Joseph Murphy – Compliance & Ethics Professional – December 2019
There are a number of key elements for a compliance program, such as training, audits, policies, discipline, program evaluations, and speak-up systems, but the element of incentives stands out for two reasons: Of all the steps, it hits the most resistance, and of all the steps, it is the most powerful.
Why do I say it is the most powerful? Here is a challenge for you: Let’s see who, between you and me, would have the most influence in a company after one year. You can control all the training, policies, codes of conduct, posters, and everything else you associate with a compliance program. I get to determine who receives incentives, bonuses, promotions, pay raises, recognition by the bosses, and the cool perks.
A year later, who do you think will have had the most impact and molded the culture more? You with the posters and lectures, or me with the money and power? I predict I will win hands down. As Professor Mollie Painter-Morland succinctly put it, “A company’s real code of conduct is its budget.”
But you may object with, “It’s impossible,” “It’s too difficult,” or, “There’s no way to measure and reward integrity.” Of course, it is neither impossible nor too difficult—some companies have done it for years, and it has been part of the Sentencing Guidelines standards for more than 15 years.
Here is one example of how companies are missing out. There was an SCCE survey about how many compliance officers reviewed in advance their company’s decisions to implement management incentive plans. Only 23% even claimed to do this. Yet incentive systems can drive all kinds of misconduct. If you doubt this, just look back on the Wells Fargo case.
Incentives in a compliance program can be used effectively in a number of ways, but at a minimum, if a company is really serious about compliance and ethics, the compliance officer will always be part of the decisions on incentives and promotions.
