Staying out of Trouble

Charles Giesting ILP Articles Leave a Comment

An E&C program lets others know where you stand

Editors Note: This article originally appeared in the Hamilton County Business Magazine’s June/July 2014 issue.  A PDF version of the magazine article can be found here.

As I address the topic of ethics in this magazine, I will approach the issue from a slightly different perspective than Dr. Wilhelm, who has been writing this column for the past three years. Though I have academic experience as an adjunct professor, I have been a business ethics practitioner for the past twelve years and view the issue through a framework of ethics and compliance (E&C) programs. I believe the best way for a business to ensure it is conducting itself ethically is to adopt a set of guidelines to help establish and maintain a sound ethical culture that helps to direct the behavior of its employees.

Furthermore, unethical conduct is often illegal conduct. By running your business ethically and complying with current laws and codes of conduct, you not only are doing right by your customers and vendors, you are avoiding the legal risks associated with questionable behavior.

Like many other important decisions it’s easy to put this one off. Some organization leaders have rationally reasoned:

  • We’re just not big enough to be able to afford spending much time on this,
  • As the owner, I personally know all my employees,…. uh, or at least I used to, and they would never behave in a way that would hurt my company,
  • I believe we operate pretty ethically, we treat our employees well, and we contribute to the local community,
  • I haven’t heard of any companies like ours getting in trouble, and besides, I wouldn’t really know where to start as far as how to develop a formal E & C program!

These all sound reasonable. However, at the end of the day, if an unethical and/or non-compliant act is discovered, the responsible organization will likely be held liable and forced to defend itself, possibly arguing that the malicious act was not a failed result of any company culture or policy, but merely the individual act of a rogue employee.

Assessing your risk

Without going through a litany of all the organizations which have been in the news over just the last six months for potential or proven ethics or compliance violations, it should be clear that no matter what type of organization you are in, no matter what reputation you have had in the past, or what measures you have taken, no organization is immune to potential major losses of revenue, reputation and future business. With this in mind, how can an organization begin to assess their current situation and find out what needs to be done?

One of the most valuable sets of tools that can be used to evaluate an organization’s current situation is the Federal Sentencing Guidelines (FSGs) for Organizations. Melvin Oden-Orr, Esq, in his April 2014 article in the magazine Compliance & Ethics Professional, states:

“These guidelines offer incentives to organizations to reduce and ultimately eliminate criminal conduct by providing a structural foundation from which an organization may self-police its own conduct through an effective compliance and ethics program,”


“Today, C & E programs find their primary value in the role they play for organizations found to have violated federal law. Federal prosecution for violation of federal laws is a real risk to organizations of all sizes…having an effective C & E program reduces an organization’s level of culpability and allows for mitigation of punishment if the organization is found in violation of federal law.”

In other words, if you get into ethics and compliance trouble, the feds may go lighter on you if you can show that you at least try to enforce an ethics program.

Protecting Yourself

There is no federal mandate to install effective E & C programs to stay out of jail or avoid potentially hefty fines. The FSGs are set up to help give organizations “reasons” for doing what they should be doing all the time anyway, assuring an ethical and compliant culture exists within their organization. But it is clear that guilty organizations can be rewarded with less severe punishments if they can prove to the government prosecutors that an effective E & C program existed at the time the criminal act was committed. In some cases, organizational fines have been reduced by up to 90 percent!

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