Abstract There is a remarkable tendency in modern legal systems to increasingly use carrots. This trend is not limited to legal systems but can also be observed in, for instance, parenting styles, social control mechanisms, and even law schools' teaching methods. Yet, at first glance, sticks appear to be a more efficient means of inducing people to comply with legal rules or social norms because they are not meant to be applied (thus minimizing transaction costs and risks) and may cause fewer unintended distributional distortions. So how can we justify the widespread use of carrots? This Article shows that carrots can be superior in two cases. The first is when the lawmaker faces specification problems, which means that she does not know what to expect from each individual citizen (for instance, she may not know which citizen should spend time composing songs or which part of the cargo of a sinking ship should be rescued). In those cases, sticks are likely to punish citizens who are unable to comply with the norm and likely to cause wasteful transaction costs, risks, and undesirable wealth changes. The second is when the lawmaker needs to require significantly higher efforts from some citizens than from others. We use the term singling-out danger to refer to this problem. This is the case, for instance, when the lawmaker wants only some families to send a family member to the army, or only some families to sacrifice land for a highway project. In such cases, sticks would cause significant unintended distributional distortions (artificially impoverishing those from whom much is required), making carrots superior. Overall, our results predict that in societies with more specialization and division of labor, carrots will be used more often. But they also predict that within each society, carrots will be used more often in situations that involve a higher degree of complexity. Applications include patents, regulatory takings, contract bonuses, the duty to rescue, finders, information disclosure to contract parties, the Endangered Species Act, incentives in the military, slavery, health policy, and parenting. Show
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The Organizational Sentencing GuidelinesThe Organizational Sentencing Guidelines: The Rearview Mirror and the Road Aheadby Earnie Broughton, ECI Senior Advisor This year marks 30 years since the release of The Federal Sentencing Guidelines for Organizations (FSGO) by the US Sentencing Commission (USSC). The FSGO marked the transition from a period of relatively few government regulations and discretionary enforcement to the modern era of organizational ethics & compliance that we see today. Not only are the Guidelines as relevant today as they were 30 years ago, but the FSGO continues to evolve and adapt to changing conditions and challenges faced by organizations – and it will likely do so for the foreseeable future. This week the United States Sentencing Commission (USSC) released a 94-page document called, “The Organizational Sentencing Guidelines: Thirty Years of Innovation,” which summarizes the history of the Federal Sentencing Guidelines for Organizations (FSGO) and the 30-year impact of the guidelines on the practice of organizational ethics and compliance, including summary and analysis of data related to organizational sentencing over the past three decades. Promulgated in 1991, Chapter 8 of the US Sentencing Commission (USSC) guidelines ensured that punishments imposed on organizations for criminal misconduct were not only just, but that the sanctions also led to programs, policies, processes, and oversight aimed at reducing misconduct in the future. The guidelines used a “carrot and stick” approach, incentivizing organizations to establish and maintain effective ethics and compliance programs, to demonstrate the effectiveness of their efforts, and to strive for accountability through a system of culpability factors. Chapter 8 also defined seven elements of compliance programs that quickly became a roadmap which organizations have used to establish and evaluate the adequacy of their programs for these last three decades. In many ways the promulgation of the guidelines was a defining moment in our collective journey in understanding and realizing the benefits of good corporate character. According to a New York Times article in 1998, the number of companies with ethics officers more than doubled from 200 to 500 in the six years following the promulgation of the guidelines. As noted in the Sentencing Commission report, the Bureau of Labor Statistics recorded 291,000 compliance officers in the United States in 2021, representing an exponential growth of over 100,000 in a decade. Over the years, the FSGO has inspired the creation of compliance-related academic programs in higher education, plus the development of resources, policy statements and guidelines from the DOJ, SEC, EPA and other government agencies, and the globalization of ethics and compliance through the OECD and international standards and frameworks. The guidelines themselves have continued to evolve over the years. They were amended in 2004 to highlight the importance of risk assessment, building and sustaining an organizational culture that promotes the prevention, detection and reporting of criminal conduct, and requiring ethics and compliance training at all levels. In 2010, additional amendments expanded the culpability score reduction to include small organizations and emphasized the importance of providing access of compliance personnel to the governing authority, among other changes. The Ethics and Compliance Initiative (ECI) and two additional non-profit subsidiary organizations – the Ethics and Compliance Association and the Ethics Research Center – are noted in the report as having contributed valuable commentary on the guidelines and proposed amendments over the years. The Ethics Research Center convened a special panel in 2011 to assess the impact and policy implications of the Federal Sentencing Guidelines for Organizations (FSGO) in observance of the 20-year anniversary of the guidelines. The distinguished 21-member panel included former Justice Department, Sentencing Commission, and Congressional officials, as well as federal judges, current and former general counsels, senior in-house compliance practitioners, and professors of law. Four members of the 2011 Advisory Group also served on an Advisory Group convened by the Sentencing Commission in 2003 to recommend changes to the FSGO framework. The resulting report, “The Federal Sentencing Guidelines for Organizations at Twenty Years,” was a call to action for more effective promotion and recognition of effective ethics & compliance programs. In 2015, the ECI created a blue-ribbon panel of former enforcement officials, leading academics, and senior-level ethics & compliance professionals to develop a framework titled, “Principles and Practices of High-quality Ethics & Compliance Programs.” The blue ribbon panel report serves to inform the ongoing evolution of organizations and their E&C programs in ways that are complementary and which build upon the criteria established by the FSGO. This year, the Ethics and Compliance Initiative celebrates its 100-year anniversary as the oldest non-profit dedicated to the study and practice of organizational ethics, with a long tradition of collaborating with the Sentencing Commission and other organizations and institutions, to evolve world-class ethics and compliance programs. Those of us who have contributed to and grown professionally within the practice owe a good measure of our success and achievements to the Federal Sentencing Guidelines for Organizations. With this week’s publication of the summary report, it is gratifying to pause and reflect on what has brought us individually and collectively to this moment. Considering such emerging factors as the transformational influence of ESG, innovative applications of AI, machine learning and data analytics, and our deepening understanding of the behavioral underpinnings of ethical conduct and decision-making, it is exciting to consider what the next 30 years will bring! Read more on the USSC.gov website and download The Organizational Sentencing Guidelines: Thirty Years of Innovation and Influence | United States Sentencing Commission (ussc.gov) . To learn more about assessing and building a high-quality ethics and compliance program (HQP), please contact ECI through this page. By: Editorial Team Page load linkWhat does it mean when the text says that in general government regulators use a carrot and stick approach?If an organization has a carrot and stick approach or policy, they offer people things in order to persuade them to do something and punish them if they refuse to do it. The government is proclaiming a carrot-and-stick approach to the problem.
Which of the following statements best explains the carrot and stick approach of the US Sentencing Commission guidelines for organizations?Which of the following statements best explains the carrot-and-stick approach of the U.S. Sentencing Commission Guidelines for Organizations? Delayed product delivery is less of an issue when compared to delivering a faulty product, which can potentially cause harm.
Why do managers need to know about the US Sentencing Guidelines for Organizations quizlet?Why do managers need to know about the US Sentencing Guidelines for Organizations? It is better to hire someone who is naturally inclined to behave in an ethical manner than to rely on a company code of ethics to encourage an unethical employee to make ethical choices.
What is the last step in a basic model of ethical decision making?The last stage of this process is the adaptation stage. In this stage, the clinician will look to adapt the selection or solution of the ethical dilemma by refining it, or by returning to the evaluation and selection stages to find and choose a better solution.
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What does it mean when the text says that the US Sentencing Guidelines use a carrot and stick approach?
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