Ethics Exchange: Is Ethics & Compliance Art or Science?

By Ethics Exchange posted Aug 22,2013 10:37


Jeff Kaplan:   The E&C field has obviously gone through many changes since you and I each started in it in the early 1990’s, Steve.  Do you see it becoming more of an art, more of a science or more (or less) of both? And do you think that what you see is good for the field?

Steve Priest: The key to me is that E&C leaders understand that it is—and always will be—both an art and a science. The recent Chinese government charges against GSK that involve rampant use of false receipts aided by a travel agency support my view beautifully, I think. Large, sophisticated companies like GSK have created systems to audit and monitor for fraud and bribery that have been tested and improved over time. These represent the organizational “science” of E&C, as do anti-money laundering systems of banks, safety compliance systems of utilities, and so on.

Jeff:  What about the art?

Steve: Humans being human, we find a way to circumvent even the best systems. This is where the art comes in. How many scientifically minded auditors or compliance professionals would have predicted the rapid development of a sophisticated market in the sale of fake or unused receipts to aid and abet fraud and bribery? In case after case we are not as easily controlled or as predictably manipulated as Pavlov’s dogs. Managerial insight and adaptation are required.

Jeff:  I agree with both parts of your analysis, and think as time goes on we’ll see more types of compliance-related science.   What interests me most in this is behavioral science – and particularly the various findings from psychologists showing that we’re not as rational as we think.  The ideas and information from these studies point to ways of enhancing key E&C functions including risk assessment, training, promoting accountability (in investigations and discipline) and managing conflicts of interest, as I describe on my blog.  Indeed, a Harvard Business School professor, Francesca Gino, is speaking at the ECOA annual conference on “The Science of Compliance.” But do you worry that science can lead us astray? Is there a Frankenstein’s Monster scenario in E&C?

Steve:  One of the reasons science fiction has been such a popular genre for a century now is that our rational, professional communities are notoriously bad at spotting the risk around the corner. Speaking of risk, one of the areas where many believe we are close to science is in risk assessments. And my experience is the opposite. I did a risk assessment for a major professional sports league in the US, and none of its top three E&C risks had ever appeared in any other organization’s risk assessment, nor in any professional literature I had reviewed. And I recall a risk assessment we did together Jeff, that was very professional and “scientific.” And yet none of us inside or outside the company predicted the reputational damage the firm faced soon thereafter when its most prominent spokesmen faced ethical challenges.

Jeff:  Those are good points. I also worry about an over-reliance on data in managing programs, in sort of the same way I worry about driver-less cars.  While in principle, I’m 100% for gathering and using more data, I worry that some of it may generate false positives and false negatives, and lead practitioners away from common sense judgments that can strengthen their programs.  So it is not just that there is still a place for E&C art in a science-based world but that the need for such art is in fact greater than ever.

Steve: I absolutely agree. I love metrics like most business people, but I have seen metrics mislead almost as often as they illuminate. The artist Mark Twain (“Lies, damn lies and statistics) and the scientist Albert Einstein (“Not everything that can be counted counts, and not everything that counts can be counted”) align on this point. One major implication for E&C leaders is, I think, that they should explicitly work to build diverse teams of people, including diverse approaches to thinking about how the world works. You want the Einsteins and the Twains, perhaps accepting those of us with IQs shy of these luminaries.

Jeff & Steve will be presenting at the 2013 Annual E&C Conference in Chicago (September 24-27). Click here to find out how you can join the conversation!