FCPA and Sales Strategy
By Matt Kelly
There aren’t too many reasons out there for a sales executive to bribe a government official other than to close a sale. That’s why we talk about anti-corruption compliance and the sales team so often.
Compliance and the sales function also deserve so much attention because their pairing so often can go wrong. Risk assessments aren’t thorough; internal controls don’t catch suspicious transactions; one side doesn’t know (or trust) what the other one is doing.
All of those missteps can happen when the compliance and sales functions aren’t aligned in how they approach anti-corruption risk. Even more frustrating is that most sales leaders want to behave ethically; they want to close sales based on their own skill rather than by cheating. Winning is that much sweeter when they do.
So how do things keep going awry in practice?
First, the messages about ethical conduct don’t resonate all the way down the sales department — or more precisely, sales employees hear multiple conflicting messages. One comes from the top, that ethical conduct is important. The other comes from somewhere below the top, that sales goals must be met.
Think hard about that situation, because it means that your corporate culture isn’t unified. Instead, you have a subculture (“meet sales goals”) that contradicts the ethical culture the CEO and other senior executives like to talk about.
If you can identify that, yes, we have conflicting messages and subcultures at our organization; then you can attack that subculture with practical steps to stamp it out.
For example, one typical step would be to revisit your incentives. Sales teams live and die on incentives — and there’s nothing inherently wrong with that, if your incentives push them in the correct way. Do your incentives punish failure more than they encourage success? Do they encourage cooperation among the team, or pit sales reps against each other?
Certainly, a compliance program should also include independent measures, such as accounting controls that block suspicious payments to intermediaries, or audits of due diligence procedures. The compliance function always needs to act with independence, and verifying the sales team’s compliance with policy and procedure is part of that job.
Still, a company doesn’t encourage compliance, really. You explain compliance, which is a procedure that employees should follow. You encourage ethical conduct, which is (or should be) a core corporate value — and when employees embrace it, their behavior naturally follows those compliance procedures you’ve established.
Why should we split hairs that much? Because companies can indeed enforce compliance with the sales team: by auditing and punishing non-compliant behavior or sealing up opportunities for non-compliance. And if those efforts are strong enough, you might even prevent compliance failures on those efforts alone.
But at what cost, either financially or culturally? A rigid system of controls, rules, and punishment might make for fewer FCPA mistakes (although that’s stretch). It also sounds like a painstaking system to implement and a miserable place to work.
The far more effective way is to ensure that ethical business conduct is at least an equal priority (if not greater) to hitting sales targets. Then you can ponder: are we structuring incentives to support that priority? Are we relying on intermediaries and agents to the minimum amount necessary? How many due diligence duties can we put onto the sales team, and how many do we place with compliance or audit to trust, but verify?
The answers to those questions aren’t necessarily easy to find. In most organizations, with pre-existing sales functions, business practices, and cultures, the answers will also be laborious to implement. At least, however, sales and compliance will be aiming toward the same objective of doing business ethically — and that’s what alignment is.
Far better than the alternative of trying to build a compliance program while the sales and compliance teamwork at cross-purposes, viewing each other with distrust and frustration.
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