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Daily Compliance News

February 28, 2020, the Mental Toughness edition


In today’s edition of Daily Compliance News:

  • Does HR exist to help employees or exploit them? (FT)
  • Trump Administration moves to muzzle CDC announcements on Coronavirus. (NYT)
  • New database to expose companies which force employees to arbitrate harassment claims. (Washington Post)
  • They brought it on themselves. Why this season will be so mentally tough on the Astros. (com)
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31 Days to More Effective Compliance Programs

The Role of Human Resources in Incentivizing Compliance


One of the key points that representatives of the DOJ and Securities and Exchange Commission (SEC) have continually raised when discussing any best practices compliance program. The 2012 FCPA Guidance is clear that there should be incentives for not only following your own company’s internal Code of Conduct but also doing business the right way, i.e., not engaging in bribery and corruption. On incentives, the 2012 FCPA Guidance said, “DOJ and SEC recognize that positive incentives can also drive compliant behavior. incentives can take many forms such as personnel evaluations and promotions, rewards for improving and developing a company’s compliance program, and rewards for ethics and compliance leadership. Some organizations, for example, have made adherence to compliance a significant metric for management’s bonuses so that compliance becomes an integral part of management’s everyday concern.” But it also recognizes that incentives need not only be limited to financial rewards as sometimes simply acknowledging employees for doing the right thing can be a powerful tool as well
Incentives can be integrated into the DNA of a company through the hiring and promotion processes. There should be a compliance component to all senior management hires and promotions up to those august ranks within a company. Your HR function can be a great aid to your cause in driving the right type of behavior through the design and implementation of such structures. Employees know who gets promoted and why. If someone who is only known for hitting their numbers continually is promoted, however they accomplished this feat will certainly be observed by his or her co-workers.
 Three key takeaways:

  1. The DOJ 2019 Guidance specifically calls out incentives for doing business ethically and in compliance.
  2. HR can lead the efforts around incentives.
  3. Incentives go beyond financial rewards.

 

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31 Days to More Effective Compliance Programs

Using the Reference Check to Operationalize Compliance


As far back as 2004, in Opinion Release 04-02, the DOJ realized this was an important part of an overall compliance program when it approved a proposed compliance program that had the following requirement, “Clearly articulated procedures which ensure that discretionary authority is not delegated to persons who the company knows have a propensity to engage in illegal or improper activities.” One tool that is often overlooked in the hiring process is the reference check. Many practitioners feel that a reference is not of value because prospective candidates will only list references that they believe will provide glowing recommendations of character. This leads to a pro forma reference check.

The hiring of someone who will perform business activities in compliance with anti-corruption laws such as the FCPA will continue to be as much art as science because the hiring of quality employees for senior management positions is similarly situated. But that does not mean a company cannot work to not hire those persons who might have a propensity to engage in bribery and corruption if the situation presented itself. The hiring process is just one more tool that can be utilized to build an effective and operationalized compliance program.

Three key takeaways:

  1. The hiring process is the first step in operationalizing your compliance program.
  2. The DOJ spoke to hiring as part of a best practices compliance program as far back as 2004.
  3. Reference checks are an underutilized part of the hiring process and a key internal HR control.
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31 Days to More Effective Compliance Programs

The Hiring Process as a Step to Operationalize Compliance


One of the conventional wisdoms about compliance training is that you will never be able to reach 5% of your workforce with compliance training because they are predisposed to lie, cheat and steal anyway. Whether they are simply sociopaths, scumbags or just bad people; it really does not matter. No amount of training is going to convince them to follow the rules, as they do not think such laws apply to them. They will lie, cheat and steal no matter what industry they are in and what training you provide to them. But knowing such people exist and they may be able to lie, con or otherwise dissimilate their way into your organization does not protect your company from FCPA liability when they inevitably violate the law by engaging in bribery and corruption. It is still the responsibility of your company to prevent and detect such conduct and then remediate if it occurs.
This is where your HR function has a dual role, with both their traditional hiring role and in a compliance function. They can work to help weed out such miscreants and to communicate your corporate values of doing business ethically, in compliance and aligned with your corporate values of integrity.
Through a structured series of questions, however, a properly trained HR professional can begin to assess whether an employee might have a propensity to engage in bribery and corruption. By adding information about your company’s values towards doing business ethically and in compliance, you can introduce this topic at either the interview evaluating process or in the promotion process. While true sociopaths will most certainly lie to you, perhaps even convincingly, by introducing the topic at such a pre-employment stage, they may be encouraged to take their skills elsewhere
Three key takeaways:

  1. Use the interview process to determine who will be an ethical and compliance fit for your organization.
  2. Consider the skill, will and fit approach.
  3. Ask open-ended questions.
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Blog

Day 21 of One Month to Better Compliance Through HR-Human Resources Gap Analysis for Compliance Issues

  • Does the HR department have an inventory of policies, procedures, laws and regulations covering employees and employment-related matters applicable to the company’s business?
  • If yes, do you have a specified person who is in charge of updating the inventory?
  • If no, what system does the HR department utilize to ensure that it is aware of the various compliance laws and regulations and has a process to comply with them?
  • What evidence would the HR department be able to produce to the government to support a finding that the company has a solid compliance program for applicable labor and employment laws and regulations?
  • What types of compliance training are mandatory for all employees, which are optional and how does HR track and document completion? How is the training performed? Is it provided in the native language of the employee or only in English?
  • What types of enforcement actions predominate in the compliance arena for your industry or where your organization does business? How is such data tracked in your company?
  • Are employees within the HR department specifically trained to understand compliance requirements applicable to your organization?
  • Does the HR department provide senior management with periodic updates on the monitoring of results, key risks, and compliance violations within HR?
  • Has the HR department established some type of escalation criteria to ensure that high-risk compliance issues are reviewed at the corporate level?
  • Does the HR department have compliance monitoring standards in place?
  • Does the HR department perform periodic audits to ensure that the policies and procedures are being complied with?

These are only a few of the questions that you may want to ask to begin the process of assessing how compliance and the role of HR apply to your company. My final suggestion is to work with HR to create a consolidated Human Resources Compliance Audit Checklist that can be used to audit (and document) the company’s HR Compliance Program. The key to compliance, in my opinion, is having the proper structure to identify the issues, implement policies and procedures to address the issues, audit for compliance and document, document, and document. Three Key Takeaways

  1. A gap analysis is a key component in the risk assessment process.
  2. The ultimate responsibility should lie with the business units and functional discipline to fully operationalize compliance.
  3. The role of the compliance department is to oversee, provide subject matter expertise and coordinate.

[tweet_box design=”default” url=”http://wp.me/p6DnMo-3iM” float=”none”] How a gap analysis can help you to operationalize your compliance program. [/tweet_box] This month’s series is sponsored by Advanced Compliance Solutions and its new service offering the “Compliance Alliance” which is a three-step program that will provide you and your team a background into compliance and the FCPA so you can consider how your product or service fits into the needs of a compliance officer. It includes a FCPA and compliance boot camp, sponsorship of a one-month podcast series, and in-person training. Each section builds on the other and provides your customer service and sales teams with the knowledge they need to have intelligent conversations with compliance officers and decision makers. When the program is complete, your teams will be armed with the knowledge they need to sell and service every new client. Interested parties should contact Tom Fox.  ]]>