Glossary of Ethics and Compliance Terms
Even among those who believe they know ethics, there is not total agreement on the meaning of the terms that are used.
Below are some ethics terms used on this website and in publications of the Ethics Research Center, the research arm of ECI. Many of the definitions come from our own files, but we have also tried to indicate where a definition is derived from another source.
ECI has also compiled a list of the definitions of values typically used in codes.
Belief that one has the power to enact change. Agency is a critical component in reporting decisions because most people will only report if they believe their action has the potential to make a difference.
A strong desire to achieve something high or great. An aspirational code would be intended to reach a higher standard of “doing what is right,” superseding mere compliance with what the law mandates.
The process of comparing to established “best practices,” peer organizations or even past results in order to better understand strengths, challenges and progress made.
The development of an organization’s core skills and capabilities, such as leadership, management, finance and fundraising, programs and evaluation, in order to build the organization’s effectiveness and sustainability. It is the process of assisting an individual or group to identify and address issues and gain the insights, knowledge and experience needed to solve problems and implement change. Capacity building is facilitated through the provision of technical support activities, including coaching, training, specific technical assistance and resource networking (from the California Wellness Foundation’s “Reflections on Capacity Building”).
Code of Conduct or Code of Ethics
A central guide and reference to assist day-to-day decision making. It is meant to clarify an organization’s mission, values and principles, linking them with standards of professional conduct. As a reference, it can be used to clarify standards, organizational values and policies; promote effective decision-making; and direct users to identify relevant ethics-related resources within the organization.
Code of Conduct
Can refer to a listing of required behaviors, the violation of which would result in disciplinary action. In practice, used interchangeably with Code of Ethics.
Code of Ethics
Often conveys organizational values, a commitment to standards and communicates a set of ideals. In practice, used interchangeably with Code of Conduct. In Section 406(c), the Sarbanes-Oxley Act defines “code of ethics” as such standards as are reasonably necessary to promote– (1) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the issuer; and (3) in compliance with applicable governmental rules and regulations.
The specific standards of behavior and performance expectations that your organization chooses to highlight and address in your code.
Conforming or adapting one’s actions to another’s wishes, to a rule or to necessity. A compliance code would be intended to meet all legal requirements.
Comprehensive Ethics and Compliance Program (as defined by ECI)
An ethics and compliance program should include six key elements : 1) written standards of ethical workplace conduct; 2) training on the standards; 3) company resources that provide advice about ethics issues; 4) a means to report potential violations confidentially or anonymously; 5) performance evaluations of ethical conduct; and 6) systems to discipline violators. A seventh element is a stated set of guiding values or principles.
Conflict of Interest
A person has a conflict of interest when the person is in a position of trust which requires her to exercise judgment on behalf of others (people, institutions, etc.) and also has interests or obligations of the sort that might interfere with the exercise of her judgment, and which the person is required to either avoid or openly acknowledge.
The abuse of public power for private benefit. Perversion or destruction of integrity in the discharge of public duties by bribery or favor or the use or existence of corrupt practices, especially in a state or public corporation.
Choosing to do what one believes is right even if the result will not be to everyone’s liking or may lead to personal loss.
Fundamental beliefs (or a set of beliefs) or guiding principles.
Effective(or Well-Implemented) Ethics and Compliance Program (as defined by ECI)
A vital, living parts of a company’s ethos and way of doing business that ensures ethical conduct is rewarded and that employees know how to and feel supported in their efforts to uphold ethics standards in their work. ECI measures six hallmarks of a company with an effective ethics and compliance program: 1) freedom to question management without fear; 2) rewards for following ethics standards; 3) not rewarding questionable practices, even if they produce good results for the company; 4) positive feedback for ethical conduct; 5) employee preparedness to address misconduct; and 6) employees’ willingness to seek ethics advice.
Caring about the consequences of one’s choices as they affect others. Being concerned with the affect one’s decisions have on those who have no say in the decision itself.
A situation where one’s decision is consistent with, aligns with, the applicable set(s) of values. Under these circumstances, a choice to take some action will harmonize with the decision-maker’s values. The organizational state where values, behaviors and perceptions are aligned.
Decisions that involve ethical considerations. Factors to be considered include:
- Impact of the action or decision on others or relationships with them (altruistic considerations)
- Determination of the “right thing to do” – as defined by the values and principles which apply to this situation (idealistic considerations)
- Potential consequences of the action or decision (individualistic considerations)
- Business consequences of this action or decision (pragmatic considerations)
Situations in which two people agree on a particular value and disagree as to the action to be taken or decision to be made.
Challenging situations that require involve competing sets of values.
The study of right and wrong conduct. Alternately, it can be defined as:
- The decisions, choices, and actions (behaviors) we make that reflect and enact our values.
- The study of what we understand to be good and right behavior and how people make those judgments (from “What is the Difference Between Ethics, Morals and Values?” Frank Navran).
- A set of standards of conduct that guide decisions and actions based on duties derived from core values (from “The Ethics of Non-profit Management,” Stephen D. Potts).
- There are many definitions as to what ethics encompasses:
- The discipline dealing with what is good and bad and with moral duty and obligation;
- Decisions, choices and actions we make that reflect and enact our values;
- A set of moral principles or values;
- A theory or system of moral values; and/or
- A guiding philosophy.
(From “Creating a Workable Company Code of Conduct,” 2003, Ethics Resource Center)
The extent to which employees at all levels are committed to doing what is right and successfully upholding values and standards. Ethics culture includes ethical leadership (tone at the top); supervisor reinforcement of ethical behavior; and peer commitment to support one another in doing right.
Potential for harm to an organization caused by misconduct that goes undetected and persists due to lack of management awareness and action.
A small group of people gathered to share their opinions and experiences, thus serving as a representative sample of a larger population. Information obtained from focus groups is not analyzed statistically, but instead used for informational purposes (i.e., to assess the culture of an organization).
Based on the belief in the accuracy of the information or concern being reported.
The act, process or power of exercising authority or control in an organizational setting.
In the most general usage, freedom to act without control or influence from others, to be free to make decisions and act without external constraint. In the business world, independence has come to have a specialized meaning. It is most commonly understood to mean freedom from conflicting interests – the specialized case of having the ability to make a decision or act in ways which are free from conflict between one’s personal interests and the interests of the party on whose behalf we are making the decision (from “No Virginia, There Is No Such Thing as Independence,” Frank Navran).
Consistency of values and actions that breeds trust and confidence in stakeholders. When stated and operative values are in congruence.
Short, pithy statements that are used to instruct and guide behavior.
Values that we attribute to a system of beliefs that help the individual define right versus wrong, good versus bad. These typically get their authority from something outside the individual – a higher being or higher authority (i.e., government, society). Moral concepts, judgments and practices may vary from one society to another (from “What is the Difference Between Ethics, Morals and Values?”, Frank Navran).
A designated neutral or impartial dispute resolution practitioner whose major function is to provide confidential and informal assistance to managers and employees and/or clients of the employer: patients, students, suppliers or customers.
Results of actions taken. The expected outcomes of an ethics and compliance programs are reduced pressure to compromise standards; fewer observations of misconduct; increased rate of reporting observations that occur; and a decline in retaliation against whistleblowers.
Data that is descriptive rather than numeric. It can be collected in several ways: focus groups, interviews and open-ended survey questions. Qualitative data is generally more subjective than quantitative data.
Data that is numeric and, as such, lends itself more easily to comparisons. Quantitative data is often gathered via survey research.
Any employee who observes workplace misconduct and informs an appropriate authority (either external or internal to the organization).
Any mechanism (i.e., helpline, hotline or website) established by an organization in order to provide employees and other agents with a means to report misconduct to the organization without fear of retribution. An essential component of an ethics and compliance program, reporting systems may be confidential and/or anonymous and enable the organization to “exercise due diligence to prevent and detect criminal conduct” per Chapter Eight of the Federal Sentencing Guidelines Manual.
Potential for harm resulting from the loss of stakeholder trust.
Rules-Centered Code of Conduct
Frequently takes the form of a list of behavioral requirements, the violation of which could result in disciplinary action.
A small selection intended to be representative of the whole. For example, survey research is frequently conducted on a randomly-selected portion of population rather than a census of the entire group. Sample selection can be stratified to enable result to be representative of identified subgroups as well as the population as a whole.
Belief in the safety of one’s person and position. Security is a driving factor in employee reporting.
A set of questions used to examine a condition, situation or value.
Generally, referring to a state or condition that can be maintained over an indefinite period of time. Commonly used with development as in: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (from the landmark 1987 publication “Our Common Future” by the World Commission on Environment and Development).
- Sharing information and acting in an open manner.
- A principle that allows those affected by administrative decisions, business transactions or charitable work to know not only the basic facts and figures but also the mechanisms and processes. It is the duty of civil servants, managers and trustees to act visibly, predictably and understandably (based on 2006 publications by Transparency International, https://www.transparency.org/).
The core beliefs we hold regarding what is right and fair in terms of our actions and our interactions with others. Another way to characterize values is that they are what an individual believes to be of worth and importance to their life (valuable) (from “What is the Difference Between Ethics, Morals and Values?”, Frank Navran).
Values-Centered Code of Ethics
A set of principles for an organization and its employees grounded in ideals (such as integrity, trust-worthiness and responsibility) which guide workplace decision-making and conduct
Whistleblower (ECI definition)
Any employee who reports misconduct when observed in the workplace. Although some believe whistleblowers are distinct from internal reporters, ECI research indicates that nearly all employees who report to someone outside their organization report internally as well. Furthermore, internal reporting always precedes reporting externally. External reporting is usually a function of the organization’s (perceived) lack of adequate response to the report (for more information, see “Inside the Mind of a Whistleblower, 2010, Ethics Resource Center).
- Free Ethics & Compliance Toolkit
- Ethics and Compliance Glossary
- Definitions of Values
- Why Have a Code of Conduct?
- Code Construction and Content
- Common Code Provisions
- Ten Style Tips for Writing an Effective Code of Conduct
- The PLUS Ethical Decision Making Model
- Five Keys to Reducing Ethics and Compliance Risk
- Business Ethics & Compliance Timeline