A while back Matt Kelly, my Compliance into the Weeds cohort, challenged me to write a blog based on Bloomsday, as we are both fans of James Joyce and his seminal work Ulysses. For those uninitiated of you out there, Bloomsday is a commemoration and celebration of the life of Irish writer James Joyce, during which the events of his novel, which takes in one day, June 16, 1904 are relived. It is observed annually on that same date, June 16, literally across the world. Even in the cultural wasteland of Houston TX, our local Irish Society gathers at a local pub to raise a pint and read from Joyce’s work. Joyce chose the date as it was the date of his first outing with his wife-to-be, Nora Barnacle; they walked to the Dublin suburb of Ringsend. The name is based upon Leopold Bloom, the protagonist of Ulysses. Matt, this year the first pint is on you.
Just as Bloomsday follows Leopold Bloom around the city of Dublin, which forms the backbone of the book, corporate culture forms the backbone of how a company does business; ethically and in compliance or outside the lines and potentially in violation of such laws as the Foreign Corrupt Practices Act (FCPA). In a recent white paper from SAI Global, entitled “Predicting Risk A Strategic Culture Framework for the C-Suite”, Dr. Caterina Bulgarella wrote, “culture at the epicenter of it all may seem like evoking a ghostly figure. Culture is not only hard to see but difficult to understand and measure. Yet, for all its intangibles, its importance cannot be downplayed.”
Bulgarella went on to state, “culture comprises a system of assumptions that the organization learns as it adapts to the external environment and gets better integrated internally.” Moreover, “Culture encompasses implicit beliefs about the organization’s purpose (i.e., mission, strategy, and goals), the necessary means to achieve it (i.e., systems, structure, and processes), the appropriate feedback mechanisms to gauge progress, and the remedial strategies to use at times of crisis.” Finally, “Culture also encompasses what the organization believes when it comes to language; group boundaries; power, authority and status; the rewards and punishments used to encourage and censor behavior; and the meaning of unexplainable events, human nature, and appropriate human activity.”
All of this means that culture fills in the role that Dublin provided for Joyce. It sets the foundation. In the Compliance Week 2018 Keynote speech, Deputy Attorney General Rod Rosenstein addressed part of his remarks about the importance of corporate culture. He said, “Ethical, law-abiding companies can better attract investors and partners. People want to do business with companies that they perceive as honest and reliable”.
As the foundation, culture must be nurtured from the compliance perspective. On this week’s Everything Compliance podcast, Jay Rosen discussed several issues related to corporate culture, derived from Rosenstein’s speech. Rosen pointed to Rosenstein’s remarks that compliance “mitigates risk, making companies more valuable and less likely to encounter unanticipated costs that may result from protracted investigations and penalties.”
When companies come under investigation, the DOJ will ask two principal questions about the company’s compliance function. The first question is “what was the state of the compliance program at the time of the improper conduct?” This question “focuses on whether there was an adequate compliance function.” Under the 2008 Filip Factors, the DOJ “directed prosecutors to determine “whether a corporation’s compliance program is merely a ‘paper program’ or whether it was designed, implemented, reviewed, and revised, as appropriate, in an effective manner.”” Yet Rosenstein also made clear that prosecutors “recognize that even the best compliance program may not stop individual bad actors.”
The second question is “what is the current state of the compliance function,” followed immediately by “after remediation to address any lessons learned?” Obviously, it will begin with a root cause analysis to see what the base reason for the compliance failure was. But the next inquiry is to consider what steps did a company take and are they (or were they) effective?
Rosen went on to lay a detailed program to assess corporate culture. He said it all begins with an agreed upon workplan to make the assessment. From there you can determine a baseline assessment of where the company’s compliance culture is through surveys and in-person interviews, either 1 on 1 or in groups. Rosen believes the in-person survey may be a more powerful tool.
He provided an example where a company might have issues with financial controls. He said your team should meet with key members of the finance function and then meet with mixed groups of employees for feedback on how they interact with the finance function. From that point you will have the feedback to understand the corporate culture baseline and, more importantly, you can identify areas of improvement for the organization. This protocol also satisfies part of Rosenstein questions noted above. Your baseline assessment shows where corporate culture was, from there you can create a workplan to address the improvements that needs to be accomplished. The baseline assessment and subsequent updates will serve to inform regulators of the progress that is being made.
Bulgarella, in her SAI Global white paper, said, “Because culture is all-encompassing, it cannot be reduced to only one thing… For an organization, both views are true: behaviors, beliefs, values, and other schemas, along with the systems used to regulate them, mold and perpetuate the organization’s culture.” Rosen’s approach to finding the baseline and then improving from there ties into the regulatory requirements under such laws the FCPA, as laid out by Rosenstein.
Joseph Brady, writing in a piece in the The Irish Times piece entitled “James Joyce’s Dublin: a city of contrasts”, said, “much of Dublin’s urban life is captured in Ulysses and in Dubliners and it is reasonable to argue that Joyce offers a sense of what life in the city was like; whether it is the interior of Barney Kiernan’s pub in Little Britain Street in the Cyclops episode or the sweaty world of Monto, the busy red-light district in the Circe episode. In addition, Joyce presents an accurate account of the geography of the city as experienced by his characters as they criss-cross through Dublin’s various streets.”
A visit to Ulysses is an experience awaiting you. On June 16th, pick up a copy, pick up a pint and see what you have been missing.
As Dublin provides the foundation for Ulysses; corporate culture provides the foundation for a successful compliance program.Click to tweet
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© Thomas R. Fox, 2018