Ethics and Compliance About More Than Just Rules, Survey Says

New data from LRN Corp. indicates that basing an E&C program on values, rather than rules, may be the way to go.

When it comes to making investments in ethics and compliance programs, it’s best for companies to keep their efforts focused on a values-based approach, according to a new report.

The 2018 Ethics and Compliance Effectiveness Report, released by consulting firm LRN Corp., found that values-based ethics and compliance programs are more effective at encouraging ethical behavior than those focused on processes and rules.

Some 78 percent of respondents whose E&C programs rated as high performers on LRN’s Program Effectiveness Index said in the past five years their programs have increasingly focused on values, not just rules.

The report points out the countless number of organizations in the past year that have been upended by sexual harassment scandals. “Many of these organizations have invested in ethics and compliance programs … but such measures didn’t prevent the unethical behavior itself,” the report said.

The report continued, “These scandals graphically illustrate the gap between talking the talk and walking the walk when it comes to maintaining an ethical workplace.”

Last February, the Fraud Section of the U.S. Department of Justice released a memorandum on how corporate compliance programs should be evaluated. And per the criteria, LRN asked respondents if their organizations perform a root-cause analysis when misconduct arises to determine the underlying causes.

According to the report, the vast majority of companies do. Eighty-nine percent of high-performing companies said they do such an analysis, and only 11 percent do not.

Most organizations reported that the human resources function is tasked with conducting the root-cause analysis.

Additionally, 77 percent of respondents with high-performing E&C programs on the PEI scale said their organizations’ consideration of ethics and compliance risks or factors led to the substantial modification or to the abandonment of a business initiative. From that group, about 23 percent said this occurs “sometimes,” and 54 percent said it happens “regularly.”

This article was written by Stephanie Forshee, originally published by Corporate Counsel.