10 Jul

Compliance Courseware – Risk Assessment and Program Structure

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The next part of our Compliance Courseware series, Chapter Four – Risk Assessment and Structuring the Program, is now available. You can access it at the following link:

Chapter Four – Risk Assessment and Structuring the Program

The previous lectures are available at this location.

This material is being made available for your educational, non-commercial usage, but if you would like to discuss your organizational needs for this, or other compliance related courseware, please get in touch.

If you found this material to be informative, we invite you to order your copy of our book today.

01 Jul

Free Compliance Courseware: Introduction

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In conjunction with recently release Compliance Handbook, we have developed complimentary interactive courseware to serve as an adjunct to each chapter’s text. This courseware includes audio lectures, slides, quizzes, and additional resources. These four lectures are the first of several sets of courseware which we will be sharing.

Introduction

 Section One: Importance and Foundations of Compliance Management

Chapter One – Why Doing the Right Thing Matters

Chapter Two – Dealing With Ethical Challenges

Chapter Three – Corporate Governance, Corporate Responsibility & the Environment

This material is being made available for your educational, non-commercial usage, but if you would like to discuss your organizational needs for this, or other related compliance courseware, please get in touch here.

If you found this material to be informative, we invite you to order your copy of our book today.

09 Jun

Ten Outrageous Bribes

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An article entitled “Ten Outrageous Bribes from Around the World”, written by The Corporate Ethics and Compliance Professors, was recently selected as a featured article for the Society of Corporate Compliance and Ethics’ publication: Compliance & Ethics Professional, in the June 2015 Edition.

Today we invite you to read that article and to gain further insight into the ways in which bribery and unethical behavior manifest in different cultural contexts. Additionally, you will learn about the ways in which localization can help you mitigate cross-cultural risks by bridging cultural gaps.

You may access the article at this location.

 

 

03 Jun

Compliance, Culture and Ethics: An Interview with Dr. Nitish Singh

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Professor Singh was recently interviewed by Dr. Kara Tan Bhala of the Seven Pillars Institute for Global Finance and Ethics. In the interview, Professor Singh discusses many concepts of interest to readers of this blog, including: corporate culture, ethics in compliance management,  ethics training, and more.

SPI

You can access the interview by clicking the SPI banner above, or by clicking here.

04 May

Compliance Principles: Ethical Leadership

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Today we share with you the first article of our new Compliance Principles series, which will highlight key operational concepts associated with ethics programs, management issues concerning ethics, and other themes in the realms of business ethics. The articles in this series have been generously provided by guest contributors and we thank them for sharing their knowledge with us.

Ethical Leadership

Douglas Roy – Ph.D. Candidate
John Cook School of Business – Saint Louis University
and Brendan M. Keating, VP – IntegTree LLC

 

Links Between Ethics and Leadership

Business ethicists increasingly highlight the importance of proper ‘tone at the top’ in establishing a healthy, ethical business climate. Leadership is a fundamental duty of management, therefore strong ethical leadership is a necessary pre-requisite in creating an organizational culture in which ethical behavior and business practices can flourish. In essence, ethical leadership is leadership that is directed by respect for ethical beliefs, values, dignity and rights of others.  It calls to mind concepts such as trust, honesty, consideration, charisma and fairness.

Concerns about ethics and leadership have dominated recent headlines about business and shaken public confidence in many organizations, and the historical, spectacular ethical lapses resulting in the implosion of Enron, Arthur Anderson, WorldCom, and Tyco come to mind. These catastrophic outcomes are directly linked to the lack of ethical leadership at these firms, and conversely the presence of strong ethical leadership can offer enormous boons to your organization; ethical leadership predicts outcomes such as perceived effectiveness of leaders, followers’ job satisfaction and dedication, and their willingness to report problems to management (Brown et al., 2005). These benefits flow from the fact that in the workplace, leaders should be a central source of guidance.  Yet we know little about the ethical dimension of leadership.  Most attention to this topic has relied upon a philosophical perspective, focusing on the question of how leaders ought to behave.  Although much has been said about the importance of ethical leadership, the topic has received little systematic scholarly attention (Ciulla, 1998).

A common refrain is that leaders’ ethics exert a significant influence on the ethical climate of the organizations they head.  For instance, the results of research done by Schminke et al. (2005) suggest that organizational leaders play an important role in the ethical climate of the organization. Despite this seemingly widespread knowledge, leaders often underestimate their influence (Trevino et al., 2000). It is important for leaders to recognize their influence in shaping the ethical climate of an organization. Their influences extend beyond the personal ethics of firm employees.  “The results indicated that leader moral development exerts an influence above and beyond that of the average moral development of firm employees.” (Schminke et al. 2005 p.148)  Mentoring or pairing young managers with more senior leaders who have reputations for ethical leadership could be a means in which to develop ethical leadership. By this method, a solid ‘tone at the top’ of the organization can filter down through the ranks to individual team leaders and supervisors.

Practical Implications

The practical implications for businesses come down to concerns of  problem avoidance and maintenance issue.  Company management may not always recognize that they are facing a moral issue. Rarely are ethical implications obvious, nor are observed issues necessarily easy to resolve.  Ethical decisions are ambiguous, and the ethical decision-making process involves multiple stages that are fraught with complications and contextual pressures. “The notion that being ethical is simple also ignores the pressures of the organizational context that influence the relationship between moral judgment and action.” (Trevino & Brown, 2004 p. 71)

Top leadership sets the pace and vector of the company, so it is only natural that such leadership guides the ethical compass as well.  Researchers have begun to study the phenomenon of ethically framing issues, and they refer to it as moral awareness, ethical recognition, or ethical sensitivity.  “The use of moral language has been found to influence moral awareness.” (Trevino & Brown, 2004 p. 70)  Using moral language in company policies and procedures can set the tone for ethical execution and the individual interpreting the guidance would be more likely to think about issues in ethical terms. This is important because outright unethical individuals are relatively rare. When thinking about what is right, individuals tend to look outside themselves for guidance; searching for consensus and context. “Most unethical behavior in business is supported by the context in which it occurs-either through direct reinforcement of unethical behavior or through benign neglect.” (Trevino & Brown, 2004 p.72)

In sum, the importance of ethical leadership in shaping business culture cannot be overstated. Managers and supervisors serve as powerful role models for their subordinates, and the examples that they set – for good or ill – will leave a lasting impression on their workforce and their business culture as a whole.

Below please find article references, as well as additional sources of information on the importance of ethical leadership, and how to foster this value in your workforce.

Ethical leadership References

Brown, M. E., Treviño, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for construct development and testing. Organizational behavior and human decision processes, 97(2), 117-134.
Ciulla, J. (1998). Ethics, the heart of leadership. Westport, CT: Quorum Books.
Schminke, M., Ambrose, M. L., & Neubaum, D. O. (2005). The effect of leader moral development on ethical climate and employee attitudes. Organizational Behavior and Human Decision Processes, 97(2), 135-151.
Trevino, L. K., & Brown, M. E. (2004). Managing to be ethical: Debunking five business ethics myths. The Academy of Management Executive, 18(2), 69-81.
Treviño, L. K., Hartman, L. P., & Brown, M. (2000). Moral person and moral manager: How executives develop a reputation for ethical leadership. California Management Review, 42, 128–142.
Treviño, L. K., & Weaver, G. R. (2003). Managing ethics in business
Watts, T. (2008). Business Leaders’ Values and Beliefs Regarding Decision Making Ethics. Lulu.com.

24 Apr

China’s War on Corruption: Losing by Winning

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By: Brendan M. Keating, VP IntegTree and Dr. Nitish Singh (Associate Professor Saint Louis University and President IntegTree LLC)

Traditionally crackdowns on corruption do not result in mixed feelings pertaining to justice, but in the case of China, the jury is still out. In recent months, the Chinese government has engaged in something of a crusade against corruption and bribery – on paper that sounds like progress, but the details belie a notion of justice.

The Chinese government has scooped up more than 50 high level officials and tens of thousands of bureaucrats in the Communist Party’s most recent campaign against bribery and corruption [1]. No doubt such headlines help bolster the Party’s image amongst everyday Chinese, as well as enhance the country’s international image as a rapidly modernizing economic power with an expanding rule of law. But consider the case of Wang Guanglong, a midlevel bureaucrat from from the Fujian Provence.  Mr. Guanglong signed a confession stating that he took $27,000 in bribes… after he was allegedly starved, interrogated, and beaten for several days [1]. The personal face of this campaign against corruption stands in stark contrast to the newspaper headlines and the spectacular number of miscreants. According to ChinaDaily, “China prosecuted 21,652 officials accused of bribery in the first nine months of the year, with 13,414 of those cases resulting in convictions….”[2] Additionally, “[o]f those prosecuted, 13,437 had their judgments handed down, including 13,414 who were found guilty and 23 who were judged to be innocent….”[2]. Those conviction statistics are jaw-dropping, and a reasonable person can only conclude that the Chinese court system does not ascribe to the noteworthy Blackstone’s Formulation: “It is better that ten guilty persons escape than that one innocent suffer“[3].

This is an unsettling story, but communist governments are not well known for their respect of human rights, nor the rule of law. However, there is a tragic business perspective to this story too. The headlines of crackdowns on corruption appeal to businesses, which seek a stable institutional environment upon which to base their economic enterprises. A strong rule of law allows companies to conduct business in an efficient manner, on a level playing field. But the details of the personal stories emerging from this crackdown perhaps convey a different message: the rule of law is illusory, and punishment is arbitrary. That is not a soothing message for businesses looking to set down roots in your country. Further, this war on corruption may have the unintended consequences of increasing corruption: if your actual innocence does not factor into whether you will be found innocent, you may be inclined to buy some “insurance” from your local party representative. Thus corruption becomes a self-fulfilling prophecy – people pay bribes because the law does not protect them if they do not.

Given these stories of government crackdown on corruption, it is important for your company to better understand the interplay of social-cultural and institutional forces, and your compliance response. Because of cultural barriers, your foreign workers may not have the same understanding and appreciation of the necessity of your program. Perhaps your foreign workers may see some aspects of corruption as a daily part of the corporate and political environment and may expose your company to various regulatory risks. These risks can include ethical orientation, cultural moral standards, and business norms, among other factors. Psychometric testing can help you identify potential gaps between management and foreign workforce perspectives, and program localization experts can assist you in molding your compliance protocols into a program that is targeted and effective to your local work force. You can contact Dr. Nitish Singh at IntegTree for a complementary analysis of your current program’s potential deficits, and methods to mitigate your compliance risk exposure.

Additionally, if you are interested in learning more about reducing your risk exposure and other compliance-related issues you can sign up for our professional newsletter by clicking here. We feature multi-part article series on the FCPA, FSGO, localization, psychometric testing, and other compliance topics.

[1] http://www.nytimes.com/2014/10/20/world/asia/the-new-victims-of-chinas-war-on-corruption.html?_r=0

[2] http://usa.chinadaily.com.cn/china/2014-10/31/content_18836090.htm

[3] http://www.britannica.com/topic/68589/supplemental-information

14 Apr

Upcoming Ethics Webcast

This Friday, April 17th, from 11AM to 1PM EST, Dr. Singh will be presenting on the topic of Ethical Decision Making for Corporate Professionals, Accountants and Lawyers as part of a 2-hour live webcast. This presentation may also be eligible for CLE and CPE Ethics credits in your jurisdiction, depending on your state’s board rules concerning live webcasts.

To find out more information about this webcast, or to register, please click here.

Additionally, thanks in part to the support of our readers, our book: Compliance Management A How-to Guide for Executives, Lawyers, and Other Compliance Professionals has now been featured as the #1 New Release in Business Law, Business Ethics, and Human Resources. To learn more about the book or to secure a 10% discount, please visit our site at this location.

Book Cover

 

Biz EthicsBiz LawHR

 

31 Mar

Book Release Announcement

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We are pleased to announce the release of our book:Compliance Management A How-to Guide for Executives, Lawyers, and Other Compliance Professionals. Yesterday Amazon featured our book as the #1 New Release in the Business and Law category.

As followers of this blog, you are already aware of the importance of ethical, compliant business practices – but our book will prove to be an invaluable resource for business professionals and academics alike; we include showcases, best practices, interviews, examples, guides and more. Additionally we are in the process of producing interactive courseware to accompany each chapter, in addition to quiz modules. We will also be providing whitelabel copies of this material for organizational and institutional use.

book cover

Please visit our book companion site to learn more about the book and view a brief introduction sample of the courseware.

You can order the book on Amazon, or via the publisher for 10% off with a coupon code on our site.

27 Mar

Imminent Book Release

We are pleased to announce that next week our book, Compliance Management A How-to Guide for Executives, Lawyers, and Other Compliance Professionals will be released. As followers of this blog, you are already aware of the importance of ethical, compliant business practices – but our book will prove to be an invaluable resource for business professionals and academics alike; we include showcases, best practices, interviews, examples, guides and more. Additionally we are in the process of producing interactive courseware to accompany each chapter, in addition to quiz modules. We will also be providing whitelabel copies of this material for institutional use.Please visit our book companion site at http://compliancehandbook.integtree.com/ to learn more about the book and view a brief introduction sample of the courseware.You can order the book on Amazon, or via the publisher for 10% off with a coupon code on our site.

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20 Feb

The Truth Will Out

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      By: Brendan M. Keating, VP IntegTree and Dr. Nitish Singh (Associate Professor Saint Louis University and President IntegTree LLC)

It is an unfortunate sign of our times that big bank “scandals” are in fact no longer scandalous. They are upsetting to be sure, but not shocking. However, occasionally there is a headline that stands out, and in this case it is the story of a memo which cost some big banks around $37 billion.

This tale begins with Assistant U.S. Attorney Richard Elias, who stumbled across a memo, no doubt one of tens of thousands of documents being reviewed, written by a J.P. Morgan employee to her bosses. In the memo the employee expressed concern over bad loans being rolled into securities. This memo set off a chain reaction that resulted in additional subpoenas, and ultimately resulted in 3 whopping bank settlements totaling $37 billion. [1]

The moral of this story is that eventually the ‘truth will out’. One bane of fraudsters in our information age is the digital paper trail. We routinely find that, between email leaks and trial exhibits, someone, somewhere along the way put something concrete down on paper. Document retention programs demand that records be kept, and violations of those programs are themselves unlawful. Failure to comply with the dictates of these retention programs can result in adverse inferences being drawn concerning whatever happens to be missing – if it looks bad that you lost that memo, the memo was probably bad for you. The information age has made it nearly impossible for fraud to go undetected in perpetuity.

Thus it is somewhat surprising that we continue to see so many corporations, and individuals engage in nefarious behavior in light of the seemingly innocuous ways they are caught – like a mere memo. The needle may be in the haystack, but in the digital age, the needle can be found – it is just a matter of time. And that needle will lead to the discovery of more, and sooner or later the evidence becomes overwhelming. So why does this keep happening?

One component may be the diminution of personal responsibility and consequences. Much to the chagrin of many hoping for individual criminal charges and jail time for executives, arising out of bank failures that triggered the Great Recession, U.S. Attorney General Eric Holder noted that: “[r]esponsibility remains so diffuse, and top executives so insulated, that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual. ” [2] While such a sentiment may or may not conflict with the law, and your personal sense of justice, it does highlight an important element in these cases: ethical culture.

Outside observers question how such behavior could have gone unnoticed for so long, but the unfortunate truth is that corporate culture can have a sweeping impact on the way business is done – for good or for ill. Violations start small with minor rule bending and breaking, and if those violations are not ferreted out and condemned, you can sully the entire cultural orientation of the organization. The Stanford Prison Experiment provides shocking insight into the degree to which normal people can become ungrounded and unethical when exposed to the wrong kind of environment, reinforcement, and group dynamics. Individual concerns and reservations can be suppressed in an unethical setting, but in a properly grounded ethical environment, unethical behavior will not flourish. Like a garden, routine proactive tending ensures that undesirables, like weeds, cannot take root. If you are negligent in your duties, the entire area may be over-run, and you will lose the good crops to the bad.

Psychometric testing is one mechanism by which you can proactively assess your corporate culture. By assessing individual orientations towards ethical dilemmas, compliance sensitivities, risk awareness, and other metrics of ethical corporate culture, you can develop a better understanding of your employees’ strengths and vulnerabilities in relation to ethics and compliance. Such testing can help you identify gaps in training programs and allow you to better tailor your policy reinforcement to the specific needs of your workforce. If you are interested in learning about psychometric testing, please contact us for more information.

If you are interested in learning more about cultivating your compliance culture, psychometric testing, reducing your risk exposure, establishing an ethical environment, and other compliance-related issues, you can sign up for our professional Ethics Resources Newsletter by clicking here. We feature multi-part article series on the FCPA, FSGO, psychometric testing, and other compliance topics.

[1] http://www.wsj.com/articles/how-a-memo-cost-big-banks-37-billion-1418959802?mod=djemalertNEWS

[2] http://www.justice.gov/opa/speech/attorney-general-holder-remarks-financial-fraud-prosecutions-nyu-school-law