Friday, October 28, 2011

Anti Corruption Detection and Prevention. 8 Critical Elements of an Effective Anti-Corruption Compliance Program.

Corruption has a corrosive impact on both overseas market opportunities and the broader business climate. It also deters foreign investment, stifles economic growth and sustainable development, distorts prices, and undermines legal and judicial systems. More specifically, corruption is a problem in international business transactions, economic development projects, and government procurement activities.
As a result of this problem, and to obtain a competitive advantage in the global markets of the 21st century, a growing number of businesses are taking proactive steps to detect and prevent corruption.

Anti-Corruption Detection and Prevention

Developing a comprehensive “anti-corruption” compliance program as part of your company’s standard business practice—and that of your foreign subsidiaries—may limit your company’s risk and help avoid potential costs.
An anti-corruption compliance strategy can also help to protect your company’s reputation, minimize its liability, and maintain its long-term viability.

Critical Elements of an Effective Compliance Program
An effective corporate compliance program, is one that ultimately yields intended results: education, detection, and  deterrence.

In structuring your corporate compliance program, you may want to consider the following general elements typically found in  successful compliance programs. The following steps are critical to a successful program.

Tone from the Top
■ It is crucial that all of the elements of your company’s corporate compliance program receive the full support of upper management.
■ The corporate compliance program must be enforced at all levels within the company.
■ If upper-level management does not take efforts to combat corruption seriously, then neither will employees.

Code of Conduct
■ Corporate directors, officers, employees, and agents put themselves at risk of incurring criminal or civil liability when they do not adhere to the FCPA or similar anti-corruption laws of other countries.
■ A corporate code of conduct generally consists of a clearly written set of legal and ethical guidelines for employees to follow.
■ A comprehensive and clearly articulated code of conduct, as well as clear policies and procedures relative to seeking guidance and making disclosures, may reduce the likelihood of actionable misconduct by your employees.
■ It is important that a company’s code of conduct be distributed to everyone in the company and, if necessary, translated into the languages of the countries abroad where your company operates.
■ Finally, developing a code of conduct should not be the final act. The code must be effectively implemented and enforced at all times.

Compliance Monitoring
■ A compliance program may be run by one person or a team of compliance or ethics officers, depending on the size of your business.
■ Implementation and responsibility for a corporate compliance program by high-level management employees are vital for accountability.
■ Corporate compliance officers and committees can play key roles in drafting codes of conduct and educating and training employees on compliance procedures. Committee compliance members may include senior vice presidents for marketing and sales, auditing, operations, human resources, and other key offices.
■ Past experience has shown that empowering compliance officers with access to senior members of management and with the capacity to influence overall company policy on integrity issues can be of utmost importance.

Training and Communication
■ The overall success of a compliance program depends on promoting legal and ethics training at every level of the company.
■ Regular ethics and compliance training programs should be held for all company employees, including board members and senior management officials.
■ Compliance programs should educate employees at all levels of the company about the FCPA and, when necessary, other countries’ anticorruption laws.
■ More specific legal and ethical training may be necessary for employees in high-risk areas.
■ A company should also take reasonable measures to communicate its values and procedures in an open environment to encourage participation and feedback.
■ Employees should be informed as to whom they should contact to report violations or ask questions.
■ Training materials that are both interactive and cost effective can help build employee support for a compliance program.
■ Most importantly, compliance issues should not be limited to training classes and the compliance team: compliance should be stressed as an integral part of the company’s way of doing business.

Due Diligence
■ Conducting prompt and thorough due diligence reviews is vital for ensuring that a compliance program is efficient and effective. Due diligence reviews are also key for preventing potential harm to the company’s reputation.
■ Self-monitoring, monitoring of suppliers, government relations consultants, and reports to the board of directors are all good tools for ensuring that a compliance program is being followed. Moreover, from vetting new hires, agents, or business partners to assessing risks in international business dealings (e.g., mergers, acquisitions, or joint ventures), due diligence reviews can uncover questionable conduct and limit liability.

Auditing and Internal Controls
■ Auditing and monitoring of systems of internal accounting controls contribute to building an effective compliance program by the early detection of inaccuracies and misconduct (e.g., bribery, fraud, or other corporate malfeasance). Financial disclosure and reporting should be an integral part of a company’s internal accounting controls.
■ Companies should have a clear and concise accounting policy that prohibits off-the-books accounts or inadequately identified transactions.
■ Companies should monitor their accounts for inaccuracies and for ambiguous or deceptive bookkeeping entries that may disguise illegal bribery payments made by or on behalf of a company. The FCPA requires compliance with various accounting and record-keeping provisions.

Reporting Mechanism
■ Enforcement of a company’s code of conduct is critical. Compliance officers should be accessible so that employees will feel comfortable discussing any of their compliance questions or concerns.
■ Creating reporting mechanisms with adequate policies on confidentiality and nonretaliation, as well as other safeguards related to reporting, is extremely important.
■ Whistle-blowing protections, confidential reporting mechanisms, and “hotlines” facilitate detection and reporting of questionable conduct.
■ Companies should provide guidance to assist employees and agents on how to cope with and resolve difficult situations. Such counseling not only protects the person in the field, it also protects the company.

Appropiate Response
■ A company should ensure that all employees understand that failure to comply with its compliance policy and procedures will result in disciplinary action, ranging from minor sanctions to more severe punishment, including termination of employment.
■ In instances of noncompliance, a company should take the necessary preventive steps to ensure that the questionable conduct does not recur in the future.

The measures listed here are general elements for developing an anticorruption corporate compliance program. Note that compliance programs’ emphasis on specific elements will vary from one company to another, depending on the particular risks engendered by the company’s business (e.g., antitrust, health care fraud, construction fraud, or environmental issues). You should seek the advice of legal counsel to learn more about what kind of corporate compliance program is most appropriate for your business.


Monday, October 17, 2011

3 Proactive Talent Management Process that Fuel Organization Excellence. Key Obstacles to Successful Human Resources Systems.

There are factors that most contributed to the creation and sustenance of organization excellence. We examined organizations that had survived and prospered, and those that had failed, over a 25-year period. The results suggested that six human resources conditions had to be met. These conditions were:
  • a performance-oriented culture,
  • low turnover (particularly in premium employee groups),
  • high levels of employee satisfaction,
  • a cadre of qualified replacements,
  • effective investment
  • in employee compensation and development, and
  • the use of institutional competencies (success factors) in employee selection and performance evaluation processes.

Key Obstacles
The infrastructure of human resources systems and processes for the failed organizations
was typically an incoherent mosaic of unconnected, incomplete, missing, and inconsistent assessment, planning and development tools, and methods.
This meant that performance appraisal, assessment of potential, competency evaluation, career planning, replacement planning, development and training, compensation, and selection (the core elements of human resources management) were unlinked and largely irreconcilable. Additionally, the return on the cost of implementing these separate and distinct programs was low, time expenditure was high, credibility was low, and employee dissatisfaction was pervasive.

Additional finding indicated that, there was no commonly acknowledged, espoused, and/or utilized approach for identifying, assessing, and developing a cadre of high-talent people for meeting an organization’s current and future needs. Had the failed companies recognized the importance of the three success drivers, there still would be the issue of the availability of valid human resources processes to power them to excellence.

To optimize an organization’s ability to achieve sustained excellence, we must recognize the need for proactive talent management and have a systematic way of accomplishing the activity.

The successful organizations focused on proactively and systematically managing their human resources along these lines. The organizations that failed took a more casual, traditional approach. Successful companies either articulate or intuitively  focus on three outcomes.

1. The identification, selection, development, and retention of Superkeepers.
Superkeepers are a very small group of individuals who have demonstrated superior accomplishments, have inspired others to attain superior accomplishments, and who embody the core competencies and values of the organization. Their loss or absence severely retards
organization growth because of their disproportionately powerful impact on current and future organization performance. Bill Gates once said, “Take our twenty best people away from us and I can tell you that Microsoft would be an unimportant company.”

2. The identification and development of high-quality replacements for a
small number of positions designated as key to current and future
organization success.
Gaps in replacement activity for key positions are highly disruptive, costly, and distracting to the organization.

3. The classification of and investment in each employee based on his/her
actual and/or potential for adding value to the organization.
The employee groups are Superkeepers, those employees who greatly exceed expectations; Keepers, those employees who exceed organization expectations; Solid Citizens, those employees who meet organization expectations; and Misfits, those employees who are below organization
expectations. Poor allocation of compensation and training and development resources can lead to unwanted turnover and morale and performance problems, particularly in Superkeeper and Keeper groups.

The talent management process will fuel organization excellence by:

1. Identifying and creating a set of career paths, development, and reward plans for Superkeepers. This will ensure that high-quality role models will enable the organization to achieve and maintain superiority.

2. Identifying key positions and ensuring that associated voids are immediately addressed and that the quality of replacements is affirmed. This will ensure that organization continuity is not disrupted because of the loss of any individual.

3. Segmenting the talent pool into each investment category (Superkeeper, Keeper, Solid Citizen, and Misfit) and managing the investment in each category appropriately.

Once an organization commits to excellence through the three outcomes stated above, it will need a carefully constructed human resources process that links together the core elements of human resources planning (the dots) and then joins them to strategies, policies, and action plans. Additionally, the process must be easily understood, credible, cost-effective, and time-efficient.


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