What is the difference between integrity based ethics programs and compliance

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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?

1. 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.
2. 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.
3. 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.

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