This week, in this podcast series on the FCPA Compliance Report, I visit with Patricia Harned, Ph.D., the Chief Executive Officer (CEO) of Ethics and Compliance Initiative (ECI), about the firm’s 2018 Global Business and Ethics Survey (GBES). There were four GBES reports released by ECI in 2018: Q1-The State of Ethics & Compliance in the Workplace; Q2-Measuring the Impact of Ethics & Compliance Programs; Q3-Building Companies Where Values and Ethical Conduct Matter; and Q4-Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It. Today, we consider final reflections, where compliance may be heading and what the regulators may be thinking about corporate compliance.
I began by asking Harned about where she thinks the regulators may be headed on compliance; both the prosecutors at the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Harned noted that ECI is privileged to have opportunities to talk with the DOJ and other enforcement agencies about this very topic, both in this past year and in prior years. “First of all is increasing awareness by enforcement agencies regarding their influence on the behavior in our industry, but also with business leaders more broadly. They have a greater understanding that if they make an enforcement decision or declined to prosecute and they focus on one part of any effective compliance, it draws an immediate amount of attention. This has led them to think more broadly about not just to focus on certain program elements but on overall compliance program effectiveness.”
Harned believes we will continue to see the regulators advance the dialogue around compliance program effectiveness and she added, “one of the things that ECI has tried to do and will continue to do, is to also challenge the enforcement community to think encouraging higher quality programs.” While having a minimum standard program does make some difference, a company that really invests in a high-quality program receives much better results. To the extent that regulators help reinforce that message, they are helping to improve business behavior across all industries.
We next consider the evolution of compliance from a rules-based paper program to a more proactive approach to compliance. A rules-based approach comes “from creating boundaries and guidelines for employees based on things that have happened. You can never have enough rules to anticipate all of the challenges that are on the horizon.” This is why compliance has “evolved to a more proactive mindset and a proactive approach.” One of the manners in which an organization can act “is to focus on having a set of core values that articulate not just how and where are the outer boundaries are but instead focuses on the way an organization wants to do business.”
Your company should focus on culture. This means institutional justice and institutional fairness. So are you creating an environment where people feel free to raise concerns? Will employees come forward and report wrongdoing? These are things help to help an organization to think more broadly about what the compliance and cultural challenges are ahead and does it have an environment where people will alert the company if there are things it needed to know about.
We concluded by exploring technology but not focusing the discussion on the new technological innovations that help to make the compliance practitioner more efficient, rather we explored the human side of compliance and the need, even with all of the explosion of tech we have seen in compliance, for the human element now.
Harned said that while Artificial Intelligence (AI) is one of the examples of new technologies available to the compliance practitioner; it is also “one of the primary examples of what happens when you remove the human element from ethical decisions.” This will be one of the challenges in front of compliance professionals and organizations. She pointed to the example of “self-driving cars. In this field there are decisions that have to be made by a machine, by a programmed entity about in certain circumstances of what may be the best of all bad options. In some of these bad options, there are risks to people’s wellbeing.” She asked the question, “How does that decision get made?”
For Harned, the “bottom line, is that ethics is about trying to treat people well and doing good by others.” Yet there may be an ethical decision which has to do with making a decision, where “the outcome of which affects other people and you’re trying to do good in the world as opposed to doing harm or doing the wrong thing.” This quandary brings up the human element of compliance. Harned concluded, “You’re never going to be able to come up with rules to anticipate all of the risks on the horizon or how people will behave in certain situations. You can also never program a machine or create software that can anticipate all the human elements of an ethics issue that.”
I hope you enjoyed this blog series and the five-part podcast series summarizing the 2018 ECI Global Business Ethics Survey. The information can help you benchmark your compliance program, business ethics and corporate culture. I look forward to reporting on the 2019 GBES.
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© Thomas R. Fox, 2019