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A Commando Approach to Compliance: Managing Your Gifts and Hospitalities Efficiently

By Pauline Blondet (Updated )

Have you ever noticed how talking about gifts and hospitalities (G&H), and potential limitations thereto, tends to get people excited? Everyone seems to have an opinion!

I have never seen a topic so passionately discussed at all levels: compliance committees, at the coffee machine, and at an organization's board meetings.

It’s interesting, right? Maybe it's because the topic is easier to fathom than bribes that could be hiding behind that undetailed invoice from your distributor in some risky part of the world. Maybe it's also an easier topic for the compliance team, the organization, and your employees alike to tackle?

If you are about to define, refine, or deploy a G&H process in your organization, pragmatism should be your motto. At the end of the day, the key to your success lies in defining clear rules to cover real risks and avoid overburdening the team with administrative tasks that don’t really make sense. You need a process that is manageable and properly enforced. And unless you work in a highly regulated industry, the worst thing that you can do is ask people to register every coffee they give away. This will make them hate the system, and you with it.

If your top management has a full zero gift policy, go for it, it is by far the simplest rule to implement and will save you a lot of time. However, if you are in a non-regulated industry, and if you are looking to further structure or implement a process around gifts and hospitalities in your organization, here are a few tips.

gifts and entertainment process

1. Assess the practices within your organization

This will give you a very solid idea of the key risks you face, which departments are the most exposed and help you prioritize your next steps. Partner up with internal control/audit (or other relevant teams) to further enhance your understanding. They can give you a very solid idea of the current ongoing practices.

You can also use your corruption risk mapping to assess current practices related to gifts and hospitalities. This is relevant whether you already have a procedure in place or not. Your findings will inform the creation of your rules, your deployment strategy and priorities you want to implement, and more generally your change management plan.

2. Keep your eyes on the prize

Business relationships may lead to the exchange of gifts and hospitalities to further good business relations, we already know that to be true. However, certain gifts and hospitalities may create a corruption risk by influencing a person to act or refrain from acting, in breach of his/her duties. This is why proper management of gifts and hospitalities is key to managing the corruption risk.

To accomplish this without drowning your resources, we advise you to keep your eyes on the prize. You are implementing a new process and you want to focus on what really matters (the biggest risks) rather than trying to have full visibility of every coffee paid by your employees.

External Gifts and Hospitalities

Unless you work in a highly regulated environment, the vast majority of private gifts and hospitalities will rarely raise a major risk, provided they abide by a few common-sense criteria:

  • Legitimate business purpose
  • Appropriate and reasonable
  • Made at an adequate timing and not too frequent
  • Legal in both the country of the offeror and the recipient
  • Made openly and transparently
  • And of course, cash or cash equivalent, valuable information, illegal items, employment positions or personal favors are never appropriate!

On the other hand, gifts or hospitalities to public officials and their relatives are way more sensitive, notably the appropriateness and business purposes. This is where you should put most of your tight rules, review, attention, and effort (and if you manage to fully prohibit them subject to very limited exceptions maybe this can turn out to be simpler).

Internal Gifts and Hospitalities

Unless you want your new process to receive a strong push back, I suggest you keep yourself out of internal gifts and hospitalities (ie, gifts between colleagues and the like). In my opinion, they carry a limited level of risk and are better handled by another department (HR, Internal control?).

Once you have scoped your action, you are ready to define your rules. In doing so, don't forget to involve relevant stakeholder in your organization (remember, this topic gets people excited at this is one more opportunity to make compliance a joint collaboration - for more on this topic, read A Commando Approach to Compliance: 3 Steps to Get Every Department Excited About Compliance).

3. Define or revise your procedure

Once you have your landscape and scope of action, you need to decide on your rules, and who does what, including thresholds and approval levels:

All Gifts and Hospitalities should abide by these principles:

  • Keep the rules simple and easy to understand for all. For example, use the same rules for G&H offered or received. This is key to ensure good adoption within your organization.
  • You may want to set thresholds for declaration and approval, for example:
    • Private G&H above $100 (declaration and approval by line manager)
    • G&H to a public official, irrespective of the amount (declaration, approval by a line manager, review by E&C)

You want your process to be used but it's essential to keep in mind that you have limited resources. The last thing you want to do is to drown your team in irrelevant administrative tasks (while we are on the topic of resource management, don't forget to read: A Commando Approach to Compliance: The Secrets to Keeping Your Team Motivated).

A few recommendations to keep the whole process manageable:

Be Pragmatic 

  • If you are just getting starting with your process, don't ask your employees to declare what is below the threshold you set for yourself (except in the case of G&H to/from public officials of course). Doing otherwise comes at the risk of having your process rejected by the organization. Don’t overburden everyone, focus on the main risks instead.
  • It's also advised to work with declaration and approval thresholds rather than prohibition thresholds. This allows for more flexibility and pragmatism along the way once your process is deployed.

Work With Your Organization Wisely

  • Always involve line managers to review and approve G&H from their teams, as an initial level of approval. This is key to accountability but also to root your process deeply within the organization
  • Use your scarce compliance resources to focus on reviewing requests about G&H to/from public officials, but also to provide guidance and drive change around the process.

4. Deploy strategically & trust people

Once you have set your rules, you need to deploy them. Don't underestimate the time this takes.

Use a Tool

Your well-defined process can only come to life fully if you use a tool to make it easy for people to do as you ask. Use the deployment of your tool as an excuse to carry out pilots in the most reluctant entities (involving the naysayer is always a good idea - A Commando Approach to Compliance: How to Listen to Compliance Feedback)

Own Your Change Management Plan

Map the existing versus the new, and identify the gaps and changes needed to go where you want to go.

Create Excitement

Let’s not forget that G&H gets people passionate, so be sure to make the most of it: brief your compliance team and network, find ambassadors and prepare a deployment plan that triggers a lot of excitement (maybe fun videos, teasers, posters, etc.).

You are now ready to roll out! To read more about G&H processes I highly suggest reading The Definitive Guide to Gifts & Entertainment Management which is filled with examples, workflows, and solutions to the most common hurdles.

Gifts and Entertainment Compliance

A Commando Approach to Compliance

In case you didn’t catch the introductory post, Key Compliance Challenges from the Field: Meet GAN’s Newest Expert, I wanted to fill you in on what ‘A Commando Approach to Compliance’ is all about. In short: it is a blog series that focuses on the very concrete challenges compliance officers face in their day-to-day lives. The commando aspect of this title refers to the diligent and proactive approach that I believe drives the best results for compliance leaders. This blog series aims to address some of the most common but least addressed hurdles that compliance professionals strive to overcome.

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