Chipping Away at Compliance : How Compliance Programs Lose Legitimacy and Its Impact on Unethical Behavior

Employee perceptions of an organization's compliance program are critical. A program that has lost legitimacy with its employees is not just ineffective, but creates more harm than good by leading to more unethical behavior. This paper first presents two different, but often working in tandem, ways that corporate actors can inadvertently diminish the legitimacy of the compliance program. The next part discusses how an illegitimate compliance program can lead to an increase in unethical and illegal behavior. The final part suggests reforms to help protect against this process of a compliance program slowly losing its legitimacy within the organization. These reforms are a board level standing committee on compliance, an independent CECO, and a mandatory evaluation of the corporation's ethical culture, as necessary reforms