During the past few decades while working in various compliance roles, I have been fortunate to witness the impact of ethics and compliance programs that grew from the dedication and ingenuity of the corporate teams that worked hard to design them. Several factors come to the forefront when looking to implement or, in some cases, update an ethics and compliance training program.

It has become increasing important that corporate compliance officers consider methods that reach beyond traditional compliance steps by testing transactions in a different way, engaging employees and suppliers top-down, and reach stakeholders in locations far from company strongholds.

1. Take a top-down approach to ethics

We hear it too often that the tone must be set at the top. While this holds true to an extent, if you wish your program to be more than a campaign with nice slogans the message of compliance needs to reach down into the middle and lower tiers of your organization.

No program will survive without clear messages being communicated and re-enforced from the top. The program must ensure that leaders, at all levels, are spreading the right corporate message on ethics and compliance.

2. Improve awareness levels

No matter their background prior to employment with your company, all staff members must be given an equal opportunity to learn about ethical or compliance risks faced by the company and ways to mitigate those risks. A good way to institute learning programs is to offer regional workshops led by trained compliance experts.

This awareness training is equally important for compliance teams to stay sufficiently well informed. Fundamentally, the most well thought out programs don’t work if they are not effective at the operational level.

For example, if you have a problem that surfaces in accounts payable, the real problem may actually be in the procurement department. The importance here is that compliance tests are designed to help all teams identify the difference between a simple mistake and a lack of compliance.

3. Establish clear guidelines

Company guidelines should be readily available and understood by employees to ensure that these are translated where necessary and to also provide employees with examples of what is considered acceptable behavior and what is not.

Colgate-Palmolive shows us how to avoid any doubt by giving specific guidance regarding gifts to or from third parties in their code of conduct (a limit of USD $50 is considered nominal value and any gift of a higher value requires a report to legal counsel for further guidance).

The Coca Cola Company Code of Business Conduct also demonstrates frequent use of Q&A sections beside its main text. This shows an effective method of both illustrating meaning and setting the tone for expected conduct within the company.

listening to employees4. Give your employees a voice

It is important that companies provide several methods for receiving questions or complaints relating to ethics and compliance. Contact details for the compliance department including email address, postal address and telephone number should all be published, so that an employee can feel comfortable using any form of communication.

It should be clear that while anonymous communication is allowed, any false allegations would also be handled with the utmost seriousness. Additionally, companies and their employees should be aware that the Dodd-Frank Act offers them another avenue to report misconduct if they choose not to report misconduct allegations internally.

5. Get access to third-party records

In the settlement of the Panalpina case, the Department of Justice refers to the use of third-party audit rights as a best practice audit program. Not every company will want to grant these rights, and some companies may believe that failure to use an audit right might be challenged by the Securities Exchange Commission or the DOJ. A well written contract clause on the right to audit in the event of suspected ethical breaches could prove valuable for a company.

6. Perform transaction tests beyond traditional audit scope

It’s important to note that most bribes do not surface during a traditional audit exercise; some may not be large enough to be considered “material,” and in other cases they may go unnoticed. In fact, less than 20% of corporate fraud is identified through traditional and external audit procedures.

Compliance teams must be afforded the opportunity to design their own testing programs that focus on ethical and compliance risks. These compliance programs should involve both transactional and material testing (i.e. testing the largest round-sum consultancy payments, looking at petty cash receiptions, and all payment to vendors that were paid to an offshore account).

Equally important is that compliance teams understand the jurisdictional nuances of the global locations where your company might do business, and be flexible in their approach to addressing and solving them.

7. Allow for feedback

By creating awareness and encouraging a culture of compliance within your organization, employees should feel more comfortable to come forward and provide feedback. This feedback should be strategically integrated into your company’s overall compliance program.

The UPS is a perfect example of a company that in recent years responded to the comments of employees that felt that the name “conduct line” used for reporting potential compliance breaches had a negative meaning in some countries. They changed the name to “helpline,” which now semantically suggests that employees can call to seek advice about issues they are concerned about, rather than focusing on reporting the conduct of fellow employees.

In the U.K., the retailer Marks and Spencer have named their helpline “Think Again.” This name was instituted by the ethics and compliance team to encourage staff members to feel comfortable openly discussing their concerns.

There still may lie within the doubt that these measures aren’t necessary for ethics and compliance departments. Outlined below are a few favorable outcomes:

  • Companies with a well managed E&C program can make significant savings in managing legal and financial costs arising from anti corruption investigations.
  • The penalties for non-compliance are very high and enforcement agencies from more countries are following up potential leads more aggressively than in the past.
  • Higher levels of employee engagement are reported by companies that adopt a consistent ethical approach to business.
  • There are excellent marketing opportunities for companies that have a proven track record of ethics and compliance.



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