Government Policies Cannot Produce Ethics

Companies are big on corporate ethics programs. Trouble is, they don’t do much good.

“Compliance cannot compel ethical behavior” writes Greta Guest reporting for the University of Michigan. Twenty-five years ago, government regulators had the best of intentions:

Corporate ethics compliance programs have flourished since the federal government gave companies that established one a break on fines and penalties in 1991.

Corporate scandals also have continued unabated. A new analysis by University of Michigan researcher David Hess suggests that both companies and the government rely too heavily on merely having a compliance program—and not enough on preventing bad behavior.

Corporate executives would apparently smack their hands and feel good that they had a “program” in place. But it was just a piece of paper. The program had no teeth.

Both corporate executives and government officials like reporting on things they can measure, like how many employees took an ethics program or how many audits were performed. It gives them good press on the annual reports. Hess says those things fail to measure the corporate culture. He feels companies need to create a climate that encourages people to do the right thing.

Hess gives two suggestions to improve the ethical culture of an organization:

• Monitor the organization’s informal system of communication, surveillance and sanctions, and promote an informal system that supports the goals of the compliance and ethics program.
• Periodically assess organizational members’ perception of the organization’s ethical climate.

So if the auditors find ways to measure those two things, will bad behavior go away?

Bosses cannot make bad people good. Neither can government. They can only punish wrongdoing or reward actual good behavior, making it more costly to engage selfish lusts that are inherent in human nature (see Romans 13:1-7). Policies can be instituted to turn selfish desires to good ends, as in free market capitalism, where the only way an entrepreneur can get more money is to please as many customers as possible. This can at least create a moral culture from a group of selfish individuals (see Walter Williams describe how this works in a 5-minute video clip on Prager University). Another example comes from military culture, where the code of honor encourages teamwork and mutual support against a common foe. But these cannot change the inner person.

Ethics must come from within each individual, from unmixed motivations that actually love good and hate evil. That takes a transformation of the heart. The only Great Physician who can do spiritual heart transplants is the Creator. Because of His new covenant with mankind (Hebrews 10), he is able to write his laws on the mind and heart, granting people a spirit of obedience that makes them want to do right.