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What Does “Business Ethics” Mean?

Corruption, Crime & Compliance Blog -

Forgive me for the title of this posting – I am trying to make a point; a rather obvious one.  I confess I did not take philosophy classes in high school or college.  So, I may have missed the boat on this issue.  But from my limited vantage point with respect to the compliance industry, everyone needs to take a breath and reevaluate their use and understanding of the term “business ethics.”

As a start to this effort, let me first tell you what ethics in relation to compliance does not mean – we are not talking about some metaphysical, undefined concept surrounding human existence.  Also, and perhaps more relevant, we are not speaking about legal ethics, a term that has little to no relevance to corporate or business ethics except for perhaps one minor issue (duty to act in circumstances where lawyer has knowledge of future illegal actions, e.g. a client who tells his/her lawyer that he/she intends to commit a violent crime).  Legal ethics has very little relevance for business ethics. 

Without belaboring all the feel good and esoteric discussion surrounding societal ethics and applying these concepts to business ethics, I would suggest that we focus on the term “business ethics” by focusing on the concept of ethical decision-making.  Companies act every day and make important decisions.  In certain circumstances involving difficult decisions, a business ethics framework can be helpful to ensuring that a company considers its mission, its values and relevant stakeholders. 

To do so, a company has to answer several important questions:

  • What is the company’s mission

A company has to define its mission in a clear and concise manner.  Hopefully, the company will define its mission beyond just making money, building good products, and selling lots of goods and services.  By mission, I mean defining the company’s mission in relation to people, communities and society.  A company is only as good as it relates to important constituencies – e.g. customers, community, government, shareholders.  I think of it as a company’s inspiration – what motivates the company and its actors?

  •  What are the company’s values?

A company’s values are an important statement of its organizational and operational principles.  Hopefully, the company’s statement of values is short, sweet and simple.  A company’s values has to reflect again it mission and the means by which the company plans to accomplish its mission.

  • Who are the company’s stakeholders?

 A company operates in its community, relates to its shareholders, customers, vendors and suppliers and has important interactions with government entities.  An important aspect of ethical business decision-making is to understand your stakeholders, their interests and concerns, and nurturing the company’s relationships with these stakeholders.

  •  Does the company have an established framework for ethical business decisions?

Once you have defined the company’s mission, its values and its stakeholders, the company should define a framework for ethical business decisions.  It is here where designs can get tripped up – by ethical business decisions, I do not mean what is right or wrong from a political or social perspective.  I am focusing on balancing important interests to a company’s stakeholders.  Social and political issues, however, may be taken into account depending on concerns from stakeholders like the government, shareholders, the community in which the company operates, and customers.  It can be a factor but rarely will be the driving force for most companies.

Instead, let me offer a framework for ethical business decisions.  As you will see, this framework goes beyond just asking whether a decision is “legal” to defining whether a decision is “right.”

  • What are the relevant facts around the issue?  Of course, to make an important decision, a company has to know and understand the relevant facts surrounding the issue.
  • What the available options?
  • Does the issue involve more than whether the decision is legalDoes the issue implicate any code of conduct provisions? Assuming the decision does not violate the law or code of conduct, what relevant issues are raised?
  • What impact will the decision have on each relevant stakeholder?
  • What are the benefits and negative impacts to the company and its stakeholders (cost-benefit analysis)?  In other words, do the benefits outweigh the negative impact to stakeholder(s)?
  •  Which option is most consistent with the company’s mission and values?
  • If the decision is reported in the press, how would stakeholders respond? 

While this is not an exhaustive list or the definitive list, my hope is that it will help identify some relevant considerations.  This framework is intended to integrate a decision-making process that weighs a company’s mission, values, code of conduct, stakeholders and legal considerations (if any). 

The post What Does “Business Ethics” Mean? appeared first on Corruption, Crime & Compliance.

Top 5 Reasons Companies Fall Short of State Compliance Requirements

Corporate Compliance Insights -

New York, NY –  10 October 2019  – Computershare has revealed a list of the most common reasons that companies are found to fall short of state compliance requirements. The company’s growing Registered Agent Services division supports companies with statutory representation, annual report filings, and transactional services to help them remain compliant. It says that […] The post Top 5 Reasons Companies Fall Short of State Compliance Requirements appeared first on Corporate Compliance Insights.

(This is only a summary. Click on the headline to view the entire article at Corporate Compliance Insights and participate in the discussion.)

That's no shortcut, it's accounting fraud

The FCPA Blog -

Last month Fiat Chrysler paid the SEC $40 million in penalties. The company had accumulated unreported sales in what FCA employees called a "cookie jar." In months when FCA wanted its vehicle sales to appear better than they were, it dipped into the cookie jar to inflate sales numbers.

Time for Japan to Take a Tougher Stance on Foreign Bribery

Corporate Compliance Insights -

Some apparent deficiencies have come to light in Japan’s prosecution of foreign bribery, and the OECD is urging the country to take action to close loopholes and stiffen penalties. Clifford Chance’s Wendy Wysong, Tess Forge and Catherine Ho weigh in. with co-authors Tess Forge and Catherine Ho In June 2019, the Organization for Economic Cooperation […] The post Time for Japan to Take a Tougher Stance on Foreign Bribery appeared first on Corporate Compliance Insights.

(This is only a summary. Click on the headline to view the entire article at Corporate Compliance Insights and participate in the discussion.)

The Importance of Whistleblowers to a Speak Up Culture

Corruption, Crime & Compliance Blog -

The twist and turns of our political world amid the ongoing controversy surrounding whistleblower reporting has focused  attention on an important issue – encouraging whistleblowers as part of a speak up culture and protecting them from retaliation is critical.

Without getting into the merits of the specific allegations raised by the CIA whistleblower, the political debate concerning the identity, motives and protection of the whistleblower is important to monitor.  To the extent that political ideas and perception concerning the CIA whistleblower influence your company’s culture and attitudes, compliance officers have to be vigilant to protect the integrity of their own whistleblower program.    This is a perfect example of where social and political attitudes can influence corporate speak up cultures.

As the current controversy drags on, compliance officers should reinvigorate communications and training to reinforce the protection of whistleblowers and reporters who come forward to report issues of concern.

To remediate the impact of the current political controversy, compliance officers should reinforce the following four messages:

  1. We Want to Hear from You – Senior management and compliance officers should communicate and demonstrate where appropriate the importance of employees reporting their concerns, whether directly to their supervisors, the compliance office, human resources, or a reporting hotline.  If an employee wants to report anonymously, that should be an option.
  • We Will Protect Your Identity —  Many employees want to report their concerns anonymously.  While the substantiation rates for anonymous complaints has been increasing over the last few years, compliance officers recognize that hearing from an employee, whether anonymous or not, is vital to a compliance program.  Luckily, most case management systems facilitate communications with an anonymous reporter so that follow up questions and dialogue can occur.  It is important that compliance officers protect the anonymity of the reporter.
  • We Will Investigate Your Allegations – A speak up culture depends on a company’s commitment to investigate whistleblower allegations and hold actors and supervisors accountable for their behavior.  If a company brushes allegations under the rug and fails to investigate a whistleblower’s claim, a company’s speak up culture will quickly deteriorate.  In order to maintain trust with its employees, companies have to devote adequate resources to investigate and resolve whistleblower claims on a timely and prompt basis.
  • We Will Protect You From Retaliation – Whistleblowers have been suffering from an increase in retaliation – overt and subtle actions taken by supervisors and other corporate managers.  It is often difficult to collect enough evidence to substantiate claims of retaliation given the variety of subtle tactics to impact a whistleblower’s status.  Compliance officers have to be vigilant in monitoring a whistleblower’s status and potential efforts to retaliate against the whistleblower.  When credible allegations are raised that an employee has retaliated, the compliance officer has to carefully investigate such claims recognizing that the results of the investigation could have a significant impact on a company’s culture.

The post The Importance of Whistleblowers to a Speak Up Culture appeared first on Corruption, Crime & Compliance.

Do Physicians Know When They’re Prescribing Too Many Opioids?

BRINK News -

Efforts are underway to fight the opioid crisis. One missing component? The prescribing habits of doctors. 

Meet Physician #1

Let’s say there’s one physician who really takes her time to educate patients on what pain level they should expect after a common surgery. She explains to them how to ladder Tylenol and Ibuprofen to manage pain. Maybe she even prescribes a few opioid pills here or there — with three specific instructions, that is: use only if pain becomes unmanageable, use them sparingly and dispose of them properly given their addiction risk and potential for abuse. The result? A typical patient leaves with a prescription for 5 opioid pills.

Meet Physician #2

Let’s say another physician (who’s practicing on the very same floor) has a different approach to opioids. He leaves the patient education component out of the equation, instead just handing over prescriptions right to the nursing staff to manage. Unlike Physician #1, he gets calls a couple of times a week from patients who complain of ongoing pain. To avoid patient follow-up, he errs on the side of prescribing more opioid pills. The result? A typical patient leaves with a prescription for 30 opioid pills.

Meet Physician #3 

A third physician (working in the very same building as the others) just uses the pre-filled hospital order sets with a typical dose of opioids following similar common procedures. Given the variation in perspectives among doctors and the desire for efficiency (they’ve developed a single order set for all patients getting this procedure), they just pick the highest number of pills a patient might need. Then, this prescription is automatically sent to the patient’s pharmacy to be easily filled: E-prescribing for the win. The result? A typical patient leaves with a prescription for 60 opioid pills.

What do these physicians all have in common? None of them believes they’re delivering “bad” care.

As illustrated above, many factors go into the care a patient receives. We believe ensuring patients are getting the right care (and not too much care) is still the responsibility of the physician. It’s physicians who have the clinical authority to dictate when care is right, or not right, for their patients.  

Yet, physicians estimate more than 20 percent of all care delivery nationwide — at an annual cost of $265 billion — is unnecessary and potentially harmful to patients. All three physicians above likely believe they aren’t part of these staggering statistics because they are delivering “good” care. 

It is only when each physician is presented with a report showing how their prescribing pattern compares to guidelines, and to their peers, that they have the occasion to step back and question the default practices ingrained in health care. This type of unnecessary care spans surgeries, diagnostics, prescribing and the like, across every area of health care. 

Measurement and Monitoring

In my view, the only way to combat this is to bring more guideline-based, comparative measurement to help health care professionals identify where outlier practices exist so they can spur discussion, education and reinforcing mechanisms that cause broken default care patterns to be reviewed and changed.

Consider, for instance, the number of physicians who regularly prescribe more than 40 opioid pills for a knee surgery, whereas (a Johns Hopkins-affiliated program identifying recommended opioid amounts after specific procedures) recommends 8 tablets (of Oxycodone 5 milligram equivalent) for an arthroscopic partial meniscectomy, or up to 20 tablets for an anterior cruciate ligament (ACL) or posterior cruciate ligament (PCL) repair. 

The fact that some orthopedic surgeons performing these procedures prescribe 50, 60 or 70 pills is an incredibly concerning variation. This lack of awareness among physicians in how their treatment choices differ from guidelines and peers is commonplace across the health care industry. This chart, based on analysis from Practicing Wisely, a program developed by Oliver Wyman, provides an interesting and even shocking glimpse into opioid-prescribing habits.

Source: Oliver Wyman Health Innovation Journal

Bringing Greater Visibility

Although Appropriate Use Measure guidelines indicate fewer than 15 opioid pills are necessary, many orthopedic surgeons, for instance, prescribe an average of 40 pills to patients in their practice. Our initiative will hopefully curb the opioid crisis by reducing the number of pills that are legally, ever so easily and far too often prescribed for some of the most common reasons people receive care. These are pills that are incredibly addictive, destructive and typically aren’t even needed in the first place.

Curbing the opioid crisis and improving care across all areas of medicine requires that we bring more visibility to individual physician performance (de-averaging performance analysis that show overall hospital or medical group performance across a blend of medical procedures), and use peer-based variation analysis to help physicians understand how their treatment patterns differ from best practices and from peers.

The opioid crisis is a stark example of how excessive care can destroy the lives of people who have sought the trusted guidance of a physician when they are at their most vulnerable. Variation analysis can help physicians make wiser choices when caring for their patients. Necessary care, not dangerous care on autopilot, will save lives and improve care delivery.

Credit Lines and Fund Performance

Compliance Building -

Dr. Christoph Jäckel, a Director of Montana Capital Partners AG, wades into the discussions about fund credit facilities with some new research he published in Private Funds CFO. His findings? A credit line increases IRR for most funds by only one percentage point.

Of course, it’s a bit more complicated than that. The average in his findings was 4%, but that was inflated by a few, very well-performing funds. The study looks at funds from 1990 to 2007 using quarterly cash flow data from Prequin. As for the equity multiple, he only found a small effect.

This is all against the back-drop of the ILPA guidance encouraging more disclosure on the use of credit lines. Around the same time, Howard Marks of Oaktree Capital took a deep but practical dive into the use of lines.

Another research study in the works by James Albertus and Matthew Denes found that use of credit lines increased performance by 6.1%. They used a different data set with a focus on data from 2014 to 2018. Unlike the Jäckel study, they only report the average effect, so it could be skewed by highly successful funds, similar to his report. As with Jäckel, they found an effect on the equity multiple, but it was small. They also note that younger funds skewed the data, presumably since the short time frame would have relatively more on the credit line and less returned to investors.

What about compliance? It has become an industry best practice to disclose in performance marketing that the fund used a credit line and the performance would be different without use of the line.


2019 SCCE CEI Guest Blogs

The Compliance & Ethics Blog -

A Misleading Session Title By Nick Sanders The name of the session was "Top Five Compliance Risks When Contracting with the Federal Government," but that title was misleading. In fact, it was an overview, with details and anecdotes, of many compliance risks. The amount of information provided was astounding. I've been to multi-day training seminars […]

CONVERGE19 – The Ethics Impact

Convercent Blogs -

Converge19 just wrapped up and I’ve left the conference feeling invigorated, inspired and made some new friends in the process. Like no other ethics & compliance conference, over 350 number of E&C practitioners, influencers, and industry analysts convened over two […]

Why a Duck-Episode 5, Horsefeathers and the Juniper Networks FCPA Enforcement Action

FCPA Compliance & Ethics -

From Vaudeville to the Silver Screen to the Small Screen, the Marx Brothers made an impact wherever people found them. Now Tom Fox and Mike Volkov have wedded their love of the Marx Brothers with their passion for compliance and bring them into the boardroom to help explain and explore the sometimes-chaotic world of governance, [...]

The post Why a Duck-Episode 5, Horsefeathers and the Juniper Networks FCPA Enforcement Action appeared first on Compliance Report.

A decade of action in Ethical Corporation in 2020

Ethical Corporation Feeds -

2020 is a critically important year for sustainable business, with the deadlines falling due for ambitious commitments to end deforestation and cut CO2 emissions. Other 2020 deadlines were made as part of the 2015 Paris Agreement, including mobilising $100bn in green finance by the turn of the decade. This is also an election year in the US, and an important staging post for delivery of the SDGs, which are five years old this year.

Image: Channels: Business StrategyTags: editorial calendarsmart citiesESGenterprise risk managementclimate activisminvestor activismsustainable seafoodshippingPalm OilsoyabeeftimberpaperSBTsSDGscircular economyplasticse-wastewater riskenergy transitiongeothermal energy

Cheater, Cheater: Dishonest Workplace Behavior Is a Complicated Phenomenon

Loss Prevention Media -

For those charged with protecting company assets, a couple of recent news items raised red flags about dishonest insiders. Multiple studies underscore the risk from dishonest insiders and found that an important security tactic—the “two-person rule”—isn’t always enough. The research also provide insights into how employees rationalize dishonest behavior.

Why Culture Matters-Episode 1, What is Ethical Culture and Why Does it Matter

FCPA Compliance & Ethics -

Welcome to this special five-part podcast series with Jay Rosen, VP of Business Development for Affiliated Monitors, Inc. (AMI), who is the sponsor of this podcast series. Corporate culture exists in the space between what an organization professes and what it does. It is important to pay attention to corporate culture as disconnects in this reality [...]

The post Why Culture Matters-Episode 1, What is Ethical Culture and Why Does it Matter appeared first on Compliance Report.

LP Associate Hit by Shoplifter in Vehicle

Loss Prevention Media -

In Tennessee, Memphis police have arrested a woman following a shoplifting incident and the assault of a security guard at a Marshalls on Polo Grounds Boulevard near Bill Morris Parkway. According to an affidavit, Iann Davenport, 46, is facing multiple charges after she was seen putting $700 worth of products in her purse by the […]

Shoplifter Shot by Deputy to Be Re-Examined

Loss Prevention Media -

The latest on a deputy who shot one man fatally in 2017 and wounded a woman on a scooter in August. Prosecutors are re-examining the fatal shooting of a suspected shoplifter by a Kansas City-area sheriff’s deputy after the same deputy was charged with shooting a scooter rider in the back while trying to arrest […]


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