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Investing in the Future

Investing in the Future – Megan Folkerts – The Way: Leadership Development

How do small towns and rural counties invest in their future? Tom Fox and Andrew Gay explore this topic in their new podcast series Investing in the Future – Developing Leadership in Kerr County. Leadership Kerr County is the premier leadership program in the Hill Country which enables men and women to learn more about the issues and topics that face Kerrville, Kerr County, and the Hill Country daily; everything from education and social services to economic development and health care. Kerr County has made the decision to invest in its citizens to create future leaders and lay a foundation for their future involvement in the leadership of Kerrville and Kerr County. This podcast is produced and hosted by the Texas Hill Country Podcast Network.

Megan Folkerts is an exemplary example of what can be achieved when you have a passion for leadership and community development. As the senior management analyst for the city of Kerrville and downtown liaison for Main Street, she was accepted into the Leadership Kerr County program this year and has been networking with like-minded individuals and exploring the different standard pillars of the community.

Megan heard about Leadership Kerr County a couple of years ago and was encouraged to apply. She was accepted into the program on the first application and has since been networking with other people who have like-minded interests in leadership and developing themselves. She has explored different facilities and learned about the different standard pillars of the community such as healthcare and nonprofit. She also experienced a poverty simulator to understand the struggles people face day to day. After going through the poverty simulator, she realized how privileged one is.

Megan Folkerts is an inspirational example of what can be achieved when you have a passion for leadership and community development. She grew up in Buda, between San Marcus and Austin, and got her bachelor’s in business from Tarleton and Stephenville. She got her master’s from Tarleton while working for the city of Bastrop. She applied for the Leadership Kerr County program after being encouraged by Drew Paxton. She has since been networking with other people who have like-minded interests in leadership and developing themselves.

 Resources

Andrew Gay on LinkedIn

Tom Fox on LinkedIn

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Compliance Into the Weeds

Compliance into the Weeds: Messaging App Enforcement and Internal Controls

The award-winning, Compliance into the Weeds is the only weekly podcast that takes a deep dive into a compliance-related topic, literally going into the weeds to explore a subject more. Looking for some hard-hitting insights on sanctions compliance? Look no further than Compliance into the Weeds! In this episode, Tom and Matt consider the recent SEC and CFTC enforcement actions around messaging app non-compliance.

Join Tom and Matt as they take a deep dive into the enforcement actions and then consider how such claims would impact non-regulated industries. Regulated industries, particularly broker-dealer firms like Wells Fargo and Morgan Stanley, are facing enforcement actions and hefty fines for their employees’ use of messaging apps like WhatsApp and Snapchat that allow record preservation to be disabled. The involvement of senior managers in these misconducts has prompted the SEC to require an independent compliance consultant in settlements.

The conversation between Tom and Matt emphasizes the importance of messaging policies and procedures in regulated industries and the need for stricter compliance measures. They also discuss the complexities and potential consequences of record-keeping obligations and the regulatory concerns over the use of messaging apps. The conversation briefly touches on the future of AI chatbots in customer service, with differing perspectives on their ethical implications. Overall, the conversation highlights the significance of messaging policies, enforcement, and compliance in regulated industries.

Key Highlights

·      Enforcement Actions Against Regulated Industries

·      Enforcement actions and messaging policies

·      Record-keeping obligations for broker dealers and other industries

·      Regulatory concerns over the use of messaging apps

·      Internal Controls and non-regulated industries

 Resources

Matt 

LinkedIn

Blog Post in Radical Compliance

No Smoke and No Fire: The Rise of Internal Controls Absent Anti-Bribery Violations in FCPA Enforcement by Karen Woody in Cardoza Law Review

Tom 

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Blog

The Power of Compensation: Building a Culture of Compliance

The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have repeatedly emphasized the importance of aligning compensation plans with compliance goals. According to Tom Fox, aligning the compensation plan of salespeople can have a greater impact on compliance revenue than other forms of communication. By incentivizing ethical behavior, companies can reinforce the message of compliance and create a culture that prioritizes adherence to regulations.

To maximize the impact of compensation structures, immediate implementation is crucial. Waiting too long can dilute the message and hinder the desired behavioral changes. Employees should clearly see the connection between their actions and the incentives they receive. This immediate feedback loop motivates them to align their behavior with the goals of the compliance program.

While transparency is important in the incentive system, it should not solely be a democratic process where salespeople design the program around their own needs. However, involving employees in the process can help them appreciate changes that may not be favorable to their individual situations. Transparency fosters a sense of trust and accountability, leading to better acceptance and adherence to the compensation structure.

Compensation can be a powerful motivator for salespeople to act in ways that support the company’s evolving business model and strategy. By integrating compliance incentives into the compensation program, companies can make compliance an integral part of their organizational values. This not only drives compliant behavior but also ensures that employees understand and support the company’s overall strategy.

If your company has not yet integrated compliance incentives, it’s time to catch up. The DOJ and SEC recognized the importance of compliance incentives over 15 years ago, so companies without them are lagging behind. A practical way to start is by allocating a percentage of the discretionary bonus program to compliance. Even a small percentage can demonstrate the company’s commitment to ethical conduct and encourage employees to prioritize compliance.

Compliance incentives play a crucial role in shaping the behavior and mindset of employees within an organization. While disciplinary actions are essential, incentives provide a positive reinforcement mechanism that encourages individuals to embrace compliance as an integral part of their work. Tom Fox emphasizes that compliance incentives need not be elaborate or groundbreaking; what matters most is their consistent implementation.

There are six core principles that form the foundation of successful compliance incentives.

  1. Consistency is Key. Compliance incentives must be consistently applied throughout the organization. By doing so, companies can create a sense of fairness and predictability, reinforcing the message that compliance is non-negotiable.
  1. Supporting Systems. To ensure compliance incentives are followed, it is crucial to have supporting systems in place. These systems can include regular training, clear guidelines, and robust reporting mechanisms, enabling employees to understand and adhere to compliance standards.
  1. Transparency. Making compliance incentives transparent within the organization is essential. By showcasing the recognition and rewards associated with compliance, companies can inspire others to embrace ethical behavior and create a positive ripple effect.
  1. Overcoming Competing Goals. If safety is No.1 within an organization, doing business ethically and in compliance should be goal 1A. But often challenges can arise when competing goals, such as financial pressures, overshadow compliance incentives. To counterbalance this, a strong counterweight is necessary to ensure that compliance remains a priority, even during financial downturns.
  1. Rewarding Performance. Compliance incentives can be used to hold leaders accountable for their performance, aligning their goals with the company’s compliance objectives. This approach ensures that compliance is not sacrificed for short-term financial gains.
  1. Non-Linear Alignment. Compliance incentives should align work in an oblique, non-linear way, allowing employees to choose their own pathways while still adhering to compliance standards. This flexibility empowers individuals to contribute to compliance efforts in a manner that suits their strengths and preferences.

All of these guidelines mean that you must align compliance as an integral part of your company’s DNA. Regularly communicate the importance of compliance and the benefits it brings to the organization and its stakeholders. It is critical to implement compliance incentives at all levels of the company. Division or business unit heads can define pro-social goals and establish supporting structures and systems. Even lower-level employees should have their own version of the compliance incentive process.

There must be tangible incentives offered to employees;  both financial and hierarchical, to those who consistently demonstrate ethical behavior and compliance within your Code of Conduct and relevant laws. These rewards can range from cash awards to certificates, plaques, or even coffee mugs and t-shirts. Obviously Document Document Document is critical. Just as all other parts of your compliance program are documents, so should your incentive program.

Document compliance actions to demonstrate to regulators, if necessary, that your organization takes compliance seriously. This documentation showcases your commitment to ethical business practices and provides evidence of your compliance efforts. There must be support systems in place to reinforce the message of compliance, even during challenging times.

Creating a culture of compliance requires a multifaceted approach, and compliance incentives play a vital role in driving ethical behavior within organizations. By consistently implementing these incentives, aligning employees around compliance goals, and leveraging tangible rewards, companies can foster a sustainable culture of compliance. Remember, compliance is not just a checkbox; it’s an integral part of your organization’s success.

Incorporating compensation systems into compliance programs is a vital step towards building a culture of compliance within organizations. By aligning salespeople’s compensation plans with compliance goals, implementing immediate and transparent structures, and involving HR in the process, companies can reinforce ethical behavior, promote compliance, and drive the success of their compliance programs. Remember, simplicity, alignment with company values, and immediate impact on behavior are key factors to consider when designing your compensation structure. Finally always remember to prioritize compliance and create a workplace culture that values integrity and ethics.

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program: Day 11 – Institutional Justice and Institutional Fairness

Companies have finally come to realize that institutional justice and fairness are perhaps the most basic tenet of any successful workplace. If employees believe they will be treated fairly, it will engender a level of trust that can work to not simply motivate employees but lead to a more successful workplace and, at the end of the day, a more profitable company. This encompasses the entire lifecycle of the employment relationship, from hiring through separation. It works in areas as seemingly disparate as compensation and incentives, discipline, promotion, and internal reporting.

On this final point, Kyle Welch and Stephen Stubben, in their 2019 paper entitled “Evidence on the Use and Efficacy of Internal Whistleblowing Systems”, noted that a robust whistleblower reporting system speaks to a functioning and ethical corporate culture. Employees who can report issues, in a fair manner, without fear of retaliation are more empowered to make the company run more efficiently and profitably. Yet an equally interesting finding was where there was robust internal reporting, employees were more likely to speak up to improve overall business processes, thereby making the company more profitable.

An often-overlooked role of any CCO or compliance professional is to help provide employees with institutional justice. If your compliance function is seen to be fair in the way it treats employees, in areas as varied as financial incentives, to promotions, to appropriate and consistent discipline meted out across the globe; employees are more likely to inform the compliance department when something goes array. If employees believe they will be treated fairly, it will go a long way to more fully operationalizing your compliance program.
Three key takeaways:

  1. The DOJ and SEC have long called for appropriate and consistent application of both incentives and discipline.
  2. The Fair Process Doctrine will help set institutional justice as the norm in your organization.
  3. Inconsistent application of discipline will destroy your compliance program credibility.

For more information, check out The Compliance Handbook, 4th edition here.

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Blog

Mary Shirley’s new book “Living Your Best Compliance Life”

Today, we are diving into the world of compliance with a focus on enhancing compliance programs. We’ll be exploring the key takeaways from my recent conversation with well-known compliance maven Mary Shirley and Tom Fox, where we discuss Mary’s first solo book, “Living Your Best Compliance Life: 65 Hacks and Cheat Codes to Level Up Your Ethics and Compliance Program.” This book offers valuable insights and practical advice for compliance professionals, emphasizing authenticity, engagement, and continuous improvement. Let’s discover some innovative ways to level up your ethics and compliance program!

I asked Mary about her writing style. She began by saying that she had not been confident about her writing skills. She tended to write as she spoke, which served her well for public speaking but not so well in written works. She said she had “tried very hard to improve my writing and part of that has been challenging myself to do things like publish articles because if I didn’t work on it, then it wouldn’t get addressed. The first thing I’d say about writing style is just doing my best with what I have and knowing that it’s not a predominant strength of mine but consciously working on it, listening to feedback from others.”

She added that “as cute as it sounds really being authentic.” For me, speaking in a conversational tone rather than making things legalistic is how I’ve been able to survive as a compliance officer, and it’s how I’m able to survive when talking to other compliance officers as well. We are naturally a stuffy sort of a function, and I’m not really a stuffy person, and so why hide that?”

I asked her about how she wrote, and she said that during the pandemic, she had a bit of extra time since she worked from home and did not have to commute. “Whenever the mood took me, really, I always had in the back of my mind to be thinking about things and conversations with friends and colleagues in the space to note things down as they came to me and to remember to probe people more if they shared an idea that was interesting that I thought could be featured in the book.” She also related that she had  “no kids, no pets, no plants, which I think gives me the unique opportunity to be able to leverage some of my time in ways that I appreciate that others are not necessarily able to. So for me it was, any kind of time. My weekends, I spent a lot of time doing the drafting then.”

We then turned to the chapters of her book, beginning with the first chapter, The Foundation of a Strong Compliance Program. In it Mary highlights the significance of program assessments as the foundation of a compliance program. These assessments help direct compliance programs and provide guidance to new compliance personnel. To make the process more effective, Mary suggests utilizing the free resource guide with customizable worksheets available on Corporate Compliance Insights’ dedicated page for the book. These worksheets help structure and organize ideas, making them adaptable for different environments, organizations, and cultures.

The next chapter is Team Building: Building Stronger Connections, Especially in Remote Work Settings. In the era of remote work, team building has become even more crucial. Mary emphasizes the need for dedicated team building in compliance programs, especially for remote teams. By fostering stronger connections and collaboration, compliance professionals can enhance their program’s effectiveness. Mary’s book offers valuable insights on various team building strategies that can be implemented, even with limited resources.

We next reviewed her chapter entitled, Culture and Communications: Fostering a Culture of Integrity. Creating a culture of integrity within compliance programs is essential for success. Mary’s book delves into the chapter on culture and communications, providing practical guidance on how to foster such a culture. By challenging traditional perceptions of compliance and adopting a more authentic and human-centered approach, compliance professionals can create an environment that promotes ethical behavior and compliance.

In the burgeoning age of AI in compliance, Mary’s next chapter entitled, A Humane Compliance Function: Embracing Authenticity is all the more topical. Gone are the days of a strict and robotic approach to compliance. Mary’s book encourages compliance professionals to embrace a more authentic and humane compliance function. By prioritizing compassion and authenticity, compliance programs can foster trust, engagement, and employee satisfaction. Mary provides cost-effective solutions and practical guidance on how to implement this approach effectively.

It will not surprise compliance professionals to find the next chapter, Unlocking the Power of Compliance Week: Engagement and Feedback. In this chapter Mary focuses on the celebration of Corporate Compliance and  Ethics Week as a powerful tool that is often underutilized. We discussed how Compliance Week can be used as a two-way feedback mechanism to better serve internal clients. Mary shares her experience of using fun and unconventional methods to engage employees during Compliance Week, such as games that require answering compliance questions to earn tools or rewards. This not only tests the absorption of compliance training but also identifies gaps in knowledge.

Compliance Week can provide valuable insights into areas where more work is needed. Mary suggests using Compliance Week to test basic knowledge, such as knowing where to find compliance policies or the name of the chief compliance officer. She even shares an example from her book where people got the answer wrong about the name of the chief compliance officer. By incorporating low-tech methods like easels and whiteboards, compliance professionals can gather information effectively during Compliance Week.

In conclusion, Mary Shirley’s book, “Living Your Best Compliance Life,” offers compliance professionals valuable insights and practical advice for enhancing compliance programs. By focusing on authenticity, engagement, and continuous improvement, compliance officers can create a culture of integrity and foster stronger connections within their teams. Additionally, Compliance Week provides a powerful opportunity for engagement and feedback. By utilizing this tool effectively, compliance professionals can identify areas for improvement and continuously enhance their programs. So, let’s embrace these practical tips and data-driven insights to level up our ethics and compliance programs!

Remember, Mary’s book will be released on August 15th in both Kindle and paperback formats. You can find it on Amazon.com.

You can also reach Mary at the following:

LinkedIn

Book: 65 Hacks & Cheat Codes to Level Up Your Ethics & Compliance Program | from CCI Press | Compliance Communication Handbook (corporatecomplianceinsights.com)

Categories
Daily Compliance News

Daily Compliance News: August 15, 2023 – The All FT Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance brings to you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen in to the Daily Compliance News. All, from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

  • African Development Bank not using ABC funds. (FT)
  • Aide to Madagascar leader arrested for corruption. (FT)
  • Bosses must take the time to learn from mistakes. (FT)
  • China de-coupling? (FT)
Categories
Career Can D0

Quest for Quality Intern Experiences with Robert Khoury

Is there a right way to guide young professionals in today’s competitive world? In this episode of Career Can Do, guest Robert Khoury shares insights into Agile Rainmakers’ unique internship program, which offers students a rich blend of autonomy, hands-on experience, and valuable interactions with clients. Robert is the founder and CEO of Agile Rainmakers and author of a groundbreaking series on internships, How to Intern Successfully. A visionary with a keen focus on crafting transformative internship experiences, his approach is rooted in principles like harmony, empathy, intentionality, and empowerment. His commitment to bridging the gap between academia and the corporate world has made him a sought-after figure in discussions around career development and the future of work. Robert joins Mary Ann Faremouth to share  invaluable insights on how to empower students, address talent shortages, and ensure internships offer tangible value for both interns and companies.

Addressing the talent shortage companies face today, Agile Rainmakers embodies principles like harmony and empowerment, ensuring mutual satisfaction for both interns and clients. The program empowers students to set their own goals and engage directly with clients, equipping them with both hard and soft skills needed in the modern workplace. It aims to foster a community of support and mentorship by connecting students with alumni, parents, and employers, emphasizing principles such as empathy and intentional communication.

 

Robert underscores the importance of the wrap-up process in achieving closure and ensuring satisfaction for all stakeholders. This thorough wrap-up not only facilitates smooth transitions but also encourages students to articulate their gratitude, teaching them the art of professional communication. Through activities like writing thank-you notes and participating in feedback surveys, interns reflect upon their journey, helping them grow and align their career aspirations.

 

How to Intern Successfully is dedicated to bringing dignity to the internship discourse. With titles covering topics from designing exceptional internships to mentoring and parental involvement, Robert aims to elevate the perception of internships. His holistic view integrates feedback from multiple perspectives, reaffirming the idea that internships can shape the professional future of students while addressing the pressing workforce shortages.

 

Resources

Robert Khoury on the Web | LinkedIn

Faremouth.com

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Data Driven Compliance

Data Driven Compliance: Heidi Hunter on Leveraging AI and Data-Driven Solutions for Risk Management in The Financial Industry

Are you struggling to keep up with the ever-changing compliance programs in your business? Look no further than the award-winning Data Driven Compliance podcast, hosted by Tom Fox, which is a podcast featuring an in-depth conversation around the uses of data and data analytics in compliance programs. Data Driven Compliance is back with another exciting episode The intersection of law, compliance, and data is becoming increasingly important in the world of cross-border transactions and mergers and acquisitions.

In this podcast episode, Tom Fox and Heidi Hunter, Chief Product Officer – GBG Americas, explore the intersection of compliance, risk analysis, fraud detection, and cybersecurity. They discuss the importance of identity verification solutions in meeting regulatory requirements and mitigating fraud during customer onboarding. The conversation also delves into the challenges and opportunities of AI in compliance, emphasizing the need for transparency and documentation. AI’s role in risk analysis and fraud detection is examined, highlighting the need for human reasoning and oversight to overcome AI’s limitations. The importance of understanding and mitigating cybersecurity risks is emphasized, with a discussion on red-team and blue-team exercises. Overall, the episode provides insights into maintaining compliance, mitigating risks, and addressing threats in the financial industry.

·      Identity verification solutions

·      Challenges and Opportunities of AI in Compliance

·      The Role of AI in Risk Analysis

·      AI and Fraud Detection

·      The Importance of Understanding and Mitigating Cybersecurity Risks

Resources:

Heidi Hunter on LinkedIn

GBG

 

Tom Fox 

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Blog

PCAOB Proposed Rule on Compliance Audits

In the realm of auditors intersecting compliance and fraud risk audits, a fierce battle of perspectives rages on. Compliance professionals yearn for a bigger role, a seat at the table to tackle potential compliance violations. Yet, as the storm brews, the audit community hesitates, fearing the unfamiliar waters of becoming compliance and legal violation experts. Brace yourselves, for the unexpected outcome lies just beyond the horizon.

Compliance professionals are generally accepting of the idea that audit firms might look for compliance violations, as long as the proposal includes meeting with the chief ethics and compliance officer and reviewing the state of the compliance program with the audit committee. Many auditors do not want the additional responsibility, claiming it is outside their area of expertise and the requirement will increase audit costs.

Other trade and industry groups have weighed in as well. The American Bankers Association said in a letter “With respect to the legal function, auditors may be put into a position to second-guess a company’s own legal counsel regarding whether noncompliance may have occurred.  “With respect to the management function, the requirement that auditors perform ‘enhanced risk assessment procedures’ could result in auditors second-guessing how management allocates the company’s financial and human resources. This would not only blur responsibility between the legal, management and audit functions, but would also divert auditors’ time, attention and resources away from auditing financial statements.”

The group went on to note that  “Various federal and state regulatory authorities in the United States have a responsibility to examine, monitor and, where appropriate, bring enforcement actions against companies that do not adhere to laws and regulations. Moreover, given the many and varied private rights of action available against corporations in the United States, companies are subject to even further scrutiny and liability for noncompliance.”

Stephen Foley, writing in the Financial Times, said that some companies have objected that the implementation of the proposal might negatively impact the attorney/client privilege. He wrote “companies said the new rules could mean more correspondence with their lawyers would have to be shared with auditors, with the result that it loses its legal privilege and could become evidence in litigation.” He cited to Ronald Edmonds, controller at the chemicals group Dow, that “Company personnel could be more hesitant to disclose legal violations to their counsel if they fear that the communication will not be privileged. Attorneys may also hesitate to prepare written analysis for their clients for fear that it would end up non-privileged and ultimately in the hands of a legal adversary.”  Amy Johnson, controller at RTX said “The broad scope and volume of information that would be required to be shared with auditors is likely to encompass sensitive attorney advice.”

Conversely, PCAOB Chair Erica Williams told the FT, “Companies’ non-compliance with laws and regulations, including fraud, can really have devastating consequences for investors. This proposal is simply making sure that the protection investors think they’re getting today matches what the standard requires.” Foley cited to Brandon Rees, the AFL-CIO deputy director who said “All too often when a fraud is exposed, it rarely comes to light from the auditors. Auditing standards should require auditors to have uncomfortable conversations with management.”

The PCAOB will have to consider this feedback from its consultation period before deciding whether to push ahead with the proposal, or to amend or scrap it. Two of the five board members have said they are opposed to the new rules, but a simple majority is all that is needed. What are some of the issues that auditors may face if the proposed rule is enacted?

If auditors are mandated to assume more compliance responsibilities as per the proposal, there may be several challenges to address. One of the primary concerns is whether auditors have the requisite knowledge and training to identify and manage compliance violations efficiently. Furthermore, the elevated costs associated with hiring legal experts, coupled with the increased liability facing auditors can potentially create a barrier to the rule’s successful implementation.

The proposal has the potential to shape how audit firms approach their investigations into client companies, particularly with regard to compliance and legal violations. By requiring auditors to look more closely at non-compliance with laws and regulations, the proposal is intended to deliver more comprehensive audits and prevent financial fraud. However, the incorporation of duties usually performed by legal professionals into the auditing process could complicate the auditors’ role, potentially raising costs and increasing liability.

The proposed rule generates divided opinions between compliance professionals and the audit community. Compliance executives generally support the proposal, provided it includes engagement with the chief ethics and compliance officer, and necessitates a comprehensive review of the compliance program with the audit committee. On the contrary, most auditors, represented by the PCAOB, argue against the implementation of this rule, citing a lack of necessary expertise to identify compliance violations, and increased burden of audit fees.

If auditors are mandated to assume more compliance responsibilities as per the proposal, there may be several challenges to address. One of the primary concerns is whether auditors have the requisite knowledge and training to identify and manage compliance violations efficiently. Furthermore, the elevated costs associated with hiring legal experts, coupled with the increased liability facing auditors can potentially create a barrier to the rule’s successful implementation.

Compliance professionals and the audit community clash over a proposed rule on auditors reporting compliance violations. As tensions rise and perspectives collide, can these two groups find common ground or will they remain at odds, leaving the fate of the proposal uncertain?

Categories
Corruption, Crime and Compliance

The Importance of a Consequence Management System

Transparency, ethics, and compliance are more than just corporate buzzwords; they’re foundational to building trust in today’s global organizations. Consequence management systems encompass elements like transparency, robust employee reporting, protective measures for whistleblowers, and effective internal investigations. These are all essential for maintaining organizational justice, trust, and integrity. In this episode of Corruption, Crime and Compliance, Michael Volkov underscores the value of collecting and analyzing employee reports, the pivotal role of Chief Compliance Officers, and the integration of compliance compensation with consequence management.

You’ll hear Michael talk about:

  • Global companies now recognize the significance of robust consequence management systems, which encompass vital processes from internal investigations to disciplinary actions. A pivotal aspect of these systems is transparency, especially when designing and implementing employee reporting.
  • When it comes to effective employee reporting, a system is more than just a hotline; it involves tracking and addressing concerns in real-time. To foster trust, such systems must operate promptly, fairly, and consistently, ensuring that reporters are protected against obstruction and/or retaliation.
  • Key components of an effective reporting system include:
    • Clear internal communication, which ensures employees feel heard.
    • Foundational support, which bolsters efficiency.
    • Collated reports from diverse sources, which offers insights into the company’s culture and potential risks.
    • Transparency and consistency, as sporadic disclosure can negatively influence employees’ perceptions of a company’s intentions.
  • A CCO’s commitment is reflected when issues are investigated and addressed swiftly and justly. They play a crucial role in collecting and analyzing employee reporting data, as well as educating senior management and boards on the significance of employee reports.
  • Companies need to establish written protocols for internal investigations to ensure that they are conducted fairly and impartially. These protocols should outline the steps that will be taken during an investigation, as well as the rights of the employees involved. The protection of employees and whistleblowers is paramount.
  • An internal oversight committee should be responsible for overseeing internal investigations. Regular reviews ensure that procedures are followed consistently and that there is a focus on quality. Additionally, all investigations should be properly documented and resolved in order to maintain integrity.
  • Compliance and consequence management systems should work together to meet the expectations of the DOJ, promoting corporate citizenship and financial success. 

 

KEY QUOTES

“A true employee reporting system includes reports to supervisors, walk-ins to human resources, walk-ins to legal and compliance, and an automated reporting system.” – Michael Volkov

 

“The real question is whether the company backs up its statement through specific actions. This cannot be accomplished through words, but really only through deeds, through actions. All too often, companies get ahead of themselves. They make these broad pronouncements. They sound good, they pat each other on the back, and they don’t build the essential foundations and infrastructure needed to establish an effective employee reporting system.” – Michael Volkov

 

“As a basic initial requirement, every company should adopt a written internal investigation protocol that is published internally, promoted internally to demonstrate a commitment to transparency, and those protocols and procedures should be followed to the T.” – Michael Volkov

 

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group