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An introduction in five questions

Five Questions, an Introduction

Business Ethics:  Food For Thought (and Action) in Five Questions:

Q:  Why “a business case for Compliance”?

A: It highlights the idea of companies basing their compliance efforts on a business case, since it may generally not be as newsworthy as compliance efforts in response to a government investigation.  So, “a business case for Compliance” highlights that, outside the high profile cases, most companies need to find strong arguments to justify their Compliance effort. The business (and not the Compliance function) needs to be the key driver behind the concept and costing of ethical business, and the effect on market reputation, and ensure this is embedded in the company’s strategy and business plans.  Of course, you would then draw on someone with Compliance expertise as facilitator and subject matter expert.

Q:  What is your engagement style?

A:  In short – a holistic approach. For example, a scoping exercise needs to focus not only on the headline gaps or Compliance action points, but also the more subtle ones. Companies often spend resources implementing the obvious elements of a Compliance programme, without also addressing other stumbling blocks rooted in the organisation. The aim is to define the overall Compliance message without giving any conflicting messages to individual employees. So there is no point in encouraging employees to raise business conduct issues, if the resulting reports are then handled with unease. The original positive message would quickly be eroded by a perceived lack of action or interest. The company itself needs to make the organisation changes to address these inconsistencies, but an external facilitator can help run workshops using case scenarios that bring them to the surface.

Q: Would such workshops not be seen as a luxury if resources and timeframe of a company’s Compliance initiative are tight?

A:  Timeframes vary from anything between ‘immediate suspension of certain business relationships to third parties’ to ‘organic change that fits in the with company culture’.  Whichever one you take, the subtle stumbling blocks will have to be worked out.  And once the specific elements of a Compliance implementation project are agreed, the timing is a balancing act between the changes authorities might want to see implemented ‘yesterday’ and what will be a credible proposal for change internally.  The financial pain of the proposed adjustments to business practices will often be a good indicator as to how genuine a company’s efforts are.

Q: If investigations worldwide are on the increase, – who is to blame for the lack of progress in Compliance efforts?

A: We will only increase our success rate if we move away from the blame game and simply add Compliance challenges to our repertoire of “normal” business challenges. It’s now common practice for companies to agree quality standards with their supply chain even where local standards may differ, and a similar approach needs to be taken in Compliance. To ensure an adequate response to corrupt proposals from business partners, managers need to think innovatively and consider not only monetary limits to corporate entertainment, but positioning of the business and interaction channels with business partners more generally.

Q:  And those managers would have an “ethical risk appetite”?

A:  Yes, mixing the terms “Business Ethics” and “Risk Appetite” may be one way of explaining that very practical management action may well be at the centre of the change efforts. A manager’s legitimate risk appetite is not erased by Compliance efforts. In fact, the ability to respond innovatively to risks is a key to success in ethical business practices.