Setting The Bar

Ensuring Integrity In Your Organization

In today’s marketplace, a commitment to integrity is essential for every business. Not only does it ensure that employees will uphold organizational values and comply with the law, but when problems do occur, many regulatory and enforcement agencies offer credit if an organization demonstrates that it has an effective ethics and compliance program in place.

As a business leader, you may think to yourself: “My organization has an ethics and compliance program, so we’re all set.” But is your company doing enough? “Most business leaders today believe that their programs are sufficient,” says Patricia J. Harned, Ph.D., CEO of the Ethics & Compliance Initiative (ECI), a research nonprofit devoted to fostering integrity in the workplace. “Unfortunately, however, our research has shown that most organizations have not done enough to truly ensure integrity in their operations.”

WHAT CAN GO WRONG?

News headlines indicate that a variety of new business risks are surfacing daily. And with those risks comes the potential for misconduct. In fact, through its 2018 Global Business Ethics Survey (GBES®)—a longitudinal study of workplace ethics—ECI found that, on average, 47% of employees observe misconduct each year. Not all of those issues lead to enforcement action, but the consequences can be severe when they do. For example:

• In 2019, The Foreign Corrupt Practices Act (FCPA) Blog reported, based on the U.S. Department of Justice’s reported enforcement actions, that three companies paid a total of $583 million to resolve FCPA violations.

• In 2018, based on the U.K.’s Serious Fraud Office’s published cases, consultancy.uk reported triple the number of raids executed in 12 months to gather evidence for criminal investigations—“hitting its highest frequency in six years.”

• In 2018, the U.S. Securities and Exchange Commission (SEC) reported that its “whistleblower program” had collected over $1.7 billion in sanctions since its inception. • In 2018, while the number of corporate non-prosecution agreements and deferred prosecution agreements in the U.S. stayed the same, “the monetary recoveries skyrocketed to nearly $8.1 billion,” reported the law firm Gibson Dunn.

THE BENEFITS OF ETHICS & COMPLIANCE

ECI’s research shows that ethics and compliance programs can help mitigate the risk of noncompliance in an organization. Regardless of its size or industry, when an organization establishes a compliance program—even if it’s only focused on regulatory standards or the law—there are measurable benefits. According to the 2018 GBES survey, employees are:

Leaders need to commit to a high standard of integrity to truly mitigate the risk of wrongdoing.” LARRY D. THOMPSON FORMER DEPUTY ATTORNEY GENERAL, U.S. DEPARTMENT OF JUSTICE

• More than two times more likely to report suspected wrongdoing to management

• Almost four times more likely to express satisfaction with their company’s response to their report

• More than four times more likely to say they work in a strong ethical culture “Every effort that a company undertakes makes a difference,” Harned says.

QUALITY MATTERS

One drawback of a compliance program that only complies with the law, however, is that it doesn’t necessarily reduce misconduct. “An organization is not doing enough if it measures the success of its compliance program by its ability to satisfy enforcement or regulatory standards,” says Larry D. Thompson, former U.S. deputy attorney general and chairman of the ECI. “Leaders need to commit to a high standard of integrity to truly mitigate the risk of wrongdoing.”

Since 2015, ECI has worked to determine the profile and metrics of organizations that are highly effective in reducing risk of noncompliance. Through an extensive effort by an independent “Blue Ribbon Panel,” as well as research and the ongoing work of ethics and compliance practitioners, ECI established its “high-quality program” (HQP) framework to help organizations define and achieve success. According to ECI’s research, the impact of implementing an HQP is dramatic. Employees are:

• 546% more likely to say they work in a strong ethical culture

• 467% more likely to demonstrate integrity