Breaking Down the Basics: Ethics & Compliance Programs
Ethics and compliance (E&C) programs typically aren’t thought of as exciting components of the workplace, but they are one of the most important. When executed properly, E&C programs have an extremely positive effect not only on an organization’s culture, but also on employee decision-making and overall performance levels. Because ethics and compliance programs are layered with laws, rules and regulations, unmasking the basics behind these programs may seem daunting. Let’s breakdown what an E&C program is, what makes it effective, and what goals you should have for your program.
What Is an “Ethics and Compliance Program?”
The U.S. Sentencing Guidelines states that an E&C program is designed to prevent and detect criminal conduct, and promote an organizational culture that encourages ethical conduct and a commitment to compliance within the law. Ethics and compliance solutions firm LRN conducts an annual survey of Ethics and Compliance Program Effectiveness. According to survey data, the most effective E&C programs don’t “do” ethics and compliance—they help their businesses to live them through a core set of values.
Ethics and compliance programs are not one-size-fits-all. However, the Federal Sentencing Guidelines name seven regulatory “hallmarks” of an effective E&C program:
- Program structure, responsibility and resources
- Program oversight
- Written standards
- Training and communication
- Due care
- Detection, monitoring and auditing
- Enforcement and discipline
These “hallmarks” embody broad principles that allow for flexibility and independence. Each organization can tailor programs to their specific needs and unique risks faced in their workplace.
Research found that E&C programs have the best results if they are based around a set of goals that align with the company’s entire operations and priorities. Companies with the most effective programs rated the following goals to be most important:
- Promote alignment between core values and day-to-day operations
- Improve risk management capabilities
- Increase employee comfort with speaking up
- Meet all regulatory requirements for “effective” E&C programs and best practices
- Improve third-party oversight and management
- Strengthen ethical leadership
- Adapt program to changing business needs
- Improve program measurement
- Strengthen ethical culture