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Richard Bistrong
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Richard Bistrong: Frontier-market compliance risks need special handling

In a prior post on the FCPA Blog, Alison Taylor said corporate culture is hard to measure and “has been largely neglected by regulators and the anti-corruption-consulting industry.” Reflecting on her work, I said bad behavior (including my own) can truly become a compliance lesson learned. But I offered no way forward.

So as an unlikely source of advice, today I’ll take a deeper look into Ms. Taylor’s strategy and incentives. My goal is to unearth some clues about where corporate culture messaging can work better to respond to corruption risks that abound in a company’s frontier operations.

With respect to growth strategy, I ask: Is it all high fives in the C-suite when forecasts are achieved in frontier regions, where growth opportunities and corruption risks are abundantly present? Or, is someone asking how did we get there?

Perhaps, here, a simple reality check, where targets are compared to lower risk regions, or even indexed against published industry trends, might demonstrate if business strategy, as articulated through targets and forecasts, are throwing up a red-flag in terms of future corruption risk.

As to the compensation incentives that derive from such forecasts, Ms. Taylor challenges us to ask if “discretionary bonuses and targets are unrealistic, set without regard to market conditions and risk.” From my perspective, this is the Achilles heel of the entire compliance enterprise.

Where forecasts are broken down into quarterly quotas, particularly in unstable sales environments, along with targets and incentives that are set exclusively to personal performance (sales talk: “eat what you kill”), you have, in my experience, a predictably huge corruption risk.

That’s when front-line personnel wonder if management really wants compliance or sales success, as they internalize “I can’t deliver both.” If there’s a bonus plan for individual sales success, you can guess which wins. Take it from me, that part, I know.

So as an unconventional source, here’s my advice: Bring your HR and compliance teams into the forecasting and compensation planning process.

They’ll provide an objective view and will call time out when strategy and incentives are at odds with the goals of anti-bribery compliance and ethical decision-making.

Oh… and if your sales VP strongly objects (as I would have), then you know you’re making the right decision.

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Richard Bistrong is CEO of Front-Line Anti-Bribery LLC. He consults, writes and speaks about compliance issues from his experience as an international sales VP and conviction for violating the FCPA, where he pleaded guilty and served fourteen and a half months in prison. He can be reached via his website, twitter and e-mail.

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