I have reviewed the creation and update of a Code of Conduct this week, with a big assist from Eric Morehead, the Principal of Morehead Compliance Consulting. We reviewed the legal requirements, the suggested structure and form, the drafting process and rollout and training. Today I want to consider how the Code of Conduct and the issues detailed this week can work to operationalize your compliance program as articulated in the Department of Justice (DOJ) Evaluation of Corporate Compliance Programs (Evaluation), released in February.

The Evaluation focuses not on whether a company has a paper compliance program but whether a company is actually doing compliance. A company does compliance by moving it into the functional business units as a part of an overall business process. That is what makes a compliance program effective at the business level. There are several different parts of the Evaluation that touch upon the steps outlined this week.

Prong 2, Senior Leadership and Middle Manage states the following:

Shared Commitment What specific actions have senior leaders and other stakeholders (e.g., business and operational managers, Finance, Procurement, Legal, Human Resources) taken to demonstrate their commitment to compliance, including their remediation efforts? How is information shared among different components of the company? 

The Code of Conduct process should involve all of these corporate disciplines. Your Code of Conduct should enshrine your company’s values. Those are set by senior management and their input and support for any Code of Conduct project, whether initial draft or update, is critical.

Prong 4, Policies and Procedures states the following:

Designing Compliance Policies and Procedures What has been the company’s process for designing and implementing new policies and procedures? Who has been involved in the design of policies and procedures? Have business units/divisions been consulted prior to rolling them out? 

This question gets to the heart of operationalization and demonstrates how a Code of Conduct policy can work to meet the DOJ requirements. As an early part of your design and drafting process, you should assemble a cross-functional team. Morehead notes, “it’s really timely to consider if you’re going to do a new Code of Conduct project, how are you going to involve the operational parts of your organization in that process, because I think there’s an expectation now that you’re going to if you haven’t in the past.” He goes on to suggest gathering a team that forms those who will assist in the benchmarking effort, coupled with those who are going to help you out looking at designs and maybe helping forge the design of the Code. Finally, you can use a group to help in the drafting, redrafting and editing process.

Morehead concludes by noting, “It’s just important to involve people in the process and different parts of the process so that you get that buy-in because it’s actually a smart move for launching the Code a few months down the road too because if you bring in let’s call it you know 15 to 20 people in different groups then those 15 or 20 people are going to go back out into their regular role and they’re going to be advocates for this code and they’re going to be able to be cheerleaders when you actually roll it out.”

Prong 6, Training and Communication, states:

Form/Content/Effectiveness of Training Has the training been offered in the form and language appropriate for the intended audience? How has the company measured the effectiveness of the training?  

There are several different types of training, including live, interactive and online training. But in addition to training, your Code of Conduct can form the basis of ongoing communications throughout the organization. Through a Code of Conduct, a company has acknowledged certain risks and it can communicate those risks through effective use of a Code of Conduct. It can also serve as a jumping off point for training and communications about more focused topics and discussions led by employees outside the compliance department.

You can measure the effectiveness of your training through a variety of mechanisms including knowledge assessments, culture surveys, focus groups, tracking your internal intranet training, reporting of trends and even hotline calls. All of these techniques can help to drive compliance into the very fabric of your company by operationalizing compliance. Another important consideration around effectiveness for training, and the text of the Code of Conduct, is translations, or as the DOJ stated, “Has the training been offered in the form and language appropriate for the intended audience?”

Finally, you need to plan on a timeline for your Code of Conduct project. In his white paper entitled “Top 5 Tips for Effective Code of Conduct Revision”, Morehead suggests the following:

I hope that you have enjoyed the series this week. If it is not clear by now, if you are considering a Code of Conduct revision or update, you should contact Eric Morehead, www.moreheadconsulting.com.

 

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 tfox@tfoxlaw.com.

© Thomas R. Fox, 2017

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