The Ethical Commitment to Compliance: Building Value-Based Cultures

Abstract

The 2004 amendments to the Federal Sentencing Guidelines state that organizations should a culture that encourages ethical conduct and a commitment to comply with the law. This article presents data that show that procedural fairness—which concerns the objectivity and consistency of organizational procedures—is an essential component of such a culture. The data show that employees tend to believe that procedurally just organizations are legitimate. This belief legitimacy, turn, encourages them to act ethically and to comply with rules. This is a market approach to compliance because employees buy in to the organization, its values, and rules. Command-and-control approaches based on reward-and-punishment programs are significantly less effective, suggesting that rigid, rules-based approaches such as Sarbanes-Oxley are counter-productive. Procedural justice encourages employees to go beyond their job descriptions to create organizational value. This value creation aspect of procedural justice suggests a new role for ethics officers. Finally, this article includes an instrument organizations can use to measure their own level of procedural justice as well as a set of national benchmarks.

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