No matter how ethical you think your organization is, the risk of a compliance failure is there. Such a failure or lapse can result in financial, operational, and reputational harm. Some of the sanctions include assessment of huge fines, penalties or forfeiture of money, the imposition of a monitor, suspension or debarment for a period of 3 to 5 years, loss of key personnel, or the loss of liberty (corporations don’t go to jail, people do). Compliance is here to stay and the best companies are getting out ahead of the issue by establishing effective ethics and compliance programs that are fully supported from the top of the organization on down.
An effective ethics and compliance program includes the 7 elements set forth in the Federal Sentencing Guidelines for Organizations:
(1) written procedures aimed at preventing and detecting violations of law (Code of Conduct, written policies to address identified risk);
(2) high level individuals within the organization, including the Board of Directors, must be knowledgable about the program and the individual designated with the day-to-day responsibility for the program must have adequate resources and authority;
(3) exclude from authority individuals who have engaged in illegal activity or who act inconsistent with the program;
(4) communication, education and training of the standards, policies and procedures;
(5) ensure that the program is being followed by monitoring, auditing and establishing internal controls, including an anonymous reporting mechanism;
(6) establishment of a system of discipline and incentives to punish infractions and to recognize and reward behavior consistent with your code of conduct;
and (7) prompt corrective action where an infraction has been detected.
These same principles can be apply to M/W/DBE Compliance. Create a written program that assigns accountability and responsibility, train employees on the regulations and the company procedure, be transparent and forthcoming, engage agency representatives in the process, ask questions, monitor and audit for compliance and provide an avenue for employees to ask questions. Act responsibly and take prompt, appropriate corrective action where policy was not followed. And, above all else, document your actions.
An effective and well supported ethics and compliance program (1) can be brand enhancing for the organization, (2) provide a certain level of assurance to public agencies and private firms that the company is a responsible partner, (3) if done right, it can prevent wrongdoing and increase profits and (4) may provide a level of protection in the event of a regulatory enforcement action.
In this era of hyper-regulatory enforcement, “aspiring to the minimum” is no longer enough. Be proactive. Implement an effective compliance program to manage your regulatory risk. Don’t be left asking, “Where can I go to get my reputation back?”