By Tom Fox
From Compliance & Ethics Professional, a publication for SCCE members
In the business world there is rarely talk about fairness. Such concepts are seen as antithetical to profit making. However, in the compliance world, fairness is a key component of any successful best practices regime. Why? It is because procedural fairness is one of the things that will bring credibility to your employee base so that they will believe in your compliance program. Procedural fairness has been dubbed the “Fair Process Doctrine” and this “Doctrine” generally recognizes that there are fair procedures, not arbitrary ones, in processes involving rights. Considerable academic and business research has shown that people are more willing to accept negative, unfavorable, and non-preferred outcomes when processes and procedures that are perceived as fair arrive at such outcomes. By adhering to the Fair Process Doctrine in your compliance program, you can obtain credibility with the rest of the workforce.
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In a compliance program there are several areas where the Doctrine has direct bearing. In the area of internal investigations, it is incumbent that your investigations be perceived as fair. This may mean you need to bring in outside counsel who do not regularly perform legal work for your company and are skilled at corporate internal investigations. Further, the people being investigated and those regulators who review the results must have confidence that the law firm who performed the work is truly independent from management.
A second area is a company’s treatment of whistleblowers. Not only does the whistleblower need to have confidence that any information be treated confidentially and there will be no retaliation, but they also need to feel confident that a serious response will be made by the company. In addition to the company hiring outside counsel, the whistleblower should be periodically updated about what is being done about the report. A whistleblower should be appraised when an investigation is concluded. If you fail to do so, your cooperative internal whistleblower may well go to the Securities and Exchange Commission (SEC) under Dodd-Frank.
Finally, there is the area of discipline. Put simply if you fire employees in South America for conduct which violates your Code of Conduct, you have to give the same treatment to your big sales leaders in the U.S. Nothing hurts the credibility of a compliance program or officer worse than meting out unequal discipline for similar offenses.
So think about the importance of fairness in your compliance program.
Tom Fox (firstname.lastname@example.org) is Principal at TOMFOXLAW in Houston, TX.