Like many catch phrases, “zero tolerance” obscures more than it explains and hurts more than it helps. Rather than adopting zero-tolerance policies, corporate compliance should take a lesson from fields like manufacturing and strive for processes and cultures of continuous improvement.
A leader who advocates “zero tolerance” is either a knave or a fool.
In the public sphere, zero tolerance has resulted in a second grader suspended for biting his Pop Tart into the shape of a gun, a 4-year-old placed on in-school suspension for hugging a teacher and a D.C. resident with no criminal record threatened with a year in jail for having an inoperable shotgun shell in his own home.
The impact in the private sector of well-intentioned but ill-conceived zero-tolerance policies may be less spectacular, but just as harmful:
Zero tolerance sounds good to politicians, academics and activists – people who benefit from staking out the moral high ground, but who generally dodge the consequences of the get-tough policies they advocate.
The real world is imperfect. Humans are imperfect. And imperfection requires tolerance.
For corporate compliance purposes, however, “tolerance” does not mean a lack of standards or failure to impose consequences for failing to adhere to standards. Rather, “tolerance” needs to be understood in an engineering sense, meaning an essential part of businesses processes and cultures that are dedicated to continuous improvement. As these processes and cultures improve – as they become more transparent and consistent – the degree of “tolerance” will narrow.
This message appears to be sinking in even within federal enforcement bodies. In enforcing the anti-fraud provisions of the U.S. Foreign Corrupt Practices Act (FCPA), for example, the Department of Justice (DOJ) recently announced a pilot program to “promote both transparency and accountability… [by granting] those voluntarily disclosing a reduction of up to 50 percent below the low end of the applicable U.S. Sentencing Guidelines fine range.” In addition, the DOJ will not generally require appointment of a monitor, and where those same conditions are met, the DOJ will consider a declination of prosecution.
The DOJ’s pilot program may help a business make the best of a bad situation. But compliance should first work to avoid the circumstances that required self-disclosure in the first place.
How should you do this?
Begin with three simple (but not easy) steps:
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Robert Zafft practices of counsel with Greensfelder, Hemker & Gale, P.C. (www.greensfelder.com) in St. Louis, Chicago and Belleville, Illinois. He teaches business ethics at Washington University’s Olin Business School and previously served as an Associate Principal with McKinsey & Company, a Senior Advisor for Tony Blair Associates and as a Senior Expert for the Organization for Economic Cooperation and Development (OECD). He can be reached at firstname.lastname@example.org. Follow him on Twitter @RJZafft.