The difference between ethics and compliance in Ferring

118 Likewise, within workshops on the Ferring Philosophy, ethics officers stress that all employees are encouraged to always approach the person with whom they have an issue or a concern before escalating it to the next level, but that any manager at any level is obliged to listen to employees’

concerns. Sometimes, even the possibility of sending an email to one of the executive board members is mentioned. Within a Scandinavian business context characterized by flat hierarchies and informality, this approach is perfectly acceptable. But, as several scholars have demonstrated, this may pose a challenge in countries where hierarchy is more salient at the work place (see e.g. Gertsen and Zølner 2012a).

The Ferring Philosophy further states that all employees have the ‘freedom to make mistakes and to admit them without fear of retribution’.

Within a context of flat hierarchies and informality, where problem-based learning is an integrated part of the educational system (cf. Gregersen 2017), making mistakes, admitting to these, correcting them and learning from them is proclaimed as a risk-free part of any work process. However, as Søderberg experienced during a fieldwork in a research and development (R&D) department of a Danish MNC in China, the expatriate managers struggled with creating such openness among their Chinese colleagues.

In order to emphasize the importance of learning from mistakes, they placed a statement that ‘failure is the mother of all innovation’ in a central area of the office space. Despite such efforts, they had great difficulties in reproducing the kind of informality and openness that characterizes interaction and knowledge-sharing among engineers in a similar Danish R&D setting (Søderberg and Worm 2011).

In the following, I will describe how Scandinavian values are likewise reflected in the way in which the Global Ethics Office approaches its work.

119 Figure 1 - the Global Ethics Office’s distinction between ethics and compliance

This approach largely resembles Henderson’s (1982) framework for understanding the relationship between legal and ethical behaviour in international business contexts. This framework emphasizes that an action may very well be defined as ethical, although it is illegal in a particular international setting; there also exist actions that are legal in some settings but unethical in others. As noted by Lane et al. (2014), this distinction between the legal and the ethical is particularly useful in an international business setting, where laws and norms for appropriate business behaviour may differ. Dilemmas arise, they write, whereby the ethical and the legal come into conflict, and each company must decide in each situation what is the best way forward. Within Ferring Pharmaceuticals, the separation of the Global Ethics Office from the Compliance Department is an attempt to address potential conflicts between the legal and the ethical as well as to instil a mind-set of preparedness within managers and staff for handling such conflicts.

As written in the speaking notes to the slide depicted in Figure 1 for one of the presentations created by the Ethics Office: ‘Contrary to how many other companies see Ethics and Compliance, in Ferring we think they are fundamentally different and therefore we keep the two functions separate. This also goes to show that Ferring really puts an emphasis on Ethics and does not want it to be forgotten in the face of all the new Compliance regulations.’⁵⁸

Ferring has thus drawn distinction between compliance and ethics based on the notion that having a compliance approach alone was insufficient (cf. Paine 1994). Moreover, the Global Compliance

58 Excerpt from speaker notes from a presentation about business ethics within Ferring held in Spring 2017.

120 Department was only recently established as an independent business unit, whereas the Global Ethics Office has existed since 2005 and has been an independent business unit since 2010.

After having started to notice that ‘compliance’ was being used by the ethics officers to distinguish themselves from other corporate functions by explaining what is not their function, I started to include questions about the perceived difference between ethics and compliance in my interviews. Jane, an ethics officer, describes it as follows.

‘There is a true belief at the board level that there is a difference between ethics’, she says and pauses as if to emphasize the difference, ‘And compliance’. Another pause.

‘Compliance is regulations, rules and laws and that people should do certain things or behave in certain ways because of the rules and the laws, and this is what we must do.

And this is important. Compliance is absolutely critical for a company to be successful’.

She looks straight at me as to emphasize her words. ‘Ethics – the belief from a board perspective is that it’s value-based’, she continues. ‘This is that people should really behave in the right way because it’s the right thing to do. Nothing to do with the law, with the rules or regulations per se. Just because it’s the right thing to do. Often times, there is the mind-set that… ‘Well, the law says we can do this’. Or ‘it’s not against the law’. Or ‘there is really not a clear regulation, it’s a grey area, so we could do it’’, she says, imitating all the different arguments that could be brought forward for taking advantages of legislative grey zones. She continues: ‘Nobody says that you can’t. I think what ethics says is: ‘Should you?’ And that’s the difference’.⁵⁹

Thus, the point of the comparison with ‘compliance’ is to emphasize that it will never be possible to create legislation that responds to all imaginable situations and grey areas in which employees may find themselves. Therefore, a moral compass must be nurtured. Similarly, in the aforementioned Global Ethics Office policy on ‘Good Business Practice’, there is a section on ’Integrity’ that underlines this distinction between what is legal and what is right:

59 Interview with ethics officer, Autumn 2017.

121

‘Integrity is the key

At Ferring we build performance with integrity. By integrity we mean doing what is right.

(…)

Therefore, before undertaking action, we must ask ourselves a few questions:

• Is it legal?

• Does it follow company policy?

• Is it commercial?

• Is it right? (Is it ethical?)

• How would it look to those outside the company?’

Not only does the Global Ethics Office ask employees to consider whether an action is legal. It also asks employees to consider whether it is ethical despite it being legal, similar to Henderson’s (1982)

aforementioned framework [Is it right? (Is it ethical?)].

At a very early stage in the research, Maria, another ethics officer, tries to explain the value of the Ferring Philosophy by comparing it to a code of conduct that many companies have and require new hires to sign.

‘The whole idea with ethics in Ferring is that you need to think out of the box and beyond the letter of the law (…) My opinion is that if we get a code of conduct, it will describe 70% of the things that can happen to you in your everyday work life. And then there are still 30% where you have to use your head to find the right solution. And then you need the ethical principles to support you anyway’, she says, referring to why the one-page Philosophy statement is the best solution to the complex organizational challenge of ensuring that employees behave according to the company values. ⁶⁰

She admits that this approach is much more abstract than compliance, but returning to my description of the Scandinavian sociocultural context, this ability to ‘use your head’ is a cornerstone in the Global Ethics Office’s approach. It can be seen as a cultural reference to the aforementioned ideal of critical thinking that runs through the Scandinavian educational system, with its emphasis on social skills and independent learning over rote learning of rules and standards. In fact, one ethics officer directly referred to Grundtvigianism and how the concept of moral education (Danish: dannelse) had inspired

60 Interview with ethics officer, Winter 2017.

122 how she worked with ethics in Ferring. Moreover, the rhetoric surrounding this ideal of being able to

‘think out of the box’ and ‘use your head’ underscores a valuation and legitimization of this particular approach and, perhaps, an implicit devaluation of other approaches.

As expressed in the excerpts, the ethics officers do not mean to say that compliance is not a crucial part of running a pharmaceutical company. However, they plea that employees and managers think ‘beyond compliance’ as they describe it. The ways in which the Global Ethics Office works to communicate this plea to employees and managers will be described in the following.