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Are We Just Going Through the Motions for Compliance?

Are We Just Going Through the Motions for Compliance?

Without a strong tone from the top, simple survival takes first priority in today’s tough economic climate.

Getting companies to embrace ethics and compliance as a valuable addition to corporate best practices isn’t an easy task. Many owners of mid-sized and even larger companies see it as just another hoop to jump through, another unjustified expense.

But times are changing, and as more scandals and corresponding sanctions come to light, companies will be forced to take ethics and compliance seriously. At least that’s what Shannon Walker is counting on. As president of the Vancouver-based Whistleblower Security, a company that specializes in providing global ethics hotlines for companies, Walker sees the current ambivalence towards compliance as a sign of the times. It’s low on a company’s list of priorities, especially in Canada, she says.

A Matter of Priorities

In tough economic times, companies are focused more on staying in business than best practices. “People are thinking about survival, what happens in 2012, what happens with the Eurozone, what happens with the US,” says Walker.

She cites the lack of sanctions for companies that don’t have comprehensive compliance programs that include whistleblower policies as a barrier and sees a lot of business owners who simply make things look good on paper.

“And if there are any discussions about it, they can say ‘I’ve got a 1-800 line to my lawyer on the website’,” she says. “But to me that’s… not a comprehensive compliance program, it’s doing the very minimal to get around the regulations."

For a company that sets up hotlines for multinationals in foreign countries, challenges are just part of doing business. There are language issues, difficulties with using local phone lines in rural areas and lack of education about telephone use. But the biggest challenge can be just getting companies to see that they need an ethics hotline in the first place.

Tone at the Top

In some companies it’s far down on their priority list, she says. “I don’t think it resonates with staff. If you don’t have tone at the top, it’s an uphill battle.”

Companies may go through the motions, she says, but it’s not enough. Education, training and encouragement are lacking. “They can sign up so they have their due diligence checklist sheet filled up, but they’re not utilizing the service,” says Walker. “They’re not promoting the service, and there’s no enforcement.”

Walker feels that companies will embrace ethics and compliance, but that it may take time, up to 10 years, in fact.

“I think it’s still in its infancy as a department and as a concept within our organizations. Over the next 7 to 10 years I hope people really do embrace it as part of best practices and it becomes a viable department,” she says.

“Five years ago when we started, it was so new,” says Walker. “Now every week there’s something new about whistleblowing. And with all the big scandals, it becomes more and more apparent how important it is, and especially with what’s going on in the Asia market,” she says, adding that Asia is going to be a huge business development opportunity for those in the business of compliance.

With China in the hot seat over recent fraud allegations at publicly traded companies, compliance is bound to be an important discussion point for anyone considering doing business with or in China in the near future. Closer to home, as news of corporate misconduct breaks on a weekly basis, it’s bound to get more attention here too.