The Organizational Sentencing Guidelines: The Rearview Mirror and the Road Ahead
by Earnie Broughton, ECI Senior Advisor
This year marks 30 years since the release of The Federal Sentencing Guidelines for Organizations (FSGO) by the US Sentencing Commission (USSC). The FSGO marked the transition from a period of relatively few government regulations and discretionary enforcement to the modern era of organizational ethics & compliance that we see today. Not only are the Guidelines as relevant today as they were 30 years ago, but the FSGO continues to evolve and adapt to changing conditions and challenges faced by organizations – and it will likely do so for the foreseeable future.
This week the United States Sentencing Commission (USSC) released a 94-page document called, “The Organizational Sentencing Guidelines: Thirty Years of Innovation,” which summarizes the history of the Federal Sentencing Guidelines for Organizations (FSGO) and the 30-year impact of the guidelines on the practice of organizational ethics and compliance, including summary and analysis of data related to organizational sentencing over the past three decades.
Promulgated in 1991, Chapter 8 of the US Sentencing Commission (USSC) guidelines ensured that punishments imposed on organizations for criminal misconduct were not only just, but that the sanctions also led to programs, policies, processes, and oversight aimed at reducing misconduct in the future. The guidelines used a “carrot and stick” approach, incentivizing organizations to establish and maintain effective ethics and compliance programs, to demonstrate the effectiveness of their efforts, and to strive for accountability through a system of culpability factors. Chapter 8 also defined seven elements of compliance programs that quickly became a roadmap which organizations have used to establish and evaluate the adequacy of their programs for these last three decades.
In many ways the promulgation of the guidelines was a defining moment in our collective journey in understanding and realizing the benefits of good corporate character. According to a New York Times article in 1998, the number of companies with ethics officers more than doubled from 200 to 500 in the six years following the promulgation of the guidelines. As noted in the Sentencing Commission report, the Bureau of Labor Statistics recorded 291,000 compliance officers in the United States in 2021, representing an exponential growth of over 100,000 in a decade.
Over the years, the FSGO has inspired the creation of compliance-related academic programs in higher education, plus the development of resources, policy statements and guidelines from the DOJ, SEC, EPA and other government agencies, and the globalization of ethics and compliance through the OECD and international standards and frameworks.
The guidelines themselves have continued to evolve over the years. They were amended in 2004 to highlight the importance of risk assessment, building and sustaining an organizational culture that promotes the prevention, detection and reporting of criminal conduct, and requiring ethics and compliance training at all levels. In 2010, additional amendments expanded the culpability score reduction to include small organizations and emphasized the importance of providing access of compliance personnel to the governing authority, among other changes.
The Ethics and Compliance Initiative (ECI) and two additional non-profit subsidiary organizations – the Ethics and Compliance Association and the Ethics Research Center – are noted in the report as having contributed valuable commentary on the guidelines and proposed amendments over the years.
The Ethics Research Center convened a special panel in 2011 to assess the impact and policy implications of the Federal Sentencing Guidelines for Organizations (FSGO) in observance of the 20-year anniversary of the guidelines. The distinguished 21-member panel included former Justice Department, Sentencing Commission, and Congressional officials, as well as federal judges, current and former general counsels, senior in-house compliance practitioners, and professors of law. Four members of the 2011 Advisory Group also served on an Advisory Group convened by the Sentencing Commission in 2003 to recommend changes to the FSGO framework. The resulting report, “The Federal Sentencing Guidelines for Organizations at Twenty Years,” was a call to action for more effective promotion and recognition of effective ethics & compliance programs.
In 2015, the ECI created a blue-ribbon panel of former enforcement officials, leading academics, and senior-level ethics & compliance professionals to develop a framework titled, “Principles and Practices of High-quality Ethics & Compliance Programs.” The blue ribbon panel report serves to inform the ongoing evolution of organizations and their E&C programs in ways that are complementary and which build upon the criteria established by the FSGO.
This year, the Ethics and Compliance Initiative celebrates its 100-year anniversary as the oldest non-profit dedicated to the study and practice of organizational ethics, with a long tradition of collaborating with the Sentencing Commission and other organizations and institutions, to evolve world-class ethics and compliance programs.
Those of us who have contributed to and grown professionally within the practice owe a good measure of our success and achievements to the Federal Sentencing Guidelines for Organizations. With this week’s publication of the summary report, it is gratifying to pause and reflect on what has brought us individually and collectively to this moment. Considering such emerging factors as the transformational influence of ESG, innovative applications of AI, machine learning and data analytics, and our deepening understanding of the behavioral underpinnings of ethical conduct and decision-making, it is exciting to consider what the next 30 years will bring!
Read more on the USSC.gov website and download The Organizational Sentencing Guidelines: Thirty Years of Innovation and Influence | United States Sentencing Commission (ussc.gov) .
To learn more about assessing and building a high-quality ethics and compliance program (HQP), please contact ECI through this page.
