The coming weeks and months will be incredibly challenging for all as COVID-19 does not respect national boundaries, races, religions or another other construct people have created to differentiate themselves from each other. The same will be true for businesses of all stripes across the globe. This week, I want to focus my writings on some of the things a Chief Compliance Officer (CCO) or compliance practitioner can do right now, in the midst of this crisis, and what we might need to consider as we prepare to come out of the crisis, hopefully in the weeks and months ahead. Today, I lay out some specific tactical ideas and items that a CCO can and should employ at this time of the coronavirus health crisis.
Compliance Messaging
We are in an unprecedented time of employee isolation and indeed alienation for many employees. More than one person has told me they wonder if they will have a job to go back to. Many businesses in the services industry have been decimated as well as the entire energy sector. Just as people will move to more extreme measures in times of desperation, compliance must become even more vigilant about keeping cultural ethics and your company’s values up and running. This means that communications to and with employees is even more important now. Kevin Abikoff and Mike Huneke, writing in the FCPA Blog, called this “staying visible.”
This is more than the communication’s with your compliance team that I discussed yesterday. It means a frank, honest and transparent communication about what is going on with the organization. While sharing honestly is antithetical to the philosophies of many organizations, now is not the time to hide information about the health of your business. Company values are at the foundation of all of this and companies need to very much focus on communicating their values. Eric Feldman, Senior Vice President (SVP) of Affiliated Monitors, Inc. said, “Trust and integrity are paramount to business continuity preparedness, including unprecedented business impacts from employee wellbeing.” Compliance should be at the forefront of these communications.
The Small Stuff
Now would be a very good time to put into practice the maxim “Don’t sweat the small (compliance) stuff.” You do not need not to waste your scarce compliance resources on areas or matters that are low compliance risks. If your company sells internationally largely through third parties, they are your highest risk and should be managed according. Conversely, you do not need to know as much about employee sales team bonuses for domestic sales. Where are your highest sales? Are they in a region with a high risk or reputation for corruption? Then focus your attention there.
Know Your Risks
To not sweat the small stuff, you need to understand what your highest compliance risks are now, in the midst of the coronavirus health crisis. This means that now would be a very good time for you to assess your compliance program and your business model to see what your highest risks are now. If you believe there are several, you can prioritize them. This exercise will give you the basis to deliver your ever-scarcer compliance resources to your highest risk areas.
While it is true that compliance never sleeps and I do not believe the Department of Justice (DOJ) or Securities and Exchange Commission (SEC) will be sympathetic to some unsubstantiated claim along the lines of ‘I did my best with what I had’; they also made clear in the 2012 FCPA Guidance that “An effective compliance program promotes “an organizational culture that encourages ethical conduct and a commitment to compliance with the law”. Such a program protects a company’s reputation, ensures investor value and confidence, reduces uncertainty in business transactions, and secures a company’s assets. A well-constructed, thoughtfully implemented, and consistently enforced compliance and ethics program helps prevent, detect, remediate, and report misconduct, including FCPA violations.” The key is that you have assessed your organization’s risks at this time and responded to manage those risks. If through your assessment one of those risks is isolation and alienation; a compliance response to management of that risk would certainly be appropriate.
Another approach was also suggested by Feldman, who said that when a company is in the midst of crisis and economic stress, often times deficiencies will appear. This means you might want to consider a culture assessment to help understand how employees feel the company (and themselves) should act in times of the current times of high economic stress. With the technology available today, you can do this with conference calling. This has the added benefit of fostering the communications I discussed above to help fight isolation and alienation, coupled with assessment needed so that you only manage your high risks and do not sweat the small stuff.
Play Some Catch Up
Abikoff and Huneke suggested that now is the time you can play some catch up. I would first suggest that you make sure your compliance files are in order. Do you have full and complete files with your third-party sales agents? From there I would move outward in your risk profile to review the files of your risks in priority order. Abikoff and Huneke also said to use the time not simply to get caught up on reading but more importantly to use the time you have to “think critically.” Where will your company go when travel and trade embargos are lifted? Who will be your partners with going forward? What structures will you have in place? Now you should have time to think through these questions as well as many others.
Stephen Martin often talks about the need for a one-three-five-year compliance plan. While many will say, what an order as we do not know what tomorrow may bring; the business reality is that contingency and continuity planning have long gone on. As a compliance professional, you may not have been a part of those discussions but now you may have the time to engage, read and research internally to do so.
When she authored the Financial Time’s column On work, Lucy Kellaway wrote about the concept of doing less with less in an article entitled “No need to ‘lean in’ when laziness can be just as effective”. Her thesis was that by working less, or what she called ‘becoming lazy’, it is only by stepping back and focusing on what is truly important, that you can become focused and even more effective. This comes from stepping back and taking the time to make that decision. Now we have all be given that opportunity. Use this time to make your compliance program even stronger.
Tomorrow we will consider some strategic initiatives you can take.
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