Over at the NYU Law’s Compliance and Enforcement blog, ES CEO Azish Filabi has written a guest post on whether companies are in a compliance arms race— and the detrimental impact it can have on organizational culture and ethics. From the piece:
While one goal of the government and internal compliance programs is to encourage companies to create cultures of compliance and thereby improve corporate culture, criminalized compliance programs allow employees room for rationalizing their unethical or illegal behavior by importing features of the criminal law, such as vague and overlapping rules, aggressive and onerous monitoring, and inconsistent enforcement.
The question of whether a compliance mindset crowds out ethical behavior has also been studied in other academic disciplines. Fellow ES collaborators Max Bazerman and Ann Tenbrunsel have written about how ethical fading can occur in business when employees are too focused on financial goals or so-called “business decisions” that have unethical consequences. Psychologically, the notion of bounded ethicality, which describes the systematic and predictable ways that people make decisions without realizing the ethical implications of their behavior, can lead many to fall into a blind spot and rationalize decisions that later upon reflection, with time and clarity, they can’t believe they made.
By drawing from the article on ‘Cadillac Compliance’ Breakdown by Todd Hugh, Assistant Professor of Business Law and Ethics at Indiana University, in Stanford Law Review, Azish deftly makes a case for building more human-centered organizations and compliance systems.