“Professional ethics” is a never-ending battle between compliance and ethics, between rules and penalties on one side, and principles and values on the other. Compliance is easier: all you do is tell people with rules and regulations what they must or can’t do, and promise that there will be consequences if those rules are violated. For ethics to work, people actually have to understand ethical values and be committed to living by them in a professional context.
Compliance has little to do with ethics. Jack the Ripper will follow rules if they are clear, if he knows he’ll get caught if he violates them, and if the punishment when he does will be harsh enough. That won’t make him ethical. In fact, compliance–rules-based professional conduct control—is often antithetical to ethics. Rules and laws are merely a challenge to the type that Oliver Wendell Holmes called “The Bad Man”-–which includes bad women—to find ways to do things that are wrong but that avoid violating rules sufficiently to justify punishment. This is why most compliance codes have language in their introductions noting that it’s impossible to make a code that will cover every wrong someone can think of, so ethics are important too.
Pure compliance-based systems don’t improve ethical conduct. The financial collapse in 2008 was largely caused by financial manipulators operating in the grey areas of the rules and laws—that’s why so few of them could be prosecuted. In politics, The compliance mindset is extremely convenient for clever liars and cheats like the Clintons, which is why Hillary could try to explain her e-mail shenanigans by saying that “I fully complied with every rule I was governed by (heh-heh-heh!).” Unethical people will always find ways to get around rules. Ethical people, in contrast, barely need rules at all.
Another benefit of ethics over compliance is that ethics rules–compliance codes—have to be long and detailed, otherwise it’s too easy for Clinton-types to find loopholes, though they usually will find some anyway. Ethical values, on the other hand, can be stated very simply. An ethical employer thinks, “Hmm, that intern is cute, but I am married and have duties of loyalty and honesty to my wife and family, and it would be an abuse of power and influence as well as irresponsible for me as a leader to have an affair with someone under my supervision in the organization.” The Bad Man thinks, “Wow, she’s hot; my wife won’t care as long as I’m not caught; getting a hummer isn’t considered sex where I come from, and there’s nothing that says a President can’t fool around!” For the former, “A leader should not have sex with subordinates” is clear as a bell; his values tell him why. The latter, though, is thinking, “Hmmm. How can I get around this? That rule says “should” but not “shall”— that’s good. No punishment is specified. Sounds like more of a guideline than a rule. “Sex”—that must mean sexual intercourse: great! Lots of wiggle room there. And “subordinate”—is an intern really a subordinate? And I bet I could argue that this is personal, not official conduct. All good…now where’s that cigar?“
Invoking ethics rather than compliance is a new oath required by the Dutch Bankers Association. It could be printed on a postcard, and if a banker is ethical, it is all he or she needs:
I swear within the boundaries of the position that I hold in the banking sector…
…that I will perform my duties with integrity and care;
…that I will carefully balance all the interests involved in the enterprise, namely those of customers, shareholders, employees and the society in which the bank operates;
…that in this balancing, I will put the interests of the customer first;
…that I will behave in accordance with the laws, regulations and codes of conduct that apply to me;
…that I will keep the secrets entrusted to me;
…that I will make no misuse of my banking knowledge;
…that I will be open and transparent, and am aware of my responsibility to society;
…that I will endeavor to maintain and promote confidence in the banking system.
So truly help me God.
And if a banker isn’t ethical,
it won’t matter anyway.
Pointer: Legal Ethics Forum