Ethics and Compliance: An Investment, Not a Cost

compliance-ethics-ROISince we’re still feeling the wrath of the economy, a lot of organizations continue to feel strapped for cash. As spending and budgets have been reduced, it seems that every department is fighting for funding. In many organizations, this means that ethics and compliance departments are usually last to see any money, as they are often viewed as a cost centre. Until now, a there hasn’t been much information to help ethics and compliance professionals plead their case. As legislation becomes stricter and penalties increase, it turns out that ethics and compliance departments can actually save companies a lot of money.

An ROI Argument

As much as money shouldn’t be an influencer over whether or not to do the right thing, it is. Management and executives care about business performance and want to see immediate results. This poses a problem for ethics and compliance departments, as their value is best determined over time.

Ethics helps reduce company expenses and opens up opportunities for companies. When a company has an ethical corporate culture and decisions are made with the best interest of everyone in mind, losses are reduced, as business is gained in a fair manner. Ethics and compliance helps reduce losses incurred through misconduct by detecting misconduct early on or preventing it from happening at all. This reduces the amount spent on legal fees, lawsuits, investigations and other expenses Associated with misconduct.

Ethical companies are appealing to organizations when looking for suppliers, distributors, partners or other members of the supply chain. If your company is known for compromising its ethics to gain business, who will want to work with you? This hurts companies in the short and long term, as their opportunities die off quickly. This is where ethics and compliance prevails. By ditching the desire to make fast cash off of a questionable deal, ethical companies can prolong their lifespan by making fair deals.

One thing to keep in mind is that it can be difficult to determine how many incidents are avoided because of an ethics and compliance program. If your company currently tracks these numbers and you notice a decline in misconduct allegations and investigations, I guess you could assume compliance is doing its’ job. Effective ethics and compliance programs also provide some protection for companies should they find themselves entangled in a lawsuit.

It’s tough to make sure every employee acts ethically. Many regulators are taking ethics and compliance programs into consideration when determining a company’s penalty for violating the law. The FCPA and UK Bribery Act, among other laws; offer guidance to companies to help them establish effective systems to prevent misconduct. As fines for violating such laws rapidly increase, companies can benefit significantly by cooperating with regulators and establishing effective ethics and compliance programs.

Survey Says

A joint survey from the Ethics Resource Centre, Ethics and Compliance Officer Association and the Society of Corporate Compliance and Ethics was recently released. The survey calls on the Department of Justice to release more information about the role that ethics and compliance makes during the DOJ decision process when a company is being sentenced. The survey made it clear that in order for ethics and compliance programs to get greater support within American businesses, there needs to be information released by the DOJ, showing how efforts to mitigate workplace misconduct benefits companies. In a press release from the ERC regarding the survey, they state:

“Ethics and compliance practitioners seek data from the U.S. Department of Justice that identifies how often an effective ethics and compliance program yields a direct return in enforcement decisions, according to a survey jointly conducted by the ERC, ECOA and the SCCE. We welcome the recent efforts by the DOJ to publicize cases where it has rewarded companies for having strong ethics and compliance programs, but the ethics and compliance community challenges the Department to take steps to be even more forthcoming with information.”

Hopefully the DOJ will listen to this plea and provide the required information to help ethics and compliance professionals gain some ground within their respective organizations.


About the Author

Lindsay Walker is the Corporate Journalist at Customer Expressions Corporation, developers of the i-Sight investigative case management software platform, an integrated and customizable solution for corporate investigations. She maintains the company blog at

No related content found.

About the Author

Lindsay Walker

Lindsay Walker Investigation InsightsLindsay Walker is the Corporate Journalist at Customer Expressions Corporation, developers of the i-Sight investigative case management software platform, an integrated and customizable solution for corporate investigations. She maintains the company blog at

One Comment