The Role of Human Resources in FCPA Compliance

DongFanAuthor:  Thomas Fox

Thank you to Tom Fox for allowing us to post a link to his recent webinar!

One of the key company lynch-pins in any FCPA compliance and ethics program is Human Resources. Most HR professional do not think of themselves as on the front lines for FCPA compliance and ethics. However the HR function is plays a  key role in “connecting the dots” for FCPA ethics and compliance. What policy does a company take to punish those employees who may engage in unethical and non-compliant behavior in order to meet company revenue targets versus what rewards are handed out to those employees who integrate such ethical and compliant behavior into their individual work practices going forward? One of the very important functions of HR is assisting management in setting the criteria for employee bonuses and assisting management in the evaluation of employees for the bonuses. This is an equally important role in getting out a company’s message of adherence to a FCPA compliance and ethics policy.

Does a company have, as a component of its bonus compensation plan, a part dedicated to FCPA compliance and ethics? If so, how is this component measured and then administered? There is very little in the corporate world that an employee notices more than what goes into the calculation of their bonuses. HR can and should facilitate this process by setting expectations early in the year and then following through when annual bonuses are released. With the assistance of HR, such a bonus can send a powerful message to employees regarding the seriousness with which compliance is taken at the company. There is nothing like putting your money where your mouth is for people to stand up and take notice.

If a company has an employee who meets, or exceeds all his sales targets, but does so in a manner which is opposite to the company’s stated FCPA compliance and ethics values, other employees will watch and see how that employee is treated. Is that employee rewarded with a large bonus? Is that employee promoted or are the employee’s violations of the company’s compliance and ethics policies swept under the carpet? If the employee is rewarded, or in any way not sanctioned for unethical or non-compliant behavior, it will be noticed and other employees will act accordingly. One of the functions of HR is to help ensure consistent application of company values throughout the organization.

In the energy industry, (and probably lots of other industries) there is the following archetypal story. It usually is told about a Regional Manager in the Far East or the Middle East who is alleged to have said some along the following lines, “If I violate the Code of Conduct I may or may not get caught. If I get caught I may or may not be disciplined. But if don’t make my revenue numbers for two quarters I will be fired”. If such a story is allowed to percolate throughout the company, employees will feel that all that matters is hitting their revenue targets, not acting in an ethical and compliant manner. Human Resources provides a vital front line function is providing consistent, across the board application of a values core values of compliance and ethics by training and then reinforcing that “hitting the numbers” in a manner which is antithetical to the company’s compliance and ethics program is not acceptable. But this must be done in both words and actions.

The HR Department in any multi-national company has a significant role in not only managing the employee base but in assisting to set the correct expectations regarding FCPA compliance and ethics. Consistent applications of these core beliefs and values will assist any company in remaining compliant and driving home the message that the company takes FCPA compliance seriously.

[Editors Note:  We are happy to welcome Thomas Fox of tomfoxlaw.com as a Guest Author.  Tom recently spoke to Houston International HR Roundtable on HR's role in FCPA compliance.  Tom will be presenting a webinar on The Role of HR in FCPA Compliance and Ethics on Tuesday, May 18, 2010 at 2 pm (CST) that will be of interest to international HR professionals.

Registration Link:              https://secure.confertel.net/tsregister.asp?course=509107

Tom has practiced law in Houston for 25 years. He is now assisting companies with FCPA compliance, Risk Management and international transactions. He was most recently the General Counsel at Drilling Controls, Inc., a worldwide oilfield manufacturing and service company.  He was previously Division Counsel with Halliburton Energy Services, Inc. where he supported Halliburton’s software division and its downhole division, which included the logging, directional drilling and drill bit business units.  Tom attended undergraduate school at the University of Texas, graduate school at Michigan State University and law school at the University of Michigan.  Tom writes and speaks nationally and internationally on a wide variety of topics, ranging from 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.  Additional information on FCPA and compliance issues can be found at http://tfoxlaw.wordpress.com/.]

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