A manager becomes aware that her employer plans to acquire a company in a rural community in which there is already a branch office. She assumes that Corporate will want to move the two offices into one location, and she also knows that there is only one building in town that can accommodate the new office size. The building is for sale, and there are very few buyers in that area. She quietly approaches the desperate seller, offers a low price for the property and closes on the building two weeks before the merger agreement is completed by her employer. Her employer then announces the merger and immediately begins searching for a location to consolidate the two offices. Her building gets the lease at a rate that is substantially greater than the building would have brought a few months earlier. Is she guilty of using “insider information,” or is she just in the right place at the right time? Is this a compliance issue or an ethical one?
Compliance and Ethics are the Yin and the Yang of our discipline. To think that they are the same is to ignore their uniqueness; but to think they are opposite is underestimate their similarity.
The origin of The Yin and The Yang is unclear; rather than a concept named at a point in time, it is an abstraction that was a foundation of thinking in ancient Chinese philosophy. Signs of it surface in the Fourth and Fifth Centuries, BCE; Confucius didn’t invent it, but he certainly was aware of the idea of binary thinking. Two forces having opposite, yet complementary natures; each pulling in a different direction toward a common goal. In her scholarly work titled, YINYANG, The Way of Heaven and Earth in Chinese Thought and Culture, Robin Wang explains that the interaction between these two is thought to maintain the harmony of the universe and to influence everything within it. To specifically define these terms is not possible because they change their relationship in each circumstance. Wang quotes Alfred Forke, who puts it this way: “The left hand is Yang, the right hand is Yin, in this no change is possible, but raise both hands, then they are both Yang, and put them down, and they are both Yin, and no matter whether you raise them or put them down, when they are hot, they are both Yang, and when they are cold, they are both Yin.”
We like to say that compliance tells us what we must do and ethics tells us what we should do; but that is a bit simplistic. Certainly, there are situations in which the two cross over and even trade places; but it does make some sense to be aware, at least, of the interplay between them. Ethics is defined in the Oxford American Dictionary as, “Moral principles that govern a person’s or a group’s behavior.” Compliance is, “The action or fact of according with or meeting rules or standards.” Thus, the difference, but also, the similarity. Depending upon how we define “standards” we might be speaking of conduct that is agreed upon in a group rather than laws passed by a governing body; in which case, we are leaning toward ethics. Or, we may focus more on the term “rules” and lean in the direction of compliance.
In a corporate setting, compliance is the minimum that we are required to do. It is the law. We will not break the law, we will not violate a contract. Ethics defines that which raises us up above the minimum, makes us better, we believe, than the minimum; it certainly makes us different from other companies. Every company is subject to basically the same compliance requirements; yes, it varies from jurisdiction to jurisdiction and industry to industry, but essentially, we are at parity. Yet every company has unique ethics, because ethics follows the people. Ethics identifies the values that we, as a group of people in a company, agree that we should do. It is about beliefs and culture. And, yet, the two, compliance and ethics, must work together to create a sound environment. The common goal is to create a company of high integrity that obeys the law but also proclaims and supports its values.
If we have only Yin and no Yang, or Yang and no Yin, we run the risk of having only mono-directional thinking. Whether in a business, or in a family, or in our individual minds, we need to respect both compliance with the rules and commitment to our values. Otherwise, we are not complete. If we share the values honesty and full disclosure with our employees, then the opportunistic manager/building owner may take a different course of action. Her Yin needs to be complemented by her Yang.