“When compliance leaders have realistic and achievable high expectations, those expectations can transform the ethics and compliance of an entire organization. It’s mutual success multiplied by a thousand.”
— Richard L. Cassin, Founder & Editor-at-Large, FCPA Blog
Through the lens of behavioral science, explore three ways to demotivate unethical behavior and how high expectations lead to improved performance. Consider how to use financial incentives to facilitate a culture of compliance and key tips to survive corporate investigations. Learn about the latest example of compliance crackdown with the Honeywell UOP $160 million settlement with the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) compliance crackdown.
Three Ways to Demotivate Unethical Behavior Using Behavioral Science
Changing behavior requires motivation. This article uses insights from the Personality Systems Interactions (PSI) theory to explore how to motivate good and demotivate bad things. PSI theory is an overarching framework for analyzing the architecture of human motivation and personality functioning. Within compliance, this means working on the level of habits in your business, keeping employee stress levels in check, and allowing them to challenge anything safely. Dive deeper into three ways to demotivate unethical behavior through PSI theory.
Incentives in Compliance: Financial Incentives
The DOJ and SEC have made it clear that they view monetary structure for compensation, rewarding those employees who do business in compliance with their employer’s compliance program, as one way to reinforce the compliance program and message. Despite this, it is one of the areas that many companies overlook. Positive incentives such as personnel evaluations and promotions, rewards for improving and developing a company’s compliance program, and rewards for ethics and compliance leadership can drive compliant behavior. Rewarding compliant behavior through financial incentives while simultaneously penalizing non-compliant actions is one step in building a culture of compliance.
Tips To Follow DOJ Guidance And Survive Corporate Investigations
Deputy Attorney General Lisa Monaco recently stated, “[a]bsent aggravating factors, the Department will not seek a guilty plea when a company has voluntarily self-disclosed, cooperated, and remediated misconduct,” when recently announcing updates to the DOJ’s corporate criminal enforcement policies and alternatively, bring charges and require guilty please “where facts and circumstances require,” including repeat offenders. Companies should therefore ensure their compliance policies and programs are structured to position the organization to avoid a guilty plea. Explore ways to follow this guidance and survive corporate investigations.
Do Higher Hopes Lead to Better Compliance?
The Pygmalion effect, or Rosenthal effect, is a psychological phenomenon in which high expectations lead to improved performance in a given area. This phenomenon was studied in depth in the 1960s and heavily applies to business settings. It creates a self-fulfilling prophecy. High expectations (or pre-existing beliefs) change the behavior of both the leader with the expectations and the employee/s that are the target of the expectations, putting them on a path to mutual success. However, employees are motivated to perform better only if they consider the boss’s high expectations “realistic and achievable.” Unachievable goals eventually cause employees to give up and settle for less than they can achieve. Learn about the profound implications the Pygmalion effect has on compliance in this fascinating article.
DOJ and SEC Close Year with FCPA Settlement with Honeywell UOP for $160 Million
In the latest example of the DOJ and SEC compliance crackdown, the Honeywell UOP $160 million settlement resolved bribery charges in the US and Brazil stemming from bribes paid to high-ranking officials at Petrobras, Brazil’s state-owned oil company. In addition, Honeywell agreed to cooperate with the DOJ and to continue enhancing and implementing its compliance program while providing annual reports. This article unpacks the bribery investigation, the settlement, and the actions that Honeywell took along the way.
