Table of Contents
On this page:
- What this means
- Why it matters
- How you can incentivize compliance and discipline misconduct
- Tips for incentives and discipline
What this means
One of the best ways for you to communicate to your organization that compliance is important is to reward those who show leadership in this area. Having a policy that aligns your organization’s incentives with compliance shows your commitment to compliance. This has positive consequences for all your employees who support this commitment.
Similarly, your policy should also prescribe disciplinary action for any employee or manager who does not support compliance. This will clearly send a message that your organization will not tolerate misconduct by anyone working at any level.
A small reminder on what makes a compliance program credible and effective
Your compliance program needs to be credible and effective to truly help you.
To be credible, your program must at a minimum show your business’ genuine commitment to obeying the law and competing fairly.
To be effective, your program must inform all your people, and those acting for your organization, that compliance is important. It must inform them of their legal duties and your internal compliance measures. It should also give you the tools to prevent and detect misconduct.
Your program should be reasonably designed, implemented and enforced in the circumstances. This means that it addresses your organization’s risks within your resources and in light of your business activities.
Why it matters
Rewards and disciplinary measures are powerful drivers of individual behaviour.
If your organization provides compliance-linked incentive plans and takes consistent compliance-linked disciplinary action, it shows that you are committed to compliance. If managers or employees who engage in risky behaviour or potentially illegal activities get promoted, you will send the wrong message to your people. However, if managers and employees at all levels in your organization who encourage compliance and create an ethical work environment are rewarded, everyone will see that compliance must be taken seriously.
Real incentives and consistently applied consequences will help you make compliance a part of your culture, strengthening the credibility and effectiveness of your compliance program.
If you’re a small business...
Small businesses can easily align incentives with a commitment to compliance and set out penalties for misconduct. Incentives don’t need to cost your organization a lot of money. Even small actions show your seriousness about compliance. For example, these can include recognition from the leader of the organization, or a note about the employee in your internal newsletter.
To convey a strong pro-compliance message, you can also consider more substantial recognition for employees who go above and beyond when it comes to your organization’s commitment to compliance.
Make sure that your overall incentive systems and staff promotions don’t undermine this commitment.
How you can incentivize compliance and discipline misconduct
A credible and effective compliance program should clearly set out and maintain a record of:
- the incentives for managers or employees who demonstrate compliance leadership and foster an ethical work environment
- the disciplinary actions for:
- anyone, including the highest level executive, who fails to follow the compliance program or engages in misconduct
- a manager who fails to take reasonable steps to prevent or detect misconduct
- a manager who does not impose necessary disciplinary measures
Your compliance policy only records your organization’s commitment to compliance. Depending on how your organization works, your human resources department may have to design and implement the actual incentives and disciplinary measures.
Incentivize compliance leadership
- Clearly spell out the incentives in your policy for encouraging compliance
- Be creative
- Try different kinds of incentives, for example, appreciation letters, cash prizes, or promotions
- Try targeting more than individuals with your incentives. For example, instead of giving incentives to an employee, reward every member of a team for achieving a goal, such as completing training
- Make compliance part of career advancement
- Before giving promotions, review the person’s commitment to compliance leadership
- Give your compliance officer a say in promotions and identification of high-performing and senior employees and managers
- Consider linking compliance leadership to performance evaluations, promotions and bonuses
- Include compliance in your 360 degree reviews of your people. These are reviews that include colleagues of an individual who are above, below and at peer level
- If you have a board-level compensation committee, have leadership in compliance and ethics as a factor in assessments of top executives
- Have a clear record of appropriate discipline for:
- not following the compliance program
- misconduct by anyone in your organization
- managers failing to take reasonable steps to prevent or detect misconduct
- not initiating appropriate disciplinary action
- retaliation against whistleblowers
- Consequences could include suspension, holding back a promotion, demotion, dismissal or even legal action
- Before promoting someone, check with the compliance officer on pending investigations or violations, and the person’s commitment to compliance leadership
- Be consistent - consequences should apply to people at all levels, including
- employees and managers who break the law
- managers who ignore risky behaviour or potentially illegal activity or who see and fail to report them and
- senior leaders
Tips for incentives and discipline
- Treat your compliance department employees well
- For example, having this function be a path to promotion can clearly communicate to other employees that compliance is an important job
- Treat compliance awards at least on par with other awards in your organization
- Review all incentives and promotions to avoid having incentives that lead people to take short cuts and break the rules
- Keep records — document everything related to incentives and discipline as it could be relevant in case of an internal or external investigation
DISCLAIMER: Because every situation presents unique facts, the information set out herein is provided for general information only. This content is not a substitute for legal advice, nor is it a binding statement of the Commissioner of Competition’s position on the requirements or efficacy of any particular compliance program. Indeed, there is no one-size-fits-all approach when it comes to achieving credible and effective compliance.
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