Compliance & Ethics

PROFESSIONAL Vol. 8 / No. 2

04 / 2011
A PUBLICATION OF THE SOCIETY OF CORPORATE COMPLIANCE AND ETHICS

I would go I would go
to meet new to find a couch
colleagues and a conversation

I would go to figure out why the

star of HISTORY’s Pawn Stars was
selected to be a keynote speaker

All the reasons

Then, of why I would go
course, there to SCCE’s 2011 I would go
is winning a
prize for the Compliance and to get a hug
from Greg
best jersey Ethics Institute Triguba
at the Jersey
Tailgate Party ROY SNELL
CEO, SCCE

I would go to have Odell

and Rebecca brighten my
I would go to day with their smiles
thank Debbie
for what she
I would go
has done for
to watch Joe
our profession
teach Lee
and Shin Kim
the Cha-Cha
for what she
has done for
SCCE in Brazil

Turn the page for

more reasons to attend
This article, published in Compliance & Ethics Professional, appears here with permission from the Society of Corporate Compliance & Ethics. Call SCCE at +1 952 277-4977 or 888/277-4977 with all reprint requests.
 Centralized oversight of local
misconduct investigations
By Joe Gerard
Multinational enterprises have to
climb a pretty steep mountain when
it comes to compliance and employee
relations. Cultures, laws, and regu-
latory standards vary widely from
country to country—even, in some
cases, from city to city. Local man-
agers must learn to cope with, and
adapt to, each of these differences,
while at the same time adhering to
company-wide policies and codes of
conduct.
The obvious question is whether
it is best to adopt a centralized or
decentralized approach to corporate
investigations. Just how much control
should the people at the head office
seek to exert over the process? Should
they back off and allow the folks on
the ground to deal with any prob-
lems, or is that a surefire recipe for
disaster?
In most areas of their opera-
tions, multinational companies tend
to favor decentralized structures.
Decentralization allows employees
to make decisions faster and to tailor
product and service offerings to local
customers. Local units are typically
considered to be more efficient and
capable of responding quickly to
changes in the market and the busi-
ness environment.
On the flip side, decentralization
can be a Compliance and Human
Resources nightmare. With so many
different people at different levels
34  Compliance & Ethics Professional   April 2011 www.corporatecompliance.org
of the organization responsible for
gathering information and making
decisions, it is all too easy for impor-
tant details to fall between the cracks
and for seemingly isolated problems
to spiral out of control.
Although there is no perfect
strategy, experience suggests that a
balanced or two-pronged approach
makes the most sense. Companies
often empower local compliance
teams to investigate policy violations
and allegations of misconduct, and
in most cases this yields good results.
Having said that, I believe there
needs to be centralized oversight for
two major reasons.
First, centralized oversight
makes it easier to identify and deal
with repeat offenders. Over time,
employees tend to move around the
organizational chart, climbing the
corporate ladder, or even transfer-
ring to a new division or business
unit. The risk is that if an incident is
reported only to the local or regional
compliance group, there may be no
way to ensure that managers in other
parts of the organization are aware
of that particular employee’s history.
One of my clients recently
told me about a case in which an
employee had transferred to new
positions within the company no
less than five times in five years. In
each new job, the employee’s mis-
conduct was reported to the regional
compliance group for investigation.
Disciplinary action was taken each
time. The problem, however, was that
each of these cases was treated sepa-
rately, as though it was a first offence.
The disciplinary action should have
been escalated with each successive
infraction, but due to the absence of
a comprehensive case history, that did
not happen. If one of the offender’s
victims had taken the company to
court, the organization’s failure to
detect a pattern of misconduct could
easily have be seen as negligent.
The second reason why com-
panies should consider centralizing
employee relations data is that it
enables managers to identify and
implement corrective measures
proactively. It also provides the Com-
pliance department with the insight
it needs to develop programs targeted
at “problem” areas within the orga-
nization. If each region acts as an
island, it can be difficult or impossi-
ble to identify enterprise-wide trends
or to take advantage of serendipitous
discoveries. Using advanced analyt-
ics across the entire data set makes
it possible for executives to detect
global patterns and to determine the
appropriate response. This may lead
to recognition of the need to rewrite
policies or to roll out enhanced train-
ing in areas identified.
Brave new world: the impact
of social media
In the age of the Internet, it only
takes one person, one action, and
one second to put a company’s repu-
tation on the line. The popularity of
social media in particular has hugely
magnified the challenge of managing
information about your organization.
An incident or alleged misconduct
at one location can quickly become
an enterprise-wide public relations
headache.
For global companies, the stakes
are even higher. Consumers typically
expect multinational companies to
behave in a manner consistent with
the laws, values, and cultural norms
of the home country. It’s not enough
to stay on top of regulatory require-
ments and regulations in the home
country; the same attention must also
be paid to compliance with laws and
expectations in the other countries in
which the corporation operates.
Bear in mind that the court of
public opinion is often even more
demanding than a court of law.
No matter how well managed your
company is, allegations of work-
place misconduct are bound to arise
that pose a risk to your brand and
hard-earned reputation. It’s how
you respond to such incidents that
determines the degree of any lasting
damage to the company.
A timely response to
allegations
Employers and investigators
need to understand the importance
of handling every case of
alleged misconduct in a timely,
professional manner. That means
taking a systematic approach to
www.corporatecompliance.org 
employee misconduct allegations.
At a minimum, we advise our
clients to:
1. Document every allegation.
Local compliance officers
should maintain an electronic
record of every complaint or
report of misconduct, regard-
less of its perceived  credibility.
Not every report or allegation
will necessitate a full investiga-
tion, but over time the data you
collect will provide managers
with a global view of the com-
pany and any likely problem
areas. Where investigations do
take place, all documentation
must be completed thoroughly
and in conformity with court
requirements, to ensure you are
prepared if and when the case
goes before a judge.
The court of public
opinion is often even
more demanding
than a court of law.
2. Categorize risk potential.
Every allegation should be
assessed for risk. The process
does not have to be overly sci-
entific. Something as simple as
a “high, medium, or low” rating
system might well suffice. The
key is to make it easier for the
Compliance department to iden-
tify and monitor high-priority
investigations.
3. Keep everyone in the loop.
All relevant information should
be stored securely in a centralized
database that can be accessed
April 2011  Compliance & Ethics Professional  35
easily by investigators in the field,
regional managers, and head
office executives. At the same
time, your case management
system should provide the abil-
ity to restrict access to personal
or confidential information.
This approach allows corporate
headquarters to identify trends
and analyze data while ensuring
compliance with country-specific
privacy laws.
4. Make sure investigations stay
on track. Your case management
system should include automated
workflow alerts and reminders to
ensure that investigations pro-
ceed efficiently and on schedule.
You may also want the ability
to trigger notifications based on
case-related factors, such as geo-
graphic location, the nature of
the complaint or allegation, risk
potential, and any applicable reg-
ulatory milestones or deadlines.
Again, the important thing is to
ensure that individual allegations are
fully documented and that all appro-
priate personnel are kept informed at
every significant stage of the inves-
tigation. For global companies in
particular, it’s vital not to let any-
thing fall between the cracks. 
Editor’s note: Joe Gerard is the Vice
President of Marketing at i-Sight in
Ottawa, Canada.   He provides case
management solutions for corporate
compliance and ethics investigations.
He may be contacted by e-mail at
jgerard@i-sight.com.