One of the areas that many companies have not paid as much attention to in their compliance programs is compensation. However, the DOJ and SEC have long made clear that they view monetary structure for compensation, rewarding those employees who do business in compliance with their employer’s compliance program, as one of the ways to reinforce the compliance program and the message of compliance. As far back as 2004, former SEC Director of Enforcement Stephen M. Cutler noted that integrity, ethics and compliance needed to be part of promotion, compensation and evaluation processes: “At the end of the day, the most effective way to communicate that “doing the right thing” is a priority, is to reward it.”
The 2012 FCPA Guidance stated the “DOJ and SEC recognize that positive incentives can also drive compliant behavior. These incentives can take many forms such as personnel evaluations and promotions, rewards for improving and developing a company’s compliance program, and rewards for ethics and compliance leadership.”
2. The Fair Process Doctrine
One of the areas which Human Resources can operationalize your compliance program is to ensure that discipline is handed out fairly across an organization and to reward those employees who integrate such ethical and compliant behavior into their individual work practices going forward. In addition to providing a financial incentive for ethical behavior, it also provides a sense of institutionalobjectivity. Institutional objectivity comes from procedural fairness and is one of the things that will bring credibility to your compliance program.
Today, that kind of objectivity is called the Fair Process Doctrine, which recognizes that there are fair procedures, not arbitrary ones, in processes involving rights. Considerable research has shown that people are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair. As you incorporate the Fair Process Doctrine in your compliance program, there are three key areas to focus on.
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