{"id":237,"date":"2014-02-13T18:24:52","date_gmt":"2014-02-13T17:24:52","guid":{"rendered":"https:\/\/blog.iese.edu\/ethics\/?p=237"},"modified":"2015-04-08T16:50:48","modified_gmt":"2015-04-08T15:50:48","slug":"compliance-as-a-tool-of-ethics","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/ethics\/2014\/02\/13\/compliance-as-a-tool-of-ethics\/","title":{"rendered":"Compliance as a Tool of Ethics"},"content":{"rendered":"

The first time I heard the term \u201ccorporate compliance<\/strong>,\u201d I must confess it didn\u2019t sit well with me.\u00a0 The term seemed<\/strong> to transform social responsibility \u2013 or worse yet, ethics \u2013 into mere compliance with policy, norms and rules as dictated by law and regulation or corporate self-regulation<\/strong>. (An example of the latter would be best practices established by a company or trade association.)\u00a0 Of course my initial reaction was, \u201cthis can\u2019t be it.\u201d<\/p>\n

\"Canada<\/a>
Canada – Alberta Solicitor General and Public Security’s Sheriff, by Inventorchris<\/figcaption><\/figure>\n

This cannot be it because\u00a0social responsibility or ethics cannot be reduced to a checklist.\u00a0 <\/span><\/a>\u00a0\u201cBut, hey, if we\u2019ve checked all the boxes, we are responsible, right?\u201d\u00a0 As the saying goes, every rule is\u00a0 made to be broken<\/strong>, or at least every law has its loophole.\u00a0 As occurs frequently, companies can go to great lengths to \u201ccomply\u201d with the law on the surface, while slipping irregularities through loopholes<\/strong>.\u00a0 The worst part is that this type of \u201ccompliance\u201d is all about appearance:\u00a0 As Marx said (not Karl, Groucho), \u201cThe secret of life is honesty and fair dealing.\u00a0 If you can fake that, you\u2019ve got it made.\u201d<\/strong><\/p>\n

And yet, I think I have come to terms with the concept of \u201ccompliance\u201d as \u201cregulatory compliance.\u201d\u00a0 However I do still think there is the risk of misinterpretation<\/strong>, and this possibility is actually very appealing to many companies.\u00a0 Indeed, it is merely about an instrument and not about social responsibility\u2019s essence.\u00a0 Here essence is key, for without it we can end up with the manipulation of compliance mentioned before.\u00a0 And of course, instruments are as necessary as the essence for without them, social responsibility would go no further than lip service and good, yet futile, intentions<\/strong>.<\/p>\n

Why is Compliance Necessary?<\/h3>\n
\"The<\/a>
The Book of the General Laws of the Inhabitants of the Jurisdiction of New-Plimouth.<\/figcaption><\/figure>\n

Compliance is in fact necessary for one additional and very important reason<\/strong>.\u00a0 Many countries, including Spain, are introducing legislative changes that oblige companies to adapt their practices to certain standards.\u00a0 This precisely is the task of the regulatory compliance department<\/strong>.\u00a0 Those legal changes force companies to assume the responsibility for their management and employees\u2019 actions<\/strong> unless they can demonstrate that they have done everything possible to curb or dissuade inappropriate conduct.<\/p>\n

Some examples would be adhering to fiscal regulation and transparency in financial reporting<\/strong>, corporate activities that have an environmental impact<\/strong>, and HR hiring practices that could be discriminatory<\/strong>.<\/p>\n

This means that companies have to be able to demonstrate, for example, that they offer employees training about how to avoid corrupt practices providing guidelines and insights about the resources available to confront such activity if they should come across it<\/strong>.\u00a0 It also means that a company carries out regular oversight to identify inappropriate activity, especially that which is not isolated but rather organized and coordinated across the organization.\u00a0 In other words, this goes well beyond actions by particular departments or divisions<\/strong>, whether the legal department, marketing, HR, finance, etc.; this is the duty assigned to the regulatory compliance department, whether under this name or another.<\/p>\n

This means that a company should definitely be concerned about ethics and social responsibility<\/strong> and utilize the corresponding department to carry out part of the related task:\u00a0 to unify guidelines for actions, organize training, develop the necessary oversight systems (certainly not for everything, but rather for the areas most directly related to social responsibility and ethics) and coordinate this approach with all departments, mainly with legal.<\/p>\n

Compliance is not the beginning and end of social responsibility<\/h3>\nCompliance is not, the beginning and end of social responsibility <\/span><\/a>, but it does have a very important role to play, as much in the legal realm<\/strong> (compliance with the law), as the regulatory realm<\/strong> (compliance with technical, environmental and product safety regulations, etc.) and within social responsibility<\/strong> (observing best practices, the development of authorization processes, supervision, execution, information and control, development of reports, etc.)\u00a0 And that is not everything, for social responsibility should have a place in everything<\/strong> \u2013 strategy, policy, the day-to-day \u2013 and not because the law says so or because a regulatory agency could otherwise impose sanctions; not even because the internal code of ethics says so.\u00a0 Instead, compliance is carried out because it is the right thing to do<\/p>\n
\"Picture:<\/a>
Picture: Gavel (Flickr)<\/figcaption><\/figure>\n

The existence of a body whose purpose it is to ensure compliance<\/strong> would certainly be able to detect legal violations or behavior that goes against company policy; it would be able to promptly inform the corresponding parties that should be aware of and resolve these problems, and take the necessary measures so that the breach can be corrected and so that the correction be integrated, if appropriate, into future practices, procedures and routines within the organization. It is in the end, a highly effective policy to reduce risks<\/strong>.<\/p>\n

To summarize, companies in developed countries have the legal obligation to comply with regulation. Yet doing so is also desirable in many cases for the smooth functioning of an organization.\u00a0 It would be wise, then, for companies to get a head start in implementing regulatory compliance since it will help them to avoid problems and unnecessary costs<\/strong>.\u00a0 Above all, compliance will yield better practices and a greater sensitivity about the topic<\/strong>, which at the same time is likely to be a competitive advantage<\/strong> with regard to other companies.<\/p>\n

This is especially the case if you consider that compliance is not a passing fad, but rather, that it is on its way to becoming a regular practice <\/span><\/a>\u00a0\u2013 if it has not already done so.\u00a0 It affects the entire organization, starting at the top, where it really needs to be taken seriously. (The suspicion that the boss is only really worried about paying lip service to the law or implementing cursory compliance will kill any chance that it has in becoming something beneficial for the entire organization.)\u00a0 The key is not about following the law, but rather it lies in instilling within the company the conviction that doing so is not an option<\/strong>, the understanding of why it must be followed and why it is actually in the organization\u2019s interest.\u00a0 This is not only a legal issue but also ethical<\/strong>.\u00a0 And it is also about good governance and social responsibility<\/strong>.\u00a0 Certainly, we either strive for excellence or compliance becomes a dead weight <\/span><\/a>.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The first time I heard the term \u201ccorporate compliance,\u201d I must confess it didn\u2019t sit well with me.\u00a0 The term seemed to transform social responsibility \u2013 or worse yet, ethics \u2013 into mere compliance with policy, norms and rules as dictated by law and regulation or corporate self-regulation. (An example of the latter would be […]<\/p>\n","protected":false},"author":172,"featured_media":244,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[362,1189],"tags":[76072,91591,255],"coauthors":[],"class_list":["post-237","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-ethics","category-regulation","tag-corporate-compliance","tag-ethics","tag-social-responsibility","megacategoria-mc-business-ethics-and-corporate-social-responsibility"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/posts\/237","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/users\/172"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/comments?post=237"}],"version-history":[{"count":5,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/posts\/237\/revisions"}],"predecessor-version":[{"id":247,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/posts\/237\/revisions\/247"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/media\/244"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/media?parent=237"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/categories?post=237"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/tags?post=237"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blog.iese.edu\/ethics\/wp-json\/wp\/v2\/coauthors?post=237"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}