In the winter 2013 issue of the Colonial Williamsburg
magazine is an article by Michael Lombardi, entitled "Lighthouses Marked the
Shoals of the Commerce Clause". In this article, Lombardi wrote about four
lighthouses authorized by Congress in the late 18th and early 19th
century to light the way for sailors in Chesapeake Bay. The four lighthouses
were the Cape Henry Lighthouse, the Old and New Point Comfort Lighthouses and the
Smith Point Lighthouse. All four still exist today and one, the Old Point
Comfort Lighthouse, is still in operation.
I thought about the story of these lighthouses and how
they literally lit the way for sailors for over 200 years when I read an
article in the Q2 issue of Ethisphere Magazine, entitled "Imagination
Working with Integrity: How General Electric Creates a Global Culture of Ethics",
by Michael Price. Price discusses how General Electric (GE) has made "ethics
and compliance a benchmark of its operations around the world, and is, in many
ways the gold standard that other companies look to when it comes to modeling
global compliance and ethics programs."
I also considered these lighthouses in the context of how
GE sets the tone for ethics and compliance and then communicates that
commitment throughout its organization. Obviously it all starts at the top and
GE is a prime example of this strength. Price noted that GE's top brass meets
annually at a conference where one of the frequent topics was ethics and
compliance and the need for integrity in GE. Following this meeting of the GE
senior management, they cascade down this commitment to middle management and
emphasize the reputational risk to GE should there be a violation of the
Foreign Corrupt Practices Act (FCPA) or other anti-corruption statute by the
company. The middle managers then further cascade this message down so that it
goes through the whole company at regular intervals.
Price made clear that one thing that GE will not tolerate
is a manager who fails to take ethics and compliance seriously. This extends to
managers who were ignorant of compliance issues in their units. He wrote that
GE has "removed people from leadership positions when they didn't know there
was a problem". GE demands that its management not only be aware of compliance
in their units, but to ask "the right questions when they are faced with an
uncertain situation".
As you might expect from a company which has business in
over 100 countries, GE has to work with many different cultural norms. It can
be that "different cultures have different frameworks for understanding
integrity and how to confront unethical conduct." So, for instance, to overcome
some cultural barriers of reporting unethical conduct GE has "five different pathways
in which employees around the world can bring their concerns to management's
attention." These pathways include the following:
- Employees
can talk directly to their managers;
- Employees
can go to talk to people in the compliance function;
- Employees
can go to talk to someone in the legal department;
- Employees
can take their concerns to HR; and
- Employees
can report anonymously to an ombudsman through a variety of channels.
GE provides several types of training in each of these
methods and has "Compliance Days" in "which the company discusses compliance
issues and reiterates the importance about employees raising concerns about
unethical practices." The article makes clear not only how seriously GE takes
compliance but that it believes its commitment to ethical practices makes it
stand out as a market differentiator. I would say that ethics and compliance is
even a lighthouse for corporate culture at GE, in many ways, leading the way by
which GE does business and conducts itself.
I once worked for a major oilfield service company where
it was clear that safety was the Number 1 priority. We started every meeting
with a safety moment. Each year, there was one day where the entire company
stood down and met on safety on a world-wide basis. Both of these techniques
emphasized to me not only the importance of safety but that safety was my
responsibility as well, even though I was a lawyer doing international
transactional work. This was another lighthouse but it was one for safety.
As a recovering trial lawyer who has handled many
personal injury lawsuits and then worked in the energy industry, I will always
consider safety as Mission Number 1 but I would like to propose that ethics and
compliance is Mission 1A in your company. Try some of the techniques that GE uses
to communicate its commitment to ethics and compliance. It does not cost
anything to have senior management meet with middle management and tell them
about the company's commitment to integrity. It does not cost anything to allow
employees to speak with their immediate managers about concerns over unethical
practices, go talk to someone in the compliance department or legal department
about such concerns or report their concerns to HR. If you do not have an
anonymous reporting line, it is about time you invested in one. I do recognize
that many companies do not have an ethics and compliance ombudsman but the key
concept there might be that by having such an impartial position, employees
believe they will be treated fairly.
How about having a compliance moment before every
meeting? By having such a moment before every meeting you can not only provide
some teachable moments but also drive home the concept that compliance is
everyone's responsibility not just the responsibility of the compliance or
legal department. How about a Compliance Day? If you cannot go that far, I
would suggest that you hold a series of brown bag lunches where you talk about
doing business with integrity through ethical and compliant business practices.
You could hold them throughout the company.
One thing I learned as a lawyer is that you are only
limited by your imagination. Try to get the message out because compliance is
in many ways, the 21st century lighthouse for doing business.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues
faced by multi-national US companies, insurance coverage issues and protection
of trade secrets.
This publication contains general information
only and is based on the experiences and research of the author. The author is
not, by means of this publication, rendering business, legal advice, or other
professional advice or services. This publication is not a substitute for such
legal advice or services, nor should it be used as a basis for any decision or
action that may affect your business. Before making any decision or taking any
action that may affect your business, you should consult a qualified legal
advisor. The author, his affiliates, and related entities shall not be
responsible for any loss sustained by any person or entity that relies on this
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the author. The author can be reached at tfox@tfoxlaw.com.
© Thomas R. Fox, 2013
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