Managing Your Gifts and Hospitality Compliance

Gifts and hospitality (G&H) compliance, and potential limitations they present, is always a topic of priority within leading organizations. The fact that bribes could be hiding behind an undetailed invoice from your distributor in some risky part of the world makes gifts and hospitality management, or similarly, gifts and entertainment management, a priority for compliance teams and employees alike.

How to Think About Gifts and Entertainment Compliance Within Your Organization

If you are about to define, refine, or deploy a gifts and entertainment process in your organization, pragmatism should be the 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 disclosure 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.

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.

1. Assess Gifting Practices Within Your Organization

Examining current gifts disclosures 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 entertainment management. This is relevant whether you already have compliance policies 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 In Mind the Goal of Limiting ABAC Risks

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 ABAC risks 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 corruption risks and conflicts of interest.

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.

Unless you work in a highly regulated environment, the vast majority of private gifts and entertainment 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 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).

Once you have scoped your action, you are ready to define your corporate gifting policies. In doing so, don't forget to involve relevant stakeholders in your organization (remember, this topic gets people excited as this is one more opportunity to make compliance a joint collaboration).

3. Define or Revise Your Gifting Policies

Once you have an understanding on current gifting practices, benchmarks, and scope of action, it’s important to build policies determining who does what, thresholds, and approval levels:

All gifts and entertainment 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 gifts and entertainment 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.

A few recommendations to keep the whole process manageable:

Be Pragmatic When Building Gifting Policies

If you are just getting started with your gifts disclosure 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 Policies Strategically & Trust People

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

Use a Disclosure Management 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 disclosure management tool as an excuse to carry out pilots in the most reluctant entities. Learn more about these tools by exploring our Buyer’s Guide to Gifts and Entertainment Management.

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 around Gifts and Entertainment Management

Let’s not forget that gifts and entertainment compliance get 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 gifts and conflicts 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.