Higher Ground

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Designing Rules for Humans

The compliance industry has grown exponentially over the past three decades, but ethics scandals remain depressingly frequent. An active compliance team, glowing press coverage, and best-practice awards are all unreliable proxies for ethical conduct at a company.¹ How can we explain this? The disturbing reality is that the corporate responses to regulatory imperatives aren’t merely insufficient. At their worst, they lead to a narrow focus on removing bad apples—at the expense of focusing on how strategic goals, incentives, and hierarchical pressures shape behavior.

From 2015 to 2018, a slow-motion wreck unfolded at Wells Fargo. Evidence emerged that its retail banking employees had been pressured to open 3.5 ...