COMPLIANCE TO CORPORATE ETHICS

Man, by his natural giving is unlikely to obey ethical rules if not being persuaded to do so. Thus, ethical standards and principles will remain largely elusive and nonexistent if there are no laid down procedures aimed at driving enforcement to make people obey them.

Ethics being fundamental to an organization’s progress needs some force to back up its existence. In other words, if organizations must achieve their goals, those laid down principles which form the command chain of the organization must be kept alive by requisite enforcement mechanisms.

In Nigeria, for instance, there are internal and external measures put in place to ensure compliance to ethical standards in organizations. While internal measures are those which exist within the organization, the external measures are those which exist outside the organization, both aimed at enforcing the ethical standards which are set to ensure the organization’s progress.

A.     Internal Mechanisms

Every organization has it’s internal mechanisms which seek to drive compliance to ethics. These internal mechanisms exist all the same while the ethical standards vary with organizations. For instance, a financial institution (like First Bank of Nigeria) will not have same set of ethical standards and principles with an education institution (for instance, Abia State University). This variation is owing to the aims and objectives of the organization. While a financial institution would program it’s ethical standards to ensure effective cash transfer and accountability (being it’s core responsibility), the education system would program it’s ethical standards to ensure adequate delivery of teaching and research (being it’s core responsibility). But that is not to say that the mechanisms which are put in place to enforce these ethical standards vary. For more information on the nature of ethics, read the introductory section of this course titled What isCorporate Ethics?

The internal mechanisms can be divided into Query system, Petitioning and Litigation method and Warning and Caution.

i.                    Query System

This method is usually effective in organizations that have a scalar chain of command. These are organizations that have a super-ordinate (a higher officer) and a subordinate (a lower officer) relationship.

Here, the subordinate is accountable to superordinate regarding his line of responsibility and duties within his own division. In the enforcement of ethics, the superordinate issues query to any of his subordinates who violates the ethical standards of the organization.

The query system is applicable to most (if not all) Nigerian corporate organizations.   In the event of violation of office or arbitrary acts, the subordinate is meant to account for them.

The query system has a top-bottom movement as query can only be issued by a senior officer (in this case, a boss) to the junior officer.

ii.                  Petitioning and Litigation Method

Having in mind that senior officers equally violate ethical standards, the petitioning and litigation method becomes important. This method is trans-hierarchical in the sense that it applies to both junior officers, senior officers and officers of coordinate ranks. Here, anyone can petition anyone within the organization.

In most organizations, there are specific steps taken in the issuance of petitions. Most organizations have quasi-judiciary bodies within the organization which entertain petitions from aggrieved staff. These petitions may be related to matters of subordinate versus superordinate relationship; it may equally be related to matters of coordinate ranks-a situation whereby a staff in Grade Level 10 petitions a staff in another unit in same grade level with him. They may be related to matters of violation regarding individual staff, usurpation of official powers, infringement of rights, etc. 

When petitions are received, it is traditional that such petitions are acted upon either by a quasi-judiciary panel or an ad-hoc panel which of course has both jurisdiction and specialization to act on them. As a matter of fact, the proceedings of quasi-judicial panels are a mimic of the court system and subject to the principles of equity and natural justice.

Decisions reached after a litigation process is usually endorsed by the chief executive of the organization to give it a force of law. Parties who are dissatisfied with decisions reached by litigation panels are advised to appeal to court of Law which has competent jurisdiction to entertain such a matter. The court, in this case, has the locus to reverse, approve or amend the decisions of the quasi-judiciary.

The petitioning and litigation method is practiced in most corporate organizations of modern considerations, in that it helps to check violation of rights and arbitrary use of official privileges of staff across ranks.

iii.                Warning and Caution

Most times, organizations may not be stern with enforcing necessary punishments on staff or members of the organization who default from the ethical standard. What is simply done is to issue warnings on erring members in form of caution, identifying the areas where such ere was made. Such warnings are usually in written forms and documented. This is usually applicable to first time offenders and or in cases where it is clear that such offense is minor.

B.      External Mechanisms

Like we noted earlier, external mechanisms are those which take place outside the locus of the organization. Here, the matters of concern are usually taken outside the organization for settlement. Whatever becomes the decisions of the external mechanics is applied to the organization.

The reason for external mechanisms is to ensure thorough and professional examination of matters, by giving room for persons who have more adept experience in the matter to make inputs.

External remedies are sought by an aggrieved staff or by the corporate organization when:

Ø    Every internal measures have been exhausted and there are doubts that justice is yet to be met

Ø    The corporate organization lacks the locus to entertain such a matters, especially criminal cases, which demands an express action by the state.

In administrative law, an aggrieved will not take a matter outside the corporate organization unless internal mechanisms have been explored and sufficiently exhausted. As a claim, the aggrieved will be expected to prove that the internal mechanisms did not guarantee justice.

The court respects the internal institutions which belong to the organizations and respects the ethical standards which organizations have put in place in as much as such standards do not contradict with constructions or extant legislations.

Also, the court respects internal mechanisms which enforce corporate ethics and can only reveres their decisions when these institutions follow extra legal procedures or assumes procedures which contradict the basic principles of equity and natural justice.

When an administrative matter passes through the internal mechanism to the court, the court will determine if the internal mechanisms followed due process and if the internal mechanisms are in tandem with basic principles of law and fundamental human rights.

Also, the court will determine if the ethical standard upon which the decisions of the internal mechanisms were reached contradicts extant legislations. If any contradiction is determined and established, the court will over rule any of such decisions taken on the basis of such an arbitrary ethical standard.

So, it therefore becomes clear to note that external mechanisms of compliance to corporate ethics derives strength from the internal mechanisms. Failure or inability of the internal mechanisms to resolve matters of ethical questions gives room for the external processes and procedures which include Penal method, Grievance remedial method, Private arranging method, Professional method, Institutional administrative method, Fiscal method and conferral of social benefit method.

i.                    Penal Method

Penal Control is a legal method used by the state to punish offenders who generally perpetrate criminal activities. Here, the state is a fundamental actor, because corporate organizations may not have the locus to entertain criminal charges made against their staff.

When acts of crime are perpetrated in an organization, the most an organization can do is to effect corporate penalties on the staff, but may not have the powers to effect requisite punishments to offenders or those culpable of crime according to law.

Such offenders, especially on matters of crime are reported to the state’s criminal law administration and enforcement agents (such as the Police) who carry out litigations against the offenders in a court of competent jurisdiction. When the accused are convicted, the state will enforce necessary punishments.

The penal method is important because the organization cannot take action on behalf of the state even though such crime was committed in the organization. For fear of penal actions, the corporate organization and it’s staff will be forced to work on established ethical standards.

ii.                  Grievance Remedial Method

Grievances will surely arise between staff of corporate organizations as well as between the corporate organizations and it’s staff. Such grievances may range from issues of contract breach, denial of rights, non-payment of emoluments and remunerations as well as other industrial misunderstandings.

In such cases, the staff involved or the corporate organization involved may take up litigations to the court which gives out remedies and sanctions in the principle of natural justice. In judicial administration the court gives justice to the aggrieved, the aggressor and the society. Justice to the aggrieved is given as a remedy, justice to the aggressor is given as sanction while justice to the society is given as a precedent to set the stage for a more-just society.

iii.                Private arranging method

When ethical standards are violated by individuals against an organization or an organization against an individual or an organization against an individual, such offenses are not often settled in the law courts. The parties involved may settle on private bases. This may involve three significant measures viz: conciliation, mediation and arbitration.

Conciliation is a private meeting between the two (or more) parties involved in the matter. Here, the parties meet on a private basis to lay out their minds about the offense and come up with a consensus. This consensus agreement becomes a solution to the problem. In conciliation, there is no third party involvement. The aggrieved parties meet to discuss the crux of the matter and come up with a solution.

Mediation involves a third party. Here, an individual or a group who are neutral to the matter engages in a bilateral relation between the parties to discuss the matter separately. The mediator meets with the parties on individual basis and irons out the issues.

Arbitration involves a third party which is usually known as an arbitration panel. The arbitration panel meets with the parties all together where each party bares out their mind on the matter. The arbitration panel, usually made up of professionals take decisions on the matter. Unlike Mediation, the decisions of the Arbitration panel is enforcing and recognized in the court of law.

iv.                Institutional Administrative Control

The government sets up Administrative Institutions to perform regulatory functions on behalf of the government. Theirs is to ensure that corporate organizations as well as staff who work in them are made to follow laid down regulations and ethical standards. Example of these institutions include National Food Drugs Administration and Control (NAFDAC), National Council for Legal Education, National and state civil service commissions, the Corporate Affairs Commission etc. These were set up to regulate ethical activities of public and private bodies as well as those that work in them.

These institutions are given powers to establish ethical standards for organizations and punish offenders.

v.                  Professional control

This includes professional institutions which officials are registered. Professional outfits have regulatory powers. They set standards and best practices for their members as well as disciplinary measures for those who default from them.

Most organizations may lack the locus to punish offenders who belong to professional bodies. These offenders are usually reported to their professional bodies and requisite punishments are meted out in line with professional ethics. Some of these professional bodies as Nigerian Medical Association, Nigeria Bar Association etc. Any registered professional who violates the ethical standards of their professional outfits is usually dismembered and denied the right or license to practice. So, professional bodies help to ensure compliance to corporate ethics and standards which are peculiar to certain professions.