There’s a new deputy sheriff in town and her name is Sally Quillian Yates, deputy attorney general of the United States
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Business Ethics
Case (20 Marks)
There’s a new deputy sheriff in town
and her name is Sally Quillian Yates, deputy attorney general of the United
States. In September, she announced significant Department of Justice policy
shifts in the prosecution of corporate wrongdoing. Monday her memo was
clarified, making it even clearer that the DOJ wants companies to cooperate and
do so in a timely way. The changes, six of them listed below, are a sea change
in leadership direction at the DOJ. The thrust of the changes moves from
seeking the most amount of money from corporate coffers to insuring that
individuals are held accountable for crimes they commit on the corporate watch.
Is this a big deal? You bet. These new guidelines will likely change how
executives and boards and ethics and compliance functions divvy up internal
investigations to protect interests that have been separated with these
changes. No longer are the employee accused and the company where that employee
works going to find mutual benefit in a shared defense. Remember “Prisoner’s
Dilemma,” the economic game theory you learned in college that introduced the
concept of win-win in negotiating. The game proves that people do not always
act rationally and sometimes can achieve a better outcome by cooperating than
pursuing just their self-interest. It uses captured criminals in separate
interrogation rooms to demonstrate these effects. Each would get the best outcome
for himself if he turned in his fellow criminal but if they both act in their
own self-interest, their punishment is even greater. In other words, it was a
win-win for them to collaborate and seek a solution that worked for both of
them even though an initial analysis might have led them to believe that not
collaborating, or cooperating, with one another would serve their personal
interests more. In a beautiful, ironic twist, Yates is deploying the prisoner’s
dilemma to turn up the heat on white-collar criminals. Yes, the notion of two
people choosing not to be truthful is a paradoxical choice to use in discussing
how these policy shifts will change the dynamics in corporate corruption
investigations. Yates has introduced six key changes, outlined here, that
effectively drive a wedge between employee and employer when it comes to doing
wrong in the name of a corporation. Now, internal corporate compliance officers
must share internal information implicating employees who acted badly—or their
supervisors—or risk steeper fines or other penalties. Prior to these changes,
the company and the bad actor were in fact motivated to cooperate with one
another to protect criminal claims against the employee who broke the law and
reduce fines the company would have to pay under the DOJ sentencing guidelines.
Yates has reset the playing field so that the company and the employee who has
erred are each motivated to protect their own interests by disclosing as much
as possible about the other party. Predictions are that early examples will be
made of corporate executives to achieve deterrence, a shift from the goal of
netting the most money possible in lucrative settlements to pursuing justice and
personal accountability. How will this change corporate and corporate
compliance dynamics? Compliance has been ruling the day in response to
increasing regulation enacted to prevent more Enrons, AIGS, Big Pharma pricing
issues and Volkwagen-like unethical product design. Let’s hope these changes
help the pendulum swing back to ethics with its emphasis on doing what is right
in the first place rather compliance’s concern with mitigating punishment when
caught. Perhaps these changes will drive for a separation of ethics from
compliance in corporate life, a move I could support if ethics became the
domain of leadership and human resource professionals, rather than attorneys,
as it should be now in order to cultivate a culture that helps employees to do
the right thing, even when no one is looking. Decisions are made more quickly
with these conditions, in my view, and strategic and employee alignment is
easier to achieve, all of which bodes well for the business playing for
long-term returns.
Answer
the following question.
Q1.
Give an overview of the case.
Q2.
How it is possible to separate ethics from compliance in corporate life.
Debate.
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