11 - Criminalized Compliance

Summary

Abstract: Corporate compliance programs have become increasingly criminalized. In the truest of ironies, companies have adopted compliance protocols that are motivated by and mimic application of the law they seek to avoid most. This approach to compliance – using the precepts of criminal enforcement and adjudication to govern employee conduct – is inherently flawed, however, and can never be fully effective in abating corporate wrongdoing. Criminalized compliance programs impose unintended behavioral consequences on employees, specifically by fostering rationalizations that allow would-be offenders to square their self-perception as “good people” with the unethical or illegal behavior they are contemplating, thereby allowing wrongdoing to go forward. By importing into the corporation many of the criminal law’s delegitimizing features, criminalized compliance encourages rationalizations and creates the necessary precursors to the commission of corporate crime. Once this dynamic is understood, it provides a new way of conceptualizing corporate compliance and explains the ineffectiveness of many “leading” compliance programs. It also suggests that companies committed to making gains in ethics and compliance should often ignore the practices of their peers and the regulators that influence them, and instead design behaviorally cognizant strategies aimed at combating individual and organizational rationalizations.