A 2012 Survey conducted by Ernst & Young this past summer indicates that a large portion of Chief Financial Officers are experiencing “a certain degree of fatigue about anti-corruption and compliance initiatives.” This is not entirely surprising given the fact that companies are currently spending tens of millions of dollars on internal corruption investigations and anti-bribery compliance measures.
Compliance fatigue can, however, be avoided. Just as one of the best ways to fight off the common flu is simply to practice every day good hygiene like remembering to wash your hands, so too can companies make life easier for themselves by practicing easy, every day compliance solutions. The key is to streamline the compliance process and adopt cost-effective solutions. We’ve listed below five ways compliance officers are doing just that and warding off compliance fatigue in their companies:
1. Remember, perfection is neither possible nor necessary. When devising a compliance plan, it’s important to remind oneself of the big picture. A company need not break the bank to have a compliance program that follows accepted best practices. As discussed below, there are various ways that good compliance can be affordable. And companies are not responsible for developing full-proof compliance programs; they only need to develop programs proportionate to the risk they face, with the understanding that no program will completely eliminate all risk from the equation. Unlike in other areas of business, when it comes to compliance, being in the middle of the pack is okay.
2. Integrate compliance procedures. New rules and regulations do not necessarily mean more work, and companies that approach compliance duties in a piecemeal manner run the risk of duplicating their efforts and increasing costs. The better approach is to integrate compliance procedures so as to eliminate redundancy. Sarah A. Altschuller, an attorney at Foley Hoag LLP wrote earlier this month that companies with existing anti-bribery compliance programs, for example, can easily integrate human rights-specific considerations into their already existing FCPA due diligence on new investments and potential business partners. We’ve noted in previous posts, that companies are doing the same regarding the SEC’s new conflict mineral rules as well as the enhanced federal regulations on human trafficking.
3. Be social. Companies that worry about whether they are practicing “best practices” are often not sufficiently communicating with one another to share insight and guidance. This concern can lead them to spend unnecessary costs or to give up on compliance altogether. Increasingly, though, companies are opening up to their competitors and entering into shared-cost models for compliance. As Mark Pieth, Chairman of the OECD Working Group on Bribery in International Business Transactions, discusses in his article entitledCollective Action and Corruption, sharing compliance information between competitors limits everyone’s overall costs, levels the playing field, and standardizes best practices across industries.
4. Incorporate compliance into the every day. Yearly anti-bribery training courses can become distant memories in the thicket of other training classes that a company may require its employees to take, and just as a Chief Financial Officer can experience compliance fatigue, so too can other employees. One way companies are making anti-bribery compliance more relevant is by breaking training down into smaller, bite-sized portions that can be spread out over a longer period of time. Our previous post on the “five-minute ethics plan” explains further how compliance departments are reminding employees about anti-bribery every day by keeping the message engaging, relevant and, most importantly, brief.
5. Share the responsibility with third parties. The responsibility for complying with anti-bribery obligations does not fall solely on the shoulders of the multinational corporation. Increasingly, large corporations are asking their agents, distributors, vendors and other companies in the supply chain to certify that they have taken it upon themselves to be properly trained and vetted for anti-bribery concerns. On their end, third parties are seeing the advantage that obtaining a recognized due diligence certification has insofar as not having to complete overlapping paperwork and having the ability to share their certification with an unlimited number of global partners. TRACE offers several of these ‘portable’ due diligence solutions, which you can read more about by clicking on this article by the Wall Street Journal.
In the long run, compliance need not be exhausting or costly to be done correctly. Much like developing a strong immune system through healthy diet and exercise can help fight off the flu, so too can simple, sustained changes in a company’s approach towards compliance help fight off compliance fatigue.