By Deann M. Baker, CHC, CCEP, CHRC
From Y-Comply, a service of the Society of Corporate Compliance & Ethics.
Many of us enjoy watching television game shows. Some require knowledge and skill, while others are purely games of risk and guessing. It can be entertaining.
In business organizations, we have to be careful to know and understand the risks and certainly not guess, but more than that, to conduct due diligence. Due diligence is the care that a reasonable person exercises, and is a level of judgment, scrutiny, and caution a person takes to avoid harm to other persons or property. The outcome of not carrying out proper due diligence in an area of risk can carry a high price, which is not an entertaining prospect.
[bctt tweet=”The price of conducting screening may be of concern, but what about the potential cost of noncompliance? @SCCE” via=”no”]
An area of risk where organizations need to exercise due diligence is in the area of screening individuals hired or contracted. The Federal Sentencing Guidelines (FSG) for Effective Compliance and Ethics programs addresses this risk and states: “The organization shall use reasonable efforts not to include within the substantial authority personnel of the organization whom the organization knew, or should have known through the exercise of due diligence, has engaged in illegal activities or other conduct inconsistent with an effective compliance and ethics program.” In plain and simple language that means companies need to use care to avoid hiring or contracting with those who are not trustworthy or honest.
A part of conducting due diligence is taking into consideration guidance provided, and the activities carried out, by enforcement agencies. For instance, organizations in the U.S. that participate in federal healthcare programs are required to screen employees and contractors to ensure they are not excluded from doing business with federal healthcare programs. The enforcement agency, the Office of Inspector General (OIG) of the Department of Health and Human Services, for many years has completed monthly updates to their database system of the names of those individuals and organizations excluded from participation with federal healthcare programs. We could then conclude that monthly screening by organizations would be a best practice.
The price of conducting screening more frequently may be of concern, but what about the potential cost of identifying an excluded individual or entity two, six, or 12 months after they were hired or contracted? The cost and consequences of addressing a finding caused by lack of diligence could be a much higher price to pay. What price might the company pay for a lost reputation with customers, business partners, or others?
Screening processes particularly impact professionals in the workplace that are involved in hiring, contracting, or purchasing, but we all have a responsibility to be aware of these types of requirements and risks. How organizations conduct screening has a direct correlation to the effectiveness of the compliance and ethics program, helps ensure a right organizational culture, and protects a good reputation.
Y-Comply is intended to help communicate the value and purpose of compliance and ethics to the general workforce. You are free to copy this article to your organization’s website or electronically distribute it to your workforce; no attribution to either SCCE or the article’s original author is necessary. Subscribe to the quarterly Y-Comply newsletter here.