In the ever-evolving realm of corporate compliance, the Justice Department’s recent revisions to its Corporate Enforcement Program and Evaluation of Corporate Compliance Programs highlight a renewed emphasis on compensation systems and consequence management. This paradigm shift and its implications were discussed extensively in a recent podcast episode titled Episode 284 — How to Implement a Compliance Compensation System.
The Volkov Law Group elaborates that the driving theory behind the Department of Justice’s amplified focus is an intent to increase the consequences faced by individuals who engage in misconduct, or supervisors neglecting their responsibilities towards detecting and reporting such erroneous behavior. As of now, individuals stand the risk of being criminally prosecuted for engaging in misconduct, but this increased oversight aims to expand this prospect.
This change in corporate policing, strengthening the deterrent of misconduct, escalates the importance of implementing a compliance compensation system. It further underscores the need for effective consequence management. Beyond conventional penalties for misconduct, thinking holistically about reward systems that incentivize ethical behavior and robust compliance could be game-changing in the ongoing fight against corporate malfeasance.
From a global perspective, these changes denote a stronger willingness on the part of regulators to craft a corporate environment where malfeasance doesn’t pay off, and the people at the helm are held accountable for the behavior of their subordinates.
In the podcast, the implementation of effective compensation systems in line with compliance objectives and the larger role of such dynamics in corporate well-being are instructively discussed. The episode is especially enlightening for legal professionals working in multinational corporations and big law firms who wish to stay at the cutting edge of compliance issues.
While each business entity would require unique compliance structures fitting its individual needs, the podcast episode provides valuable insights and discussion points that legal professionals can consider when evaluating or architecting their firm’s compliance and compensation systems.