Cosmetic or Substantial Compliance?

During the last ten years, I had the possibility to analyze, for research or consulting reasons, hundreds of compliance models of companies operating in Europe, North America, Africa and Latina America.

Let me share with you a very simple statistics: over 95% of them adopted a compliance approach that I define in my courses as “cosmetic”.

What I mean with that? Cosmetic compliance is when a company undertakes actions just to apparently comply with the requests of the national legislator(s). Cosmetic compliance does not seriously review internal and external activities of the company to identify possible threats, risks and weaknesses; on the contrary, it is just an eccentric corporate maquillage exercise.

I know, I know: your company is too busy to manage the complexity and turbulence of this difficult period. Recent years have been extremely though for you. The commercial division does not allow anyone to slow down or complicate daily operations. The market is a jungle and there is no time for compliance and ethics.

Do you know what? I heard those phrases many times, unfortunately, in many situations I was serving as expert witness in a civil or criminal trial against a company and/or its top managers.

What is the problem with cosmetic compliance? The simple answer is that your company is not managing in a proper way the risks associated with corruption and corporate malpractice. But, in such a case, there are at least three main issues that are worth of your attention.

• First, your organization is not properly protecting itself from internal and external threats. Let me use an analogy: imagine you move to a risky country where locals kidnap people. Wouldn’t you contract a very good security service for you and your employees? I think that the analogy is pretty clear: don’t you think that your company is highly exposed to corruption-related problems in one way or the other?, So, don’t you really need a good security service, that is an appropriate, well-working compliance system? Well, if you have any doubt, please, look below at the most recent transparency international corruption map…
• The second is that you are not responsibly protecting your employees, exposing them to very difficult situations. Imagine the pressure of your commercial guys operating in some very problematic countries and market segments… Do you really believe that it is responsible to abandon them with just a cosmetic code of conduct, cosmetic anti-bribe procedures and cosmetic corporate attitudes?
• The third issue, which is the most important for me, is that your organization is underestimating the importance of ethics. Compliance is for many respected experts of the field a tool to achieve a much important objective: developing an ethical organization, where important values such as justice and the respect of people are operationalized in a tangible and impactful way.

We should never forget that the fundamental premise of compliance practice is prevention. But, controls, risks mapping, code of conducts and all other compliance tools should be used in a substantial way: changing corporate practices in order to fundamentally impact people’s conscience and attitudes.