Keep Managers’ C&E Duties Top of Mind to Improve Compliance

Codes of conduct almost always have a discussion (typically in the introduction) of the compliance-and-ethics (C&E) duties of all employees and a discussion of the additional duties that managers have under the code.  But not all companies fully leverage this discussion throughout other parts of their C&E programs.

Managers’ C&E duties tend to include leading by example and maintaining a “speak-up” environment.  Somewhat less frequently one also sees mandates to serve as a “champion” of the C&E program, make sure that the employees in their unit understand how the code applies to their respective jobs and be alert to C&E risks.

These sorts of discussions can be useful – but only if they are reinforced elsewhere in the program.  Examples of this sort of reinforcement include:

• Have Q&As and examples to flesh out these concepts in the code and substantive policies (e.g., in an antitrust policy, give an example of a manager failing to ensure that a subordinate who attends trade association meetings follows company policy with respect to attending such events).
• Include a discussion of managers’ C&E duties in training – and not just code training, but on “substantive” topics too, such as anti-bribery.
• Through email campaigns and other types of communications, tie these duties to both risk areas of compliance and program processes (e.g., managers are responsible for making sure that all employees in their respective units take required training).
• Include managers’ C&E duties in the scope of C&E auditing – such as by asking employees questions about the extent to which their respective managers fulfill those duties.
• Train investigators to look at issues of supervisory fault when investigating helpline calls and other reports of violations.
• Build consideration of such fault into disciplinary protocols.
• Publicize instances of such discipline (consistent with respecting legitimate privacy expectations).
• Perhaps most importantly, companies should consider tying the “Managers’ C&E Duties” discussion into their performance evaluations – as a way of incentivizing compliance.

The challenge of promoting strong compliance by managers is not new.  Indeed, the 1991 Sentencing Guidelines included a provision that companies should impose “appropriate disciplinary measures…for failing to take reasonable steps to prevent or detect criminal conduct.”  Moreover, the recent advent of “behavioral ethics” – as discussed in this post from the Conflict of Interest Blog  – has helped underscore how difficult it can be for companies to establish a regime of managerial accountability.

Leveraging a provision on managers’ C&E duties throughout one’s program is not a quick fix for these legal and psychological challenges. But it can provide a place to start.