The Ethics & Compliance Initiative's Patricia Harned on the Evolving Role of Ethics

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In an era of increasing globalization and regulatory scrutiny, ethics and compliance remains a top priority for U.S. companies.

To push organizational ethics and compliance forward, the venerable Ethics Resource Center--a nonprofit, nonpartisan organization that has focused on organizational ethics since 1922--last fall announced a key alliance with the Ethics & Compliance Officer Association. The alliance has spawned the Ethics & Compliance Initiative (ECI), consisting of two longstanding nonprofit organizations as well as a new, certification-focused entity: the Ethics & Compliance Certification Institute.

Bloomberg BNA's Yin Wilczek March 26 interviewed Patricia Harned, ECI's chief executive officer, about the new developments and what challenges lie ahead for ethics and compliance professionals.

Bloomberg BNA: The Ethics Resource Center has been renamed the Ethics Research Center (ERC), and the Ethics & Compliance Officer Association has been renamed the Ethics & Compliance Association. You head both organizations as well as the ECI. How will the new ECI help compliance and ethics professionals?

Patricia Harned: We've known for quite a while that compliance and ethics practitioners are in need of good resources that are grounded in sound research to help them to be able to improve their programs. There are a number of really good conferences where you can go and get good exposure to a lot of the issues that are out there in the industry but there are not a lot of efforts to provide rich conversation and best-practice sharing that are based on research and reliable metrics. So that's what we did in creating the Ethics & Compliance Initiative.

BBNA: ECI recently announced that it plans to launch an online resource center that will offer survey information, industry white papers and online forums, among other material. When will the new resource center be ready?

Harned: We're aiming to get it developed and available to members and partners of the initiative within the next few months.

The ERC for many years has done a number of research studies. Just in the National Business Ethics Survey® and its supplemental reports alone, we have approximately 45 different research studies that we've completed. In addition, there are research projects that have been performed by our Fellows Program and other studies that ERC has undertaken. These studies are available on the ERC website.

We will continue to do the National Business Ethics Survey®, but we're going to be expanding it globally. We also will be developing best-practice reports based on the conversations and the sharing of our members. In other words, we have a very rich library of research and best-practice reports and we want to put them in a central place so that people can come, search for and access different topics and research studies.

BBNA: Since 1994, the National Business Ethics Survey® has served as a benchmark for ethical behavior in U.S. corporations. When will the survey go global?

Harned: As you may know, the study historically has been based on a sampling of the U.S. workforce. And it's been a very rich study in terms of what we've learned about what works in ethics and compliance. But its limitation is it's a U.S.-only survey, and a lot of companies and organizations that look at that data are multinational.

We will likely use a panel methodology to do the data collection. Right now we are looking at what metrics we'll use and what countries we will survey first, and how we'll go about doing it. So the planning is underway and we haven't really finalized it yet.

BBNA: Speaking more generally, you've been president of the ERC since 2004. How have the ethics and compliance functions changed in that time?

Harned: There's no question that it's becoming much more complicated to be an ethics and compliance practitioner. The amount of knowledge practitioners must have of regulation that's relevant to their industry; the amount of knowledge they must have about the culture of their organization and how they can impact it; and also the complexity of enforcement actions and the priorities of regulatory officials: it's a different kind of job than it was 10 years ago.


There's no question that it's becoming much more complicated to be an ethics and compliance practitioner.


A decade ago, it's not that it was a simpler job, but the extent of the involvement of ethics and compliance in internal business matters such as government and legal affairs, in financial internal controls, human resources, was not as broad. The priorities were far more focused on values and educating people about the standards of the organization. The profession still focuses on those priorities, but there's also this other very large dimension in terms of making sure that all employees and the company are in compliance with all relevant laws and regulations in all the places where an organization is doing business.

BBNA: Are ethics and compliance the same thing?

Harned: They go hand in hand. Compliance is observing and upholding the minimum standard as outlined by law and regulation. Compliance focuses on the activities we are not going to engage in. Ethics, by contrast, focuses on what should we do, how do we want to engage in business, what are the principles we're going to apply? So they go together but there are certainly lots of organizations where they're designated as very separate functions. Even when they are separate functions they work very closely together because the two really are interconnected.

BBNA: What do you see as the top five challenges facing the ethics and compliance functions?

Harned: Among the biggest issues that ethics and compliance functions are dealing with right now are the speed of growth of technology and all the challenges and risks that that brings. That includes matters such as cybersecurity, social networking among employees, protection of privacy, observance of privacy, use of big data.

That whole bucket of technology and the growth of it and its impact on our business models and the values that we have--that's a huge one. We just finished a conference that talked about the future and what are the things that people need to take into account and technology was of course a very big theme in that.

Another challenge is global changes and global demands on organizations. The bigger you get as a company the more likely you are to do business overseas. Certainly, there is pressure to have FCPA and anti-corruption programs, but also just working in very complex environments globally, that's a whole other challenge.

A third challenge is reputation management for the company. Ethics and compliance becomes a priority once a company’s reputation has been harmed, and I think increasingly, businesses are starting to think about the fact that proactive reputation management has to involve the ethics and compliance function. I think that's a challenge that will become even greater especially as people are more willing to blog and tweet, and expose companies for things that they’re not happy about in social media.

Enforcement is yet another challenge. That’s been a challenge for quite a while. Just being able to stay on top of what the regulations are and the priorities of the enforcement and regulatory communities is always really complicated.

As a final thought, another challenge involves the changing social consciousness of society and its expectations for businesses. Millennials are coming to the workplace expecting to work for companies with high integrity, and consumers are far more in tune with the behavior and the values of companies than they ever have been before. From an ethics and compliance perspective, that's a huge challenge in terms of educating employees. Our traditional ways of training employees are not necessarily effective with millennials. That is an area that I don't know we've really gotten our arms around yet.

BBNA: Are companies starting to recognize that there is a generational gap with millennials?

Harned: I think so, yes. Some companies more than others are engaged in the discussion, and it tends to be companies with younger workforces where they're very aware of shifts in the way employees behave. For example, accounting firms employ a lot of people right out of college, as do retail stores--those kinds of industries where they have a very dominant population of millennials--are much more in tune with the conversation than some of the other companies that are not employing as large a population.

BBNA: What are the top challenges facing ethics and compliance practitioners?

Harned: I don't know if it's the biggest but certainly a very large challenge is raising as a profession the level of our own dialogue about what we're doing, why we're doing it and how we're doing it.

And that certainly was the biggest motivator for why we created the Ethics & Compliance Initiative. There are conferences and consultants and lots of places you can go to get pieces of the discussion on different topics, but as the industry matures, there is a need for a higher level of conversation and research about how you do it better. And that's what we're trying to do.

In addition, for the profession as a whole, is deepening our knowledge of how people behave and what helps people to comply. That includes getting our arms around big data and what it can mean for us in terms of predicting behavior, but also the ethics issues that will come with it.

Another challenge for us as an industry is relevance in our businesses, making sure that we're part of the conversation across the business functions and not just siloed. Air time in the business is always a challenge.

And then finally, we must have adequate resources to do what we need to do.

BBNA: Looking ahead, how can ethics and compliance professionals overcome these challenges?

Harned: Certainly they should get plugged into communities where they're sharing best practices, where they're getting good insights from reliable resources, reading publications and staying abreast of what regulatory actions are happening. Within our industry there are some really great resources out there for practitioners to stay informed about what's happening out there. That's probably a big one.

But within their own businesses, ethics and compliance professionals should make sure they are connecting across the business and becoming familiar with what the company does. And then integrating ethics and compliance into that conversation.

BBNA: Do you see any emerging topics they should be aware of and prepared for?

Harned: The whole conversation about technology and how it's changing our culture and the way we work, is an area that professionals should be aware of.

I think that the impact of global climate change is also one that is not really getting discussed in our industry yet but has huge implications for business and will have huge implications for ethics and compliance functions, especially as we’re trying to help people navigate through really tough decisions that are on the horizon. I don’t know if that’s in the next five years but certainly, it’s something that’s starting to come up.


Every practitioner should be reading the financial statements and disclosures of their own companies. They should be very well versed in the documents that their companies are putting out because that’s really how you get a sense of the business activity and what the compliance risks are.


Every practitioner should be reading the financial statements and disclosures of their own companies. They should be very well versed in the documents that their companies are putting out because that’s really how you get a sense of the business activity and what the compliance risks are. And then just general resources coming out of our industry around what are the drivers of good conduct in companies, what are the biggest risks, what are the best practices out there, those are the kinds of things that I think practitioners would be wise to be attuned to.

BBNA: Any practical takeaways for people who are in, or thinking of joining, the profession?

Harned: I think it's an exciting time for ethics and compliance. Our industry has certainly grown substantially over the years. Practitioners should get themselves plugged into good communities of their peer organizations but also other practitioners who are engaging in discussions about what are the issues that are on the horizon and how do you design a good program. Those are probably the best things that a new practitioner can do to really learn the profession.

There are ethics and compliance programs in colleges and universities now, which is a great thing to see happening. But it’s one thing to have the knowledge base; it's another to implement a good program. And that’s where being connected in the associations and communities that are out there is really valuable.

I’m especially excited about what we’re about to do with the Ethics & Compliance Initiative because it’s going to be very different from what other organizations in our industries are doing. So yes, I think it’s a really good time to be in ethics and compliance, and I’m hoping people will get involved in what we’re doing.