The fraud triangle is well-known to most compliance practitioners: pressure, opportunity, and rationalization. When these three factors converge, there is danger of an ethical lapse which could lead to violation of law. Bribery and corruption under the FCPA are types of fraud where the employee or employees do not keep the direct proceeds of their conduct but enrich the company. Of course, if their collective bonuses are drawn from the fraudulent conduct, the cycle is complete around how the fraud triangle applies to the FCPA.
Yet, most compliance practitioners do not think of the fraud triangle when they consider their corporate compliance programs. Todd Haugh, wrote in a MIT Sloan Management Review article, “The Trouble With Corporate Compliance Programs,” that even best practices compliance programs fail to take into account behavioral best practices and one important, but too often overlooked, key to strengthening both individual and overall corporate behavior is eliminating rationalizations.
As a prescription, Haugh recommends several steps. The first was one of the most intriguing—for a company to employ a behavioral specialist to take current research and theory into practice in an organization. This dovetails to the Justice Department’s Evaluation of Corporate Compliance Programs on a tailored approach to anti-corruption training. Wedding these two types of tailored employee training, anti-corruption and anti-fraud, could be quite powerful.
Haugh concludes by recognizing that no compliance program will always eliminate bad employee behavior. However, his article and research gives the compliance practitioner new insights into how to motivate employees and make compliance more effective in an organization. Many of the ideas and suggestions put forth by Haugh would help to more fully operationalize your compliance program as specified by the DoJ in the Evaluation. Finally, the use of behavioral techniques can add a powerful tool to the compliance practitioner in more fully integrating compliance into the fabric of an organization.