Can Ethics be Monitored?

THE JOURNAL OF PRACTICAL BUSINESS ETHICS
JULY/
AUGUST 2017
Vol. 31 | No. 4
A PUBLICATION FROM THE SOCIETY OF CORPORATE COMPLIANCE AND ETHICS
Cyber security crisis:
From the front lines
of corporate law
page 1
What the U.S. Army
can teach business
organizations
about ethics
page 6
corporatecompliance.org/ethikos

Can ethics be monitored?
BY ROBIN SINGH
W
hat is ethics?
There is no standard definition of the word ethics.
The Macmillan Dictionary describes ethics as a set of
principles that tell people what is right and wrong. This is remarkably
similar to the definition for morality, except that morality is
about what society considers to be right and wrong. Ethics is more
personal, and because every person thinks differently, his/her ethics
could be different from the next person.
But broadly speaking, it is about putting others first, above self.
Professional/workplace ethics is easier. There wouldn’t be many
people, if any at all, who think it is ethical for a doctor to prescribe
the drugs of a manufacturer that pays for his vacation. For a lot
of business practices, high ethical standards are accepted by many
without question, mostly because they agree with the personal
ethics of the people concerned. Corporate ethics are the hardest,
because both ends of the spectrum could agree with one’s own
personal ethics. For instance, some might think it is alright to do
business with a firm located in a country that is politically opposed
to the country where the organization is located. Others might feel
it is politically incorrect, and hence unethical. Yet others might
hold views that fall somewhere in between—they might think it
depends on the nature of goods/services involved.
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ethikos July/August 2017 19

The role of perception
Perception is one key element which can make
or break the ethical barrier. Perception is like
the smoke before the fire in a pile of wood.
For instance, if employees perceive a CEO to
have loose character, then that could be detrimental
for the company and team as well. On
the other hand, if a CEO is perceived to be a
person with character, they will be seen as a
person with ethics and that will be beneficial
for the company and the company’s shareholders.
In the end, a simple perception can make
or break a person’s viewpoint toward another.
The role of a compliance officer to
monitor ethics
There is no point to talking about ethics if
they are not going to be monitored for compliance.
The latter is otherwise known as
“walking the talk” and a full-time compliance
officer is necessary to ensure this.
In some sectors, like the pharmaceutical
and/or life science industries, ethics is of the
utmost significance. Ethics are closely tied to
regulations that govern research, and a compliance
officer ought to be well-versed in all
aspects of the company and also where possible
breaches of the regulations are likely to
occur. It would be the compliance officer’s job
to communicate the organization’s key ethics
principles and organize periodic training sessions
so that everyone knows what is expected
of him/her at work.
Compliance officers must, therefore, be
people of integrity as their job would require
them to review others’ work. They need to
have a keen eye for detail so they are able to
notice violations and possess excellent interpersonal
and communication skills. They must
not be willing to let their professional working
relationships take precedence over the company’s
code of ethics.
Compliance program is the key for
guiding ethics
A compliance program must list out which are
the ethical guidelines to be followed. It must
also identify possible breaches and the penalties
associated with each violation.
The point is to build ethics into the compliance
program. The compliance program
should outline who is responsible in case of a
breach. At ethical companies, managers willingly
take responsibility for any shortcomings
in compliance within their business unit. They
realize it is their job to ensure compliance
by their subordinates. The more ethics are
included into the compliance program, the less
of a burden it will become on these managers
20 July/August 2017 ethikos
This article appears with permission from the Society of Corporate Compliance & Ethics. Call +1 952 933 4977 or 888 277 4977 with reprint requests.

and others who are placed in charge of compliance.
This happens as the right decisions are
always taken every time, with respect for both
people and processes.
Ethical companies also make it possible for
employees to anonymously report violations
of the code of ethics at the workplace. This is
part of the compliance program and makes it
easier to take remedial action before things get
out of hand.
Thought leaders propose two varied lines
of thought when it comes to internal reporting
in a compliance program. One thought is,
should reporting be optional, giving a person
a choice to report? The other line of thought
suggests making reporting mandatory, where a
person must report a witnessed unethical act,
fraud, or misconduct.
Does it make a difference? Well, in my
opinion, it is not the line of thought, but
rather “doing the right thing.”
By itself, a well-designed compliance program
would ring the alarm bells even before
the ethics compliance violation occurs. This
requires a thorough understanding of processes
at the organization when framing the
compliance program. If anything is headed
on the wrong path, the senior management
can step in and set things right before any
damage is done.
How to ingrain ethical culture
Good organizations realize that it is their
employees, not regulations, which drive the
company forward. They lay as much emphasis
on ethics as skill upgradation.
The only way to ensure that a culture of
ethics is ingrained in the minds of the employees
is for the top leadership to set an example.
When senior executives practice ethics, it has
the effect of percolating down to the lower
layers. Some companies don’t leave it to their
This article appears with permission from the Society of Corporate Compliance & Ethics. Call +1 952 933 4977 or 888 277 4977 with reprint requests.
ethikos July/August 2017 21

compliance officers to conduct training workshops
on corporate work ethics—they have
their senior managers do it themselves. This
sends the message out loud and clear that the
organization is one which stands for ethics.
Anyone who wishes to be a part of the company
must follow the code of ethics that has
been laid down. No one is exempt, be he the
chairman or the doorman.
To further reinforce this, the consequences
of not being ethical are informed
to every employee at the time of joining.
Companies could do well to build a culture
where those pointing out possible breaches
are not victimized in any way. Those who
engage in unethical practices are also not to be
rewarded, even if those result in revenue for
the company.
but water, sugar, and chemicals. Instead of
withdrawing the product from the shelves,
he chose to let the status quo continue. An
FDA investigation led to the company being
fined $25 million for mislabeling and adulteration.
The profit they stood to make was only
$700,000 at the time. Beech-Nut subsequently
went out of business.
Ramification on compliance officer and the
CEO for not monitoring ethics in the eyes of
the stakeholder
It is the responsibility of the compliance officer
to work closely with business units within
the organization to put in place appropriate
contingency plans in the event of a breach—if
word gets out, it could result in the company
being censured by regulatory authorities.
The loss to the share value notwithstanding,
fines imposed may amount to millions of
dollars. This is why the compliance program
is headed by a Chief Compliance Officer
at large institutions. The CCO’s role is
such that even the members of the Board
are not exempt.
At Beech-Nut, the CEO discovered
that the concentrate used by the company
for its “100% pure apple juice” was nothing
If an organization is not ethical, it will not
have customers. It will also lose the respect
of its peers in the industry; and over the long
term, it will find itself struggling to survive.
The CEO’s job is to review the code of ethics
periodically and make changes as necessary, in
tune with the changing business environment.
One cannot monitor individual’s ethics but can
develop a framework for employees to “operate
by a code” for which a management plays a
key role to set the right tone at the top. •
Robin Singh (robinsingh002@yahoo.com) is Senior
Compliance & Fraud Control Officer at Abu Dhabi Health
Services Company in Abu Dhabi, UAE.
22 July/August 2017 ethikos
This article appears with permission from the Society of Corporate Compliance & Ethics. Call +1 952 933 4977 or 888 277 4977 with reprint requests.