Tag: institutional fairness

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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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Adventures in Compliance

Adventures in Compliance: The Abbey Grange

Today, I consider The Adventure of the Abbey Grange.

In the story The Adventure of the Abbey Grange, Holmes feels something is just not right about the story told by Lady Mary Brackenstall regarding the death of her step-father Sir Eustace Brackenstall. Holmes’ largest concern turns on the contents of three wine glasses, one of which contains beeswing and the other two do not. It turns out that Sir Eustace was killed by a companion of Lady Mary, which Holmes uncovers. However, Holmes has an adaptability for justice when the situation demands it, stating, “Once or twice in my career I feel that I have done more harm by my discovery of the criminal than ever he had done by his crime.” Satisfied the actions of the criminal and his accomplice (Lady Mary) were both warranted and just; Holmes does not report his findings to the local police. Klinger dryly noted, “his sympathies may have overridden his judgement: Many scholars believe that Holmes lets himself be fooled by a villainess clever than he credited.”
This story provide two key points for any best practices compliance program.

  1. Institutional Fairness through the Fair Process Doctrine, which mandates that the process itself is fair and impartial.
  2. Institutional Justice which means more than simply fair and equitable treatment; it requires employees concerns, once raised, be listened to and addressed, all without the fear of retaliation. Moreover there will be a consistency of both discipline and incentives.