This week, in a five-part podcast series, I am exploring the role of corporate monitorships in compliance and some of the key issues which companies and compliance professionals may face in dealing with monitors. I am joined in this exploration by Vincent DiCianni, founder and President of AMI and Eric Feldman, Senior Vice President and Managing Director of Corporate Ethics and Compliance Programs for Affiliated Monitors, Inc. (AMI), who is the sponsor for this series. Today, we consider what issues a company should consider when hiring or retaining a corporate monitor.
It is important to note right off the bat that the selection of an appropriate monitor can either make or break the entire monitorship program for an organization. Feldman advises that to forestall such a problem a company needs to have a clear understanding of what wants to achieve from a monitorship. If you are at the end of a Foreign Corrupt Practices Act (FCPA) enforcement action, your goals may be different than attempting to engage in a pre-settlement monitorship. You also need to understand what might be required by the government in any post-resolution settlement.
After this initial self-assessment of the company’s goals, you can move to considering the monitor. Here you need to assess what Feldman called the philosophy of potential candidates. Is the monitor coming in to simply investigate the company or help to prevent or resolve issues? This means staying away from the prosecutorial ‘gotcha’ mindset and move towards a monitor who is focused on remediation “to help you be a better company”.
The next line of inquiry is can the company obtain the maximum value it can get from the expertise, the independence and the viewpoints the monitor can provide? In other words, what is the value the monitor will deliver to your organization? Feldman suggests asking a question such as: “Can the Monitor help my business?”
Third is the expertise of the monitor. However, this is more than being a subject matter expert (SME) in the area of law being applied, such as the FCPA; it is being an expert in monitorships. It is also more than simple cost-effectiveness. It is also how the monitor will work without disrupting your organization or working to keep such disruptions to a minimum. Such expertise would include how to conduct an evaluation, how to create a work plan which is rigorous yet cost-effective, and to “socialize the work plan with the company and with the government.” This means the monitors should have experience in balancing the interests of the government and the company. Other skills necessary include interview skills, ability to conduct focus groups, data gathering and analytics are also critical. Finally, consider the writing of the report and communication of information, for, as Feldman stated, “There’s no value added if there’s not a clearly written factually based monitoring report, at the end of the process, that makes recommendations that logically flow from the information gathered and are culturally appropriate for that particular company. There is no one size fits all for the reporting or for the recommendations.”
Feldman spoke about the different types of value a monitor can bring. Obviously, the situation where there is a Deferred Prosecution Agreement (DPA) or other enforcement action resolution document in place would suggest one type of value. Yet there are other more business-process focused values a monitor can add. In the area of internal controls, a monitor’s assessment can lead to more effective internal controls, often through a reduced number of overall internal controls.
Feldman spoke to another ‘soft’ factor when he noted, “There’s also another interesting factor involving value in a company. That is that the actual methods that we use to do the monitoring to go in and talk to employees, to do employee surveys to do interviews. That alone can have something of a cathartic effect on the company’s employees and on the mood and the morale in the company. And we’ve seen that over and over again, when employees see that the company cares enough to bring in a firm that asks their opinions on what works and what doesn’t work and ask their opinions about whether their managers are creating and an open environment to communicate issues and to report issues. It helps improve the company and as we know better morale in the company improves the bottom line.”
Finally, a company needs to consider whether the monitor is “independent and conflict free”. Feldman says this is important “Because if not, then the value of the findings the value of the entire effort can be at risk. And we’ve seen this over time in organizations that bring in monitors that you know may, within their broader organizational structure, have some kind of a conflict within the industry or within that company.”
The selection of an appropriate monitor can either make or break the entire monitorship program for an organization.Click to tweet
For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.