To help prepare compliance professionals for the year ahead, we’ve talked with industry experts, our colleagues at NAVEX Global, and ethics and compliance professionals from our more than 12,500 client organizations to gather insights on the top issues and trends that will impact compliance programs in 2016. We’ll share each of the trends here over the next few weeks.
In the U.S., the 2016 election now dominates the news, social media and many employee conversations. And for global companies, it’s always election season somewhere. So now is a good time for ethics and compliance officers to address the potential risks, challenges and volatility that can arise when business and politics mix.
Politics create a unique set of compliance problems ranging from campaign financing regulations, quid pro quo deals and the misuse of company resources. Heated political conversations can also cause collisions of political points of view that can undermine teamwork and tranquility among our employees. These conversations can and sometimes do lead to policy violations involving inappropriate or discriminatory behaviors.
Key Steps for Organizations to Take
1. Review your code of conduct and policies to make sure they’re clear and up-to-date about political contributions, political activity and campaign financing.
These issues are complex and can vary from one jurisdiction to another. It is a good idea to email employees, especially senior managers, to remind them of the rules and to encourage them to ask questions if they’re in doubt. This is especially important if you’re a government contractor or if your company or industry is active in lobbying efforts.
2. Lookout for shareholder resolutions expanding political spending disclosures.
In the U.S. and elsewhere, a variety of laws already require some disclosure of corporate political spending. But over the last few years shareholder activists have been pushing for additional transparency, especially concerning contributions to trade associations and social welfare groups or political parties. In an election year, the push for more transparency is likely to increase.
While it’s unlikely that you will be directly involved in monitoring or responding to shareholder resolutions, as the ethics and compliance officer you need to ensure that someone is addressing the potential risk. You need to be aware of the potential consequences if additional disclosures are made.
For example, disclosure can have a significant impact on some employee opinions of the company and its leadership, and in extreme cases can lead to consumer actions and even boycotts of your business. Also watch for an uptick in helpline reports and investigations related to the disclosures.
3. Be clear about limits on using company resources for political activities.
Most managers have no problem making the easy calls. It’s not okay for an employee to use company equipment to make copies of campaign flyers. It’s not okay to send emails to customers urging them to support a particular candidate. But what about some of the more nuanced issues? For example, do you allow candidates to hold a rally at your facility—or take a tour with media in tow? Do you make exceptions if the rally focuses on particular issues—like healthcare, energy or defense—that are directly related to your business?
It’s best to get ahead of these issues in advance with well-thought-out processes, and to be prepared through communications and targeted training.
4. Reinforce role-specific policies—particularly with senior executives.
Do you make exceptions to your code of conduct or policies if your CEO or a senior executive is a big supporter of a particular political candidate or cause? How would you respond to a complaint from an employee who feels he is experiencing retaliation by his boss after they discussed their political preferences? And is there anything you can or should do if your CEO or a senior executive chooses to publicly support a controversial candidate?
Experience has shown that such leader-driven partisan support can have a significant impact on employee morale and recruiting—and can do long-term damage to your brand and reputation.Tone (and actions) at the top matter.
5. Be prepared to make the hard decisions.
No matter the strength of your code of conduct or policies, odds are that you will face challenges and unexpected situations that may require you to take an unpopular stand. In those cases, your corporate culture, guided by your code of conduct and policies, should help guide your decisions.
For example, most companies prohibit employees, without clearance, from speaking on behalf of the company and publicly endorsing a candidate. But what do you do if a sales associate insists it’s her right to wear a candidate’s button when visiting customers? In this case, clarifying for her that wearing the button while representing the company is a violation of policies may be an unpopular stance, but it is one that you must take.
And, while no action is necessary yet, recent debates over free speech on college campuses have begun to turn to a re-examination of academia’s codes of conduct regarding provisions that broadly prohibit “offensive speech” or that seem to equate types of political speech with harassment or bullying. It’s only a matter of time before someone questions similar provisions in corporate codes of conduct.
6. Guard against political discussions that become derogatory and offensive.
While most employers allow employees to discuss politics at work, recent world events and the stances of political candidates throughout the world significantly increase the risk that employees will move from appropriate discussions into comments about race, religion and national origin that may violate your policies against harassment, discrimination and respectful treatment of others.
Communicate now with your employees about the standards of behavior that you expect, and train managers how to handle situations in which employees’ discussion have crossed the line. Remember, this is not just about enforcing policies, but can have a real impact on productivity, morale and employee retention.
Want to talk with an expert about your specific challenges for the coming year? Schedule a consultation with our ethics and compliance experts—we'd love to see how we might help support you and your organization.