The 7 Essential Elements of a Corporate Compliance Program

| January 14, 2011 | 0 Comments

This past decade’s stepped-up compliance efforts of thousands of employers and their advisors in every industry and sector of the economy have ultimately resulted in a body of practice that constitutes “known, feasible, usual and reasonable management practice.” This includes the wide range of management responses to the business and social incentives and the challenges of providing effective compliance programs concerning a wide variety of laws. “What to do” and “what not to do” or “what works” and “what doesn’t work” in regards to the reasonable management practices relevant to compliance programs has been of major interest to courts, the media, and to all organizations that are looking to do the right thing when it comes to compliance. Based on this experience and knowledge, it is clear that effective compliance requires the following elements, at a minimum:

Clear and unambiguous organizational commitment:

As reinforced by regulations, governmental guidance, and other compliance literature, one of the most important aspects of an effective compliance program is an unambiguous organizational commitment to compliance. This means that organizations must invest adequate resources into establishing and enforcing a comprehensive compliance program that includes: top leadership awareness and attention as well as employing the competent legal, human resources, and other compliance personnel necessary to establish and deploy the policies, procedures, systems, and processes to actively and effectively enforce the organization’s stated compliance commitments.

Supportive corporate culture:

Appropriate organizational culture is a critical component of workplace compliance.  An organizational culture which fully supports outlined compliance and ethics policies will guide the organization safely through most challenges posed by day-to-day differences in perceptions, understanding, and competing claims and values, and address inevitable lapses and mistakes.  An organizational culture that is not supportive of compliance and ethics will fatally undermine even the most carefully established and well-resourced program.

Clear and comprehensive compliance policies, procedures, processes, and programs (Remember the 4 P’s?):

A crucial element of an effective compliance program is the employer’s clearly stated prohibition of conduct that violates the 4 P’s. This should include an explanation of what constitutes a violation; a statement of managers’ and supervisors’ responsibilities regarding the organization’s policies and procedures; a description of an accessible and workable complaint procedure for raising complaints of violation; assurance of reasonable confidentiality, promptness and fairness in handling complaints; a clear warning of serious disciplinary consequences; and a credible promise of non-retaliation for making a complaint. Such policies and procedures must be comprehensively and effectively communicated. Finally, an employer must establish and maintain all of the 4 P’s to adhere to any particular law to which it is subject.

Effective education:

Meaningful, comprehensive education for all members of an organization is one of the most important weapons in an employer’s arsenal for combating compliance violations. “Meaningful and comprehensive education” is not merely “training” on the employer’s policy. Rather, it is accessible and understandable explanation, as well as real-life scenarios incorporating both knowledge and the skills necessary to participate effectively in the prevention and correction process.

Managerial accountability systems:

Employers committed to workplaces free of compliance violations must also explicitly communicate to managers and supervisors that both the law and the organization’s policies prohibit the misconduct in question. The organization must hold all managers and supervisors accountable for following and enforcing the employer’s compliance policies. This includes both disincentives such as appropriate disciplinary or corrective action where necessary, as well as incentives in the form of rewards, recognition, or other bonus for compliance missions accomplished. Employers should also let employees know of managers’ responsibilities and accountability for acting in accordance with the organization’s expectations and policies.

Effective investigation and evaluation of complaints:

Another critical weapon in the compliance arsenal is the capability of the organization to conduct effective internal fact-findings or investigations when presented with a complaint or circumstance that does or should put the organization on notice of potential legal or policy violations. Appropriate compliance policy enforcement and necessary remedial action is usually impossible without accurate information. While each compliance investigation is based upon unique facts, the process of achieving a fair and effective investigation is relatively unvarying.  Characteristics of such an investigation can be referenced in our most popular blog post to date, the 7 Qualities of an Effective Workplace Investigation.

Adequate documentation and record-keeping:

Another important element of an effective compliance program is the requirement of systems and processes that enable accurate and complete record-keeping, archiving, retrieval of relevant information and data related to all aspects of the compliance program. Accurate, fair, and non-discriminatory decision-making depends upon the appropriate documentation and retention of information, as do appropriate remediation of complaints and policy violations. Deterrence of future wrong-doing also depends upon accurate and complete record-keeping and retrieval, as does the ability to monitor, and where necessary, alter or improve defective policies and practices.

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Category: Compliance Training, Organizational Compliance, Prevention and Correction

About D. Jan Duffy: D. Jan Duffy is a former employment attorney and business school professor who now serves as President of Management Practices Group. Jan has spent more than 30 years working to provide education and promote awareness of reasonable employment and compliance-related management practices. She has provided independent investigative services and corporate training to several hundred Fortune-500 companies and other organizations in both the public and private sector. Jan also acts as an expert witness to both plaintiffs and defendants in employment and compliance-related litigation and mediation. She is known for her practical and informative advice on the prevention and correction of harassment, discrimination, and retaliation; reasonable workplace investigations; workplace privacy and communications issues and managerial decision-making, as well as corporate compliance and ethics matters. View author profile.

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