Difference between Ethics and Compliance

Difference between Ethics and Compliance

Ethics and Compliance are frequently used synonymously. This makes it difficult for anyone to make out the difference between the two. In reality, compliance and ethics are as distinct to each other as Science and Moral Science. Whereas Science is a window to facts and rules of nature, moral science gives us values for our conduct in lives. Similarly, compliance is a code of conduct as per the law or a company rule book, while ethics are values that are imbibed in a company to carry out its operations. Yet again, there is a vast difference between legal compliance and code of conduct compliance. But let us stick to discussing code of conduct compliance and ethics compliance in a company.

Understanding Compliance

In an interview to define compliance, Cindy Morrison, the Director of Compliance for Post Holidings, Inc. said, “Compliance is the act of conforming to company policies and procedures as required by laws and regulations.” So basically, compliance means following the laws and rules that abide by a business. You might have to consider the advice of your legal supervisor very closely when you start building up the rule book of your company. This rule book will not only adhere to the local laws relating to the function of the company but will also include the laws that you would want the employees to put up with.

Compliance decree can invoke serious repercussions when not obeyed sternly. While a small in compliance might compel the employees to pay fines, liabilities or get suspended from their jobs for a few days; serious in compliance issues that affect a company’s operations and reputation in the competitive market might even result in jail time and firing of the employees.

Understanding Ethics

There can never be a universal rule book for ethics, even for a small unit like a company. Ethics is mainly the values that a company observes in its conduct. Ethics help the employees decide right and wrong, or sometimes the better out of the two options. Ethics is the conduct of behavior expected by a company from its employees.

Ethics is much difficult to follow as compared to compliance. This is because every individual is raised by different parents of different values and in a different environment. A person’s ethics are influenced by his life and so every individual has a different rule book when it comes to ethics. Something that is ethical for an employee might be unethical from the company’s viewpoint and vice versa. And it is near to impossible to change someone’s moral values.

Unethical performance doesn’t always result in serious repercussions. No unethical behavior will ever result in jail time or fines unless it is also a compliance issue. But any divergence from the ethical expectations from a company might damage its name irreparably in the market. This might have long-lasting effects and can even result in a declination of a big empire. This holds true for an individual as an employee also. An employee might not have legal actions against him or her for ethical misconduct but it can harm his or her entire professional life irreversibly.

Inequation between Ethics and Compliance

Many companies have a separate officer who looks for the obedience of codes of conduct by the employees. In some companies, the officer is designated as Compliance Officer while in some others the officer is called Ethics Officer. Some organizations also prefer the designation to be Compliance and Ethics Officer. When the concept of Compliance and Ethics is not clear to the organizations themselves, it is futile to expect this from the employees. The two words cannot be used interchangeably, though they are currently being used so.

There are incidences in companies where conduct is morally correct but regarded as misconduct in terms of compliance towards the rule book of the organization. For example, the government mandates a particular font size and style to label certain products. However, a company chooses to labels its products differently. This is morally correct but does not go as per the compliance. Whereas, some conducts are ethically and morally incorrect but lawfully correct. For example, an employee decides not to help his colleague when he actually can. This is ethically incorrect but lawfully, he is not doing any wrong. In such scenarios, an organization needs to have separate departments for ethics and compliance and keep a strong check on the operations of the company internally as well as externally.

Ethics play a vital role in shaping a company’s values and work culture. It is also an important factor that builds up a company’s brand. Compliance is equally important for the name of the company in the competitive market but it has an almost negligible role in fabricating the internal work culture, atmosphere, and values of a company.

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