By Blandine CORDIER-PALASSE, Revue RH&M n°56 p.50
Companies are subject to an increasing number of precise regulations and standards. Their impact largely depends on the company's ability and willingness to comply with them and to integrate them into its corporate culture.
In 2007, an investigation was launched against a European company under the FCPA (US regulations on the prevention of corruption).
A customer initiated the investigation. The subsidiary was fined $50 million.
Above all, it led to a three-year investigation in over 50 countries. 25 million emails were seized, 8 million of which were reviewed by external counsel. 2 million pages were forwarded to a judge. This generated 100 million dollars in legal costs, the involvement of 440 external professionals, 300,000 hours of lawyers and 150,000 hours of investigators...
Not to mention the time spent in-house answering all the questions asked by everyone.
Financial and non-financial consequences :
1. Lost sales of more than $100 million a year for four years,
2. Heavy loss of customers,
3. Obligation to leave certain countries,
4. Sharp fall in share price,
5. Dramatic damage to the Group's image and reputation for at least seven years.
Lessons learned from this difficult period: Resilience. Forced to start with, the company set up a major Compliance programme and turned it into a competitive advantage. It convinced customers, suppliers and all stakeholders. This would protect them from the increased risk of non-compliance. The scope covered by Compliance is therefore increasingly broad. It covers governance issues such as insider trading, confidentiality, executive liability and conflicts of interest, as well as the prevention of corruption, fraud, antitrust and competition law.
Social and environmental responsibility, particularly with regard to diversity, non-discrimination, data protection, the safety of people and property and environmental protection, must be taken into account in the context of the new obligations to communicate with the public, since legal and non-financial risks will have to be taken into account in companies' next annual reports from 2015. Faced with this increased exposure, international companies have strengthened their governance and taken compliance initiatives. The role of top management is to reconcile financial pressure with performance and integrity management: to develop systems, processes and best practices built on clearly articulated principles and based on performance with a culture of integrity.
Culture is therefore fundamental. How employees think, feel and behave. What characterises and motivates this culture? Values, standards, initiatives, sanctions and transparent processes. It's not just about preventing people from doing the wrong thing through threats and sanctions. By combining the carrot and the stick, it also seeks to develop and reward employees who adhere to and behave in this way by recognising and respecting values and exemplary integrity. The company's top managers have a key exemplary and leadership role to play in this paradigm shift. They create this culture by constantly articulating the code of conduct, principles and policies in their written and oral communications. They give meaning to the actions of all stakeholders, in line with the company's strategy.
Designed in this way, governance and compliance generate benefits within the company. They do so in the market and, more generally, in the macro-economic and societal environment. These are interactive elements. There is solid and sustainable economic performance, strong adherence to the spirit and letter of the legal rules. Reference is also made to financial and non-financial rules. Then there are the more global standards that promote its fundamental values. In addition to these, the company's long-term economic prosperity is enhanced and its reputation strengthened.
