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Ethics v. Compliance

Ethics v. Compliance

AUGUST 5, 2014

Over the years I have seen a common problem primarily in regulated industries; that is, confusion between compliance and ethics. Even with compliance programs becoming “value based” instead of “rules based,” the underlying foundation of compliance in regulated industries is rules.  And, rules rule.

Ethics, on the other hand, prepares people not for particular issues or problems, but with the skills and compass to make the “right” decisions and, maybe more importantly, to seek advice from others.

I have repeatedly said at many companies that my main goals are to give employees confidence to seek advice and to have confidence that the advice givers are skilled and have the tools necessary to assist.  In other words, asking questions is not a sign of weakness.

The common practice of combining the compliance and ethics responsibilities with one person needs to be revisited. It detracts from both and each is different. Moreover, compliance responsibilities are likely to overwhelm ethics responsibilities since compliance is seen as more important in view of the rules which might be transgressed.

Measuring success at each effort is quite different. Auditing and testing by regulators and internal audit teams may give you comfort about your compliance program. But who is asking the questions that need to be asked to determine if your employees are thinking and acting ethically and looking after the company’s ethical interests?  One observation I have made; in an ethical company, employees are less likely to look the other way or hide behind the excuse that improper conduct is none of their business as long as they do their jobs.

In fact, I’ve never really been convinced that companies know how well their compliance training works. Ask a company how well their program works and the usual response will be that we get 99.9%, or some other impressive number, participation in our training. Not the same thing. But that discussion is for another day.


About the author

schwartz_bBART M. SCHWARTZ

Bart M. Schwartz is the chairman of Guidepost Solutions LLC, a global leader in investigations, due diligence, security and technology consulting, immigration and cross-border consulting, and monitoring and compliance solutions. Bart can be reached at


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