This series of articles by ERC Principal Consultant Kenneth Johnson describes and comments upon the US Sentencing Commission's amended requirements for an "effective program to prevent and detect violations of law." We believe this to be a subject worthy of close study: less because organizations should anticipate having problems with federal regulators or prosecutors than because the amended FSGO will provide an excellent foundation for designing ethics and compliance programs.
Part 1: Key Terms and Profound Changes
This article highlights new key terms used in the amended FSGO, such as compliance and ethics program; governing authority and organizational leadership; and "certain individual(s) hav[ing] day-to-day responsibility for the compliance and ethics program." It also describes four profound changes to the definition and practice of an effective program.
Part 2: Enterprise Risk Management (October 2004)
This article, the second in the series, discusses the new requirements of "risk assessment" and "program evaluation." Mr. Johnson puts these requirements into the broader context of other current management initiatives, such as "enterprise risk management," "managing for results," and "outcomes-based program evaluation." These various initiatives suggest that, to be effective, a compliance and ethics program must manage identified risks and uncertainties through a carefully tailored program that is designed, implemented, enforced, and evaluated to achieve carefully chosen program outcomes.
Part 3: Seven Minimum Requirements (November/December 2004)
In the third article in this series, Mr. Johnson provides background information and discusses in some detail the seven "minimum requirements" of an effective compliance and ethics program, as the Commission defines one. For each requirement, he includes the actual language of the 2004 Organizational Guidelines, followed by the comments made by the Commission in the document forwarding the proposed amendments to Congress. He then comments on what our research and experience suggest might be helpful in either understanding or applying the 2004 Organizational Guidelines.
Part 4: Designing an Outcomes-Based Ethics and Compliance Program Evaluation (April 2005)
In this article, Mr. Johnson explores how an organization might approach evaluating its ethics and compliance program. To aid the reader in understanding this broad topic, he divides his discussion of program evaluation into the following segments:
- Two Approaches to Program Evaluation
- Measuring Organizational Culture
- Measuring Overall Program Performance
- Developing a Data Collection Plan
- Benchmarks and Baselines
- Reporting Program Performance
- Organizational Learning
Part 5: The Amended Federal Sentencing Guidelines and the "Litigation Dilemma"
The purpose of this article, the fifth in the series, is to point to some of the potential costs and consequences of good corporate citizenship, within the context of the FSGO. The potentially adverse consequences discussed here do not argue against designing, implementing, and evaluating an effective compliance and ethics program. They are submitted as matters that governing authorities and organizational leadership need to anticipate."
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Participating companies have the opportunity to conduct an employee survey using ERC’s metrics in order to better understand the impact of ethics and compliance programs, measure ethical culture strength, and compare against peer organizations.
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