Managing ethics and legal compliance:: What works and what hurts

This survey of employees at six large American companies asked the question: "What works and what hurts in corporate ethics/compliance management?" The study found that a values-based cultural approach to ethics/compliance management works best. Critical ingredients of this approach include leaders' commitment to ethics, fair treatment of employees, rewards for ethical conduct, concern for external stakeholders, and consistency between policies and actions. What hurts effectiveness most are an ethics/compliance program that employees believe exists only to protect top management from blame and an ethical culture that focuses on unquestioning obedience to authority and employee self-interest. The results of effective ethics/compliance management are impressive. They include reduced unethical/illegal behavior in the organization, increased awareness of ethical issues, more ethical advice seeking within the firm, greater willingness to deliver bad news or report ethical/legal violations to management, better decision making because of the ethics/compliance program, and increased employee commitment.