A Cure for the compliance “Groundhog Day Syndrome”

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

 

For over a decade now business has heard the persistent drumbeat of enforcement actions by regulatory authorities.

The reaction of organisations reminds me of the movie Groundhog Day. In this the doomed protagonist lives the same day over and over, until he gets his act together. Some notorious cases illustrate this happening:

  • The Ralph Lauren Corporation subsidiary in Argentina bribes custom officials.
  • An ADM subsidiary in the Ukraine bribes government officials to obtain value-added tax refunds.
  • Pfizer’s subsidiaries in Bulgaria, Croatia, Kazakhstan and Russia makes improper payments to government officials
  • Tyco’s International subsidiary in the Middle East pays bribes to Saudi Arabian government 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 to obtain a commercial advantage of one kind or another. bribes

Many of our best companies suffer from the “Groundhog Day Syndrome.”

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

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

The folks in corporate headquarters in the United States responsible for compliance have not the slightest idea what is happening on the ground on a day-to-day basis in their operations in the far-flung parts of the world.

And those far away are fully aware the compliance people at Headquarters do not know what what is happening locally.  They can be reasonably confident they will avoid detection if they engage in corrupt practices to achieve their business goals,

Traditional approaches like performing anti-corruption audits and installing compliance hotlines help. But, conducting audits of every subsidiary annually in every high-risk jurisdiction can be prohibitively expensive.

Outside of the United States employees can be notoriously reluctant to report misconduct on the company hotline. The requirement is for an efficient and cost effective way to regularly learn what’s really happening on the ground that does not cost an arm and a leg.

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 remote parts of the world. But, a targeted anti-corruption survey is the best way to gather the information required to keep your firm 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.