Uneven Discipline Undermines Compliance

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unfair2The internal corporate world mimics broader social forces.  A perfect example of this is a corporate disciplinary system and our criminal justice system.

The analogy works like this – if justice is handed out in a disparate way, meaning that similarly situated individuals who commit the same offense are treated differently based on an improper factor, the integrity of the criminal justice system is questioned.  Eventually, such questioning can result in increased offensive behavior and greater disregard for compliance with rules and laws.

We have always had a vigorous debate on the overall fairness of the US criminal justice system.  Many complain that uneven justice occurs between the rich and the poor, whites and African-American and other classifications of criminals.

The same principle applies within a company.  If a disciplinary system is seen as meting out disparate results to similarly situated offenders, managers and employees will have little regard for the overall compliance regime.

Not much is written about this issue but it really can undermine significantly a company’s compliance program.  In the corporate environment, if a senior manager commits the same offense as a lower-level manager and receives lighter punishment, that sends a disturbing message to the entire organization.unfair

Some managers and employees will start to think, rules are for everyone except those who are favored by the company.  The message stinks and the impact smells even worse.

Even if your compliance program contains no positive incentives for compliance (e.g. awards, employment reviews), handing out disparate discipline in a company can quickly erode whatever goodwill or capital the CCO and senior management have.  It is a quick way to render the CCO and the overall compliance program as ineffective.

One way to protect against disparate punishment problems is to establish a structure which promotes uniformity.  Discipline should never be decided by one person – an HR officer, a CCO or anyone else.   A discipline committee, consisting of key stakeholders is a good structure to promote uniformity.

A discipline committee can review cases on a regular basis, provide feedback during an investigation and ultimately ensure consistency in discipline.   Every employee, no matter what position, should be subject to discipline from the committee.  If a C-Suite executive is involved, the committee’s decision should be reviewed at the Board level.

unfair3To ensure adequate input from the C-Suite, a few senior executives should be assigned to the committee.  A record of the committee’s actions, reviews and practices should be maintained to memorialize the process and ensure that no outside influences were involved.

Topics:  Chief Compliance Officers, Compliance, Disciplinary Proceedings, Disparate Treatment, Managers, Supervisors

Published In: General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Group Law Firm | Attorney Advertising

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Michael Volkov
The Volkov Group Law Firm

The Volkov Group Law Firm specializes in white collar defense, corporate compliance, internal... View Profile »


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