Difference Between Compliance, Ethics

안녕하세요 지식마블입니다. 

월스트리트 저널에서 컴플라이언스와 윤리의 차이에 대해 인터뷰한 내용이 있는데, 내용이 좋아서, 아래에 원문 그대로 옮겨놓습니다. 

Difference Between Compliance, Ethics

Michael McMillan, director of ethics and professional standards at the CFA Institute, talks to Risk & Compliance Journal about the difference between following the rules and doing things ethically.

CFA INSTITUTE

 

Michael McMillan, director director of ethics and professional standards, CFA Institute.

What is the difference between ethics and compliance?

Mr. McMillan: Compliance really focuses upon rules and regulations. Are you following the rules, are you following the regulations and the laws of your company, or the laws and regulations of the country or environment in which you work? Ethics are completely different. Ethics are about encouraging behavior that is above just following rules and regulations. It is requiring to get people to act more in consonant with the values of the company.

Part of the problem with the financial crisis--and part of why you have organizations like Occupy Wall Street, why we lost trust with the investment industry--is that people were following rules and regulations but still weren’t being ethical. There is a big difference between following the law and being ethical. Very few people were charged with crimes or convicted of crimes because what they were doing wasn’t necessarily illegal, but many people viewed it as being unethical.

Can a company have a good compliance program without it being based on strong ethical values?

Mr. McMillan: Yes, of course. When you say compliance, you have to follow rules and regulations, so companies always are making sure their employees are staying within the rules of the law. That doesn’t mean these same employees are acting in the best interests of their clients or customers. Just because you have a good or great compliance program doesn’t mean people are not going to be behaving unethically or not have an environment that encourages unethical behavior.

Is the reverse true—can a company have a strong ethical culture and not have a strong compliance program?

Mr. McMillan: If you have a strong ethical culture then you don’t really need to have a huge compliance department because people are going to do the right thing because that’s what the values of the company are promoting. The stronger the ethical culture of the company the less you need a large or well-developed compliance program.

Can you tell if a company really has an ethics-based culture of compliance? What are the signs for exposing those who say they do but don’t?

Mr. McMillan: Ethics should permeate the entire company. All decisions that are made, all operating activities that are done should always be tied to the values of the company. It has to infiltrate all levels of the company and be reflected in all operating activities and decisions the company makes. One of the things I would look at is how involved are the middle managers in the company’s ethics program, how are they trained and how the compensation of the company is related to the values of the company.

You always hear the message “ethics starts with tone at the top” and I certainly believe that, but as an employee of a company I don’t come in contact with the CEO or the people in the C-suite on a daily basis. I do come in contact with my managers, the middle managers of the company. The CEO can be trumpeting ethics all he or she wants, but if it’s not being manifested by the middle managers that’s where the breakdown occurs. It’s the middle manager asking me to do something unethical, not the CEO. It’s the middle manager who decides what my compensation is based on and who may punish me or not promote me if I’m not doing what they are asking me to do, although I may feel uncomfortable about ethical issues surrounding that situation.

How can something like ethics be measured when it means something different to everyone? How do you quantify that?

Mr. McMillan: It is in some ways intangible and hard to quantify. When I do ethics training I always show my students this ethics manifesto by a company. I call it RICE–respect, integrity, communications and excellence. I would say who would want to work at a company like that, and almost all of them would raise their hands. It turns out that was the ethics statement for Enron. I use this to illustrate the fact it takes more than a well-articulated code of ethics or value statement to encourage people to act ethically. To measure you have to incorporate it into the compensation structure, to encourage people not just to focus upon outcomes but also the processes that are used to get to that outcome. It takes continued monitoring.

Why is ethics training important?

Mr. McMillan: A lot of times people do things because they think they’re helping the company as opposed to doing something illegal or bad. It gets people to think about what they’re being asked to do, to have their ethics radar up. That’s really the value of ethics training, just to get people to be more conscious and aware of their own thoughts and behaviors.

How has the corporate outlook toward ethics changed in the last five-10 years?

Mr. McMillan: I think people are talking about ethics, corporations are talking about ethics because that’s the buzzword. But whether they’re really fundamentally changing their cultures to make them more ethical, I have a question about that.

Write to Ben DiPietro at ben.dipietro@dowjones.com, and follow him on Twitter @BenDiPietro1.