One of the concepts articulated in the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) Foreign Corrupt Practices Act (FCPA) Guidance was that every company should assess its own risks for bribery and corruption and manage those risks accordingly. In the introductory section of the Ten Hallmarks of an Effective Compliance Program it states:
Compliance programs that employ a “check-the-box” approach may be inefficient and, more importantly, ineffective. Because each compliance program should be tailored to an organization’s specific needs, risks, and challenges, the information provided below should not be considered a substitute for a company’s own assessment of the corporate compliance program most appropriate for that particular business organization. In the end, if designed carefully, implemented earnestly, and enforced fairly, a company’s compliance program—no matter how large or small the organization—will allow the company generally to prevent violations, detect those that do occur, and remediate them promptly and appropriately.
Last week I focused on the above regarding the issue of having a carefully designed and reasoned approach to your compliance program. Today I will focus on the above quote for another benchmark for your compliance program transparency. In a recent article in the Corner Office section of the New York Times (NYT), entitled “Transparency Is Much More Than a Buzzword”, reporter Adam Bryant interviewed Ryan Smith, co-founder and Chief Executive Officer (CEO) of Qualtrics, a provider of online research survey platforms.
Smith said that his company is “extremely transparent, but not so that we can be cool. And it’s not about an open environment, because that’s not what makes a company transparent. It’s more around the fact that everyone needs to know where we are going and how we are going to get there.” He wants everyone to understand the company’s “objectives and make that available to everyone as we’re evolving, so people aren’t guessing and they’re not internally focused. That’s one obstacle a lot of companies fall into.”
Further, Smith believes that his company should “be transparent because we want to encourage our people to have all the information to keep them focused on what really matters — our objectives and how they’re going to contribute.” He explained that transparency helps everyone in the organization understand what the goals are and how they are working to achieve them. This transparency has an effect on everyone because they understand the environment that they are operating in within the overall company structure. But Qualtrics has taken this to a very high and detailed level. Smith described the following path for transparency, “We have another system that sends everyone an e-mail on Monday that says: “What are you going to get done this week? And what did you get done last week that you said you were going to do?” Then that rolls up into one e-mail that the entire organization gets. So if someone’s got a question, they can look at that for an explanation. We share other information, too — every time we have a meeting, we release meeting notes to the organization. When we have a board meeting, we write a letter about it afterward and send it to the organization.” By doing this Smith believes that “When everyone’s rowing together toward the same objective, it’s extremely powerful. We’re trying to execute at a very high level, and we need to make sure everyone knows where we’re going.”
The idea that transparency has importance in the compliance function is clear. If everyone understands that compliance and ethics are a value of the company, then everyone can operate in that manner. Smith made clear that at his company and all of the employees need to know where the company is going and how the company should get there. One of the keys that Smith articulates is that a company should focus on transparency so that people “aren’t guessing”. If your company simply focuses on quarterly numbers, the message is that you need to do everything you can to meet your numbers. In other words wherever compliance falls into your company scale of importance, it is not Number 1 or even Number 2.
Throughout the Ten Hallmarks of an effective compliance program is the concept of transparency through communications. Obviously it starts at the top but written policies, procedures and fair administration of your compliance program are key as well. Risk assessment, then monitoring should be used to help employees do business in a more compliant manner through remediation. If you are transparent in this process not only will employees understand better and more fully the purposes behind these practices but they will embrace the solutions going forward. As Smith noted, “We can’t control the way they think. All we can control or have an effect on is the environment around them.”
If Smith can use transparency to get everyone at Qualtrics “rowing together” I believe that you can use this same technique to get employees all moving forward on doing business in an ethical and compliant manner. Remember “Transparency” is the key.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at firstname.lastname@example.org.
© Thomas R. Fox, 2013