We’ve seen in the past few years more CEOs stepping down for displays of poor conduct, bad judgment, and even a disregard for taking misconduct seriously enough. Travis Kalanick at Uber, Roger Ailes at Fox News, Dov Charney at American Apparel, and Harvey Weinstein at The Weinstein Company are among them.
Yes, top-level folks are being held accountable. They’re now expected to act in accordance with the letter and spirit of the law.
It’s not just the press keeping watch. New legal standards are breaking out on both sides of the Atlantic.
The UK has introduced the Senior Managers and Certification Regime and the United States has emphasized the naming of wrongdoers — no matter how high level — as an element of its Justice Department-led corporate cooperation policy in criminal cases.
And Canada, through its Office of Superintendent of Financial Institutions, regularly assesses how well boards of directors are seeking to understand and monitor the decisions, plans and policies being undertaken by senior managers, plus their potential impact on the firm.
Importantly, none of this will work unless these executives/board members feel as if they are indeed potentially culpable and appreciate that not reporting misconduct to authorities will have repercussions.
Plus, senior managers should give the go-ahead — or offer some supportive impetus — for several incredibly important effectiveness checks to be done within the institution. Those checks might happen without the senior managers saying so, but it would surely help the executives bolster their argument that they were actively promoting and evaluating their business’s compliance objectives.
Top brass can ask for short reports and even evaluative grading from various business sectors, chosen at random throughout the year, that center on how the business is doing in offering required and well-crafted training programs.
And they can ask if employees feel like they are being rewarded for their exemplary conduct, not just deals cut, and whether employees know how to find and use the whistleblower portal, for starters.
And here’s the fun one: A certain number of top executives should (in earnest) spend a half-day day per year job-shadowing one employee chosen randomly — so they can get some sense what a day in the life of an HR representative, IT desk technician, internal audit, or executive assistant (etc.) feels like.
When I was 16 years old, I worked for one summer at a federal records center that had these terrible, rusty, rickety ladders we had to climb to find dated documents. (Yup, back in the day, we had these things called papers and folders. …)
Anyway … when a senior vice president had to climb one of those rusty ladders during a “walk their walk” type of management training initiative, he didn’t climb up beyond the first step. And we got new ladders a week later.
In short, if you’re in a position to certify or otherwise sign off on any risk and compliance program, think about the ladders. Stuff outlives its effectiveness.
If you’d like to read more on this topic, I recommend checking out the book Conduct and Accountability in Financial Services from Bloomsbury Professional. It was written by my colleagues at Thomson Reuters, Stacy English and Susannah Hammond. They provide an excellent overview of conduct, culture, and governance expectations worldwide and talk about the implications of the global focus on culture and conduct risk.
Julie DiMauro, pictured above, is a contributing editor of the FCPA Blog. She writes best practice articles and speaks about compliance and risk issues in the financial services sector as part of the Regulatory Intelligence group at Thomson Reuters in New York. Follow her on Twitter @Julie_DiMauro and email her here.