Incentives in compliance & ethics programs: What does Chat GPT tell us?

Those of us in C&E always need to keep up with developments in our field.  This means staying current in the developments involving artificial intelligence.  In experimenting with this we asked ChatGPT a basic question about incentives.  We chose this topic because it is one that many in our field avoid or minimize.  Below is the response; notes in italics are my comments. 

The question we asked:   What is the role of incentives in a compliance and ethics program?

ChatGPT said:

Incentives play a critical but often underutilized role in a compliance and ethics program. Their purpose is to positively reinforce ethical behavior and compliance with laws, policies, and company values, helping to shape the culture of the organization. Here’s how: Note the observation that this is “often underutilized” – this is exactly accurate and should be a concern in any compliance program. 

Missing from the following analysis is the need for C&E to have a say in the company’s incentive programs, to raise concerns or recommend controls where incentives might drive misconduct. This was missing in the Wells Fargo debacle.  

✅ 1. Reinforce Desired Behavior

Incentives help align individual and organizational interests. When ethical conduct and compliance are tied to rewards (e.g., promotions, bonuses, recognition), employees see that the organization values integrity—not just results.

✅ 2. Counterbalance Pressure

In many organizations, there’s intense pressure to meet targets or increase revenue. If incentives are tied only to financial outcomes, they can push employees to cut corners. Compliance-related incentives can counterbalance that pressure, showing that how results are achieved matters.

✅ 3. Encourage Reporting and Cooperation

Employees are more likely to speak up or cooperate in investigations if the system rewards transparency, honesty, and ethical courage—not just punishes wrongdoing. Some programs reward managers who foster speak-up cultures or handle concerns effectively. This is an excellent example of where managers can be evaluated relating to C&E.  If employees feel free to speak up that should be a positive in the manager’s assessment. 

✅ 4. Support Culture and Accountability

By incorporating ethical criteria into performance reviews and leadership evaluations, incentives help embed ethics into everyday operations. This sends a clear message that compliance is everyone’s responsibility—not just the legal department’s. Here is should not just reference the legal department, but C&E as well. 

✅ 5. Legal Expectations

U.S. federal guidelines (like the U.S. Sentencing Guidelines §8B2.1) and enforcement agencies expect companies to include incentives in their compliance programs. DOJ guidance emphasizes evaluating whether an organization “incentivizes compliance and ethical behavior.” This point is clear enough that Chat GBT features it, even though companies still ignore it.  Also, amazingly, if you read what scholars write about the USSGs and compliance they often seem to ignore it. 

📌 Examples of Compliance Incentives

• Bonus structures that include ethics/compliance metrics “ethics metrics” is at least problematic. But you can address other elements.
• Recognition programs for ethical leadership. This could include things like whether the leader references the code of conduct, refreshes compliance training messages, accepts input from those who speak up, and works cooperatively with C&E. 
• Promotion criteria that consider integrity and values. This is critical.  If you really want to assess culture, just look at who gets promoted. Commitment to C&E needs to be an element in all promotion decisions.  
• Awards for raising concerns or improving controls. This one can be difficult.  It is fine to recognize those who suggest improvements in controls, but you don’t want to create a bounty-hunter environment by offering cash for reporting on others.  However, there can be recognition, including having this be a positive factor in promotion decisions. 
• DOJ in its questions asks about how the C&E staff are recognized and rewarded. This is also an important element.  If they are treated as a backwater with no rewards, recognition or promotions that sends an important, negative message about how the company values C&E.

🚩 Common Pitfalls to Avoid

• Token gestures with no real influence on advancement or pay. There is nothing wrong with recognition that does not involve cash.  But if it does come across as meaningless tokens, while those who hit their numbers are the only ones who get real rewards, then the concern expressed here is right. 
• Rewarding only results, regardless of how they were achieved. Exactly right, but you have to incent managers to apply this. 
• Ignoring the role of mid-level managers in shaping culture. This seems a bit outside of the incentive discussion.  On the other hand, when you are assessing incentives, you do need to include management top to bottom.  At the top, have the board-level compensation committee have it written into their charter that they must assess the officer’s actual commitment to C&E, including active support for the program. 

Bottom Line:

Incentives are essential for reinforcing a culture of ethics and compliance. They help demonstrate that ethical behavior and compliance leadership are is not only expected—but rewarded.

ChatGPT can make mistakes. Check important info.

For more detail on the reasons for including incentives and how to do this in practical ways, see Murphy, “Using Incentives in Your Compliance and Ethics Program” (SCCE; 2012), https://assets.hcca-info.org/Portals/0/PDFs/Resources/library/814_0_IncentivesCEProgram-Murphy.pdf