By Anne Marie Logarta, Esq., CCEP and Ruth M. Ward, CCEP, CFE
Not since the U.S. Federal Sentencing Guidelines were issued on the Seven Elements of an Effective Compliance Program in 1987 have legal and compliance and ethics professionals focused so much time and attention on reviewing or revising their companies’ codes of conduct. Arguably, the impetus for many was the passage in 2010 of the Dodd-Frank Act and the U.K. Bribery Act, the latter which became effective in 2011.
As compliance-related laws are passed or revised, or internal policies are developed or revisited, a company must adapt and respond quickly to the changing legal and regulatory environment. A regular review process of a company’s Code should be established internally to ensure employees receive updates in a timely manner. The Code review process is essentially an assessment of the characteristics of the policies in place to help guide your company’s legal and ethical business practices. Suffice it to say that the Code review process is a major undertaking and challenge, and should be approached as such.
However, where do you begin? Before taking on this challenge, you need to consider:
– When was the last time the Code was released or revised?
– Have there been changes to internal policies since the last revision?
– Have there been changes to a country’s laws relating to a Code topic (i.e. anti-bribery, antitrust, boycotts and embargoes, etc.)?
– Are any of the guidelines outdated?
– Is there a budget to create a Code?
It would also be helpful to benchmark your Code against other companies’ Codes. Many companies typically post their Codes on their public web sites and sample Codes are also available on the internet. Moreover, there are law practitioners or compliance consultants who can provide assistance in writing a new Code or assessing an existing Code.
If you decide to pursue a revision after considering the above, the following six steps will assist you in a successful revision process.
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1. Get Buy-In from Decision-Makers at the Highest Level of the Company
The mandate to revise a company’s Code must be obtained from the highest level, the Chief Executive Officer, the company’s General Counsel or the Chief Compliance Officer. He or she will explain the legal and regulatory, or business need to other high level decision-makers and get their buy-in. As such, he or she should be consulted at every major step of the Code review process if it involves a change in direction of key policies.
2. Establish a Core Revision Committee
The revision committee would have the overall responsibility to provide direction to the function representatives, establish an overall budget (if necessary), set deadlines and manage timelines. A core revision committee should be formed consisting of cross-functional workforce representatives. Be sure to include Compliance and Ethics, Legal, Communications, and Human Resources. Functions such as Finance & Accounting, Information Technology, International, Marketing, Operations, Sales, Security or the philanthropic arm of the company may also be included as part of the revision committee.
Functions will be given the flexibility to revise text or even to recommend removal of a Code topic. The revision committee must also create a timeline at the outset of the revision and hold the function representatives accountable for meeting their deliverables. Doing so is critical to the success of the project.
3. Conduct a Thorough Technology Assessment
The backbone of the revision process is how you capture, collaborate and preserve all of the comments, notes, edits and decisions during the entire project. . Training all team members is extremely important to this process. Appointing one team member per function to make the updates suggested by the specific function is effective in maintaining the integrity of the documents.
Additionally, you will need to assess whether your Code will be hard copy, online or both. If online, determining the best application to launch your Code and whether it includes a certification process is important. An effective online or hard copy distribution method to provide copies of the new or revised Code to your employees should be in place. Make sure all prior copies of the Code are no longer available online or in print; however, be sure to preserve copies for historical purposes.
4. Determine Translations and Localizations
If your company does business internationally, then this step is vital to ensure you have one universal Code, no matter the language. If you decide to use a vendor to translate, appoint an approved company translation subject matter expert (SME) for each language. There are quite a few words or phrases that don’t have an equivalent translation in many languages. Sending your translated materials to your appointed country SME will ensure the translations are localized and understood by the people in that country.
5. Develop a Plan to Communicate the Code of Conduct
It is important that the new or revised Code of Conduct is communicated in a manner that encourages employees to review and use the Code on an ongoing basis. If the company has the appropriate resources, it would be money well spent to attractively package the Code using graphics, color, interaction, etc. to motivate employees to use the Code as a resource, not just a desk decoration.
If the company has employees in multiple locations around the U.S. and internationally, the Code should be launched in a manner that is suitable for the location. The communications and human resources functions must be involved to help determine the best and most effective way to make your Code available to your employees and the general public, where applicable.
6. Stay on Deadline and Budget
If you set realistic expectations, then this last recommendation should be easy to adhere to. However, make sure you have enough time so you won’t feel rushed or in a hurry to “get it done”. You want to set aside enough time and money so that your Code will represent your company’s commitment to quality and integrity, as well as your company’s standards of conduct.
Following these six steps will help ensure a successful revision project, while maintaining the integrity of the process.
Anne Marie Logarta is a Global Compliance Manager with UPS in Atlanta, Georgia. She can be contacted at email@example.com.
Ruth M. Ward is a Global Compliance and Ethics Manager with UPS and serves as a board member on the Atlanta Compliance and Ethics Roundtable (ACE) in Atlanta, Georgia. She can be contacted at firstname.lastname@example.org.