An organization comprised of humans will have its failings; people are fallible, after all. But this in no way means we should take unethical behavior in stride. Ation Advisory’s Frank Orlowski discusses the human element of wrongdoing.
Human vulnerability to situational influence is the main contributor to FCPA violations and controls and compliance issues. As psychologist Dr. Phil Zimbardo published in 1971:
“Decades of evidence shows us that situations can persuade even the most ethical and compassionate people to betray their own values.”
It’s a natural human tendency to be a bystander and to follow a leader or a group that we know may be doing something wrong for a sense of acceptance and security.
As Harvard Business School professor Max Bazerman writes:
“Unethical conduct happens because people are unconsciously fooling themselves.”
This is why lapses in action in the corporate world seem so pervasive and intractable… it’s business! When employees are laser-focused on operational objectives along with “pressure from the top,” the ethical implications of acts fade from people’s minds, and the risks of an FCPA infraction increase.
We have all heard the term “this is business,” which at times can be an excuse or permission to do something ethically or personally wrong. It can be hard at specific moments for employees to act consistently from their values in the face of fear and pressure.
To reduce potential compliance and controls violations in an organization, it is critical to build an ethically courageous corporate culture. This behavior needs to come from the top of the organization and must be engrained in the corporate culture.
For example, Pfizer Pharmaceuticals created an “Own It” Culture in 2013, encouraging colleagues to seize the opportunity to try something new and be accountable for the success of their projects and the work around them. The global program was launched as “OWNIT!” and the focus is on owning the business, winning in the marketplace, impacting results, confronting corrosive behaviors and having trust in one another.
Since the inception of the program, Pfizer was able to reduce compliance and control issues, including those related to the FCPA. Self-identified issues within the organization also increased, as colleagues were encouraged to confront and report on potential violations or compliance issues. Self-identifying compliance issues has been shown to reduce penalties by the SEC and DOJ and to potentially eliminate public relations issues.
The cliché phrase “we’re only human” certainly points to the root cause of the FCPA and compliance and controls challenges organizations face. However, understanding the upstream driver of the unethical, noncompliant human behavior within organizations can help prevent issues. Developing a global program that encourages openness, challenges the status quo and promises a safe environment without retribution is a great way to prevent and/or self-disclose FCPA issues and gaps in compliance and controls.