Monday, October 08, 2012

Corporate Culture and Ethical Leadership Under the Federal Sentencing Guidelines

What Should Boards, Management, and Policymakers Do Now?

In 1991, in recognition that the acts of individuals can create criminal liability for their organizations, the U.S. Sentencing Commission expanded the Federal Sentencing Guidelines to include a new chapter on organizational crime. The intent was twofold: to provide a consistent set of guidelines to deter and punish organizational crime and to encourage positive behavior — specifically, the establishment of effective corporate compliance programs. In the two decades since, one of the chief aims of the guidelines has been to encourage basic cultural change within organizations in ways that might reduce both criminal and ethical risk. On May 16, 2012, RAND brought together a group of public company directors and executives, chief ethics and compliance officers, and stakeholders from the government, academic, and nonprofit sectors for a series of conversations about organizational culture, as well as to explore the business and policy ramifications of efforts to build better ethical cultures in corporations. The symposium discussions featured a range of viewpoints on the history and progress of compliance initiatives, the barriers to achieving a strong ethical culture, and what corporate boards, executives, and compliance and ethics officers, and policymakers can do to cultivate such cultures. Participants put forward a range of solutions, many of which sought to overcome the common tendency to view compliance as a legal issue more so than a cultural one.

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