Most compliance professionals understand the need to discipline employees who may have violated ethics and compliance programs or otherwise engaged in bribery and corruption. However, many Chief Compliance Officers (CCOs) and compliance practitioners do not focus as much attention to compliance incentives. I have developed six core principles for incentives, adapted from Spring 2014 MIT Sloan Management Review article, entitled “Combining Purpose with Profits”, and formulated them for the compliance function in an anti-corruption compliance program.
1. Compliance incentives don’t have to be elaborate or novel.
2. Compliance incentives need supporting systems if they are to stick.
3. Support systems are needed to reinforce compliance incentives.
4. Compliance incentives need a “counterweight” to endure.
5. Compliance incentive alignment works in an oblique, not linear, way.
6. Compliance incentive initiatives can be implemented at all levels.
Obviously, this list is not exhaustive. Yet it is now more important than ever that you demonstrate tangible incentives for your employees to gain benefits, both financial and hierarchical, through doing business ethically, in compliance with your own Code of Conduct and most certainly in compliance with relevant anti-bribery laws. It is also a requirement that such actions be documented so they can be demonstrated to the regulators, if they come knocking.
Three key takeaways:
- Compliance incentives do not have to be elaborate or novel.
- You must create support systems for your compliance incentives.
- Compliance incentives should be implemented at all levels.