What the Justice Department can learn about promoting compliance programs from a noted Marxist (meaning Chico – not Karl)

The fundamental truth about incentives can be found in this classic exchange from Monkey Business: “Groucho:  Just how tough are you?  Chico:  You pay little bit, we’re little bit tough. You pay very much, very much tough. You pay too much, we’re too much tough.”

And the application of that truth to corporate compliance can be found in this recent study from the Ethics Resource Center and an earlier study I co-authored for the Conference Board , both showing that the government doesn’t do a good job in incenting compliance programs. For that reason many C&E programs are only “semi-tough.”

Two weeks ago, however, as with the dawn’s early light, compliance professionals were encouraged by what seemed to be change of direction by Justice – in the Morgan Stanley case, described here.  Let’s hope this is indeed the start of a trend, so that many more C&E programs can be “very much tough.”

(Note: this is adapted from a white paper I’ll be presenting next week at a Rand Corporation symposium on Corporate Culture and Ethical Leadership Under the Federal Sentencing Guidelines:  What Should Boards, Management and Policymakers Do Now?It is an invitation only event, but the white paper will be available soon after.)

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