Businesses and the legal community are continuing to explore critical issues and best practices when developing and maintaining effective compliance systems
It remains pertinent 30 years after the Delaware Chancery Court issued its seminal decision, Caremark, in 1996, in which a corporate board's duty of oversight was first well-articulated. The case was widely considered a launch pad for the compliance industry, with intended and unintended consequences
"Why does Caremark matter to you?" asks Neil Taylor, Corporate Law director at the University of Cincinnati College of Law. "If you have attended an online training on business ethics, or been given a code of conduct or code of business ethics, or had to report on your business activities outside work, you have Caremark to thank."
Taylor joined Bridget McGraw, a UC Law alum and general counsel, Propulsion and Additive Technologies GE Aerospace, to discuss effective compliance systems, corporate ethics and the legacy of the Caremark decision on WVXU's Cincinnati Edition.
Taylor says the Delaware Chancery Court noted that "any rational person" would notice the Sentencing Guidelines for organizations offering reduced penalties if the company had an effective compliance plan.
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Bridget McGraw and Neil Taylor shown at the WVXU studio in Cincinnati. Photo provided.
"Before Caremark, companies in highly-regulated industries often had a compliance program, but after Caremark, nearly everyone did," adds Taylor. "Thirty years on, we want to use the anniversary to talk about what progress we have made and where we need to improve."
Ethical decision making may be largely shaped by a company's culture.
Taylor told WVXU that it is incumbent on corporate leaders to not just tolerate dissent within a company, but it works really well if leaders get feedback before a decision is made. It could be as simple as having everyone write down their ideas about a proposal to gain input before a corporate leader gives what's considered the right answer.
"People would rather be part of their group than be in the minority position unless that group celebrates minority positions and understands that you can make better decisions and have better answers if you allow everyone to speak fairly and not just allow it but be happy by it," says Taylor.
McGraw echoed many of Taylor's sentiments.
"It does start with leaders and that respect for people and it is not just building a compliance program, it is that intentionality of building a culture of openness for all employees to raise their hand on any issue even the tough ones," McGraw told WVXU.
She added that making sure there are different outlets for raising issues by allowing employees alternative paths to offer input is key. McGraw noted that following through by leaders and ensuring that individuals understand they have been heard matters.
"People inherently want to do the right thing, they want to know how to do the right thing and making tools available for them to understand how to find the answer or how to ask the question is really important," McGraw says.
The full segment with Taylor is available on WVXU's website.
Learn more about UC Law's Neil Taylor on the UC News webpage.
Featured top image shows journalist Lucy May with Bridget McGraw and Neil Taylor at the WVXU studio in Cincinnati. Photo provided.
