Exhibit A: The Perils of Outdated Policies

by NAVEX Global
Contact

Well structured, updated policies can be a first line of defense against employment related litigation and regulatory investigations. However, an organization’s policies can quickly turn from defensive tactic to litigation aid if an effective policy management system is not in place to keep up with the pace of changing legislation.

No Policy vs. an Outdated Policy

Outdated policies can be used against the organization they were intended to protect.  In 2009 a large restaurant company was fined more than $1 million for gender-based discrimination under Title VII of the Civil rights Act of 1964. The company had a longstanding policy, which was established in 1938, that prohibited the hiring of men as food servers. The company maintained the same policy for 39 years following the enactment of Title VII, until a discrimination charge was finally filed in 2003.

This extreme example of failing to review and update policies is not unique. An examination of Equal Employment Opportunity Commission cases reveals numerous similar examples of organizations penalized for failing to align “longstanding” policies with current laws.

This stark example raises the question: Is it better to have no policy at all than a policy that is not followed? There is no easy answer, but what is certain is that companies that approach policy management strategically and exercise ruthless discipline with respect to their policies will yield returns in organizational alignment, corporate culture and, ultimately, their bottom-line results.

Exhibit A in a Defense

Take Morgan Stanley as a high-profile example. In 2012 the US Department of Justice (DOJ) declined to prosecute the company when employee Garth Peterson violated the Foreign Corrupt Practices Act (FCPA) because “Morgan Stanley’s internal policies, which were updated regularly to reflect regulatory developments and specific risks, prohibited bribery and addressed corruption risks…”

The DOJ statement  further reveals it declined to bring any enforcement action as   “…Morgan Stanley trained Peterson on the FCPA seven times and reminded him to comply with the FCPA at least 35 times. Morgan Stanley’s compliance personnel regularly monitored transactions, randomly audited particular employees, transactions and business units, and tested to identify illicit payments.”

Proving your Policy has Been Heard

As clearly illustrated in the Morgan Stanley example, policies alone were insufficient. It was the company’s ability to prove regular training and monitoring that protected it from prosecution.

A good colleague, who is a prominent compliance attorney, recently shared with me a compelling example of the perils of policy mismanagement, and the ensuing lack of consistent evidentiary data to protect the organization.  A major Fortune 50 client took disciplinary action against a number of employees who engaged in the circulation of sexually explicit images using their computers. After an investigation, the company discovered that the practice was widespread and issued suspensions and termination notices to the worst offenders. However, a number of those disciplined challenged the action on the basis that that “everyone was doing it” and no policy that specifically prohibited their actions had been circulated.

The Company had a clear and comprehensive sexual harassment prevention policy in place that clearly applied in this case.  However, upon review they were unable to prove the policy had been received and, more significantly, it discovered that multiple version of the policy existed on various websites.

Check out NAVEX Global’s blog entry on tips for the transformation of policy & procedure here.

The Consequences of Mismanagement

The lack of policy tracking and centralization meant that the company in the above scenario had no way of ensuring the updates were included across all platforms or that they were sent to employees with an electronic signature. Ultimately, the employees who were dismissed had their disciplinary action converted into a warning. However, more than one manager had their employment terminated over mismanagement of the sexual harassment policy.  The lasting impact of this kind of HR mess is immeasurable. 

The incident served as an expensive lesson, demonstrating that policy mismanagement is one of the leading causes of failed enforcement of good business standards.  These situations frequently flow from failure of updating and failure of provable distribution rather than from the policy being defectively drafted.  While the missteps seem so rudimentary and basic, the consequences can be devastating.

For a deeper analysis, NAVEX Global’s Definitive Guide to Policy Management is worth a review.

 

Written by:

NAVEX Global
Contact
more
less

NAVEX Global on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.