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principles for an organization and its employees

In the business world, it’s common to hear the word ethics accompanied by the word compliance and vice versa. Business people sometimes incorrectly use the terms interchangeably. Ethics and compliance have different meanings; yet, they often go hand in hand. Corporations have different ways of addressing ethics and compliance issues within their companies.

Some corporations enlist the help of a Chief Ethics Officer or Chief Compliance Officer. Other corporations combine the two titles and give the position the title Chief Ethics and Compliance Officer. Regardless of what companies label the position, most corporate boards know that ethics and compliance have a strong influence on corporate culture. Ethical culture can lead to corporate success or failure. Perhaps what is a bit more challenging is how to bring a strong ethics and compliance program into the workplace in order to prevent misconduct.

Defining Compliance

Compliance has a surprisingly simple definition. It merely means following laws, rules or policies to the letter of the law. The government requires corporate compliance, and it’s up to boards and corporate directors to get all employees to comply. Compliance is a reactive word that forces people to make a conscious choice.

Defining Ethics

Ethics means doing what is right regardless of what the law says. It’s also a conscious choice that is a personal one. It’s entirely possible to be ethical without being compliant. Ethics is proactive, rather than reactive as compliance is. Our personal values system, including our character, values and core principles, guide us when we make decisions. Most people feel a sense of deep personal satisfaction when they make ethical actions and decisions.

Impact of Ethics on Corporate Culture

In a corporate setting, strong ethics leads to improving employee morale. Corporations with strong ethics and compliance programs discourage employee misconduct and encourage employees to report misconduct by others. Improving a corporation’s ethical culture requires planning, commitment and follow-through. Doing so has several benefits.

Strengthening the corporate ethical culture promotes feelings of self-worth across the company. It creates an environment where managers and employees want to come to work. The net result of a strong corporate ethical culture combined with integrity-filled employees is a profitable company with strong prospects for operational sustainability.

While developing a strong ethical culture takes a strong commitment of time, it has minimal impact on the corporate budget.