There is a reason that every compliance solution begins with the ubiquitous tone at the top. The reason is very simply, if the top leader of the company does not believe in compliance and make it a priority for their organization, it will not become a priority. Yet there is another level to this debate which was explored by Eugene Soltes, the Jakurski Family Associate Professor of Business Administration at Harvard Business School in his recent book Why They Do It. What The Man From FCPA found most interesting about Soltes’ findings were not the sociopaths in the C-Suite, ala Bernie Madoff or Allen Stanford but the mundaneness of how white collar criminals slide into illegal conduct.
Soltes writes “In a sense, it's the routineness of the actions, even to themselves that makes this malfeasance all the more important to understand. It usually starts with small violations of internal corporate policies and leads to actions which cross the line into criminal violations. There are not many employees who go into a job committed to engaging into criminal actions. They usually get their one step at time. As noted in the Wall Street Journal review of the book, “Done at scale, though, playing so fast and loose with accounting rules reflects a toxic corporate culture capable of seriously deceiving investors by lying about when revenues are earned.”
Soltes’ findings and insights provide significant fodder for any compliance practitioner to consider. A compliance program is designed to prevent, detect and remediate. Both the prevent and detect prongs apply for both levels of fraud that Soltes details in his book. For the salesman who closes deals in Q2 but books them in Q1 for revenue recognition purposes to the CEO who intones Just get the deal done and make your number, a compliance program can work to not only stop conduct moving into an illegal sphere but protect the company from the illegal actions of its employees.