31 Days to a More Effective Compliance Program

In this chapter, we will consider innovation in compliance from a variety of angles including artificial intelligence (AI) and computer technology (ComTech), structural innovations, tools and tactics and innovation in leadership. This will provide you a number of solid ideas you can use to move your compliance program forward. Begin by considering the starting point, which is an innovation strateg...

As we end this month on the intersection of HR and compliance, I have developed a series of goals and objectives which you might want to use as a starting point for operationalizing your compliance initiatives through your corporate HR function.  How are compliance goals cascaded down to individual workers? Does anyone complain that your compliance targets are too complex? How do you deal with rep...

Hopefully you now understand that many of the traditional functions of HR can be seen as compliance internal controls. At every touchpoint in the lifecycle of the employment relationship there is a HR touchpoint. Fulfilling those touchpoints can be controls for compliance. If you think of multiple HR functions as compliance internal controls, one of the questions becomes how can you determine if H...

One of the most important focuses of the DOJ’s 2019 Guidance was around culture. This means how far has the culture of compliance been driven down into an organization. The 2019 Guidance posed the following: Culture of Compliance – How often and how does the company measure its culture of compliance? Does the company seek input from all levels of employees to determine whether they perceive senior...

The DOJ has made clear that middle management is a critical part of any compliance program’s success. While it does all start at the top, with the Board of Directors and senior executives setting the tone for the rest of the company; prosecutors are mandated, under the 2019 Guidance to “how middle management, in turn, have reinforced those standards and encouraged employees to abide by them.” More...

The role of HR in corporate compliance programs, is often underestimated. If your company has a culture where compliance is perceived to be in competition or worse yet antithetical to HR, the company certainly is not hitting on all cylinders and maybe moving towards dysfunction. Another way you can operationalize compliance is in HR’s involvement in employee promotion. Such compliance embedded int...

The exit interview can be a further mechanism to operationalize compliance. This type of interview is used when someone voluntarily departs from a company, as opposed to a lay-off or reduction in force exercise. Typically departing employees are more willing to share about their experiences, concerns and issues which led to their employment departure. Three key takeaways: The exit interview is an...

Employment separation and layoffs can present some unique challenges for the compliance practitioner. Employees can use layoffs to claim that they were retaliated against for a wide variety of complaints, including those for concerns that impact the compliance practitioner. Yet there are several ways that operationalization will help to protect your company as much as possible. The reasons for the...

What should a company do when it desires to hire a CCO? To do so, a company needs to fully understand and appreciate what it needs from such a position going forward. Unfortunately, many companies do not have this insight at the beginning of the recruitment process. The key company stakeholders need to understand the full hiring process. Obviously, this will include HR and others involved in the h...

One of the ways to operationalize compliance and to drive it into the DNA of an organization is through a performance review. Indeed, the 2019 DOJ Guidance stated: Incentive System…Have there been specific examples of actions taken (e.g., promotions or awards denied) as a result of compliance and ethics considerations? Who determines the compensation, including bonuses, as well as discipline and p...

Another area where Human Resources can help to more fully operationalize compliance is in succession planning. Succession planning is just as important as governance, enterprise risk management and strategic oversight. In other words, it is just as important. Sadly, many companies fail to give it the attention it requires. A PricewaterhouseCoopers (PwC) survey, found nearly one-half of the more th...

Companies have finally come to realize that institutional justice and fairness are perhaps the most basic tenet of any successful workplace. If employees believe they will be treated fairly, it will engender a level of trust that can work to not simply motivate employees but lead to a more successful workplace and, at the end of the day, a more profitable company. This encompasses the entire lifec...

In the DOJ’s 2019 Guidance, Incentives and Disciplinary Measures it stated:  Incentive System – Has the company considered the implications of its incentives and rewards on compliance? How does the company incentivize compliance and ethical behavior? Have there been specific examples of actions taken (e.g., promotions or awards denied) as a result of compliance and ethics considerations? Who deter...

A 2015 New York Times article by Gretchen Morgenson, entitled “Ways to Put the Boss’s Skin In the Game”, dealt with a long-standing question about how to make senior executives more responsible for corporate malfeasance? Her article had direct application to compliance programs and compensation for senior management tied to compliance. Morgenson said the issue was “Whenever a big corporation settl...

One of the areas that many companies have not paid as much attention to in their anti-corruption compliance programs is designing their compensation system to more fully operationalize compliance. However, the DOJ and SEC have long made clear that they view monetary structure for compensation, rewarding those employees who do business in compliance with their employer’s compliance program, as one...

Most compliance professionals understand the need to discipline employees who may have violated ethics and compliance programs or otherwise engaged in bribery and corruption. However, many Chief Compliance Officers (CCOs) and compliance practitioners do not focus as much attention to compliance incentives. I have developed six core principles for incentives, adapted from Spring 2014 MIT Sloan Mana...

One of the key points that representatives of the DOJ and Securities and Exchange Commission (SEC) have continually raised when discussing any best practices compliance program. The 2012 FCPA Guidance is clear that there should be incentives for not only following your own company’s internal Code of Conduct but also doing business the right way, i.e., not engaging in bribery and corruption. On inc...

As far back as 2004, in Opinion Release 04-02, the DOJ realized this was an important part of an overall compliance program when it approved a proposed compliance program that had the following requirement, "Clearly articulated procedures which ensure that discretionary authority is not delegated to persons who the company knows have a propensity to engage in illegal or improper activities." One t...

One of the conventional wisdoms about compliance training is that you will never be able to reach 5% of your workforce with compliance training because they are predisposed to lie, cheat and steal anyway. Whether they are simply sociopaths, scumbags or just bad people; it really does not matter. No amount of training is going to convince them to follow the rules, as they do not think such laws app...

The Evaluation of Corporate Compliance Programs, 2019 Guidance, makes clear that operationalization of compliance into an organization should be done at multiple levels. The 2019 Guidance also called out culture as a key indicia for an ethical culture. Creating an ethical culture is an important step for any company to burn compliance into the DNA of a business. It must be done at every level of a...

Ed. Note-my series in January, 31 Days to a More Effective Compliance Program, was so popular, I decided to extend it through 2020. Each month, I will focus on one topic in a best practices compliance program. I begin in February with the role of Human Resources in compliance. The series has its own iTunes channel, 31 Days to a More Effective Compliance Program. I hope you will find these podcasts...

Due diligence is generally recognized in three levels: Level I, Level II and Level III. Each level is appropriate for a different level of corruption risk. The key is to develop a mechanism to determine the appropriate level of due diligence and then implement that going forward. The question becomes how you use the information you obtained in the business justification and the questionnaire to de...

We previously considered the Prong in the Evaluation that was not present in the Ten Hallmarks of an Effective Compliance Program; that being root cause analysis. The requirement was first raised in the 2017 Evaluation. It was then carried forward as a requirement in the FCPA Corporate Enforcement Policy, later in 2017. It was discussed again in the 2019 Guidance. You should begin with the questio...

Well known fraud investigator Jonathan Marks, defined a root cause analysis as “a research based approach to identifying the bottom line reason of a problem or an issue; with the root cause, not the proximate cause the root cause representing the source of the problem.” He contrasted this definition with that of a risk assessment which he said “is something performed on a proactive basis based on...

Your company has just made its largest acquisition ever and your CEO says they want you to have a compliance post-acquisition integration plan on their desk in one week. Where do you begin? A good place to start would be the 2012 FCPA Guidance language: Pre-acquisition due diligence, however, is normally only a portion of the compliance process for mergers and acquisitions. DOJ and SEC evaluate wh...