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How Focusing on Societal and Corporate Values Closes the Circle on Compliance Excellence

The Third Ring A Simple Description of an Ethical System

Tom Tropp, Global Chief Ethics Officer, Arthur J. Gallagher & Co

Compliance tells us what we must do; Ethics tells us what we should do.  I believe that there are three layers to an ethical system and each layer serves a different purpose.  Visualize a target with three rings; the center of the target is labeled Compliance

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 The first decision we make as a company is whether or not we will obey the law.  Now that may seem like a simple decision that we make and move on; however, each of us knows and has had experience with, companies that employ individuals who make conscious decisions to break the law. Of course, every company has those individuals and we work hard to remove them.  But if those individuals happen to be top decision-makers and rainmakers in the company, the entity itself begins to take on the culture of illegality.  Good companies put systems in place to safeguard against the rogue lawbreaker and have standards of conduct that reinforce the goal of legality.

The second ring of our chart we will label as Universal Rights.  There are certain values that we must, as a twenty-first Century company recognize as obligations even if specific laws do not address them; they are the rights that human beings have simply by the fact that they are human beings.  Through the centuries there have been critical documents that have reinforced those rights.  In 1789 the Declaration of the Rights of Man and Citizens, and in the same year the Preamble to the Constitution of the United States of America spelled out those rights that we expect as human beings.  Today, an excellent iteration of those rights is in the United Nations Global Compact, which lists ten basic truths accepted by that international body.  These documents generally agree upon such rights as freedom of speech, freedom of religion, the right to a safe workplace, freedom from discrimination, the right to a fair wage and the opportunity for advancement.  These universal rights are not subject to choice at this time in companies and countries of integrity; they are close to compliance in their mandate but laws protecting these rights may vary from country to country.  

If you spend time searching through the websites of major companies, you will find a reference to compliance in almost all of them.  The statement is typically called the Code of Conduct and is found in the Corporate Governance section of the site.  For the most part, the documents deal with compliance.  Fifteen years ago, very few of the company codes dealt with the softer subjects of universal rights.  Today we see more and more sticking their toes into this pond of human rights; this is a good thing.  But we must encourage our companies to move beyond the first two rings of the ideal ethical system to The Third Ring.

The subjects of this final ring of our chart are the unique values that we, as a group of people, have decided we should accept.  It is here that we describe those beliefs that separate us from other companies, the values that we choose to celebrate and reinforce among our people.  Here we go beyond what is necessary or expected.  It is here where we collectively identify who we are as people gathered together to function as a business entity with integrity.  It is here that we describe our Ethics.  It is here that we share our Culture.  So what does this look like?  

Typically, this Third Ring is shared in a separate document from the one dealing with the first two rings.  The document may be referred to as a Value Statement, or as a Statement of Beliefs, or something similar.  It contains statements such as, “Empathy for the other person is not a weakness,” or “Never ask someone to do something you would not do yourself,” or “Loyalty and respect are earned, not dictated.”  It is in this Third Ring that a company demonstrates its uniqueness.  The values stated here are what separates a company from others; it does not necessarily make that company better than others, rather makes it different.  Companies of high integrity attract people of high integrity, and it is in its Statement of Values that a company advertises the nature of the people it seeks.  We need to encourage discussions of this Third Ring in our companies and then reinforce those values in a consistent way.

About the Author

Tom Tropp is Global Chief Ethics Officer for Arthur J. Gallagher & Co. (NYSE: AJG) reporting directly to Chairman/CEO, J. Patrick Gallagher, Jr.   Tom holds a Master of Arts Degree in Religious Ethics from the University of Chicago.


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