Research Article
The Rise of
ComplianceBased Ethics
Management
Implications for Organizational
Ethics
ROBERT ROBERTS
Abstract
Compliance-based ethics management has become the primary method of maintaining high ethical standards in governmental and non-governmental organizations.
There are several reasons why organizations have embraced compliance regulation
as the key method of keeping public confidence in their integrity. Compliance-based
management (1) provides organizations a certain level of immunity from illegal acts
committed by their employees and officials, and (2) significantly reduces pressures
to implement integrity-based programs by lowering organizational ethical expectations. The heavy reliance on compliance ethics has made it much more difficult
for employees and officials to hold organizations accountable for actions that fall
outside the scope of compliance-based ethics laws and regulations.
In late 2007, the Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (FAR Councils) published a final rule requiring all federal contractors with new contracts worth more than $5 million to adopt a Contractor Code
of Business Ethics. Prior to the adoption of the new FAR ethics code requirement,
many large federal contractors had used comprehensive codes in response to strong
pressure by the federal government to take greater responsibility for preventing illegal
conduct by their organizations. This article argues that beginning in the late 1980s,
the federal government took a number of steps to pressure private corporations and
other non-governmental organizations to put in place comprehensive compliancebased ethics programs. It further maintains that organizations have warmly embraced
such programs because they have the ability to provide organizations a certain level
of immunity from illegal actions by their employees and officials and to significantly
Public Integrity, Summer 2009, vol. 11, no. 3, pp. 261–277.
© 2009 ASPA. All rights reserved.
ISSN 1099-9922/2009 $9.50 + 0.00.
DOI 10.2753/PIN1099-9922110305
Robert Roberts
reduce pressure on organizations to implement integrity-based programs. Finally, the
analysis suggests that this trend will make it more difficult for employees and officials
to protest against unethical, although legal, actions by their organizations.
The Rise of Compliance-Based Ethics Programs
The period since the early 1960s has seen an explosion in governmental and nongovernmental compliance-based ethics programs (Kurland 1993, 137–145; Roberts
2007, 313–332; Ruhnka and Boerstler 1998, 309–326). Several important trends
have given organizations major incentives to embrace these programs as the primary
method of maintaining public trust. First, from the late 1940s through the early
1970s, there was a major redefinition of public service ethics. Prior to the late 1940s,
regulatory efforts focused on the prevention of traditional forms of corruption, such
as theft and bribery (Anechiarico and Jacobs 1994, 465–467). During the first half
of the twentieth century, governments made substantial progress in reducing high
levels of graft by adopting budget, audit, and contracting reforms (Anechiarico and
Jacobs 1994, 466–467). Between 1950 and 1980, governments were under pressure
to regulate financial conflicts of interest involving public employees because of
increasing doubts about the objectivity and impartiality of officials entrusted with
allocating vast sums and enforcing a growing number of regulations (Perkins 1963,
1113–1169; Roberts 1988).
Second, the 1970s and 1980s saw critics attack big government for allegedly
wasting vast sums as the result of massive waste, fraud, and abuse (Anechiarico
and Jacobs 1994, 468). Third, the popular media and scholars saw the 1970s
Watergate scandal as strong evidence of a serious erosion of public service ethics that threatened democratic institutions (Frederickson and Frederickson 1995,
163–172). As a direct result of the Watergate scandal, law enforcement agencies
launched an assault on corruption (Roberts and Doss 1993, 6–17). Fourth, the
1990s reinventing-government movement and financial expediency led governments at all levels to greatly expand the contracting out of government services,
thus increasing opportunities for illegal practices (Berrios 2006, 119–130; Dietrich
2005, 521). Between 1960 and 1990 these four trends led to the growth of a public
ethics bureaucracy responsible for enforcing administrative ethics (Huddleston and
Sands 1995, 139–149).
Organizational Vulnerability and Integrity-Based Ethics
The rapid adoption of compliance-based ethics programs by governmental and nongovernmental organizations was the result of the gradual realization that they offered
many more advantages than integrity-based programs do. Specifically, they could
provide a certain level of immunity from illegal actions undertaken by organizational
employees. Equally important, they lowered ethical expectations for organizations
and reduced the pressure to implement integrity-based ethics programs.
Even though the second half of the twentieth century saw organizations embrace
compliance programs as the solution to their ethics problems, a fierce debate erupted
over the effectiveness of so-called low-road regulation in maintaining ethical organizations (OECD 1996, 59). Such strategies use “strict compliance with administrative
procedures and detailed rules (often codified in legislation)” to “define what public
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servants should do and how” (OECD 1996, 59). Not surprisingly, they rely heavily
upon attorneys or personnel specialists to provide “authoritative interpretations” of
ethics rules and regulations (Gilman 2001, 3). Every federal agency, for instance,
has appointed one or more individuals as designated agency ethics officials (Designated Agency Ethics Officials List 2008). And the U.S. Office of Government
Ethics (USOGE), the Public Integrity Section of the Justice Department, and Federal
Inspectors General Offices exercise key roles in the administration and oversight of
the executive branch public integrity program (Gilman 1995, 74–75; Huddleston
and Sands 1995, 144–147). The USOGE, for instance, has issued hundreds of pages
of rules and regulations interpreting criminal and administrative ethics prohibitions
that cover millions of federal employees
(USOGE 2009).
Criticism of compliance ethics systems Not surprisingly, compliance-based
has focused on the fact that they leave little ethics systems rely heavily upon
room for individual conscience or decision attorneys or personnel specialists to
and do not encourage employees to deal with
provide “authoritative interpretations”
the full range of issues that confront individuals in governmental and non-governmental of ethics rules and regulations.
organizations (Gilman 2001, 3). Not surprisingly, some scholars view rule-driven
programs as directed more at public relations than at maintaining high standards.
Quoting Huddleston and Sands:
To begin with, codes are drafted by legislators who feel pressed, often by still-fresh
newspaper headlines, to do something quickly, about ethics in government. The newly
minted standards are then delivered to agencies for enforcement with little, if any,
prior input, or consideration for enforceability. Indeed, the codes are meant to affect
as punitive and unnecessarily restrictive, betraying a lack of trust and respect for
public administrators. This is particularly the case in the area of financial disclosure,
where the public’s right to know conflicts with the individual’s right to privacy. (1995,
143)
Integrity-based, or “high-road,” ethics systems, in contrast, are “designed to increase human autonomy through aspirational goals avoiding rule structures” (Gilman
2001, 3). Specifically, integrity systems focus on what “should be achieved rather
than what behavior should be avoided” (OECD 1996, 59). As a result, they include
(1) the definition of broad aspirational values, (2) “a focus on what is achieved rather
than how it was achieved,” and (3) “an emphasis on encouraging good behavior rather
than policing and punishing errors or bad behavior” (OECD 1996, 59). Advocates of
these approaches argue that the vast majority of employees and officials understand
the difference between right and wrong and just need a push in the right direction.
More important, they argue that a preoccupation with low-road ethics may provide
employees a justification for not considering the much broader implications of their
actions and the actions of their organizations for their clients and society at large.
For instance, “Administrators . . . find themselves having to even out inequities in
access to governmental beneficence and remediation occasioned by disparities between particular claimants” (Reynolds 1995, 130). Alternatively, critics of integrity
systems suggest that they are built on the quicksand of “wishful thinking” and run
the danger of empowering “morally bankrupt” employees (Gilman 2001, 3). They
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also argue that the media and public take low-road ethics violations much more seriously than do public employees and officials, because citizens are taxed or required
to pay fees or charges to finance the vast majority of programs.
It is beyond the scope of this paper to detail how management reforms, from the
late nineteenth century through the first half of the twentieth century, largely succeeded in reducing traditional forms of public corruption (Anechiarico and Jacobs
1994, 466). Through the second half of the
nineteenth century and well into the twentieth
Criticism of compliance-based ethics
century, urban political machines demanded
systems has focused on the fact that
bribes and kickbacks from individuals and
they leave little room for individual
businesses seeking government contracts or
conscience or decision and do not
franchises (Ford 1904, 673–686). “Pay to
encourage employees and officials
play” was the rule rather than the exception.
High levels of corruption drove up the cost of
to deal with the full range of ethical
delivering goods and services. The passage
issues that confront individuals in
of the Civil Service Reform Act of 1883 (the
governmental and non-governmental
Pendleton Act) constituted “a major step toorganizations.
ward enshrining the principle of merit as the
major criterion for federal appointment” and
a major step in the fight against corruption (Locke 1995, 21). Advocates of reform
believed that employees selected on the basis of merit and protected from being
forced to participate in partisan activities would be much less likely to engage in
corrupt activities (Ingraham and Rosenbloom 1990, 213).
The progressive movement (1900–1920) believed that “the correct deployment
of administrative authority, coupled with comprehensive monitoring and evaluation,
would prevent corruption or quickly bring it to light” (Anechiarico and Jacobs 1994,
467). During the first half of the twentieth century, the widespread adoption of the
line-item budget, competitive bidding, uniform financial management and accounting systems, and the city manager form of local government played an important
role in reducing corruption (Emmerich 1952, 5).
To a certain degree, public administration became a victim of its success. The
ability of administrative systems to curb traditional types of corruption paved the
way for an explosion in spending that began with the New Deal and continues today.
But support for big government remained fragile. During the second half of the
twentieth century, advocates of big government came to understand that evidence
of large amounts of waste, fraud, and abuse, preferential treatment of special interests by government employees, or ethical backsliding could seriously undermine
public support. With such high stakes, the 1940s saw a spirited debate erupt over
how best to assure high standards in government organizations (Maesschalck 2005,
22; Skidmore 1995, 30–31). Friedrich (1940) placed his faith in internal controls,
while Finer (1941, 335) placed his faith in external control.
During the early 1950s, defenders of government felt that if significantly reducing
corruption was enough to immunize public organizations against allegations that
they lacked the capacity to prevent their employees from being seduced to do the
bidding of special interests, protecting the long-term viability of the administrative
state required the adoption of low-road compliance programs to maintain support
for larger and larger public expenditures. Although the punishment of employees
for taking illegal gifts may do little to improve the efficiency of a public program,
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it does a great deal to reassure the citizenry that an organization has the capacity
to maintain discipline. More important, strict enforcement of narrowly drawn ethics rules has the ability to distract attention from broader questions regarding the
conduct of organizations. Compliance programs focus upon disciplining individuals
for narrow low-road violations, rather than holding organizations accountable for
much broader high-road ethical failures.
The early 1950s saw the honeymoon with
integrity programs come to an abrupt end. A To a certain degree, public
series of well-publicized influence-peddling
administration became a victim
scandals involving federal agencies touched
off a public service ethics “feeding frenzy” of its success. The ability of public
(Wood 1955, 1–7). It appeared that many administrative systems to curb
civil servants lacked a public service ethos—a traditional types of public corruption
dedication to the common good and a com- paved the way for an explosion in
mitment to mission. Through the first half
government spending that began with
of the twentieth century, scholars had demonstrated a strong “antipathy” toward public the New Deal and continues today.
law (Rohr 1988, 168). Attracting individuals
with a strong public service ethic provided the populace with sufficient protection
against widespread or illegal conduct by government employees. Defenders of integrity ethics management pointed to the fact that many of the most serious lapses
were by political appointees and not careerists.
For instance, the Bureau of Internal Revenue scandal did serious damage to the
Truman administration. Before 1952, collector of internal revenue was a highly
sought patronage position. The investigations revealed that a number of collectors
had taken gifts or had received other benefits to resolve the tax problems of wellconnected individuals. Writing in 1952, Herbert Emmerich rejected the argument
that the so-called Truman scandals demonstrated a major slump in ethics:
But when one considers the enormous expansion of government services in every
field, the amount of delegated discretion, the vast sums of money for loans, guarantees, contracts, and subsidies, and the extent to which governmental action touches
private interest at every point, it is remarkable how free federal officials have been
of wrongdoing and favoritism in comparison with previous times. The sensational
emphasis given to the backsliding trend is partly because it has news value, partly
because of partisan considerations; but I believe the indignant reaction is also an
evidence of the higher standard of public morality and expectation of governmental
integrity to which we have become accustomed. (1952, 4)
Emmerich was correct regarding the progress made in dealing with traditional forms
of public corruption, but he greatly underestimated the growing hostility toward
big government.
In 1951, a subcommittee of the Senate Labor and Welfare Committee, chaired
by Paul Douglas of Illinois, recommended that Congress amend the Administrative Procedure Act to prohibit federal employees from (1) accepting gifts from
private interests with matters pending before the government, (2) using confidential
government information in personal business transactions, (3) discussing future
employment outside the government with individuals or organizations with matters pending before the federal government, (4) divulging “valuable commercial
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information. . . . to unauthorized individuals,” (5) accepting private hospitality from
individuals or organizations with matters pending before the government, and (6)
placing new limits on the lobbying activities of former federal officials before their
former agencies. Equally significant, the subcommittee recommended that highlevel executive branch officials and members of Congress be required to file annual
financial-disclosure statements with the comptroller general of the United States
(Douglas 1952, 156–157).
Douglas recognized that integrity programs left agencies vulnerable to unjustified
attacks by critics of government and members of the media who lacked understanding
of the progress that had been made in eliminating public corruption. A way had to
be found to immunize programs from the fallout surrounding the actions of a small
number of public officials. The answer rested with the establishment of comprehensive compliance-ethics programs, despite the opposition of ethics scholars.
Significantly, between 1961 and 1969, the Kennedy and Johnson administrations
embraced compliance-based integrity management as an important reform directed
at protecting the legitimacy of the administrative state. Key elements included new
criminal conflict-of-interest statutes, as well as new standard-of-conduct restrictions. The criminal and administrative sanctions covered a spectrum of financial
conflict-of-interest issues, including acceptance of gifts, misuse of confidential
information, conflicting financial interests, outside employment, seeking other
employment, post-employment representation restrictions, and financial disclosure
(Gilman 1995, 58–75; Manning 1964, 239–256; Newland 1967, 158–180; Perkins
1963, 1113–1169).
Marginalization of Integrity-Based Ethics and Organizational Security
The late 1960s and early 1970s saw the birth of the so-called New Public Administration. Its advocates believed that administrators had a moral obligation to evaluate
unethical policies and practices and to devote their professional expertise to improving the efficiency and effectiveness of public programs. Equity, justice, and personal
responsibility increasingly became the themes that dominated the ethics literature
(Hart 1974, 3–13; Thompson 1980, 905). Not surprisingly, the emergence of the New
Public Administration made many scholars even more opposed to compliance-ethics
programs. Consequently, during the 1970s and 1980s they viewed any focus on lowroad ethics issues, such as financial conflicts of interest and financial disclosure,
as diverting attention from more serious moral issues. According to Rohr, this led
the “literature on ethics and morality in Public Administration to eschew conflict
of interest issues” (1988, 169). Many scholars sincerely believed that integrityfocused education had the ability to transform the values of public organizations.
Two important trends, however, would provide organizations with incentives for
abandoning integrity ethics as a viable method of maintaining citizen confidence
in organizations dependent on public funds. First, the 1970s saw advocates of
regulation of the private sector accuse public organizations of being controlled by
special-interest groups. Second, the 1980s and 1990s saw renewed interest in the
privatization of public goods and services, which raised questions about the ability
of governments to prevent waste, fraud, and abuse in the contracts.
The emergence of the regulatory-capture theory caught scholars off guard. It
argued that special interests had succeeded in either infiltrating individuals into
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agencies or co-opting employees to promote private interests ahead of the public
interest. In 1952, Senator Paul Douglas provided an early description of the impact
of regulatory capture on decision-making:
Certain institutional tendencies or failures of administration tend to defeat public
policies. One is the tendency of independent regulatory agencies to surrender their
regulatory zeal as they age, and to become more and more the protagonists of a clientele industry, and less and less the vigilant defenders of the welfare of consumers or
the general public. All too often, those who are supposedly being regulated, actually
regulate their nominal regulators. (1952, 154)
Since administrators no longer could be trusted to serve the public interest,
it became imperative to strengthen compliance-ethics programs to screen out
individuals with financial conflicts of interest. Proponents of regulatory capture
demanded the adoption of even tougher conflict-of-interest restrictions, including
mandatory financial disclosure for high-level federal officials and new restrictions
on former employees lobbying their agencies (Common Cause 1977). Even though
the Watergate scandal had nothing to do with regulatory capture, reform advocates
succeeded in persuading Congress to enact the Ethics in Government Act of 1978,
which included a number of remedies for regulatory capture, including mandatory
financial disclosure for high-level federal officials and new “revolving-door” restrictions (Walter 1981, 659–665).
The 1980 election of Ronald Reagan further accelerated the pressure to put in
place a comprehensive executive branch compliance-ethics program, but for very
different reasons than those advocated by the proponents of regulatory-capture
theory. Prior to his victory, Reagan made clear that government needed to work
much more closely with business and industry in order to increase governmental
efficiency. This included making much greater use of the private sector to deliver
government goods and services and relying upon corporate experts to improve the
efficiency of public programs and agencies. The administration generally viewed
compliance-ethics regulations as a major obstacle to the recruitment and retention
of private-sector expertise. Specifically, many administration officials had found
themselves the subject of fierce criticism for conflict-of-interest violations. Many
of these officials took great offense at allegations that they had allowed their close
contacts with business to influence the administration’s regulatory agenda. They
refused to recognize that their actions created the strong appearance that the regulatory agenda of corporate America dominated the agenda of the administration. Many
openly criticized the “appearance of impropriety” standard included in Section 201c
of President Johnson’s Standards of Conduct Executive Order (Executive Order
11222 1965) for opening them up to attack. The section read:
(c) It is the intent of this section that employees avoid any action, whether or not
specifically prohibited by subsection (a), which might result in, or create the appearance of—
(1) using public office for private gain;
(2) giving preferential treatment to any organization or person;
(3) impeding government efficiency or economy;
(4) losing complete independence or impartiality of action;
(5) making a government decision outside official channels; or
(6) affecting adversely the confidence of the public in the integrity of the Government.
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From the perspective of the Reagan administration, the broad appearance of impropriety gave its critics ammunition to raise questions about its regulatory strategy.
The standard provided credibility to the charges of critics that the administration
placed special interests ahead of the public interest.
The same period saw further support for the expansion of compliance-ethics
programs, responding to a crisis over the ethical practices of major defense contractors. The first term of the Reagan administration saw a massive increase in defense
spending. By the mid-1980s, a series of major procurement scandals raised serious
questions about the ability of the Department of Defense to spend billions of dollars on weapon systems and other types of defense procurement without massive
amounts of waste and fraud (Kurland 1993, 137–145; Lansing and Burkard 1991,
357–364). Critics argued that defense contractors had too much influence over
policy and that the close relationship between contactors and Pentagon officials
meant there was inadequate oversight of the
Many scholars . . . during the 1970s and procurement process.
In 1986, Reagan appointed a commission
1980s viewed any focus on low-road
to
make
recommendations on how to improve
ethics issues, such as financial conflicts
the efficiency and restore the integrity of the
of interest and financial disclosure, as
procurement system. He appointed David
diverting attention from much more
Packard, co-founder of Hewlett-Packard and
serious moral issues.
Defense Department official in the Nixon
administration, to chair the president’s Blue
Ribbon Commission on Defense Management. Packard recognized that the scandals
had built pressure in Congress and the public to impose stronger criminal penalties
for contractors who defrauded or overcharged the government (Packard 1989, 4–9).
Yet, Packard and other commission members believed that further criminalization
of the procurement process would make it much more difficult for the Defense
Department and defense contractors to work together. To head off this possibility,
the commission recommended that industry take responsibility for policing itself
by putting in place compliance-based ethics programs (Kurland 1993, 137). A short
time after the issuance of the commission’s recommendations, seventeen major
defense contractors signed on to the Defense Industry Initiative on Business Ethics
and Conduct (DII). Members of the initiative were required to adopt ethics codes
and comprehensive compliance programs. This ushered in a new era of corporate
ethics self-regulation and significantly expanded the use of compliance approaches
to protect the public trust.
Seeking to avoid the problems experienced by Reagan appointees, in 1989 President George H.W. Bush issued Executive Order 12674, which directed the U.S.
Office of Government Ethics (USOGE) to “write a single comprehensive, and clear
set of executive branch standards of conduct that shall be objective, reasonable and
enforceable” (Ley 2001, 5). Consequently, the primary goal was to clearly define
permissible and impermissible conduct (Ley 2001, 5). Of particular significance,
the Bush order revised the appearance-of-impropriety test. The new standard read
that “(n) [e]mployees shall endeavor to avoid any actions creating the appearance
that they are violating the law or the ethical standards promulgated pursuant to this
order” (Executive Order 12731 1990). The White House fully understood that sharply
limiting the scope of the appearance-of-impropriety standard would make it much
more difficult for critics to question the motives of actions. Equally important, it
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would be easier to train employees and officials not to violate ethics restrictions.
The U.S. Sentencing Commission provided the final impetus for the adoption
of compliance programs. Even before the USOGE had completed its revision of
the executive branch standard-of-conduct regulations, the Sentencing Commission
issued new guidelines in 1991 that placed pressure on all organizations to establish
formal ethics programs. Prior to the issuance of the guidelines, federal judges had
broad discretion to impose fines and penalties on corporations and other organizations
found responsible for white-collar crimes committed by their employees. Relying
upon a carrot-and-stick approach, the guidelines greatly reduced the discretion
of judges in determining the fines and penalties for organizations found guilty of
criminal behavior. They required judges to impose much larger fines and penalties on
organizations that failed to take “at least minimal steps to avoid corporate misdeeds”
(Khalfani 1996, 1). With the threat of substantial fines and penalties hanging, many
corporations rushed to adopt new codes and
compliance programs (McKendall, DeMarr, The success of compliance strategies
and Jones-Rikkers 2002, 370–372).
reduces the incentive for organizations
The collapse of Enron in late 2001 raised to encourage their employees to address
questions regarding the effectiveness of volhigh-road ethics issues.
untary compliance-ethics programs operated
by non-governmental organizations, particularly large corporations (Timeline 2004). In response to Enron and a growing number
of corporate-integrity scandals, in 2002 Congress passed the Sarbanes-Oxley Act,
which mandated much higher levels of financial transparency for non-governmental
organizations. Sarbanes-Oxley also directed the U.S. Sentencing Commission to
review its sentencing guidelines. In 2004, the commission issued revised Federal
Sentencing Guidelines for Organizations that required organizations to implement
seven mandatory requirements for ethics programs in order to qualify for reduced
fines and penalties for white-collar crimes committed by their employees (Maatman 2004, 1). Specifically, the guidelines required organizations (1) to “establish
standards and procedures to prevent and detect criminal conduct,” (2) to have “high
level personnel, with the appropriate resources, access and authority, overseeing the
compliance and ethics program,” (3) to use “reasonable efforts to limit individuals
with substantial authority from engaging in illegal activity,” (4) to take “reasonable steps to communicate aspects of the compliance and ethics programs, through
effective training, to the employees and the organization’s governing authority,”
(5) to ensure that “the organization’s compliance and ethics program is followed
by auditing and monitoring the program on a periodic basis,” (6) to promote “the
compliance and ethics program through incentives for appropriate behavior and
sanctions for inappropriate behavior,” and (7) to take “reasonable steps to respond
to criminal behavior and prevent similar misconduct from occurring in the future”
(Fiorelli and Tracey 2007, 468–469).
In March 2008, the Ethisphere Institute published the results of its study of the
ethics programs of 1,000 federal government contractors. The analysis ranked the
programs on the basis of each corporation’s (1) code of ethics and business conduct,
(2) leadership and tone from the top, (3) internal control systems, and (4) ethics and
communication programs (Ethisphere 2008). Interestingly, a significant number of
the largest contractors voluntarily submitted to having their ethics programs evaluated
by the Ethisphere Institute.1 Significantly, a number of the 100 largest federal governPUBLIC INTEGRITY
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ment contractors received below-standard ratings or did not provide the necessary
information to the institute to receive a rating.2 Nevertheless, the Ethisphere rating
system did help major contractors demonstrate that they had made a commitment
to high ethical standards.
Integration of Compliance-Based and Integrity-Based Integrity Systems:
Problems and Prospects
The spread of compliance-based ethics programs has transformed ethics management in the United States. Today a growing number of organizations have embraced
compliance initiatives as the solution to their problems. Not surprisingly, organizations now may contract with one or another of the private companies that specialize
in putting such programs in place and maintaining them (Brightline Compliance
2009; Global Compliance 2009; LRN 2009).
Interestingly, not all governments have embraced compliance ethics as a way to
ensure the ethical behavior of organizations. In 1996, the Organization for Economic
Cooperation and Development reported on a study of how nine member countries—
Australia, Finland, Mexico, the Netherlands, New Zealand, Norway, Portugal, the
United Kingdom, and the United States—regulated government ethics. Significantly,
it stressed that “the management of ethics and conduct is not just about monitoring
and policing behavior. It is about seeking some consensus on what is good behavior
and giving public servants guidance as to how they should act, make decisions, and
use discretion in their everyday work” (PUMA 1996, 11). The report described
the approaches of each of the countries participating in the study. It found that the
United States had perhaps the most comprehensive apparatus for managing ethics,
or at least for controlling corruption and wrongdoing. Many of the relevant initiatives were developed in response to the Watergate scandal in the 1970s, such as the
system of inspectors general, the Office of Government Ethics, and the Office of
Special Counsel (PUMA 1996, 46).
In contrast to this comprehensive approach, the study found that the United
Kingdom, Finland, Norway, Australia, the Netherlands, and New Zealand relied
primarily upon an aspirational, or high-road, approach to ethics management. The
United Kingdom’s First Report of the Committee of Standards in Public Life, for
instance, listed Seven Principles of Public Life. These included selflessness, integrity,
objectivity, accountability, openness, honesty, and leadership. The study stressed
that a number of countries depended upon high-road programs.
Despite the spread of compliance systems, critics continued to argue that they
“are accusatory, threatening, and demeaning,” “are viewed as mere window-dressing,” and do little to create an ethical climate within an organization (Kaptein and
Schwartz 2008, 112). Reflecting this line of thought, Plant observed that “ethicists
in public administration have not been fond of codes” (1994, 225). Writing in 1992,
Dennis Thompson argued that ethics programs needed to do more than just educate
employees on how to comply with rules of conduct. They also needed to raise the
ethical climate or culture of organizations. Designated agency ethics officers, he
stated, “will have to be willing to serve as a general adviser on proper conduct in
the democratic process, whether or not the advice is directly related to the ethics
regulations” (Thompson 1992, 258). In other words, programs must focus equally
on improving both the low road and the high road of organizational culture.
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However, little evidence exists that organizations place equal emphasis on
improving both their low-road and their high-road cultures. Shahinpoor and Matt
provide an explanation:
Many modern organizations tend to stress the importance of harmony and unity, of
placing the good of the organization above the good of individuals. Individuals are encouraged to leave their own identities outside the organization and to become a part of
a larger whole. One should be the organization man/woman, the team player willing
to give up everything for the group. These requirements of cooperation and self-sacrifice are made even more dramatic when organizations describe their activities using
the metaphors of war, battle, and struggle. While the goals of harmony and unity are
important and even noble, in actuality organizations are rarely the noble communities
they advertise themselves as being. (2007, 47)
The fact that many institutions have embraced compliance systems is entirely
consistent with this argument. Integrity-ethics approaches encourage employees to
challenge actions or decisions taken by their employers. Compliance-based methods
generally do not. Consequently, organizations have few incentives to incorporate
key aspects of integrity programs in their highly structured compliance-based
structures.
The 2007 National Government Ethics Survey measured personal observations
of unethical behavior by federal, state, and local government employees (Ethics Resource Center 2008). It found that “fewer federal employees observed misconduct”
than employees at the state or local government level (Ethics Resource Center 2008,
19). The report credited the lower observation rates to the “fact that more federal
government employees work in organizations with well-implemented ethics and
compliance programs” (Ethics Resource Center 2008, 19). Significantly, the four
types of misconduct most frequently observed were abusive behavior (23%), safety
violations (21%), lying to employees (20%), and putting one’s own interests ahead
of the organization (20%). Employees reported relatively few instances of observing
fellow employees taking bribes (2%), stealing (3%), or altering financial records
(4%). Equally significant, 11 percent of the employees who reported observations
of misconduct reported that they had faced “retaliation as a result of their reports”
(Ethics Resource Center 2008, 21). In addition, 24 percent of federal government
employees who observed misconduct “chose not to report it” because they feared
retaliation from management (Ethics Resource Center 2008, 21).
Recognizing the inherent problems of programs that rely solely upon either the
compliance or the integrity model, Hejka-Ekins argues that public organizations
should adopt a fusion approach to ethics training:
Such an approach to ethics training would combine two curricular areas: (1) Understanding legal statutes or agency regulations and the minimum standards necessary to
be accountable and meet one’s objective responsibilities as well as how such ethics
laws would apply in practice; and (2) identification of ethical standards and values
such as those embodied in the democratic ethos or a professional code of ethics, the
teaching of a moral reasoning process which would help public employees apply
these principles to heighten their ethical conduct, and the use of moral exemplars as
role models for encouraging the practice of public service virtues. (2001, 80–81)
One may make a persuasive case that her argument is equally applicable to the
structure of government and non-government plans.
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Despite the argument for integrating the best features of compliance- and integritybased programs, many organizations narrowly construe the rights of their employees
to internally or externally express concerns over the organization’s actions and
policies. Compliance strategies routinely encourage employees to report possible
instances of illegal conduct to appropriate government departments or agency ethics
officials. There is little evidence, however, that the vast majority of organizations
encourage employees to openly oppose the policies and actions of their employers
on moral grounds (Thompson 1985, 558).
In the aftermath of the Watergate scandal, increased concern over waste, fraud, and
abuse in public programs and the rising number of corporate ethics scandals led, in
the late 1970s, to the enactment of so-called whistleblower laws to provide employees
and organizations with increased protection against retaliation for disclosures. Not
surprisingly, concern that such protection might decrease organizational efficiency
led to the enactment of statutes that only protected employees for the disclosure
of illegal conduct, direct threats to public health and safety, and gross mismanagement. The Whistleblower Protection for Contractor Employees, for instance, states
that “government contractors shall not discharge, demote or otherwise discriminate
against an employee as a reprisal for disclosing information to a Member of Congress, or an authorized official of an agency or of the Department of Justice, relating
to a substantial violation of law related to a contract (including the competition for
or negotiation of a contract)” (FAR, Subpart 3.9). The Civil Service Reform Act
of 1978 prohibits federal agencies from retaliating against federal employees for
violations of “(1) law, rule, or regulation, (2) mismanagement, (3) a gross waste of
funds, (4) an abuse of authority, or (5) a specific and substantial danger to public
health and safety.”
Since the late 1970s, efforts to expand the scope of whistleblower statutes have
met with strong judicial, legislative, and organizational opposition, largely on the
grounds that broader protection would make it more difficult to maintain workforce
discipline. As a result of narrow judicial interpretations, the Whistleblower Protection
Act (WPA) of 1989 (Whitaker 2007) did little to expand the protection afforded to
whistleblowers. The WPA generally only protected employees against retaliation
for disclosure of violations of law or gross mismanagement. In 2007, a six-month
study of 3,600 whistleblower court cases by the Center of Investigative Reporting
“found that federal whistle-blowers almost never receive legal protection after they
take action” (Sandler 2007). The study painted a bleak picture of whistleblowers
facing an uphill struggle to protect themselves against retaliation:
[Federal employees] often face agency managers and White House appointees intent
upon silencing them rather than addressing the problems they raise. They are left
fighting for their jobs in a special administrative court system, little known to the
American public, that is mired in bureaucracy and vulnerable to partisan politics.
(Sandler 2007)
In her Ethics of Dissent: Managing Guerrilla Government, O’Leary (2006) paints
a picture of employees who generally must fend for themselves when they openly
dissent from the policies of their organizations.
Thompson argues that the “conventional theory and practice of administrative
ethics holds that administrators should carry out the order of their superiors and the
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politics of the agency and the government they serve” (1985, 556). In other words,
employees “are not expected to act on any moral principles as reflected in the orders
and policies they are charged with implementing” (Thompson 1985, 556). Integrity
programs assume that individuals in organizations have the capacity to “make moral
judgments and can be the objects of moral judgments” (Thompson 1985, 555).
Compliance policies only deviate from adherence to the ethic of neutrality up to
the point of authorizing employees and officials to disclose possible illegal conduct
or gross mismanagement. Integrity-based ethics initiatives, for the most part, reject
this blind obedience to the ethic of neutrality.
The fact that compliance-based programs significantly reinforce the ethic of
neutrality presents serious problems for employees who believe they have a responsibility to do more than comply with low-road ethics rules and requirements. Even
though whistleblower statutes may protect them against retaliation for disclosing
alleged instances of criminal conduct and direct threats to public health and safety,
neither compliance programs nor whistleblower statutes provide much protection
for employees who believe that they have a moral duty to internally protest arguably immoral actions or policies sanctioned by their organizations. This situation
typically forces them either to engage in guerrilla warfare against the organization
or to sit quietly and adhere to the ethic of neutrality.
Conclusion
Organizations have little reason to integrate compliance- and integrity-based ethics
approaches. First, they now realize that compliance-based programs have the ability to significantly reduce potential organizational penalties for illegal actions by
their employees. In contrast, integrity-based plans make it much more difficult for
organizations to respond to criticism of their policies and actions because it is more
difficult to distinguish between permissible and impermissible actions by employees.
Second, organizations embrace compliance approaches because they reinforce the
ethic of neutrality, whereas integrity initiatives programs empower employees to
challenge organizational policies and actions.
There is little doubt that compliance-based programs have succeeded in significantly reducing the level of low-road violations in organizations. Even more
important, compliance-based approaches provide organizations a certain level of
protection from low-road violations by their employees. If organizations establish
compliance programs and administer them in good faith, they are generally able to
escape severe sanctions.
But the ability of compliance plans to protect institutions from sanctions related
to low-road ethics violations by employees does not fully explain the explosion
of compliance programs. Organizations recognize that by embracing compliance
programs they largely immunize themselves against criticism for high-road ethics
failures. Finally, the success of compliance strategies reduces the incentive for organizations to encourage their employees to address high-road ethics issues. This
is not to suggest that organizations should abandon compliance-based programs.
It is maintained, however, that they have an obligation to place equal emphasis on
compliance- and integrity-based approaches and to empower their employees to
challenge them to deal with ethics issues.
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NOTES
1. These included Lockheed Martin, Boeing, Northrop Grumman, General Dynamics
Raytheon, KBR, L-3 Communications, SAIC, and BAE Systems. http://ethisphere.com/
government-contractor-top-100/, accessed July 28, 2008.
2. BAE Systems, below standard, 48.08; Mickesson Corp, NR; Bechtel Group, below
standard, 47.36; University of California System, NR; Humana, Inc., below standard
52.95; Battelle Memorial Institute, NR; Health Net, Inc., below standard, 54.02; Triwest
Healthcare Alliance Co., NR; CH2M Hill Companies, LTD., NR; Public Warehousing
Co./Agility, below standard, 54.34; URS Corp., below standard, 57.33; BNFL Inc. NR;
Amerisourcebergen Corp., below standard, 58.94; IBM Corp, below standard, 50.02;
Veritas Capital Inc., NR; DRS Technologies, Inc., NR; Exxon Mobil Corp., below standard, 41.03; Jacobs Engineering Group Inc., below standard, 41.96; Kuwait National
Petroleum Co., NR; The Alliance Contractor Team, NR; Renco Corp., NR; Macandrews
& Forbes Holdings, NR; Environmental Chemical Corp., NR; Johns Hopkins University,
NR; Washington Group International, below standard 57.33; Royal Dutch Shell Co., below
standard, 59.00; Stewart & Stevenson Services, NR; Armour Holdings, Inc., below standard, 48.08; General Motors, Inc., below standard, 51.28; Grindex Pumps AB Sweden,
NR; Korea Agricultural Cooperative, NR; Mitre Corp., NR; Chugach Alaska Corp., NR;
SRA International Inc., below standard, 43.88; Massachusetts Institute of Technology, NR;
Valero Energy Corp., below standard, 43.66; IAP Worldwide Services Inc. NR; Syracuse
Research Corp., NR; Blackwater USA, NR; Government of Canada, NR; Philips and
Jordan, Inc., NR; Refinery Associates, Inc., NR; United Industrial Corp., NR; Parson
Corp., NR; AP Moller-Maersk, NR; University of Tennessee System, NR; Akal Security
Inc., NR; Hatakeyama Bussan, NR: Thakes Group, unsatisfactory, 38.68; Chenega Corp.,
NR; Arctic Slope Regional Corp., NR; G4S PLC, unsatisfactory, 35.15; Cangene Corp.,
unsatisfactory 35.15; Nana Regional Corp., NR; Abu Dhabi National Oil Co., NR; GTSI,
below standard, 40.87; Sanofi Aventis, NA; Bahrain National Oil Co., NA.
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ABOUT THE AUTHOR
Robert Roberts, James Madison University, is the author of White House Ethics, co-author
with Marion T. Doss of From Watergate to Whitewater: The Public Integrity Wars, coauthor with Tony Eksterowicz of Public Journalism and Political Knowledge, author of
Ethics in U.S. Government: An Encyclopedia of Investigations, Scandals, Reforms and
Legislation, co-author with Scott Hammond of Encyclopedia of Presidential Campaigns,
Slogans, Issues and Platforms. Articles by Roberts have appeared in Public Administration
Review, International Journal of Public Administration, Public Integrity, PS (Political Science), Politics & Policy, and Review of Public Personnel Administration. Roberts teaches
administrative law and legal environment of public administration courses. He holds a
B.A., M.P.A., J.D., and Ph.D. in public administration from Syracuse University.
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