What is the Holy Grail of compliance? It is to demonstrate a positive return on investment (ROI) for your compliance program. We are getting closer, as a recent academic paper demonstrated that companies have a more robust anti-corruption compliance program and the direct effect on the companies’ ROI in countries that were perceived to have a high incidence of corruption.
While in countries in a low risk for corruption, there was not much difference in the sales growth for companies with robust anti-corruption compliance programs, when it came to growth in countries which had a high propensity of corruption, there was a dramatic difference. The report concluded with “The magnitudes of the estimated coefficients are economically interesting.”
These findings are equally large and important for the CCO or compliance practitioner. First, companies that have more robust compliance programs are from countries that have more robust enforcement and monitoring. Second the more robust your compliance program is, the lower your sales growth may be but the higher your overall return in a high-risk country will be going forward. Finally, even if a company sustains high sales grow in a high-risk country, if it does not have a robust compliance program, the sales will drop off dramatically and may well lead to negative ROI.
So the next time some business type tries to say that following the law by having a robust compliance program in place, you can correct them. Spikes in sales in high-risk countries do not translate into sustained growth and without an effective compliance program in place, your company may actually lose money.