Within a business, it can be difficult to urge employees to act ethically, as well as to contribute to the company’s ethics and compliance program. The 2004 Federal Sentencing Guidelines attempted to address this issue: “The organization’s compliance and ethics program shall be promoted and enforced consistently throughout the organization through (A) appropriate incentives to perform in accordance with the compliance and ethics program …”
Numerous organizations meet the requirement of “appropriate incentives” by giving away ethic awards to staff members. This method of incentives seems to have become especially popular within the past couple of years.
Even though these awards can be helpful to boost morale and recognition, is it really the best form of incentive? Are awards even what the Commission’s Advisory Group who wrote the Guidelines were really hoping would be enacted?
According to Ed Petry, one of ELG’s expert advisors at Global Compliance who was a member of the Commission’s Advisory Group, ethics awards were “not at all” what they were looking for. By linking the importance of integrating culture and ethics with the significance of HR practices, one can see that “appropriate incentives” actually referred to how employees are promoted and paid.
Taking into consideration that the Commission really wanted incentives to be provided via pay and promotions, what would be the best way to enact this? When evaluations into ethics and compliance programs are administered, ethic leaders look to see if processes exist that associate the company values with employee’s’ evaluations. Specifically, leadership is inspected to gauge if managers support the program. Criteria for salary and bonuses are also examined, as well as criteria for rating workers for leadership advancement.
It is a difficult task, though, to develop feasible and quantifiable incentives and performance criteria. If the criteria are not quantifiable, then managers have difficulty with rating imprecise objectives. There must also be consequences for when ethic goals are not met. Another important aspect is that the assessments must be meaningful—it is not possible for everyone to rate as above average. Finally, the ethic goals need to be affiliated with company prosperity as these are businesses being run, not charities.
This is not a simple undertaking, but if there is no review or compensation for ethical practices, then there is a huge likelihood that such practices are simply ignored in favor of other more realistic objectives.