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Roadblocks to corporate compliance

Corporate compliance programs are created—in large part—to protect employees. Such programs seek to promote ethical behavior and encourage whistle blowing in the event of wrongdoing. However, recent research out of Indiana University indicates that these programs are largely ineffective at curbing inappropriate corporate behavior.

With the majority of corporate compliance programs, the focus is on what is required by law. But it seems that the law is not a strong enough motivator for many employees to check their own behavior or to question that of others. Todd Haugh, the assistant professor who conducted this research, finds that employees’ reasoning to commit an unethical act is rooted in many factors outside of the law. He defines eight common defenses employees make to crimes or unethical actions within a corporation. Many of these defenses involve denial, making false claims, or diverting attention to someone or something else.

One rationale he describes that can be especially damaging for victims of sexual harassment in the workplace is what he calls “appealing to higher loyalties.” In other words, an employee who witnesses unethical or illicit behavior may refrain from reporting it because their interest in the company exceeds their interest in what is right. He suggests that such responses could explain why cases of public and pervasive sexual harassment—such as those witnessed by many former colleagues of film producer Harvey Weinstein—went unchecked for so long.

Haugh concludes that corporations should consider incorporating “ethical nudging”—a technique that provides nonmonetary incentives for ethical behavior—as a means of achieving a more compliant workplace. He states that behavioral ethics nudging, if implemented properly, has the potential to effectively combat corporate wrongdoing and defend employees.

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