Help, the Compliance Department Won’t Stop Talking About Ethics

I’m an executive in a fast-paced financial services firm, and I’m becoming increasingly frustrated with our compliance department’s persistent emphasis on ethics. We operate in a highly regulated industry and have laws in place that dictate our responsibilities. My team is focused on meeting these legal standards to ensure operational efficiency and profitability. Yet, the compliance department continuously lectures us on the importance of ethical behavior, which seems unnecessary when we’re already compliant. I question the relevance of ethics in our business practices. Shouldn’t our priority be adherence to the law rather than getting bogged down by subjective ethical discussions? — MK

You are raising a question that is on the minds of many business people: “Compliance vs. Ethics: What’s the Point?” In my 17-plus years of experience, I have encountered this question numerous times, and, to be completely honest, I have asked it myself as well. I would like to offer you an answer sourced from folklore and ancient Confucian wisdom — hopefully, the “Tale of Conscience” will provide clarity on the matter.

In ancient times, during a tranquil night when all creatures pondered their existence, Conscience was born. With eyes depicted like those of night birds and a pale face illuminated by the moonlight, Conscience ventured across the earth, seeking to awaken the moral awareness of humanity.

During the day, people were too engrossed in their daily struggles to listen. Workers were busy with construction, farmers tended to their fields, and the clamor of life drowned out the whispers of Conscience. Yet, under the cloak of night, when the world quieted, she would visit those asleep, gently stirring their thoughts.

“Have you reflected on your actions today?” she would ask. Many awoke, startled, wrestling with the memories of their choices, haunted by the weight of their decisions.

Even a wealthy man revered for his riches and wisdom could not escape the sleepless nights that followed Conscience’s visits. He pondered deeply, realizing that those he punished for stealing often acted out of desperation, trapped by poverty.

As insomnia plagued the city, the townsfolk grew restless, voicing their fears about Conscience’s influence. They turned to a renowned scholar, seeking a solution.

The scholar listened intently to the people’s grievances, a knowing smile gracing his lips. “We can help!” he declared. “We can arrange it so that she won’t even have the right to come!”

The crowd grew wary of his words. Sensing their apprehension, the scholar continued, “Let’s create laws. How can an ignorant person know what they should or shouldn’t do? We shall inscribe on scrolls what is permissible and what is not. The mandarins will memorize these laws, and anyone else can approach them to ask, ‘Is this allowed or not?’ Then, when she comes asking, ‘What did you do today?’ they can simply respond, ‘I did what is written on the scrolls.’ And everyone will sleep peacefully.”

He paused, letting his words sink in. “Of course, the rest will pay the mandarins for their guidance. After all, it’s not for nothing that they will fill their minds with laws!”

With the new laws in place, everyone was happy. The mandarins found it easier to interpret scrolls than to deal with the complexities of human emotions. For the townsfolk, paying a mandarin for guidance was preferable to wrestling with their consciences at night. They eagerly began documenting all the dos and don’ts, and soon, the wise scholar was elevated to the highest mandarin.

Life improved for many; even their faces brightened with ease. Whenever someone needed direction, they would approach the mandarin with offerings, asking, “Hello, wise one! Please unroll the scrolls — what should be done in this situation?” However, the very poor, unable to afford a mandarin’s advice, continued to suffer from sleepless nights.

Those with means dismissed Conscience when she visited, asserting they acted according to the laws. Frustrated, Conscience sought the mandarins, but they laughed, saying laws were for guiding actions, not for listening to her.

Conscience finally approached the scholar himself. She touched him lightly, and he awoke with a start. “How dare you come to someone else’s house at night without permission? What does the law say? ‘Whoever comes to another’s house secretly at night is to be considered a thief and put in prison!’”

They locked her away, and the townsfolk soon forgot her entirely. The night visits that once stirred their souls became mere memories, replaced by the comfort of compliance. People slept well and lived calmly.

Interpreted from Chinese folklore (no attributed author), summarized and translated into English.

Readers respond

The previous question was from a reader who asked about the ethical pros and cons of moving a tech company’s development and testing team overseas. The dilemma was whether to maximize profits (and please shareholders) with the move or maintain a workforce in the United States and prevent layoffs.

My response, in part: “Businesses of today have ethical duties that require them to consider the welfare of others, not just their own, in choosing how to act. This creates a unique challenge: balancing the drive for profit maximization — which is at the heart of any business — with the broader ethical obligations owed to employees, customers, and the communities in which they operate. In your case, I would advise you to resist taking the easy path of immediate profit maximization and instead focus on a more balanced, long-term strategy. Could you implement gradual cost-cutting measures that don’t immediately displace workers? Could reskilling or redeployment programs help those affected transition to new roles within the company or community? While the pressure to cut costs and meet shareholder demands is real, the decision you’re grappling with presents an opportunity to shape the kind of company you want to work for.” (Read the full question and answer here.)

Here’s a look at some of the reactions to that question:

I would add that the letter writer’s dilemma reflects a common misunderstanding in business: that ethics and profitability are inherently at odds. Many fail to see that prioritizing ethical obligations — whether to employees, communities or other stakeholders — can create long-term value. A company’s reputation, trust, and employee morale are assets that compound over time. Short-term profit maximization often erodes these foundations. It’s not just about doing the “right thing” — it’s smart business. The best leaders recognize that balancing ethics and profits isn’t a compromise; it’s a strategy. — DA

I disagree with the Ethicist’s view. Romanticizing ethical obligations to employees or communities may sound noble, but it distracts from the company’s duty to shareholders. Sacrificing efficiency for ethics jeopardizes the company’s survival and, ironically, harms all stakeholders in the long run. Profitability isn’t greed — it’s a necessity. Without it, there’s no business to be ethical about. — Name Withheld

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