Goodwill Hunting

The fines against corporations found guilty of violating laws regarding ethics are hefty under current federal sentencing guidelines. However, the fines can be reduced substantially if a company has an effective program in place before a violation occurs.

Although there's no formula, the government has issued recommendations on the components that make up an "effective" compliance program. The recommendations, as summarized by Victoria Wesseler, president of Ethics and Compliance Strategies in Indianapolis, are:

• The development of standards and procedures reasonably capable of reducing the prospect of criminal conduct

• Appointment of a senior-level individual within the company to monitor standards and procedures

• Care taken to prevent hiring individuals with a propensity toward criminal misconduct

• Communication and training regarding standards for all employees

• Monitoring and auditing the system, including an internal mechanism for employees to report violations

• Consistent reinforcement of standards

• And, in the case of a violation, timely responses to curtail the activity and prevent future occurrences.

Wesseler also suggests integrating standards into employee performance reviews.

This article was originally published in the July 1998 print edition of Entrepreneur with the headline: Goodwill Hunting.