The U.S. Sentencing Commission, an independent agency in the judicial branch of the federal government, was organized in 1985 to develop a national sentencing policy for the federal courts. The resulting sentencing guidelines structure the courts’ sentencing discretion to ensure that similar offenders who commit similar offenses receive similar sentences.

The organizational sentencing guidelines first went into effect November 1, 1991. The guidelines provide incentives for organizations to create meaningful compliance and ethics programs, report violations, cooperate in criminal investigations, discipline responsible employees, and take the steps needed to prevent and detect criminal conduct by their agents.

An "effective compliance" program has been a fundamental component of the organizational sentencing guidelines since the Commission first promulgated them in 1991. Under the guidelines, an organization’s punishment is adjusted according to several factors, one of which is whether the organization has in place an effective program to prevent and detect violations of law. For such a program to be considered effective, the Commission articulated seven minimum requirements. In 1991, these seven requirements represented the federal government’s first attempt to articulate such broad-based standards, and they quickly became the benchmark against which most organizations measured their compliance programs.

Under the new guidelines, the Commission enhanced the strictness and detail of these requirements. As a fundamental proposition, organizations must promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law. In particular, the amendment requires boards of directors and executives to assume responsibility for the oversight and management of compliance and ethics programs. Effective oversight and management presumes active leadership in defining the content and operation of the program. At a minimum, the amendment explicitly requires organizations to identify areas of risk where criminal violations may occur, train high-level officials as well as employees in relevant legal standards and obligations, and give their compliance and ethics officers sufficient authority and resources to carry out their responsibilities.

The Commission’s focus on ethical corporate behavior in this amendment reflects a shift in the legal landscape since the guidelines went into effect. Good corporate citizens have been incorporating ethical standards into their compliance programs for a number of years, and recent legislation, such as the Sarbanes-Oxley Act of 2002, has adopted ethics as a guiding principle.

For organizations that have been working for the past 13 years to determine what is an "effective compliance" program, the challenge now will be to determine what is an "organizational culture that encourages ethical conduct and a commitment to compliance with the law."

Mere knowledge of the rules is not enough. Organizations must take affirmative steps to create an environment where doing the right thing is the norm and the standard. To achieve these goals, organizations must begin to look at what environmental factors influence behavior and encourage or inhibit individual employees and managers from doing the right thing, even when they know what the rules are.

More specifically, companies must work towards developing high levels of personal accountability among all its employees. Ethics and compliance officers need to work closely with partners from employee communications and Human Resources to analyze how to create that positive environment where everyone sees that following the standards is good for them and good for the business.

Difficult? Perhaps more than merely publishing a code or compliance training. However, the good news is that the same behaviors that are critical for business success are now in fact the legal norm.

DAVID GEBLER is the President of Working Values, Ltd., a Boston-based business ethics consulting and training development firm.  More articles by David Gebler

WORKING VALUES LTD. is a business ethics and training company. Through a variety of products and services, including Web-based compliance and ethics programs, on-site training, video and award-winning ethics games for employees, Working Values aims to align employee behavior with company values. For more information as to how Working Values can narrow your company's Behavior-Standards Gap, visit www.workingvalues.com or contact cgebler@workingvalues.com. For news on ethics in the workplace, visit SmartPros Ethics & Compliance.