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“You simply must have a working knowledge of the key laws and requirements,” said Reid Bowman, attorney and general counsel of NAVEX Global, a Portland, Ore.-based ethics and compliance firm, during a Nov. 15, 2012, SHRM webcast titled “HR’s Role in Workplace Ethics and Compliance.” Knowledge and expertise are your tickets to the table, he said.
Compliance and ethics programs need to be embedded into an organization to prevent noncompliant conduct and to provide a mechanism for detecting and deterring it.
“Simply having a program or simply having a policy is not adequate,” said Bradley Siciliano, an attorney and shareholder at Littler Mendelson in New York, during the webcast.
In a webcast poll, 70 percent of the more than 600 participants reported that HR plays a strategic role in their ethics and compliance efforts, while 27 percent said HR doesn’t play a strategic role and 3 percent said they don’t know whether HR plays a strategic role.
“The good news is that many of the skills that the folks on this call regularly use already actually help shape your organization’s ethics and compliance function,” Bowman said
He noted HR is “fabulous” at drafting, deploying and enforcing workplace policies; fielding formal and informal complaints; directing, conducting or participating in investigations; recommending employee discipline for policy violations; and training.
“As a result, HR in many organizations is really looked at as the standard-bearer for ethics and compliance, and many people now leading up this function started in HR,” Bowman said.
Nevertheless, organizational silos can hamper effectiveness when complaints or concerns are not shared. HR should ensure there are clear and appropriate avenues through which employees can raise concerns and help monitor compliance developments and the compliance culture, Bowman said.
More Oversight, More Misconduct
It’s not surprising that compliance is keeping the C-suite awake, driving board expectations and generating more scrutiny from audit committees and government regulators. Penalties include multimillion dollar fines and jail time. Recent cases, governmental guidelines and new statutes are raising the bar, webcast speakers said.
They added that new federal sentencing guidelines, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Federal Acquisition Regulationare keeping corporate officers on their toes.
There appears to be more foul play afoot, as well. According to a 2011 National Business Ethics Survey, 65 percent of employees reported that they had observed misconduct in their organization, up from 53 percent in 2007. Meanwhile, the study found that 22 percent who reported misconduct experienced retaliation, up from 12 percent in 2007, and 42 percent reported weak “ethics cultures,” up from 35 percent in the previous study, Siciliano said.
What Makes an Effective Compliance Program?
Siciliano offered several hallmarks of effective compliance programs:
Seven Pillars of Effective Compliance Programs
Siciliano said that an effective compliance program tends to have these features:
How Can You Evaluate Compliance Programs?
Compliance programs can be evaluated using surveys, benchmarking and focus groups to gauge employee understanding. Siciliano recommends checking invoices and expenses in “high-risk areas” and doing self-assessments.
“A lot of companies have compliance committees that meet on a monthly basis and do qualitative analysis” he said. Exit interviews can provide candid feedback on a program.
Steps HR Should Take
According to Bowman, HR professionals who want to play a key role should do the following:
Pamela Babcock is a freelance writer based in the New York City area.
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