Tag: Tone

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Innovation in Compliance

Innovation in Compliance: Alan Saquella on Navigating The Complexities of Corporate Whistleblowing and Compliance

Innovation comes in many forms, and compliance professionals not only need to be ready for it but also embrace it. Join Tom Fox, the Voice of Compliance, as he visits with top innovative minds, thinkers, and creators in the award-winning Innovation in Compliance podcast.

In this episode, Tom welcomes back Alan Saquella to discuss critical issues surrounding retaliation, whistleblowers, and fostering a speak-up culture within corporations.

Saquella, drawing from his extensive background in law enforcement, corporate compliance investigations, and academia, delves into the challenges middle managers face due to the fear of retaliation from senior leadership. The conversation also explores the ethical dilemmas in C-suite decisions regarding vendor and supplier selection, the mechanics and significance of whistleblower hotlines, and the crucial role of senior leadership in promoting ethical practices. Alan further emphasizes the importance of protecting whistleblowers and ensuring the effectiveness of compliance mechanisms through education, promotion, and a trust-centric approach.

Key Highlights:

  • Retaliation and Whistleblowers
  • Middle Managers and Ethical Dilemmas
  • Vendor and Supplier Selection Ethics
  • Whistleblower Programs and Confidential Hotlines
  • Role of Senior Leadership in Ethical Practices
  • Whistleblower Protection and Corporate Culture

Resources:

Alan Saquella on LinkedIn

Tom Fox

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31 Days to More Effective Compliance Programs

31 Days to a More Effective Compliance Program: Day 11 – Moving Compliance Tone Down Through an Organization

The 2023 ECCP made it clear that a company must have more than simply good ‘Tone-at-the-Top’; it must move down through the organization from senior management to middle management and into its lower ranks. It stated, “Beyond compliance structures, policies, and procedures, it is important for a company to create and foster a culture of ethics and compliance with the law at all levels of the company. The effectiveness of a compliance program requires a high-level commitment by company leadership to implement a culture of compliance from the middle and the top.”

Employees often look to their direct supervisor to determine what the tone of an organization is and will be going forward. Many employees of large, multi-national organizations may never have direct contact with the CEO or even senior management. By moving the values of compliance through an organization into the middle, you will be in a much better position to inculcate these values and operationalize compliance with them.

Three key takeaways:

1. Tone at the top—direct supervisors become the most important influence on people in the company

2. Give your middle managers a toolkit around compliance so they can fully operationalize compliance

3. Organizational justice is an additional way to help operationalize compliance

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Blog

Moving Compliance Tone Down Through an Organization

Mike Volkov, in a blog post entitled, Mood in the Middle Versus Tone at the Top, said, “Even when a company does all the right things at the senior management level, the real issue is whether or not that culture has embedded itself in middle and lower management. A company’s culture is reflected in the values and beliefs that exist throughout the company.” To fully operationalize your compliance program, you must articulate the message of ethical values and doing business in compliance and then drive that message from the top down, throughout your organization.

The 2023 ECCP made clear a company must have more than simply good ‘Tone-at-the-Top’; it must move down through the organization from senior management to middle management and into its lower ranks. It stated, “Beyond compliance structures, policies, and procedures, it is important for a company to create and foster a culture of ethics and compliance with the law at all levels of the company. The effectiveness of a compliance program requires a high-level commitment by company leadership to implement a culture of compliance from the middle and the top.”

The 2023 ECCP posed the following questions under the section, Shared Commitment—What actions have senior leaders and middle-management stakeholders (e.g., business and operational managers, finance, procurement, legal, human resources) taken to demonstrate their commitment to compliance or compliance personnel, including their remediation efforts? Have they persisted in that commitment in the face of competing interests or business objectives?

This requirement speaks to the greater role of non-compliance functions in a fully operationalized compliance program. Indeed, one sign of a mature compliance and ethics program is the extent to which a company’s other corporate disciplines are involved in implementing and then taking forward a compliance solution. This approach can act as a lynch pin in spreading a company’s commitment to compliance throughout the employee base. It can also be used to ‘connect the dots’ in many divergent elements of a corporate compliance and ethics program.

What should the tone in the middle be? What should middle management’s role be in the company’s compliance program? This role is critical because the majority of company employees work most directly with middle, rather than top management and, consequently, they will take their cues from how middle management responds to a situation. Perhaps most importantly, middle management must listen to the concerns of employees. Even if middle management cannot affect a direct change, it is important that employees have an outlet to express their concerns. Your organization should train middle managers to enhance listening skills in the overall context of providing training for their “Manager’s Toolkit.” This can be particularly true if there is a compliance violation or other incident which requires some form of employee discipline. Most employees think it important that there be organizational justice so that people believe they will be treated fairly. For if there is organizational justice, it engenders perceived procedural fairness which makes it more likely an employee will be willing accept a decision that they may not like or disagree with the end result.

Even with great “tone at the top” and positive “mood in the middle”, you cannot stop. One of the greatest challenges of a compliance practitioner is how to impact the most front-line employees or the “tone at the bottom”. One of the things you can do is assemble a compliance focus group to find out how business is done in the field and if it differs from what your company expects from an ethical and compliance perspective. Begin by assembling a group of employees who are familiar with the challenges of doing business in a compliant manner in certain geographic regions to discuss the challenges of doing business ethically and in compliance. Ask them questions about their understanding of your compliance regime. Then categorize the answers into the theory and practice of compliance in your company.

From this, test what is real in theory and in practice. You can check and see which employees are promoted more regularly; those who do business ethically and in compliance or those who meet their sales quotas every quarter? After you have internally tested, reassemble the original group and have them consider the beliefs that were articulated by them individually in the context of your how your compliance model is subsequently tested. Lead a discussion that attempts to identify what is different in practice and in theory. From there you can move from theory to practice to fully operationalizing your compliance regime. Finally, and in the feedback step, test how more fully operationalized your compliance regime has become. These tests can be accomplished in the regular course of business or through a special project with a special team and separate budget.

By engaging employees at this level, you can find out not only what the employees think about the company compliance program but use their collective experience to help design a better and more effective compliance program. Employees want to do business in an ethical manner. Giving employees the chance to engage in business the right way, as opposed to cheating, will win their hearts and minds almost all the time. By using this protocol, you can not only find out the effect of your compliance program on the employees at the bottom, but you can affect them as well.

Employees often look to their direct supervisor to determine what the tone of an organization is and will be going forward. Many employees of large, multi-national organizations may never have direct contact with the CEO or even senior management. By moving the values of compliance through an organization into the middle, you will be in a much better position to inculcate these values and operationalizing compliance with them.

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program: Day 18 – Operationalizing Compliance in the Middle

The DOJ has made it clear that middle management is critical to any compliance program’s success. While it does all start at the top, with the Board of Directors and senior executives setting the tone for the rest of the company, prosecutors are mandated, under the 2023 Evaluation of Corporate Compliance Programs (ECCP), to show how middle management, in turn, has reinforced those standards and encouraged employees to abide by them. Moreover, the ECCP posed several questions to middle management, including the following: What actions have middle-management stakeholders taken to demonstrate their commitment to compliance or compliance personnel, including their remediation efforts? Have they persisted in that commitment in the face of competing interests or business objectives?

The DOJ expects compliance to be operationalized down to the middle management level. Further experience has shown that employees prefer to speak to their direct supervisors about issues or potential compliance violations they become aware of. The question is: how can a corporate compliance function reach middle management? This is a key area of assistance that Human Resources can provide, as one of the ways that HR can help to operationalize compliance is to assist each level of an organization to have a proper tone, specifically the middle of an organization.
You must think about your communication lines and communication skills when conveying your message of compliance from the top into the middle of your organization.

Three key takeaways:

  1. While the tone at the top is critical, the middle tone can work to operationalize compliance more fully.
  2. How do you train middle managers?
  3. What compliance tool kit do you provide to middle managers?

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

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31 Days to More Effective Compliance Programs

Day 4 – Moving Compliance Tone Down Through an Organization

Mike Volkov has said, “Even when a company does all the right things at the senior management level, the real issue is whether or not that culture has embedded itself in middle and lower management. A company’s culture is reflected in the values and beliefs that exist throughout the company.” To fully operationalize your compliance program, you must articulate the message of ethical values and doing business in compliance and then drive that message from the top down throughout your organization.


What should the tone in the middle be? What should middle management’s role be in the company’s compliance program? This role is critical because most company employees work directly with middle rather than top management. Consequently, they will take their cues from how middle management responds to a situation. Perhaps most importantly, middle management must listen to the concerns of employees. Even if middle management cannot affect a direct change, employees must have an outlet to express their concerns. Your organization should train middle managers to enhance listening skills by providing training for their “Manager’s Toolkit.” This can be particularly true if there is a compliance violation or other incident which requires some form of employee discipline. Most employees think it important to have organizational justice so that people believe they will be treated fairly. For if there is organizational justice, it engenders perceived procedural fairness, which makes it more likely an employee will be willing to accept a decision that they may not like or disagree with the result.
Even with a great “tone at the top” and a positive “mood in the middle,” you cannot stop. One of the greatest challenges of a compliance practitioner is how to impact the most front-line employees or the “tone at the bottom.” One of the things you can do is assemble a compliance focus group to find out how business is done in the field and if it differs from what your company expects from an ethical and compliance perspective. Begin by assembling a group of employees who are familiar with the challenges of doing business in a compliant manner in certain geographic regions to discuss the challenges of doing business ethically and in compliance. Ask them questions about their understanding of your compliance regime. Then categorize the answers into your company’s theory and practice of compliance.
More than ever in 2022, employees came to look to their direct supervisor to determine what the tone of an organization is and will be going forward. Many employees of large, multi-national organizations may never have direct contact with the CEO or senior management. By moving the values of compliance through an organization into the middle, you will be in a much better position to inculcate these values and operationalize compliance with them.

 Three key takeaways:

1. Tone at the top—direct supervisors become the most important influence on people in the company
2. Give your middle managers a Tool Kit around compliance so they can fully operationalize compliance
3. Organizational justice is an additional way to help operationalize compliance

Categories
PHorensically Speaking

Tone and Conduct from the Top

In this episode, Jonathan Marks considers both tone and conduct from the top of an organization. The nature of a corporate culture can be the difference between a thriving and a beleaguered organization, and it all starts at the top! The control environment – that is, the overall attitude, awareness, and actions of directors and management regarding the internal control system and its importance to the organization – is the key to setting the tone of the organization because it influences the “control consciousness of its people.” Factors that contribute to the control environment include, but are not limited to –
·      Integrity and ethical values communicated by executive management in speaking and writing and demonstrated by action;
·      Responses to incentives and temptations – clear policies and actions that prohibit the acceptance of inappropriate gifts, for example;
·      Moral guidance, as communicated through a code of business conduct and ethics;
·      A commitment to competence, as demonstrated by robust human resource policies and clear job descriptions for the purpose of hiring and retaining qualified people;
·      A board of directors and audit committee that are engaged, ask questions, and take appropriate action;
·      A management philosophy and operating style that place high value on risk assessment and internal control;
·      A well-defined organizational structure that is appropriate to the company’s size and complexity;
·      Appropriate assignment of authority and responsibility, with well-defined authority and duties that are appropriately segregated to prevent or detect error and fraud;
·      Human resource/capital recruiting and retention policies and practices to ensure that human capital is valued; and,
·      Ways to settle internal differences, such as a forum to discuss and settle differences of opinion between management and employees.
In any organization, the buck stops with the CEO: He or she has ultimate responsibility for the internal control system. For additional reading see the article Tone from the Top, It Dissipates!