A Cure for Compliance “Groundhog Day”

Jim NortzGuest post from Jim Nortz, Compliance & Ethics Consultant and Educator, Institute for Priority Thinking & EthicsPoll 

 

For over a decade business has heard the drumbeat of enforcement actions by regulators.

The reaction of companies reminds me of the movie Groundhog Day. In this the doomed hero lives the same day over and over, until he gets his act together. Some notorious real-life cases show this happening:

  • The Ralph Lauren Corporation subsidiary in Argentina bribes custom officials.
  • An ADM subsidiary in the Ukraine bribes officials to extract value-added tax refunds.
  • Pfizer’s subsidiaries in Bulgaria, Croatia, Kazakhstan and Russia make improper payments to officials.
  • Tyco’s International subsidiary in the Middle East pays bribes to Saudi Arabian officials.
  • Alcoa subsidiary in Australia pays bribes to senior officials in Bahrain. 

You can hardly miss the pattern. Repeatedly, groups of employees in subsidiaries located around the world thousands of miles from corporate headquarters paid bribes for commercial gain of one kind or another. bribes

Put simply, many of our best companies suffer from the “Groundhog Day Syndrome.”

They keep doing the same things, even when it’s clear traditional ways to prevent corruption in multi-nationals don’t work.

To find a cure for the Groundhog Day Syndrome we must reflect carefully on what is happening and develop new tools because

Folks in corporate headquarters in the United States responsible for compliance do not have the slightest idea what’s happening on the ground on a day-to-day basis in the far-flung parts of the world.

And those far away are acutely aware the compliance people back at Headquarters never know what’s happening locally.  They can be reasonably confident they won’t be found out if they engage in corrupt practices to achieve their business goals.  

Usual solutions like anti-corruption audits and compliance hotlines help. But conducting audits of every subsidiary annually in every high-risk jurisdiction can be costly.

Outside of the United States, employees can be notoriously reluctant to report misconduct on the company hotline. What’s needed is an efficient and cost effective way to regularly learn what’s happening on the ground.

What is the answer?

The solution is: targeted, periodic, anonymous polling.  Many companies already conduct various employee surveys to gather information about employee satisfaction, engagement and other similar factors. survey graphic

The kind of survey I’m proposing would be different.  Rather than tackling the entire employee population, it would specifically focus on gathering information from those who might have a direct knowledge of corrupt practices.

It would also gather information about: employee knowledge, attitudes, social dynamics, risk-related activities and observed misconduct. The latter would be specifically related to compliance with anti-corruption laws.

Instead of waiting and hoping employees will call the compliance hotline, such a survey would reach out and provide employees the opportunity to report what is really going on without any risk to them personally.

No survey can provide a perfect window into the remotest parts of the world. But, a targeted anti-corruption survey is the best way to gather the information required to keep the company from becoming another victim of the Groundhog Day Syndrome. groundhog2

Visit ethicspoll.org for more information about the author and EthicsPoll’s Anti-corruption Diagnostic Survey and other survey tools.

 

 

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