Corporate cultures need to progress from motivation by individual self-interest to inspiration for the greater good, from checks and balances to trust, and from rules-based behavior to being guided by what is right—just like strong safety cultures have already done.
Section 922 of the Dodd-Frank Act, which establishes SEC whistleblower mechanisms, is now in full effect. As if FCPA risks were not already high enough, now companies have to consider whistleblowers. How to manage this threat? By encouraging employees to report FCPA violations internally first, through pre-existing compliance programs.
Most compliance programs have less than five hours of employees’ time each year for dedicated compliance and ethics training (or barely a minute per day!). So, how do we shape employee behavior while allowing for the strategic freedom, entrepreneurial spirit, and on-the-job innovation that drive corporate success?
Thomas Fox takes a look at the journey of Cathy Choi, president of an energy-efficient light bulb manufacturer, as she found a way to instill values in her company as she took the reigns. Her approach could be used in the context of implementing a compliance program.
The financial crisis imposed immense costs on the nation and our financial system. And it didn’t need to happen. Good management and governance could have saved our largest institutions. As a senior staff member of the Financial Crisis Inquiry Commission (FCIC), I interviewed CEOs, traders, risk officers, board members, and regulators to try to understand: What did successful firms do that kept them out of trouble?
Management that turns deaf ears when subordinates report false billing or illegal marketing in dealing with federal or state governments can unleash a torrent of financial and reputational harm on the company. Indeed, that scenario is just the sort of situation that can turn into a full-blown, multi-million-dollar whistleblower settlement brought by a company insider under qui tam provisions of federal and state False Claims Acts.
The Freeh Report was released last week. It detailed a series of actions and inactions taken by officials at Penn State University (Penn State) that allowed Jerry Sandusky to continue his abuse of young boys from at least 1998 up until the time he was arrested.
As bad a situation as the Freeh Report portrays, I believe that there are significant lessons for the Foreign Corrupt Practices Act (FCPA) compliance practitioner and I will try to draw out some of these lessons learned.
Ehics and compliance cannot be seen as “owned” only by the ethics and compliance department. The factors that lead to misconduct, scandals, and safety accidents are within the domain of those leaders in the organization who can influence behavior. And who is better equipped and trained to manage behavior in an organization than HR?
Sometimes you just hit the brick wall. You carefully plan a strategy, implement the planned strategy and then measure the results but it falls completely flat. In other words, you hit the proverbial brick wall. So what should happen? Should you be fired for trying something that does not work? Be sent off for a two-year punishment detail at some far flung company outpost? This is not the tack taken by Kyle Zimmer, Chief Executive Officer (CEO) and co-founder of First Book. Zimmer instead may reward such activity through her company’s “Brick Wall Reward,” which is Zimmer’s way of saying, “It’s OK. You did the thinking, and you gave it your best shot. It crashed, but it was an honorable step.”