How to recognize early signals of unethical behavior in your organization - Prevention is favored over remediation.

In this Blog (#1) of Tandem Strategic Legal Advisory, practical guidance is given how to recognize early signals of unethical behavior in your organization and how to act.

So let’s look at how your organization addresses Code of Conduct breaches. In my experience, the Whistleblower reports often get lost across the silo’s of the corporate functions or are not analyzed in a holistic way. And that is where the problem starts. If information is not effectively shared between the relevant functions, important signals get lost in translation and conclusions can not be drawn about potential problem area’s and locations. You might not find the real problem area or location. You are not getting your best possible ‘heat map’ .

Many companies use the Corruption Index as a guidance for a heat map where most likely unethical behavior will occur. Or the number of breaches of the Code of Conduct that have occurred or whistleblower cases in a country. This is not sufficient and only part of a solution. For instance the Internal Audit department, Legal Department, Internal Control and HR will all have information on incidents and culture as well. Specially in this day and age where “Me Too”, incidents regarding management and other staff is closely monitored in order to investigate and correct any wrongdoing. It is not a topic that should be delegated to HR to deal with. Management and the Supervisory or Non-executive board should want a more holistic and complete view of what is going on where.

A good way to approach this is to have a group of relevant officers analyse the information on breaches and draw conclusions from the information available. And to let this group report to the companies Audit Committee and other corporate bodies such as Internal Control. Such a committee can be an Ethics Committee, which ideally should be chaired by the Ethics Officer or the General Counsel with a high degree of independence and well established mandate to act.

Having a diverse group of people looking at the same information brings new insights and leads to a better understanding of where possible unethical behavior is taking place. For instance by introducing a scoring methodology (ranking) to each of those incidents which will lead to a ranking on the heat map. Having the knowledge of this early on can prevent a serious harm to the reputation of the company and can prevent hefty penalties from regulatory bodies and enforcement agencies. Remember what a former US Deputy Attorney General Paul McNulty said: If you think compliance is expensive try non-compliance. It is a good investment of resources and money to prevent breaches and remediate any issues in an early stage. Feel free to contact me Tandem Strategic Legal Advisory if you would like to explore this important topic further.

Written by Tjeerd Wassenaar, Founder of Tandem Strategic Legal Advisory: “Contributing to solving your extraordinary corporate issue; in Tandem”