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A critical part of the “effective compliance program” analysis of US enforcement authorities is whether a specific high-level individual has been “assigned overall responsibility for the compliance and ethics program” (US Sentencing Guidelines (USSG) §8B2.1(b)(2)(B)). Typically, this is an organization’s Chief Compliance Officer (CCO) – as discussed in our last post.
In most cases, however, the CCO cannot do his or her job alone, particularly when company operations are global. This reality is recognized by the USSG, which provides that “specific individual(s) within the organization shall be delegated day-to-day operational responsibility for the compliance and ethics program” (USSG §8B2.1(b)(2)(C)).
But who are the overseas-based individuals or functions best suited to assist, and how can they help? Here are a few ideas:
Local business managers
The words and especially the actions of local leaders play a powerful role in helping to instill and maintain a culture of compliance in their respective areas and geographies. HQ may be a long way away, conduct business in a different language and there may be an “on the ground” perception that leadership elsewhere does not fully appreciate the difficulties and customs of doing business in the region. The local business leader’s compliance-related conduct and tone thus becomes a key local influencing factor as to whether the company’s words on paper (policies and procedures) have real meaning or not.
To help give structure and meaning to this important compliance-supporting aspect of the local business manager’s role, consider:
- Putting specific language in job descriptions, performance plans and other appropriate documentation that part of these persons’ roles is to act as “local compliance leader” and to promote “clean business” or the like – whatever is both consistent with the company culture and effectively communicates that this role also has a compliance aspect to it.
- Building objective compliance-related measurements into the local business managers’ performance plans, consistent with the USSG §8B2.1(b)(6) emphasis on promoting a compliance program through use of incentives and disincentives. Possibilities include incentives to communicate about compliance a certain number of times in certain ways with certain higher corruption risk roles, bringing in outside compliance speakers to internal sales events, or some degree of quota relief for not accepting possibly problematic business.
Local colleagues in other corporate support roles
Compliance function budgets rarely permit having local personnel in all places where the CCO believes representation is necessary. An alternative is to leverage the company’s other corporate support organizations that may have local representation in those same countries or regions.
To help maximize the value of these persons, while not overburdening them with time-consuming tasks that may be unrelated to their core role, consider:
- Providing training sufficient to make them aware of the primary local compliance risks, and how to spot behaviors or activities that may relate to those risks.
- Involving these persons in the design of the local internal controls directed towards primary risk mitigation.
- Establishing clear duties – with the primary emphasis on listening and passing on information and observations to full-time compliance personnel, rather than taking matters into their own hands.
- Conducting regular calls or meetings to help keep these persons actively involved and informed.
- Designating these persons locally as “compliance ambassadors” – so that employees know that there is a local compliance person.
- For those compliance ambassadors that take this additional role seriously, and who add genuine value to the compliance program’s field operations, going above and beyond to use company performance evaluation processes (e.g. notes to the file, spot performance awards and the like) to commend and publicly recognize the individual for his/her contributions.
This is not a typo or misprint; to paraphrase the famous bank-robber from the 30’s, Willy Sutton – “go where the money is.” With anti-corruption and certain other types of compliance, issues most often originate in the field – so the CCO should be there as frequently as possible to help prevent and detect compliance problems.
Find ways to delegate and automate routine tasks so that you can spend time in your higher risk geographies. Conduct in-person training, meet with the local business leaders, and most importantly, get to know some of the local employees (at all levels) in both “at work” and “after hours” situations.
These relationships built on overseas trips can pay dividends: in the authors’ experience, fully half of these types of trips result in a phone call a few days later from an overseas employee concerning a situation that he or she didn’t feel comfortable discussing with local personnel, or at the time – but now want “someone to know…”. Learning about possible compliance issues through contacts like this, at the earlier (and less costly) stages, is tremendously valuable. By comparison to the cost and complexities involved in handling later-stage compliance issues, the CCO’s overseas trip has already paid for itself several times over, at a minimum.