Wulf Ethics and Compliance Programs in Multinational Organizations

2012
ISBN: 978-3-8349-3495-6
Verlag: Betriebswirtschaftlicher Verlag Gabler
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 404 Seiten, eBook

The study examines how multinational organizations implement the concept of ethics and compliance programs into their businesses and the extent to which these programs were geared to the 2004 Amendments. The study explores the applicability of the 2004 Amendments and analyzes the instruments organizations use to successfully develop and maintain these programs. By including research from various fields, a theoretical framework was developed for implementing an ethics and compliance program that takes into account the 2004 Amendments

Zielgruppe

Research

Autoren/Hrsg.

Wulf, Katharina

Inhaltsverzeichnis

1;Acknowledgements;5
2;Table of Contents;6
3;List of Figures and Tables;17
4;List of Abbreviations;18
5;Introduction;20
5.1;1. Problem Formulation;20
5.2;2. Research Objective and Approach;21
5.3;3. Structure of this Study;24
6;Part One: Theoretical Framework;27
6.1;1. Key Concepts and Historical and Legal Developments;27
6.1.1;1.1 Ethics and Compliance in Organizations;27
6.1.2;1.2 Ethics and the Law;28
6.1.3;1.3 The Watergate Scandal and the Foreign Corrupt Practices Act of 1977;29
6.1.4;1.4 The Federal Sentencing Guidelines for Organizations of 1991;30
6.1.5;1.5 The Carrot and Stick Concept;31
6.1.6;1.6 The 2004 Amendments to the Federal Sentencing Guidelines;32
6.1.7;1.7 The Sarbanes-Oxley Act of 2002;33
6.1.8;1.8 Blakely vs. Washington: The Constitutionality of the Sentencing Guidelines;35
6.2;2. Corporate Codes of Conduct;36
6.2.1;2.1 The Purpose of Corporate Codes of Conduct;37
6.2.2;2.2 Different Types of Codes of Conduct;38
6.2.3;2.3 General Codes of Conduct;39
6.2.3.1;2.3.1 UN Global Compact;39
6.2.3.2;2.3.2 OECD Guidelines for Multinational Enterprises;40
6.2.4;2.4 Content of Corporate Codes of Conduct;41
6.2.4.1;2.4.1 Purpose Statement;41
6.2.4.2;2.4.2 Statement by the Board of Directors and Senior Management;42
6.2.4.3;2.4.3 Reporting Channels and Whistleblower Protection;42
6.2.4.4;2.4.4 The Subject Matter of Corporate Codes of Conduct;43
6.2.5;2.5 Development of Corporate Codes of Conduct;48
6.2.5.1;2.5.1 Preparation Process;49
6.2.5.2;2.5.2 Implementation Process;51
6.2.5.3;2.5.3 Administration Process;53
6.3;3. An Overview of Corporate Ethics and Compliance Programs;53
6.3.1;3.1 Regulation of Organizations;54
6.3.1.1;3.1.1 Command and Control Regulation;55
6.3.1.2;3.1.2 The New Regulatory State;56
6.3.1.3;3.1.3 Compliance-Oriented Regulation;57
6.3.2;3.2 Emergence of Corporate Ethics and Compliance Programs;58
6.3.3;3.3 Specific Regulatory Areas for Corporate Ethics and Compliance Programs;60
6.3.3.1;3.3.1 Antitrust;61
6.3.3.2;3.3.2 Financial Services;61
6.3.3.3;3.3.3 Health Care;62
6.3.3.4;3.3.4 Bribery and Misconduct in Defense Contracts;62
6.3.3.5;3.3.5 Environment;64
6.3.3.6;3.3.6 Occupational Health and Safety;64
6.3.3.7;3.3.7 Equal Employment Opportunity and Affirmative Action;65
6.3.4;3.4 Basic Tools of Corporate Ethics and Compliance Programs;66
6.3.4.1;3.4.1 Code of Conduct;66
6.3.4.2;3.4.2 Reporting Mechanisms;67
6.3.4.3;3.4.3 Ethics and Compliance Training;71
6.3.4.4;3.4.4 Interaction of the Basic Tools for Ethics and Compliance Programs;75
6.3.5;3.5 The Ethics and Compliance Profession;76
6.3.5.1;3.5.1 The Ethics and Compliance Officer’s Profile;77
6.3.5.2;3.5.2 Competence within the Ethics and Compliance Program;79
6.3.6;3.6 Empirical Evidence on Corporate Ethics and Compliance Programs;81
6.3.6.1;3.6.1 Studies on the Implementation of Ethics and Compliance Programs;81
6.3.6.2;3.6.2 Studies on Ethical Practices in Business;84
6.3.6.3;3.6.3 Studies on Corporate Ethics and Compliance Programs and Corporate Illegality;86
6.3.6.4;3.6.4 Concluding Remarks;88
6.3.7;3.7 Positive Impacts of Corporate Ethics and Compliance Programs;89
6.3.7.1;3.7.1 Reduction of Ambiguity and Complexity;90
6.3.7.2;3.7.2 Creation of Reliable Behavior;90
6.3.7.3;3.7.3 Implementation of Standards of Existential Significance;91
6.3.8;3.8 Limitations of Corporate Ethics and Compliance Programs;92
6.3.8.1;3.8.1 Limited Impact of Instructions;92
6.3.8.2;3.8.2 Unintended Consequences of Too Many Instructions;94
6.3.8.3;3.8.3 Identification with the Organization;95
6.3.9;3.9 Global Corporate Ethics and Compliance Programs for U.S.-Based Companies;97
6.4;4. The Federal Sentencing Guidelines for Organizations of 1991;99
6.4.1;4.1 The United States Sentencing Commission;99
6.4.2;4.2 Applicability of the Sentencing Guidelines;100
6.4.3;4.3 Purpose of the Sentencing Guidelines;100
6.4.3.1;4.3.1 Restitution;101
6.4.3.2;4.3.2 Determining the Fines;101
6.4.3.3;4.3.3 Organizational Probation;103
6.4.4;4.4 Effective Corporate Compliance Programs;104
6.4.4.1;4.4.1 Definition of an Effective Corporate Compliance Program;104
6.4.4.2;4.4.2 Seven Elements of an Effective Corporate Compliance Program;105
6.4.5;4.5 The 1991 Sentencing Guidelines and the “Litigation Dilemma”;112
6.4.6;4.6 Ethics in an Effective Corporate Compliance Program;114
6.4.7;4.7 Limitations of the 1991 Guidelines and Concluding Remarks;115
6.5;5. The 2004 Amendments to the Federal Sentencing Guidelines for Organizations;116
6.5.1;5.1 Enhancing Compliance through Key Legal Developments;117
6.5.1.1;5.1.1 The Caremark Case;118
6.5.1.2;5.1.2 The Sarbanes-Oxley Act of 2002;118
6.5.2;5.2 The Preliminary Work of the Ad Hoc Advisory Group;119
6.5.3;5.3 The 2004 Amendments;120
6.5.4;5.4 The Revised Seven Elements of an Effective Ethics and Compliance Program;122
6.5.4.1;5.4.1 Element 1: Standards and Procedures;123
6.5.4.2;5.4.2 Element 2: Organizational Leadership and Corporate Culture;123
6.5.4.3;5.4.3 Element 3: Reasonable Efforts to Exclude Prohibited Persons;126
6.5.4.4;5.4.4 Element 4: Ethics and Compliance Training and Communication;126
6.5.4.5;5.4.5 Element 5: Monitoring, Auditing, and Evaluating Program Effectiveness;127
6.5.4.6;5.4.6 Element 6: Performance Incentives and Disciplinary Actions;129
6.5.4.7;5.4.7 Element 7: Response to Criminal Conduct and Remedial Action;129
6.5.5;5.5 Other Relevant Changes in the 2004 Amendments;130
6.5.5.1;5.5.1 Risk Assessment;130
6.5.5.2;5.5.2 Adoption of Governmental Regulation and Industry Standards;132
6.5.5.3;5.5.3 Waiver of Attorney-Client Privilege and Work-Product Doctrine;132
6.5.5.4;5.5.4 Upward Departure;132
6.5.5.5;5.5.5 Corporate Probation;133
6.5.6;5.6 Limitations of the 2004 Amendments;133
6.5.7;5.7 The 2004 Amendments and other Corporate Governance Reforms;136
6.6;6. Concluding Remarks and Implications for the Empirical Study;137
7;Part Two: The Research Process and Empirical Findings;138
7.1;1. Empirical Research Objective;138
7.2;2. Selected Approaches for Social Research;139
7.3;3. Methods of Empirical Organizational and Social Research;140
7.3.1;3.1 Different Inquiry Forms;141
7.3.1.1;3.1.1 Semi-Standardized Interviews;141
7.3.1.2;3.1.2 Expert Interviews;141
7.3.2;3.2 Research Design;144
7.3.2.1;3.2.1 Reasons for Adopting Semi-Standardized Expert Interviews;144
7.3.2.2;3.2.2 Reasons for Choosing the Selected Experts;145
7.3.3;3.3 Limitations of the Empirical Study;148
7.3.3.1;3.3.1 Limitations of Expert Interviews;148
7.3.3.2;3.3.2 Limitations in the Selection of Experts;149
7.3.3.3;3.3.3 Limitation Due to Telephone Interviews;150
7.3.3.4;3.3.4 Limitation Due to Research Constraints;151
7.4;4. Research Procedures;151
7.4.1;4.1 Data Collection;151
7.4.1.1;4.1.1 Expert Interviews;151
7.4.1.2;4.1.2 Document and Literature Analysis;154
7.4.2;4.2 Qualitative Data Analysis;155
7.4.3;4.3 Quality Measures of the Research Design;157
7.4.3.1;4.3.1 Internal Validity;157
7.4.3.2;4.3.2 External Validity;158
7.4.3.3;4.3.3 Reliability;158
7.4.3.4;4.3.4 Objectivity;159
7.5;5. Effective Ethics and Compliance Programs in Multinational Organizations;159
7.5.1;5.1 Element 1: Standards and Procedures;160
7.5.1.1;5.1.1 Code Purpose;161
7.5.1.2;5.1.2 Code Development;163
7.5.1.3;5.1.3 Code Implementation;164
7.5.1.4;5.1.4 Code Content;170
7.5.1.5;5.1.5 Code Distribution;175
7.5.1.6;5.1.6 Code Administration;177
7.5.2;5.2 Element 2: The Ethics and Compliance Office;178
7.5.2.1;5.2.1 Organizational Structure for the Ethics and Compliance Program;179
7.5.2.2;5.2.2 Leadership Credentials and Competencies of a CECO;183
7.5.2.3;5.2.3 Professional Development and Certification;187
7.5.2.4;5.2.4 The Reporting Structure of a CECO;188
7.5.2.5;5.2.5 Outsourcing the Ethics and Compliance Function;190
7.5.2.6;5.2.6 Resources and Budget;191
7.5.2.7;5.2.7 Ethics and Compliance Committee or Council;195
7.5.3;5.3 Element 3: Oversight by the Board and Senior Management;197
7.5.3.1;5.3.1 The Right Tone from the Top;197
7.5.3.2;5.3.2 Monitoring of the Program’s Key Components;200
7.5.3.3;5.3.3 Regular Updates for Senior Management and the Board of Directors;201
7.5.3.4;5.3.4 A Code of Conduct for the Board of Directors;202
7.5.4;5.4 Element 4: Reasonable Efforts to Exclude Prohibited Persons;202
7.5.4.1;5.4.1 Information Gathering as Part of the Screen;203
7.5.4.2;5.4.2 Information Gathered Must Comport with Relevant Laws;203
7.5.4.3;5.4.3 Determining when Screens Will be Conducted;204
7.5.5;5.5 Element 5: Ethics and Compliance Training and Communication;205
7.5.5.1;5.5.1 Design and Implementation of a Training and Communication Program;206
7.5.5.2;5.5.2 Key Messages of a Training and Communication Program;208
7.5.5.3;5.5.3 Target Audiences for the Training and Communication Program;211
7.5.5.4;5.5.4 Delivery Methods for the Training and Communication Program;215
7.5.5.5;5.5.5 Training and Communication Calendar;223
7.5.5.6;5.5.6 Pilot-Test and Evaluate the Training and Communication Program;224
7.5.6;5.6 Element 6: Program Assessment and Evaluation;225
7.5.6.1;5.6.1 Program Assessment to Improve the Ethics and Compliance Function;225
7.5.6.2;5.6.2 Auditing the Ethics and Compliance Program;226
7.5.6.3;5.6.3 Comprehensive Review of the Ethics and Compliance Program;227
7.5.6.4;5.6.4 Techniques and Tools to Evaluate the Ethics and Compliance Program;228
7.5.6.5;5.6.5 Post-Evaluation Actions to Improve the Ethics and Compliance Program;231
7.5.7;5.7 Element 7: Receiving Allegations and Providing Ethical Advice;233
7.5.7.1;5.7.1 Channels for Employees to Report Violations and Submit Questions;233
7.5.7.2;5.7.2 Implementation of a 24-Hour Helpline;236
7.5.7.3;5.7.3 Oversight of the Reporting Function;239
7.5.7.4;5.7.4 Appropriate Personnel for Providing Guidance;240
7.5.7.5;5.7.5 Confidentiality and Anonymity within the Reporting Process;241
7.5.7.6;5.7.6 Protection against Retaliation;243
7.5.7.7;5.7.7 Ombudsperson;245
7.5.8;5.8 Element 8: Performance Incentives and Disciplinary Actions;249
7.5.8.1;5.8.1 Standards and Expectations for Ethics and Compliance in the Workplace;250
7.5.8.2;5.8.2 Problems with Rewarding Ethical Conduct;251
7.5.8.3;5.8.3 Methods for Rewarding Ethical Conduct;251
7.5.8.4;5.8.4 Designing a Disciplinary System with Consistent and Predictable Penalties;252
7.5.8.5;5.8.5 Responsible Function for Imposing Punishments;253
7.5.9;5.9 Element 9: Response to Criminal Conduct and Remedial Action;254
7.5.9.1;5.9.1 Process Establishment for an Internal Investigation;255
7.5.9.2;5.9.2 Designation of Investigators;257
7.5.9.3;5.9.3 Consistent Application of Disciplinary Measures;260
7.5.10;5.10 Conclusion;261
7.6;6. Additional Elements of the 2004 Guidelines;262
7.6.1;6.1 Corporate Culture;262
7.6.1.1;6.1.1 Development of a Unique Corporate Culture;263
7.6.1.2;6.1.2 Responsibility for Creating an Ethical Culture;266
7.6.1.3;6.1.3 Cultural Differences and their Challenges;269
7.6.2;6.2 Risk Assessment;272
7.6.2.1;6.2.1 Ethics and Compliance Risk Assessment or Enterprise Risk Assessment;273
7.6.2.2;6.2.2 Appointment of the Risk Assessment Team;274
7.6.2.3;6.2.3 Risk Identification;275
7.6.2.4;6.2.4 Assessing and Prioritizing Risks and Recommending Mitigation Strategies;276
7.6.2.5;6.2.5 Recommendations of the Risk Assessment Process and Regular Updates;277
7.6.3;6.3 Conclusion;279
8;Part Three: The Ethics and Compliance Program Manual for Multinational Organizations;280
8.1;1. Pillar One: The Foundation of an Ethics and Compliance Program;281
8.1.1;1.1 Element 1: Risk Assessment;282
8.1.1.1;1.1.1 Step 1: Ethics and Compliance Risk Assessment or Enterprise Risk Management;283
8.1.1.2;1.1.2 Step 2: Appointment of a Risk Management Team;283
8.1.1.3;1.1.3 Step 3: Risk Identification;284
8.1.1.4;1.1.4 Step 4: Data Gathering and Analysis;285
8.1.1.5;1.1.5 Step 5: Risk Rating;286
8.1.1.6;1.1.6 Step 6: Risk Communication and Information;289
8.1.2;1.2 Element 2: Corporate Culture;289
8.1.2.1;1.2.1 Step 1: Analysis of the Existing Corporate Culture;290
8.1.2.2;1.2.2 Step 2: Assessment of the Corporate Culture;291
8.1.2.3;1.2.3 Step 3: Implementation of an Action Plan;292
8.1.3;1.3 Element 3: Oversight by the Board and Senior Management;294
8.1.3.1;1.3.1 Step 1: Right Tone from the Top;294
8.1.3.2;1.3.2 Step 2: Monitoring the Program’s Key Components;296
8.1.3.3;1.3.3 Step 3: Regular Updates for Senior Management and the Board;298
8.1.3.4;1.3.4 Step 4: A Code of Conduct for the Board of Directors;299
8.1.4;1.4 Element 4: The Ethics and Compliance Office;300
8.1.4.1;1.4.1 Step 1: The Organizational Structure;301
8.1.4.2;1.4.2 Step 2: Leadership Credentials and Competencies of the CECO;302
8.1.4.3;1.4.3 Step 3: Professional Development and Certification;304
8.1.4.4;1.4.4 Step 4: Reporting Structure of the CECO;305
8.1.4.5;1.4.5 Step 5: Outsourcing the Ethics and Compliance Function;308
8.1.4.6;1.4.6 Step 6: The Relationship with Senior Management and the Board;309
8.1.4.7;1.4.7 Step 7: Resources and Budget;311
8.1.4.8;1.4.8 Step 8: Ethics and Compliance Committees or Councils;313
8.2;2. Pillar Two: A Toolset for an Ethics and Compliance Program;315
8.2.1;2.1 Element 5: Code of Conduct;316
8.2.1.1;2.1.1 Step 1: Collecting Existing Policies and Rules;316
8.2.1.2;2.1.2 Step 2: Appointment of a Cross-Functional Core Team;317
8.2.1.3;2.1.3 Step 3: Determine the Code’s Reach;318
8.2.1.4;2.1.4 Step 4: Accessibility for and Acceptance of Employees;319
8.2.1.5;2.1.5 Step 5: Practical Guidance for Employees;321
8.2.1.6;2.1.6 Step 6: Introduction and Distribution of the Code;322
8.2.2;2.2 Element 6: Receiving Allegations and Providing Ethical Advice;322
8.2.2.1;2.2.1 Step 1: Available Reporting and Advisory Channels;323
8.2.2.2;2.2.2 Step 2: Implementation of a 24-Hour Helpline;324
8.2.2.3;2.2.3 Step 3: Oversight of the Reporting Function;326
8.2.2.4;2.2.4 Step 4: Appropriate Personnel for Providing Advice;327
8.2.2.5;2.2.5 Step 5: Publication of the Reporting and Advisory System;328
8.2.2.6;2.2.6 Step 6: Confidentiality and Anonymity within the Reporting Process;329
8.2.3;2.3 Element 7: Training and Communication;331
8.2.3.1;2.3.1 Step 1: Design and Implementation;331
8.2.3.2;2.3.2 Step 2: Key Messages of the Training and Communication Program;333
8.2.3.3;2.3.3 Step 3: Target Audiences;335
8.2.3.4;2.3.4 Step 4: Delivery Methods;338
8.2.3.5;2.3.5 Step 5: Training and Communication Calendar;340
8.2.3.6;2.3.6 Step 6: Pilot-Testing and Evaluating the Training and Communication Program;342
8.2.4;2.4 Element 8: Program Assessment and Evaluation;343
8.2.4.1;2.4.1 Step 1: Program Assessment to Improve the Ethics and Compliance Function;344
8.2.4.2;2.4.2 Step 2: Audit the Ethics and Compliance Program;344
8.2.4.3;2.4.3 Step 3: Techniques and Tools to Evaluate the Ethics and Compliance Program;345
8.2.4.4;2.4.4 Step 4: Comprehensive Review of the Ethics and Compliance Program;347
8.2.4.5;2.4.5 Step 5: Post-Evaluation Actions to Improve the Ethics and Compliance Program;348
8.3;3. Pillar Three: Preventative Measures in an Ethics and Compliance Program;348
8.3.1;3.1 Element 9: Performance Incentives and Disciplinary Actions;349
8.3.1.1;3.1.1 Step 1: Standards and Expectations for Ethics and Compliance in the Workplace;350
8.3.1.2;3.1.2 Step 2: Fair Treatment of Employees Involved in a Disciplinary Process;351
8.3.1.3;3.1.3 Step 3: Problems with Rewarding Ethical Conduct;352
8.3.1.4;3.1.4 Step 4: Methods for Rewarding Ethical Conduct;353
8.3.1.5;3.1.5 Step 5: Design a Disciplinary System with Consistent and Predictable Penalties;354
8.3.1.6;3.1.6 Step 6: Responsible Function for Imposing Punishments;356
8.3.2;3.2 Element 10: Response to Criminal Conduct and Remedial Action;356
8.3.2.1;3.2.1 Step 1: Decision to Investigate and Process Establishment;357
8.3.2.2;3.2.2 Step 2: Designation of Investigators;358
8.3.2.3;3.2.3 Step 3: Interviewing Process;359
8.3.2.4;3.2.4 Step 4: Limits of Confidentiality;361
8.3.2.5;3.2.5 Step 5: Documentation and Closure of the Investigation;361
8.3.3;3.3 Element 11: Employee Screening;362
8.3.3.1;3.3.1 Step 1: The Screening Process;363
8.3.3.2;3.3.2 Step 2: Information Gathering and Methods for Screening;364
8.3.3.3;3.3.3 Step 3: Compliance with Relevant Laws;365
8.3.3.4;3.3.4 Step 4: Determine when to Conduct Screens;366
8.3.3.5;3.3.5 Step 5: Criteria for Exclusion due to a Candidate’s Past Activities;367
8.4;4. Conclusion;368
9;Summary and Conclusions;371
9.1;1. Synopsis;371
9.1.1;1.1 Part One;371
9.1.2;1.2 Part Two;373
9.1.3;1.3 Part Three;374
9.1.3.1;Pillar One: The foundation of an ethics and compliance program;374
9.1.3.2;Pillar Two: A toolset for an ethics and compliance program;375
9.1.3.3;Pillar Three: Preventative measures for an ethics and compliance program;375
9.2;2. Implications and Recent Developments;376
9.2.1;2.1 Ethical Corporate Culture;376
9.2.2;2.2 Organizational Leadership Structure;378
9.2.3;2.3 Risk Assessment and Risk Management;382
9.2.4;2.4 The Business Advantage;382
9.3;3. Outlook;383
10;References;385
11;Appendix: List of Interviewees;404

Über Autor(innen)

Dr. Katharina Wulf completed her doctoral studies under the supervision of Prof. Dr. Günter Faltin, Faculty of Educational Science and Psychology – Department of Entrepreneurship, at Freie Universität, Berlin.