Maintaining Effective Compliance and Ethics Programs

Establishing an ethical environment is crucial for employers, their organization, and the overall work environment. One way that this can be attained is through the establishment of a program that meets the requirements of the U.S. Federal Sentencing Commission's Organizational Guidelines.

Designed to encourage "good corporate citizenship," Congress approved the Commission's new recommendations to the Sentencing Guidelines for Organizations late last year . While most of the proposed amendments dealt with serious criminal procedure issues such as child pornography, public corruption, and drugs, the Commission also chose to impose more stringent guidelines governing compliance and ethics programs.

Any entity with a current compliance plan, which should be most everyone given the Sarbanes-Oxley Act of 2002, is directly impacted by these guidelines. They apply to almost all types of organizations including corporations, partnerships, unions, not-for-profit organizations and trusts, and reflect the principle of criminal law that an employer is responsible for the actions of its employees and agents.

The following are considered to be minimum requirements:

Establish Compliance Standards - A key factor for an effective program is to detect and prevent violations of the law. Developing a code of conduct is the first step toward meeting this requirement; however, companies should also establish a set of principles that guide decision-making. The design and implementation of the compliance plan must involve the highest level of company management. As a result, compliance and ethics considerations will become an element of upper management's daily responsibilities.

Review Personnel in Authoritative Positions - Organizations are responsible for barring from key positions any individuals "whom the organization knew or should have known through the exercise of due diligence has in the past acted contrary to the dictates of compliance and ethics." What does this mean for organizations…conduct background checks for applicants applying for these "key positions."

Implement Oversight of Compliance Plan - The Commission's Guidelines require the organization monitor and audit the program in order to ensure that is being followed. This requires an established internal reporting systems that grants employees with anonymity and/or confidentiality. This provides employees with the opportunity to submit reports of suspected criminal activity without fear of retaliation. The organization also needs to carry out periodic audits of the compliance plan to assess its effectiveness.

Effectively Communicate - The dissemination of compliance standards and procedures is just as important as what the policy says. After all, if no one knows about it, what is the point of having it? This instruction must be ongoing and need to provide compliance updates when appropriate.

Take Reasonable Steps Toward Compliance - What steps should an organization take toward complying with the law and ethical standards? First, establish an anonymous system allowing employees to report suspected ethical lapses or violations of the law. Second, employees who make good faith reports should expect reasonable protection from retaliation. Next, all employees need to be educated on the company's expectations of behavior. Finally, conduct risk assessments and make changes to prevent possible failures of the values or compliance system.

Learn the importance of responding promptly to employee complaints, when and how to conduct workplace investigations, and the process of resolving disputes internally.

Consistently Promote and Enforce Compliance Standards - To promote these programs, incentives encouraging compliant and ethical behavior should be built into the organization's compensation and recognition systems. To enforce these programs, a disciplinary system needs to be in place to punish violations of the compliance plan or to sanction those who fail to take "reasonable steps to prevent or detect criminal conduct." This is crucial both for program acceptance from regulators and for employees to recognize that everyone must meet the same standard, regardless of their status or rank in the corporation.

Responding to an Offense - If an offense is detected, several things need to happen. If there is a violation of the law, the company should often report the offense and any action(s) taken to resolve the issue to the appropriate authority. Reasonable measures may then be necessary to prevent a similar offense in the future. If the courts are involved, take appropriate organizational responsibility for the offense and if the judicial system imposes discipline on the company, accept it as part of good corporate citizenship. However, in many cases no discipline will be imposed. If there is it can be negotiated with the regulators).

Keep up with Industry Standards - Those individuals who are responsible for the ethics program must keep up with advances in ethics and compliance management. One way to do this is to associate with organizations that foster best practices. One such organization is the Ethics Officer Association (www.eoa.org).

While these requirements are not complicated, they are not necessarily easy to achieve. To establish an ethical environment, the values must be integrated into the culture of the organization. Ethical actions should be so ingrained that following them becomes second nature rather than requiring a great deal of effort.

Provided by: HRTutor.com and The Human Equation Email this article Maintaining Effective Compliance and Ethics Programs By: David Kahn
Establishing an ethical environment is crucial for employers, their organization, and the overall work environment. One way that this can be attained is through the establishment of a program that meets the requirements of the U.S. Federal Sentencing Commission's Organizational Guidelines. Designed to encourage "good corporate citizenship," Congress approved the Commission's new recommendations to the Sentencing Guidelines for Organizations late last year . While most of the proposed amendments dealt with serious criminal procedure issues such as child pornography, public corruption, and drugs, the Commission also chose to impose more stringent guidelines governing compliance and ethics programs. Any entity with a current compliance plan, which should be most everyone given the Sarbanes-Oxley Act of 2002, is directly impacted by these guidelines. They apply to almost all types of organizations including corporations, partnerships, unions, not-for-profit organizations and trusts, and reflect the principle of criminal law that an employer is responsible for the actions of its employees and agents. The following are considered to be minimum requirements: Establish Compliance Standards - A key factor for an effective program is to detect and prevent violations of the law. Developing a code of conduct is the first step toward meeting this requirement; however, companies should also establish a set of principles that guide decision-making. The design and implementation of the compliance plan must involve the highest level of company management. As a result, compliance and ethics considerations will become an element of upper management's daily responsibilities. Review Personnel in Authoritative Positions - Organizations are responsible for barring from key positions any individuals "whom the organization knew or should have known through the exercise of due diligence has in the past acted contrary to the dictates of compliance and ethics." What does this mean for organizations…conduct background checks for applicants applying for these "key positions." Implement Oversight of Compliance Plan - The Commission's Guidelines require the organization monitor and audit the program in order to ensure that is being followed. This requires an established internal reporting systems that grants employees with anonymity and/or confidentiality. This provides employees with the opportunity to submit reports of suspected criminal activity without fear of retaliation. The organization also needs to carry out periodic audits of the compliance plan to assess its effectiveness. Effectively Communicate - The dissemination of compliance standards and procedures is just as important as what the policy says. After all, if no one knows about it, what is the point of having it? This instruction must be ongoing and need to provide compliance updates when appropriate. Take Reasonable Steps Toward Compliance - What steps should an organization take toward complying with the law and ethical standards? First, establish an anonymous system allowing employees to report suspected ethical lapses or violations of the law. Second, employees who make good faith reports should expect reasonable protection from retaliation. Next, all employees need to be educated on the company's expectations of behavior. Finally, conduct risk assessments and make changes to prevent possible failures of the values or compliance system. *Learn the importance of responding promptly to employee complaints, when and how to conduct workplace investigations, and the process of resolving disputes internally.* Consistently Promote and Enforce Compliance Standards - To promote these programs, incentives encouraging compliant and ethical behavior should be built into the organization's compensation and recognition systems. To enforce these programs, a disciplinary system needs to be in place to punish violations of the compliance plan or to sanction those who fail to take "reasonable steps to prevent or detect criminal conduct." This is crucial both for program acceptance from regulators and for employees to recognize that everyone must meet the same standard, regardless of their status or rank in the corporation. Responding to an Offense - If an offense is detected, several things need to happen. If there is a violation of the law, the company should often report the offense and any action(s) taken to resolve the issue to the appropriate authority. Reasonable measures may then be necessary to prevent a similar offense in the future. If the courts are involved, take appropriate organizational responsibility for the offense and if the judicial system imposes discipline on the company, accept it as part of good corporate citizenship. However, in many cases no discipline will be imposed. If there is it can be negotiated with the regulators). Keep up with Industry Standards - Those individuals who are responsible for the ethics program must keep up with advances in ethics and compliance management. One way to do this is to associate with organizations that foster best practices. One such organization is the Ethics Officer Association (www.eoa.org). While these requirements are not complicated, they are not necessarily easy to achieve. To establish an ethical environment, the values must be integrated into the culture of the organization. Ethical actions should be so ingrained that following them becomes second nature rather than requiring a great deal of effort.
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