The Seven Pillars of Compliance

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The Chinese have a concept called the Four Pillars of Destiny which describes the four components which create human fate. Muslims across the world live according to religious edicts dictated in what are known as the Five Pillars of Islam. And our good friends across the pond in Europe have a collective body of laws, commonly known as the Three Pillars of European Union, delineating all things social, economic, and military.

So why should the compliance industry be any different? In 1984, Congress formed a committee called the U.S. Sentencing Commission which was charged with establishing effective and comprehensive standards for what would grow to become the ethics and compliance industry. These laws have since universally governed the way in which all national industries function and provide the minimal guidelines for industry operation.

These guidelines were also derived out of the need to address the issue of sentencing. Prior to their implementation, nearly identical cases of corporate corruption and illegal activity were being treated in highly disparate fashions. The Commission sought to remedy this problem by crafting guidelines which addressed three primary objectives:
  1. Establishing a model for good corporate behavior



  2. Ensuring that corporate sentencing is fair according to a set of objective criteria

  3. Establishing a model which would encourage organizations to self-regulate before any crimes occurred
Which brings us to the Seven Pillars of Compliance. These were also established by the Commission through the guidelines to help enforce and encourage effective compliance. These seven core principles are as follows:
  1. Standards and Procedures: The most important thing any company can do to maintain an environment of integrity and legality is to communicate with its employees not only what the compliance standards are, but to regularly check up on the status of their practice. Typically, these standards are referred to as the company's code of conduct. Managers and supervisors should communicate explicitly and in detail what is expected of employees and what they can in turn expect when compliance standards have been violated.

  2. Oversight: Leaders are important — we all know that. They are especially important when it comes to making sure that laws are being properly applied and adhered to. Thus, most corporations must have a supervisor whose primary duty is to make sure that all standards are being rigorously applied. Depending on the size of the organization, compliance enforcement may require more than one full-time employee.

  3. Education and Training: Everyone learns through repetition. Familiarity breeds contentment. Therefore, managers and supervisors must not only pass out information, but make sure that it is understood. The Commission recommends that regular training and reviews be utilized to ensure that employees have a full understanding of compliance. Business owners and chief officers should also foster an environment of openness where employees are free to ask questions or share comments.

  4. Auditing and Monitoring: Every organization should have its own independent method of auditing and monitoring its systems and employees to make sure it is meeting compliance standards. Typically, this will involve a compliance officer who will be in charge of monitoring and reporting all findings. Regular audits performed by internal or external auditors are best.

  5. Reporting: When compliance standards are violated, the most important initial step is to make sure that they are reported to authorities as soon as possible. All corporations should have a reporting mechanism in place which invites employees to report abuse freely and without any fear of reprisal. A common practice today is for companies to utilize a third-party vendor which allows employees to report violations via telephone or on the Internet.

  6. Enforcement and Discipline: Whenever laws or rules are broken, there are consequences, hopefully on par with the severity of the violation. Just as rules should be carefully outlined and discussed, so should the consequences of violating those rules be carefully understood. Sentencing guidelines are a major component of compliance law.

  7. Response and Prevention: All companies must respond in a timely and responsible manner to all compliance violations. Though there are a number of laws in place, little can be expected if the company's employees or supervisors choose to look the other way or remain willfully ignorant of abuse.

On the net:U.S. Sentencing Commission
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 businesses  ethics  objectives  committees  Congress  criminals  industry  organizations


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