Design matters: on the impact of compliance program design on corporate ethics

Abstract

Corporate scandals led to an increased interest in improving managers' compliance. To this end, companies implement compliance programs including codes of conduct, compliance training, and whistle-blowing as core elements. Previous research has focused on the impact of the mere existence of one or several compliance program's elements on compliance. Compliance programs differ substantially from company to company, for instance, in how training is organized and how the code looks like. This makes direct comparisons of the results challenging. Until now, it is poorly understood if and how the design of a compliance program's element affects compliance. This paper investigates firstly, whether codes per se are an effective core element of compliance programs; secondly, whether the way a code is designed (e.g., by using examples) impacts on compliance; and thirdly, whether types of compliance training as well as whistle-blowing channels make a difference in terms of compliance and whistleblowing. We conducted a factorial survey experiment with 1005 managers from a multinational European corporation. Our findings indicate that not the mere existence of a code but its design matters for compliance. There is evidence that more specific compliance training is more effective than general training. Our study contributes to the business ethics literature by providing insights on how design elements of compliance program's elements matter. Finally, we also contribute to business practice as we draw up guidelines for those who are responsible for their compliance programs.

Impact of Compliance Programs on Organizational Psychology

“…Codes may actually fuel rebellion from employees, or they may adopt a negative view of the organization and the management. It is important to place emphasis on training programs to ensure people within an organization are familiar with the established codes (Stöber, Kotzian, & Weißenberger, 2018). It is highly unlikely that the mere existence of codes will affect the behavior of people within an organization if the compliance program is not effective and comprehensive.…”

“…The whole point of organizations having programs in place is to ensure the risk of non-compliance is minimized. How such is implemented is what influences organizational psychology (Stöber, Kotzian, & Weißenberger, 2018). Organizational managers can also be impacted by such programs once they are put in place.…”

“…Organizational managers can also be impacted by such programs once they are put in place. Since they are the ones tasked with implementing such, their behavior and view of other employees can change as well (Stöber, Kotzian, & Weißenberger, 2018). Compliance programs are necessary for organizations to function.…”

Combining ethics and compliance: A systems psychodynamic inquiry into praxis and outcomes

“…Exploring the drivers that promote the combination of ethics and compliance from a systems psychodynamic perspective provides alternative and novel explanations about the attraction of this praxis (Sharpe, 2019) and its unanticipated, but impending adverse consequences (Treviño et al., 2014). The systems psychodynamic interpretations and conceptualisations in this article explicate the complex set of opposing psychodynamic forces that are unconsciously created from the incompatibility of compliance and ethics orientations (Stöber et al., 2019). The explanations offered move cognition of the attraction and outcomes beyond rationally motivated reasoning to provide original and fresh perspectives to researchers and practitioners.…”

“…Globally, similar legislative prescriptions to appoint senior managers responsible for ensuring overall compliant and ethical business conduct followed USSCGM and SOX (Marnet, 2007). Some of these include the United Kingdom Anti-Bribery Act of 2010 and the Organisation for Economic Co-operation and Development statement about corporate bribery that was adopted in 1997 (Hanson, 2018;Stöber et al, 2019), and the King IV report on corporate governance in South Africa (Institute of Directors South Africa, 2016).…”