Tag: institutional justice

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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

The Slap Seen ‘Round the World and Compliance

It was the slap seen ‘round the world. It happened last Sunday night on the televised presentation of the 94thannual Oscars award ceremonies when Will Smith stormed to the stage after comedian Chris Rock made a joke about Smith’s wife’s lack of a full head of hair and, in front of audiences worldwide, delivered a slap to the face of Rock. Smith was incensed that, according to Emily Stedman, the  comedian’s remark that his wife’s shaved haircut was reminiscent of famous film character G.I. Jane. Smith’s wife, Jada Pinkett Smith, has been openly suffering with the hair loss condition Alopecia since 2018.
Smith later won the Best Actor Oscar for his portrayal of Venus and Serena Williams’ father Richard Smith in the movie King Richard. Smith did not apologize for his actions during his acceptance speech and did not do so until “one day on from the altercation. “I would like to publicly apologize to you, Chris,” he wrote. “I was out of line and I was wrong. I’m embarrassed and my actions were not indicative of the man I want to be. There is no place for violence in a world of love and kindness.”” Rock’s only statement on the affair to date, according to Nicole Sperling and Julia Jacobs, writing in the New York Times (NYT), has been “I’m still kind of processing what happened,” Mr. Rock said, briefly addressing the topic everyone was talking about. He promised to discuss it in greater depth later. “It’ll be serious, it’ll be funny, but I’d love to — I’m going to tell some jokes.””
Apparently after the incident, the Academy of Motion Picture Arts and Sciences said, “that the actor Will Smith was asked to leave the Oscars ceremony after he slapped Chris Rock onstage Sunday night, but that the actor refused to go.” The Academy did not take any steps to physically remove Smith from the event. What lessons should every Chief Compliance Officer (CCO) and compliance professional draw from this matter?
Workplace Violence
First and foremost, violence at the workplace is never justified. What if this had happened at your office? What would you do? Would you allow the perpetrator of the violence to remain as your employee? I should certainly hope not. What if you are in a state which allows guns to be carried. Do you risk the perpetrator walking up and shooting a co-worker over a joke, in poor taste or otherwise? Unfortunately, workplace violence happens all too often.
What if the person attacked (Rock) did anything to defend themselves? In watching the clip of the slap, you will see Rock kept his hands behind him. What if he had raised his hands to defend himself and then the perpetrator shot him. In the state of Texas and Florida that would probably bring the ‘Stand Your Ground’ defense into play if the perpetrator said he thought the person he was about to attack was going to hit the perpetrator and the perpetrator actually acted to defend himself. You can see how quickly all this can spiral out of control.
Not only should you make clear that violence will never be tolerated at work, but you should use this opportunity to train about underlying causes and red flags of workplace violence. There is clearly history between Smith and Rock, the slap seen ‘round the world did not come out of nowhere. Metal health at the workplace can be as important as physical health. Every CCO should use this opportunity to reassess your company’s overall programs in these areas.
Institutional Justice
What about the Academy of Motion Picture Arts and Sciences decision not to remove Smith from the theater? The Academy was on actual notice that violence had been perpetrated but (apparently) took no action. Another comedian, Wanda Sykes, one of the hosts of Sunday’s telecast, said in an interview with Ellen DeGeneres “that the moment was “sickening” to her and that she thought Mr. Smith should have been escorted from the building instead of being allowed to stay and accept his Oscar.” She went on to add, “For them to let him stay in that room and enjoy the rest of the show and accept his award — I was like, how gross is this? This is just the wrong message.”
The Department of Justice (DOJ) made clear in the 2020 Update to the Evaluation of Corporate Compliance Programs that it expects a CCO and corporate compliance function to be the keepers of Institutional Justice in an organization. One of the tenets of this concept is that all employees must be treated fairly and equally, literally from the Board room to the shop floor. You can bet your bottom dollar that if an employee at the Dolby Theater in Los Angeles where the event was held had slapped an actor (or even a comedian) that employee would be escorted off the premises forthwith. The Academy certainly had the right and power to escort Smith off but failed to do so. Did their actions put Rock at additional risk? Possibly. What about the other attendees? I will leave that to your imagination.
What about actions by the Academy now to sanction Smith for his conduct? According to the NYT article, “The academy said that it had initiated disciplinary proceedings against Mr. Smith “for violations of the academy’s standards of conduct, including inappropriate physical contact, abusive or threatening behavior, and compromising the integrity of the academy.” It said that Mr. Smith would be given a chance to respond and that at its next board meeting, on April 18, it “may take any disciplinary action, which may include suspension, expulsion, or other sanctions.”” Stern stuff, or perhaps not, particularly if the Academy issues a stern statement to Smith “not to do it again.”

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31 Days to More Effective Compliance Programs

Day 13 | Institutional Justice and 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 seeming 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 more 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.
Categories
31 Days to More Effective Compliance Programs

Institutional Justice and The Fair Process Doctrine


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 seeming disparate as compensation and incentives, discipline, promotion and internal reporting.
The issue of Institutional Justice is most clearly seen in the area of discipline. This can be in the overall application of a compliance program to all employees, Board members and senior managers. One of the areas which Human Resources can operationalize your compliance program is to ensure that discipline is handed out appropriately and consistently across an organization and to reward those employees who integrate such ethical and compliant behavior into their individual work practices. In addition to providing a financial incentive for ethical behavior, it also provides a sense of institutional justice. Institutional justice comes from procedural fairness and is one area that will bring credibility to 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.
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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.