Developing the methodology to assess effectiveness  I mentioned earlier one of the promising new tools to assess the effectiveness of ethics and compliance programs, and that is the PEI, the Program Effectiveness Index. The excellent report by the Ethics Resource Center, The Federal Sentencing Guidelines For Organizations at Twenty Years, has drawn attention to standards for assessing program effectiveness. The report states: “Altogether, the lack of assessment standards and guidance on how the quality of a compliance/ethics program should influence the outcome of a matter create the impression, validated by the [Ethics Resource Center] and Conference Board studies...that too many judgments are being made inside a black box.”2 While we seem to be on the cusp of a number of promising indicators, like the PEI, the truth is that we are not there yet. We simply do not have a tool that will give us an accurate and reliable measure of program effectiveness. Instead, we have a situation where enforcers (including those agencies with civil enforcement authority, such as the banking agencies) tend to be result oriented. When we see that a particular organization has experienced a major compliance failure, we tend to view the failure as evidence of the ineffectiveness of the  2  Ethics Resource Center, The Federal Sentencing Guidelines for Organizations at Twenty Years at 51 (2012). BIS central bankers’ speeches  3  ethics and compliance program.
One related to fear on the part of the chief ethics and compliance officer to engage in action to resolve a conflict with a key business person – a fear of losing one’s job or her place in the corporate hierarchy. The other problem concerned access to the board of directors. It is one thing to go before the board of directors annually to have the compliance program approved. It is quite another to go before the board of directors to do battle with a senior executive who is probably before the board of directors on a regular basis. One possible solution as we move to the next level is to embed ethics and compliance issues in the disciplines that are more typical of governance issues involving the board of directors. These would be issues like strategy, business goals, and risk management, all of which touch ethics and compliance. Another solution would be to create escalation pathways to the board of directors for resolving conflicts between the chief ethics and compliance officer and a senior business leader. Conclusion As I said at the outset, ethics and compliance have come a long way in a very short time. We have learned a great deal during the journey. As I look out over the road ahead, I believe we will continue to make significant progress in business organizations that deliver on their value proposition, not only to shareholders, but to the other constituents that these organizations serve, their customers, employees, and communities.