Doing the Right Thing — as a Matter of Policy

QUESTION: One of my salesmen lied to a customer in order to keep business, and it backfired. I went to chew him out when he reminded me that I’ve done the same thing, I just haven’t been caught. I didn’t know how to react.

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Whenever unethical conduct is exposed, you hear excuses like, “I didn’t know it was wrong,” and “Everyone does it.” What you rarely hear (even though it applies 90% of the time) is, “I thought I could get away with it.”

A strong corporate ethics or compliance program can remove the excuses. Without excuses, responsibility sits squarely on the shoulders of the decision maker. Without excuses, temptation is much less attractive.

For example, by clarifying and communicating the values, principles, and standards of the organization-and by supporting these explicit statements with ongoing training and education-the excuse of ignorance is defeated.

Impartial enforcement of the rules-and application of explicit consequences-take care of the myth that “everyone does it.” Winking at misconduct when the results are positive only encourages excuses that can lead to serious damage.

Monitoring, auditing, and internal reporting heighten the awareness of ethics and compliance issues and their impact on the firm. Effective supervision also makes “getting away with it” much harder to imagine.

The most potent element of an effective ethics or compliance program is senior management’s rock-solid commitment to lead by example in an organization where the law is respected and upheld, where the truth is told and promises are kept, where hard decisions are made with courage and justice, and where integrity is the key to success.

Here, it’s important to remember what ethics compliance really means.

“Ethics” emphasizes the commitment to corporate integrity that is required for ethical performance. “Compliance” describes the focus on the rules and controls designed to detect and prevent wrongdoing. While either approach can yield results that meet legal and regulatory requirements, realistically neither can succeed on its own. Rules without integrity are unreliable; integrity without rules is exceedingly rare.

Two years ago, the federal Competition Bureau issued an Information Bulletin on Corporate Compliance Programs, intending to encourage companies to adopt internal programs of compliance with the Competition Act. But its five points can be a strong model for any corporate program to encourage responsible decisions:

o Do as you say. Corporate integrity begins with senior executives visibly and actively setting an example of respect for the rules. In this way, senior management sends a clear message that unethical and illegal behaviors are not acceptable business practices.

o Develop relevant policies and procedures. These should include a statement by the chief executive officer of commitment to the program and its policies and procedures. It should provide a practical code of conduct that identifies unacceptable activities and provides examples. It is essential that all employees be familiar with the code.

o Train and educate. Communicating content, developing skills and sharpening awareness take more than publishing a code or manual. A training program is required that targets personnel at all levels who are in a position to engage in or be exposed to anti-competitive conduct.

o Continuously assess. Compliance audits test and ensure the effectiveness of the system. They keep awareness high and help prevent unintended errors. Implementing a safe and user-friendly means of internal reporting of potential problems is suggested as part of the assessment process.

o Don’t be afraid to lay down the law. All employees must know the consequences of breaching the policy. There must be a clear and effective process for advising and reporting. The penalties for a breach of law or policy need to be clearly spelled out and consistently applied.

None of these guidelines for an effective compliance program is new; many companies have already implemented some or all of them. The message is that an ad hoc or informal program is not adequate. All of the above elements are essential, and they must be managed as an integrated program in order to be effective.

Implementing an effective compliance program that addresses both illegal and unethical conduct is simply good business. It can help a company avoid both adverse publicity and financial loss, and it will enhance understanding of what is acceptable behavior so that legitimate competitive practices can be vigorously pursued without undue worries about wrongdoing.