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Ethics and Compliance Program Developments    

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Ethics and Compliance Program Developments    

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Companies begin establishing codes of conduct and values statements

Birth of social responsibility movement

Corporations address ethics issues through legal or personnel departments

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Environmental issues

Increased employee-employer tension

Civil rights issues dominate

Drug use escalates

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Ethics and Compliance Program Developments

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Ethics and Compliance Program Developments

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OECD issues Good Practices Guidance for anti-bribery compliance programs

Passage of Dodd–Frank Wall Street Reform and Consumer Protection Act

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Appropriate use of big data

Social media and networking as agents of positive change and new areas of vulnerability

Tension between increasing transparency and loss of privacy

Identifying common standards and values in increasingly diverse workplaces

Responsible use of technology and social media in the workplace

Facilitating productive relationships in multigenerational workplaces

Responsibility to shareholders and responsibility to larger society

Best strategies for hiring and retaining talented employees in increasingly fluid labor market

Extent to which business should be responsible for environmental sustainability

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Ethics and Compliance Program Developments

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Ethics and Compliance Program Developments

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Anticorruption efforts grow: OECD Convention on Bribery (1997-2000); UN Convention Against Corruption (2003); UN Global Compact adopts 10th principle against corruption (2004)

Business regulations mandate stronger ethical safeguards (Federal Sentencing Guidelines for Organizations; Sarbanes-Oxley Act of 2002)

Stronger emphasis on corporate social responsibility and integrity management

Thompson Memo issued by US DOJ requires prosecutors to consider corporate ethics and compliance programs when making charging decisions.

Revised Federal Sentencing Guidelines for Organizations (2004)

Merging of ethics and compliance functions. Ethics Officer Association becomes Ethics and Compliance Officer Association (ECOA).

ERC research proves that strong ethics and compliance programs drive the development of ethical corporate cultures and the two together reduce ethics risk.

E&C field works to articulate best practices for chief ethics and compliance officers (CECOs).

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Cyber crime

Privacy issues (data mining)

Financial mismanagement

International corruption

Challenge of negotiating ethics standards of numerous cultures in increasingly global business climate

Intellectual property theft

The role of business in promoting sustainable development

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Increasing distrust and cynicism of corporate America. Occupy Wall Street and growing frustration over income inequality and pay gaps between C-suite and rank-and-file workers. Unprecedented level of workplace diversity. Higher expectations for transparency from companies and corporate leaders. Millennials, largest work cohort in history, are savvy about and connected to technology and social networks; less tied to particular employee or career paths; more comfortable with diversity and with ethical ambiguities.

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Unprecedented economic growth is followed by financial failures. Combination of excessive risk-taking and lack of effective controls destroys high-profile firms. Personal data is collected and sold openly. Hackers and data thieves plague businesses and government agencies. Acts of terror and aggression occur internationally, including 9/11 in the US. Great Recession takes a toll on faith in U.S. economy and institutions. Workers, whose parents experienced layoffs 20 years prior, are less loyal to companies and frequently change jobs, resulting in knowledge loss and increased competition from rival firms.

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Ethics and Compliance Program Developments

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Ethics and Compliance Program Developments

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Federal Sentencing Guidelines for Organizations (1991)

Class action lawsuits (e.g., Pacific Gas & Electric, Tobacco Master Settlement)

Professionalization of ethics function; launch of Ethics Officer Association (EOA) in 1992

Transparency International releases its first annual Corruption Perceptions Index in 1995.

ERC conducts first national survey of state of ethics in US companies.

In Caremark Delaware Chancery, court rules board members can be held personally responsible for lack of oversight of organization's ethics.

IGs requiring voluntary disclosure

Royal Dutch Shell International begins issuing annual reports on their ethical performance.

Global Sullivan Principles (1999) engage corporations in fight for human rights and social justice.

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Unsafe work practices in third world countries

Increased corporate liability for personal damage (cigarette companies, Dow Chemical, etc.)

Financial mismanagement and fraud

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Global expansion brings new risks. There are major concerns about child labor, facilitation payments (bribes), and environmental issues. The emergence of the Internet challenges cultural borders.

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Ethics and Compliance Program Developments

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Ethics and Compliance Program Developments

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Creation of the U.S. Code of Ethics for Government Service (1980)

General Dynamics establishes the first business ethics office (1985)

Defense Industry Initiative established (1986)

Some companies create ombudsman positions in addition to ethics officer roles

False Claims Act (government contracting)

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Bribes and illegal contracting practices

Influence peddling

Deceptive advertising

Financial fraud (savings and loan scandal)

Transparency issues arise

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The social contract between employers and employees is redefined. Defense contractors are required to conform to stringent rules. Corporations downsize and employees' attitudes about loyalty to the employer are eroded. Health care ethics emphasized.

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Ethics and Compliance Program Developments    

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Ethics and Compliance Program Developments    

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Foreign Corrupt Practices Act of 1977

Business ethics as a discipline is in its infancy

Increased discussion of ethics and the importance of being "values centered" instead of merely adhering to the law

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Major Ethics and Compliance Issues

Employee militancy (employee versus management mentality)

Human rights issues surface (forced labor, sub-standard wages, unsafe practices)

Some firms choose to cover rather than correct dilemmas

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Defense contractors and other major industries riddled by scandal. The economy suffers through recession. Unemployment escalates. There are heightened environmental concerns. The public pushes to make businesses accountable for ethical shortcomings.

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Social unrest. Anti-war sentiment. Employees have an adversarial relationship with management. Values shift away from loyalty to an employer to loyalty to ideals. Old values are cast aside.