starting and continuing messages about ethics, integrity and doing the right thing. Training and messaging form a large part of promoting strong ethics and compliance. The other part of the process is to hold employees accountable when they aren’t behaving in ethical ways.The Effect of Pressure on Ethics and ComplianceCressey also points out that pressure has a negative effect on ethics and compliance, particularly when companies or managers place pressure on employees to perform without placing an emphasis on integrity. Employees who feel pressured to take certain actions may be inclined to take unethical shortcuts unless instructions come with reminders about ethics and compliance policies.Final Thoughts on the Differences Between Ethics and ComplianceCorporations are wise to understand the distinct differences between ethics and compliance, and how they relate to each other. One of the main goals of ethics and compliance departments should be to make sure that they are clearly and continually communicating every aspect of the corporate culture to their employees. The other main goal is to make sure they’re doing all they can to reinforce the ethical culture in every aspect of the business.Last, and most important, ethics and compliance departments must recognize the role that pressure plays in how employees respond to ethics and compliance policies.Most Popular Posts Why HIPAA Compliance Is Important for College BoardsHIPAA is a federal law that college and university boards should be familiar with because… 12 Tips to Master Governance and Compliance for Nonprofit BoardsAs needs within communities have grown, the number of nonprofit organizations has grown along with… Leveraging Basecamp Alternatives for Secure Board ManagementThe boards of private companies have a lot of moving pieces. Strategic plans can be… Search SubmitGet Board Governance best practices directly to your inbox! TwitterFacebookInstagramLinkedInRSSprevious post: What Makes a Great Nonprofit Board Member?next post: Corporate Secretary Interview Questions for a Nonprofit Board MOREAboutBoard PortalContact SupportDo Not Sell My Personal InformationToll Free: 1 (866) 966-4987FOLLOWFacebookInstagramLinkedInTwitterRSSINDUSTRYCommunity BankingHealthcareHigher EducationNonprofits, Associations and FoundationsDOWNLOAD©BOARDEFFECT 2023 • ALL RIGHTS RESERVED • PRIVACY POLICY PRODUCTBOARD PORTAL SOFTWARESECURITYPRICINGHOW IT WORKSAPPROACHBOARD MEETING CYCLEANNUAL MEETING CYCLEBOARD DEVELOPMENT CYCLECLIENT SUCCESSRESOURCESBLOGWHITEPAPERSWEBINARSBOARD PORTAL BUYER’S GUIDECONTACT SUPPORTREQUEST A DEMO Back To Top PHP Code Snippets Powered By : XYZScripts.com

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5.5 Ethics, Corporate Culture, and Compliance - Principles of Management | OpenStax

Ethics, Corporate Culture, and Compliance - Principles of Management | OpenStaxSkip to ContentGo to accessibility pageKeyboard shortcuts menuPrinciples of Management5.5 Ethics, Corporate Culture, and CompliancePrinciples of Management5.5 Ethics, Corporate Culture, and ComplianceSearchSearchCloseSearchContentsContentsHighlightsPrintTable of contentsPreface1

Managing and PerformingIntroduction1.1 What Do Managers Do?1.2 The Roles Managers Play1.3 Major Characteristics of the Manager's JobKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case2

Managerial Decision-MakingIntroduction2.1 Overview of Managerial Decision-Making2.2 How the Brain Processes Information to Make Decisions: Reflective and Reactive Systems2.3 Programmed and Nonprogrammed Decisions2.4 Barriers to Effective Decision-Making2.5 Improving the Quality of Decision-Making2.6 Group Decision-MakingKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case3

The History of ManagementIntroduction3.1 The Early Origins of Management3.2 The Italian Renaissance3.3 The Industrial Revolution3.4 Taylor-Made Management3.5 Administrative and Bureaucratic Management3.6 Human Relations Movement3.7 Contingency and System ManagementKey TermsSummary of Learning OutcomesChapter Review QuestionsManagerial Decision Exercises4

External and Internal Organizational Environments and Corporate CultureIntroduction4.1 The Organization's External Environment4.2 External Environments and Industries4.3 Organizational Designs and Structures4.4 The Internal Organization and External Environments4.5 Corporate Cultures4.6 Organizing for Change in the 21st CenturyKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case5

Ethics, Corporate Responsibility, and SustainabilityIntroduction5.1 Ethics and Business Ethics Defined5.2 Dimensions of Ethics: The Individual Level5.3 Ethical Principles and Responsible Decision-Making5.4 Leadership: Ethics at the Organizational Level5.5 Ethics, Corporate Culture, and Compliance5.6 Corporate Social Responsibility (CSR)5.7 Ethics around the Globe5.8 Emerging Trends in Ethics, CSR, and ComplianceKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case6

International ManagementIntroduction6.1 Importance of International Management6.2 Hofstede's Cultural Framework6.3 The GLOBE Framework6.4 Cultural Stereotyping and Social Institutions6.5 Cross-Cultural Assignments6.6 Strategies for Expanding Globally6.7 The Necessity of Global MarketsKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case7

EntrepreneurshipIntroduction7.1 Entrepreneurship7.2 Characteristics of Successful Entrepreneurs7.3 Small Business7.4 Start Your Own Business7.5 Managing a Small Business7.6 The Large Impact of Small Business7.7 The Small Business Administration7.8 Trends in Entrepreneurship and Small-Business OwnershipKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case8

Strategic Analysis: Understanding a Firm’s Competitive EnvironmentIntroduction8.1 Gaining Advantages by Understanding the Competitive Environment8.2 Using SWOT for Strategic Analysis8.3 A Firm's External Macro Environment: PESTEL8.4 A Firm's Micro Environment: Porter's Five Forces8.5 The Internal Environment8.6 Competition, Strategy, and Competitive Advantage8.7 Strategic PositioningKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case9

The Strategic Management Process: Achieving and Sustaining Competitive AdvantageIntroduction9.1 Strategic Management9.2 Firm Vision and Mission9.3 The Role of Strategic Analysis in Formulating a Strategy9.4 Strategic Objectives and Levels of Strategy9.5 Planning Firm Actions to Implement Strategies9.6 Measuring and Evaluating Strategic PerformanceKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case10

Organizational Structure and ChangeIntroduction10.1 Organizational Structures and Design10.2 Organizational Change10.3 Managing ChangeKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case11

Human Resource ManagementIntroduction11.1 An Introduction to Human Resource Management11.2 Human Resource Management and Compliance11.3 Performance Management11.4 Influencing Employee Performance and Motivation11.5 Building an Organization for the Future11.6 Talent Development and Succession PlanningKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case12

Diversity in OrganizationsIntroduction12.1 An Introduction to Workplace Diversity12.2 Diversity and the Workforce12.3 Diversity and Its Impact on Companies12.4 Challenges of Diversity12.5 Key Diversity Theories12.6 Benefits and Challenges of Workplace Diversity12.7 Recommendations for Managing DiversityKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case13

LeadershipIntroduction13.1 The Nature of Leadership13.2 The Leadership Process13.3 Leader Emergence13.4 The Trait Approach to Leadership13.5 Behavioral Approaches to Leadership13.6 Situational (Contingency) Approaches to Leadership13.7 Substitutes for and Neutralizers of Leadership13.8 Transformational, Visionary, and Charismatic Leadership13.9 Leadership Needs in the 21st CenturyKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case14

Work Motivation for PerformanceIntroduction14.1 Motivation: Direction and Intensity14.2 Content Theories of Motivation14.3 Process Theories of Motivation14.4 Recent Research on Motivation TheoriesKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case15

Managing TeamsIntroduction15.1 Teamwork in the Workplace15.2 Team Development Over Time15.3 Things to Consider When Managing Teams15.4 Opportunities and Challenges to Team Building15.5 Team Diversity15.6 Multicultural TeamsKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case16

Managerial CommunicationIntroduction16.1 The Process of Managerial Communication16.2 Types of Communications in Organizations16.3 Factors Affecting Communications and the Roles of Managers16.4 Managerial Communication and Corporate Reputation16.5 The Major Channels of Management Communication Are Talking, Listening, Reading, and WritingKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case17

Organizational Planning and ControllingIntroduction17.1 Is Planning Important17.2 The Planning Process17.3 Types of Plans17.4 Goals or Outcome Statements17.5 Formal Organizational Planning in Practice17.6 Employees' Responses to Planning17.7 Management by Objectives: A Planning and Control Technique17.8 The Control- and Involvement-Oriented Approaches to Planning and ControllingKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking Case18

Management of Technology and InnovationIntroduction18.1 MTI—Its Importance Now and In the Future18.2 Developing Technology and Innovation18.3 External Sources of Technology and Innovation18.4 Internal Sources of Technology and Innovation18.5 Management Entrepreneurship Skills for Technology and Innovation18.6 Skills Needed for MTI18.7 Managing Now for Future Technology and InnovationKey TermsSummary of Learning OutcomesChapter Review QuestionsManagement Skills Application ExercisesManagerial Decision ExercisesCritical Thinking CaseReferencesIndex

What are the differences between values-based ethics and compliance in organizations?

An organization’s culture is defined by the shared values and meanings its members hold in common and that are articulated and practiced by an organization’s leaders. Purpose, embodied in corporate culture, is embedded in and helps define organizations. Ed Schein, one of the most influential experts on culture, also defined organizational corporate culture as “a pattern of shared tacit assumptions learned or developed by a group as it solves its problems of external adaptation and internal integration that have worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.”38

As Exhibit 5.6 illustrates, culture plays an important integrating role in organizations both externally and internally. Strategy, structure, people, and systems all are affected by an organization’s culture, which has been referred to as the “glue” that holds an organization together.39

Exhibit

5.6

Role of Culture in Organizational Alignment

(Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)

Leadership, in particular, as stated earlier, exerts a powerful influence, along with other factors, on culture. Schein noted that “culture and leadership are two sides of the same coin and one cannot understand one without the other.”40 Culture is transmitted through and by (1) the values and styles that leaders espouse and practice, (2) the heroes and heroines that the company rewards and holds up as models, (3) the rites and symbols that organizations value, and (4) the way that organizational executives and members communicate among themselves and with their stakeholders. Heskett argues that culture “can account for 20–30% of the differential in corporate performance when compared with ‘culturally unremarkable’ competitors.”41

While subcultures develop in organizations, the larger organization’s culture influences these, especially with strong leaders and leadership teams who set the tone at the top and communicate expectations and performance standards throughout. Other factors that indicate and help create a strong ethical culture include the following, which are based on the reputable assessment firm Ethisphere’s experience42

An organization models and communicates compliance standards through its values; employees are informed of and familiar with the assets and efforts of the compliance and ethics function.

The culture sets “enduring and underlying assumptions and norms that determine how things are actually done in the organization.”43

“Organizations can effectively identify specific locations, business units, job levels and job functions that may lack a full understanding of available resources, feel unwanted pressure, or perhaps hold negative perceptions.”

Companies and investors believe a company behaves and acts ethically.

Employees are aware of the conduct, values, and communications of senior leaders.

Employees are engaged and committed, and organizations regularly survey employees to get a sense of their engagement.

Employees feel “less pressure to compromise company standards to achieve company goals. And if they do observe misconduct, they are more likely to feel comfortable reporting it.”

“Employees perceive the ethical priorities of their coworkers, the values of their organization and willingness to share opinions.”44

Compliance and Ethics

As the section above indicates, both a values-based and compliance approach are necessary elements of maintaining an ethical corporate culture. Ethics has been characterized as “doing the right thing” and serving as a motivational force that influences professionals’ values—resembling a “carrot” approach to professionals’ behaviors. Compliance is related to influencing behaviors to act in accordance to the law or face consequences—referred to as a “stick” approach. Studies show that ethical and compliance approaches are interrelated and work best to motivate and sustain lawful and ethical behavior in organizations.45

One law in particular set a new baseline of accountability for CEOs and CFOs (chief financial officers): the federal Sarbanes-Oxley Act of 2002, 2010. This law was the first following the Enron scandal and other corporate scandals that placed constraints and issued punitive measures on CEOs and CFOs who could be punished if they knowingly and willingly committed fraud and other crimes. Several new sections of that law also signaled a change in corporate leaders’ responsibilities and liabilities; for example, the law “[e]stablishes an independent public company accounting board to oversee audits of public companies; requires one member of the audit committee to be an expert in finance; requires full disclosure to stockholders of complex financial transactions: requires CEOs and CFOs to certify in writing the validity of their companies’ financial statements. If they knowingly certify false statements, they can go to prison for 20 years and be fined $5 million; -Prohibits accounting firms from offering other services, like consulting, while also performing audits” (Federal Sentencing Guidelines, 2004). There are other parts of this law that that further establish compliance regulations.46

Because of the widespread corporate scandals discussed at the beginning of the chapter, the U.S. Congress implemented legal and compliance standards to curb and discourage illegal activities in corporations. While self-regulation will always play a major role in corporations’ “doing the right thing,” compliance has proven to be a necessary but not always sufficient element of corporate governance. Ethics continues to complement compliance, especially since the law cannot, does not, and will not cover every aspect of potentially harmful behaviors. Ethical dimensions and practices such as transparency, privacy, honesty, objectivity, integrity, carefulness, openness, respect for intellectual property, civility, confidentiality, accountability, responsible mentoring, and respect for colleagues are all necessary to motivate organizational behavior.

Ethical values become “actionable” in corporations by corporations first becoming aware of and then assuming responsibility for the corporation’s duties toward its stakeholders and stockholders. Social responsibility as a concept originated in 1953 when Howard R. Bowen, known as the “father of corporate social responsibility” (CSR), referred in a book to the “Social Responsibilities of the Businessman.”47

Concept Check

In what ways do law and compliance complement ethics in organizations?

How does stakeholder management differ from stockholder management?

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Five Keys to Reducing Ethics and Compliance Risk - Free Ethics Toolkit

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Five Keys to Reducing Ethics and Compliance Risk2021-10-25T14:03:15-04:00

Five Ways to Reduce Ethics and Compliance RiskYour company’s good name and the trust of stakeholders are two of its most important assets. You can protect your company’s reputation and increase employee engagement by creating a workplace where ethical conduct is the norm. Reduce ethics risk by taking these five key steps:

Honestly assess your needs and resources.

Establish a strong foundation.

Build a culture of integrity — from the top down.

Keep a “values focus” in moments big and small.

Re-evaluate and revise as needed.

Honestly assess your needs and your resources.

Successful businesses start with a good plan. So do successful ethics and compliance programs. In order to create a relevant and meaningful plan, you have to know the lay of the land. It’s important to know:

What ethics challenges are common in the work we do? In our workplace?

Where are our greatest areas of risk? Which groups of employees, locations, business units, etc. are potential “hot spots”?

What values are important to our company and its employees?

What values are necessary for our business, our work in particular?

What ethics and compliance resources will be most beneficial for employees? What vehicles of support (a phone line, an email, an individual or committee, internal social network, etc.) are likely to be most utilized and helpful?

In developing our code and values, which groups’ input is necessary? Who would be helpful? (For more information on this, see our resources on writing a code.)

See related blog post: Optimizing Risk Management Using Artificial Intelligence

Your program will only make a difference if you begin by having an accurate picture of existing strengths and areas of vulnerability. Risk assessment should be the starting point of your internal efforts, followed by gap analysis and program assessment. Audit reports are also an essential piece of the puzzle.

You can gather information in a variety of ways. Focus groups allow representative samples of the larger population to share their opinions and experiences; they provide a deep, rich “snapshot” of the state of ethics in your organization. Surveys (internal or conducted by a third party) provide the opportunity to gather information from a much larger group of your employees, to compare results and to analyze data by relevant subgroups (i.e., employee levels, departments, units, etc.).

Establish a strong foundation.

Once you know your needs, you can put in place the resources to address them by establishing a robust ethics and compliance program.

The good news is that such a program makes a difference. As part of the 2011 National Business Ethics Survey®, the Ethics Research Center (ERC), the research arm of ECI, demonstrated that an ethics and compliance program is a powerful tool for reducing pressure to compromise standards and observations of misconduct; increasing employee reporting of observations that occur; and decreasing retaliation against whistleblowers. In essence, when a company commits resources to ethics, it makes a difference. Fewer employees feel pressured to break the rules and fewer misdeeds take place. When bad behavior does happen, employees tell management so the problem can be addressed internally.

This strong foundation consists of several elements key elements:

Written standards of ethical workplace conduct (for more information on this, see our resources on writing a code).

Training on the standards.

Company resources that provide advice about ethics and compliance issues.

A means to report potential violations confidentially or anonymously.

Performance evaluations of ethical conduct.

Systems to discipline violators.

Chapter 8 of the Federal Sentencing Guidelines for Organizations also calls for oversight by the governing authority, high-level personnel with overall responsibility for the program, and individuals with operational responsibility for the program.

But just having these elements is not enough. When it comes to ethical conduct and compliance, it’s not enough to “print, post and pray.” Implementation and integration matter.

Your ethics and compliance program must be vital, integrated element of your work and the way you do it, ensuring that employees know how to and feel supported in their efforts to uphold ethics and compliance standards in their work. The hallmarks of an effective ethics and compliance program are:

Freedom to question management without fear;

Rewards for following ethics standards;

Not rewarding questionable practices, even if they produce good results for the company;

Positive feedback for ethical conduct;

Employee preparedness to address misconduct; and

Employees’ willingness to seek ethics advice.

Build a culture of integrity — from the top down.

People have an innate desire to get along and (long-past high school) want to fit in and conform to the norms of those around them. It may not be pleasant to admit it, but most people’s ethics standards are fairly malleable. Although most people retain a desire to “do the right thing,” the definition of right is significantly influenced by the company they keep. Culture matters.

Fortunately, if your company has diligently built an ethics and compliance program and woven it into the daily operations of the organization, a strong ethics culture is far more likely. Research proves that an effective ethics and compliance program helps build a culture of integrity in which everyone “walks the talk.” In a strong ethics culture, employees at all levels are committed to doing what is right and upholding values and standards.

Leaders are powerful drivers of corporate culture; they set the tone in any organization. They decide who gets attention, who gets promoted, what merits rewards and recognition. They set the standard. They are the example. There are several things leaders should do to help promote a strong ethics culture:

Talk about the importance of ethics.

Keep employees adequately informed about issues that impact them.

Uphold promises and commitments to employees and stakeholders.

Acknowledge and reward ethical conduct.

Hold accountable those who violate standards, especially leaders.

Model ethical conduct both professionally and personally.

When it comes to ethical leadership, there are two key things to keep in mind:

Character is paramount. Ethical leaders show integrity not only in the way they conduct themselves at work, but in their personal relationships as well. In a world of social media, private behavior often becomes public knowledge, shaping employees’ beliefs about what kind of individuals their leaders are.

Leadership happens at all levels. While senior leaders set the tone for the entire organization, supervisors shape the everyday environments in which employees work and make decisions. The actions of supervisor have a profound impact on employees and their workplace conduct.

Keep a “values focus” in moments big and small.

Ethics is about choices-big and small. Organizations with integrity keep their values at the forefront in both mundane and the extraordinary moments. Corporate values should come into play and be reflected in multiple processes that drive the everyday life of the company, including:

HR policies and their implementation

Reward systems

Hiring and retention

Performance management and evaluation

Promotion decisions

On those occasions when crises occur, leaders should recognize not only the ethical dimension of the moment at hand, but the “teachable moment” it represents. Edgar Schein, the father of the study of organizational culture, noted that moments of crisis are particularly powerful culture-builders because of the intensity of emotion involved. Our research shows that employees learn a great deal about leaders’ priorities and character when they show their “true colors.” If leaders make values their touchstone in times of crisis, employees learn that ethics matters.

Re-evaluate and revise as needed.

Situations and needs will change. You need to know what is working, what isn’t, what new vulnerabilities have emerged, what progress you’ve made and where there’s work yet to be done. Be disciplined about regularly revisiting the state of ethics and compliance in your organization. Risk assessments, follow-up surveys and periodic or ongoing focus groups will allow you to keep your program relevant and minimize risk. As an added bonus, regular assessments will demonstrate internally (and, if ever needed, externally) that the resources you’ve invested in ethics and compliance have made a difference.

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HomeMarkkula Center for Applied EthicsFocus Areas Business EthicsBusiness Ethics ResourcesRole And Responsibilities of Ethics and Compliance

"Ethics and Compliance are two separate functions," said Patrick Gnazzo at the February 2012 meeting of the Business and Organizational Ethics Partnership (BOEP). "Compliance is not an art form-it's about rules, policies, and regulations." Ethics, he continued, 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.

Gnazzo should know. Here's how Ethisphere magazine describes him:

Want your company to toe the line and stay ethical in its dealings? Better get Gnazzo. Previously SVP for the highly regarded business practices, risk and compliance programs at United Technologies Corp (UTC), Gnazzo bravely jumped ship in 2005 to create a compliance and ethics culture at scandal-ridden Computer Associates. From all reports he appears to have done a great job.

Gnazzo shared lessons from these experiences with the ethics and compliance officers and business ethics scholars who form the BOEP. In the compliance area, he emphasized the need not to pretend to be an expert in everything. "A compliance officer's role is oversight. I'm not the expert on each function's compliance. My role is to be sure the functions are doing what they said they'd do." He recommended close listening, frequent compliments, and giving employees the opportunity to "tell on themselves" if something has gone wrong.

In the ethics area, Gnazzo pointed out that everyone has his or her own opinion of what "ethics" means. The definition for the company, he argued, should not come from the ethics officer or even the CEO but from the board of directors, who are ultimately responsible for corporate behavior. The average tenure of today's CEO is less than half that of a board member.

To spread the corporation's values throughout the organization, "open communication is paramount," Gnazzo said. The company needs to tell employees, "We really want to know what you think," and then to thank individuals when they raise issues. Gnazzo has always taken a strong anti-retaliation stance. "If someone asks me what my real job is, I say, it's to protect employees who speak up."

Reflecting on approaches he tried that didn't work, Gnazzo mentioned "trusting everyone to do the right thing." While he doesn't think a compliance officer should be a cop, he advised, "Don't be shocked when you find out people are acting unethically. People can find loopholes in just about everything."

Oct 7, 2015

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Compliance

The Important Distinction Between Ethics and Compliance

Michael Volkov

November 3, 2014

Compliance, Ethics

I know that I can be a stickler for details sometimes. Ask my children. Ask my wife.

So, when it comes to compliance, I repeat myself often when I remind everyone: it is ethics and compliance, not just compliance.

Let’s be honest – it is more than a mouthful to say Chief Ethics and Compliance Officer, as opposed to just Chief Compliance Officer. But as I often say, ethics is the key. Why?

Legal compliance is one thing, code of conduct compliance is another and ethical compliance is even another level above. The consideration of ethics as a fundamental value to a company elevates everyone’s performance. An ethical focus is more than just legal compliance – can we engage in the conduct without creating significant legal risks? Instead, an ethical focus turns to an important consideration: while the conduct may be legal, is it ethical? Is the conduct consistent with our corporate values and something we want to promote within the company?

These are important questions that transcend the issue of legal liability. Why are they important?

A culture of ethics is a low-cost means by which to promote legal compliance. Am I speaking out of both sides of my mouth? No. The best way to ensure legal compliance is to promote a culture of ethics.

More importantly, an ethical culture benefits a company in several significant respects: employee morale improves, employee misconduct declines, employee willingness to report any misconduct increases and overall corporate profitability and sustainability of operations increases.

These positive effects are not trivial – they can be the difference between success and failure in a competitive market. Companies have to recognize the significance of an ethical culture as a means to promote profitability and competitive advantage.

It is important to remember that an ethical culture is not very expensive. It does not require significant expenditures; it does not require significant resources.

An ethical culture depends only on commitment. It requires companies and senior leaders to maintain focus and to follow up by asking the question – what are we doing to ensure that our culture is communicated and reinforced in every aspect of our business?

Another way to think of culture is to require disciplined thinking – a company and its managers (senior, mid-level and lower-level managers) have to ask how they are communicating and reinforcing the corporate culture of ethics. It is not as hard as everyone thinks and just requires some creative approaches to an otherwise natural question – how can we promote a culture of ethics?

Another important consideration is that promoting an ethical culture is a “feel good” task. It is a positive message and everyone reacts well to a positive message. Managers and employees want to work for an ethical organization that promotes integrity. We want to work for an organization that adheres to high standards because we all believe in our own integrity and ourselves.

A company that is ethical promotes our own feeling of self worth and we need that feeling to commit to work and self-actualization. I know this all sounds too heavy for a compliance and ethics perspective, but it is real and palpable. We all have seen and felt organizations that give us a positive feeling and reinforce the good in each of us. Ethics is nothing more than that.

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RISK: An Organizational Perspective

CAPA & Internal Audits: A Medical Device Manufacturer’s Best Friend

Michael Volkov

Michael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services. He can be reached at mvolkov@volkovlaw.com.

Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues. Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for five years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice.

Michael also maintains a well-known blog: Corruption Crime & Compliance, which is frequently cited by anti-corruption professionals and professionals in the compliance industry.

2024 Bribery & Corruption Global Outlook

by Corporate Compliance Insights February 8, 2024

2024 promises shifting dynamics in election year Global Analysis 2024 Bribery & Corruption Outlook What’s in this report from Hogan...

Albemarle FCPA Enforcement Action

by Corporate Compliance Insights December 11, 2023

What does ‘timely’ self-disclosure really mean? Albemarle FCPA Enforcement Action A Lesson in Timeliness? What’s in this whitepaper from Tom...

2023 FCPA & Anti-Bribery Alert

by Corporate Compliance Insights December 7, 2023

2023 anti-bribery & enforcement actions in the U.S., China, France, Brazil & the UK 15th annual report 2023 FCPA &...

Corruption Down Under (Part II): New Zealand Losing Its Grip

by Calvin London October 11, 2023

Failure to fund anti-corruption efforts threatens NZ standing

CAPA & Internal Audits: A Medical Device Manufacturer’s Best Friend

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imtoken任务下载|ethics and compliance

imtoken任务下载|ethics and compliance

Role of Ethics and Compliance in the Workplace | PowerDMS

What's The Difference Between Compliance And Ethics?

Ethics vs. Compliance: Is There a Notable Difference? | BoardEffect

Home - Ethics & Compliance Initiative

Building an Ethical Company

5.5 Ethics, Corporate Culture, and Compliance - Principles of Management | OpenStax

Five Keys to Reducing Ethics and Compliance Risk - Free Ethics Toolkit

Role And Responsibilities of Ethics and Compliance - Markkula Center for Applied Ethics

Difference between Compliance and Ethics | Corporate Compliance Insights

Knowledge Center - Ethics & Compliance Initiative

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