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ISO and Compliance

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Have you browsed the ISO catalog lately? Here are just some of the standards that will help your organization’s ethics and compliance program:

ISO 19600 – Compliance Management System – Guidelines
ISO 19600:2014 provides guidance for establishing, developing, implementing, evaluating, maintaining and improving an effective and responsive compliance management system within an organization.
ISO 19600:2014 is based on the principles of good governance, proportionality, transparency and sustainability.

ISO 37001 – Anti-bribery Management System – Requirements with Guidance for Use
ISO 37001:2016 specifies requirements and provides guidance for establishing, implementing, maintaining, reviewing and improving an anti-bribery management system. The system can be stand-alone or can be integrated into an overall management system.
ISO 37001:2016 addresses the following in relation to the organization’s activities: bribery in the public, private and not-for-profit sectors; bribery by the organization; bribery by the organization’s personnel acting on the organization’s behalf or for its benefit; bribery by the organization’s business associates acting on the organization’s behalf or for its benefit; bribery of the organization; bribery of the organization’s personnel in relation to the organization’s activities; bribery of the organization’s business associates in relation to the organization’s activities; and direct and indirect bribery (e.g. a bribe offered or accepted through or by a third party).
ISO 37001:2016 is applicable only to bribery. It sets out requirements and provides guidance for a management system designed to help an organization to prevent, detect and respond to bribery and comply with anti-bribery laws and voluntary commitments applicable to its activities.
ISO 37001:2016 does not specifically address fraud, cartels and other anti-trust/competition offences, money-laundering or other activities related to corrupt practices, although an organization can choose to extend the scope of the management system to include such activities.

ISO 31000 – Risk management
ISO 31000:2018 provides principles, framework and a process for managing risk. It can be used by any organization regardless of its size, activity or sector.
ISO 31000:2018 can help organizations increase the likelihood of achieving objectives, improve the identification of opportunities and threats and effectively allocate and use resources for risk treatment.

ISO 26000 – Guidance on Social Responsibility
ISO 26000:2010 provides guidance to all types of organizations, regardless of their size or location, on: concepts, terms and definitions related to social responsibility; the background, trends and characteristics of social responsibility; principles and practices relating to social responsibility; the core subjects and issues of social responsibility; integrating, implementing and promoting socially responsible behavior throughout the organization and, through its policies and practices, within its sphere of influence; identifying and engaging with stakeholders; and communicating commitments, performance and other information related to social responsibility.
ISO 26000:2010 is intended to assist organizations in contributing to sustainable development. It is intended to encourage them to go beyond legal compliance, recognizing that compliance with law is a fundamental duty of any organization and an essential part of their social responsibility. It is intended to promote common understanding in the field of social responsibility, and to complement other instruments and initiatives for social responsibility, not to replace them.
ISO 31000 – Risk Management – Guidelines
ISO 31000:2018 provides guidelines on managing risk faced by organizations. The application of these guidelines can be customized to any organization and its context.
ISO 31000:2018 provides a common approach to managing any type of risk and is not industry or sector specific.
ISO 31000:2018 can be used throughout the life of the organization and can be applied to any activity, including decision-making at all levels.

ISO 30408 – Human Resource Management – Guidance on Human Governance
ISO 30408:2016 provides guidelines on tools, processes and practices to be put in place in order to establish, maintain and continually improve effective human governance within organizations.
ISO 30408:2016 does not address relations with trade unions or other representative bodies.

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1. Denial of responsibility.
“When a crime is committed, everyone can, with some degree of plausibility, point the finger at someone else.”
“The competitive structure of the marketplace also generate the perception that they have ‘no choice’ but to violate the law.”

2. Denial of injury.
“Most white collar criminals never meet or interact with those who are harmed by their actions.”

3. Denial of the victim.
“The offender believes he is in fact playing tit-for-tat.”
This can also come from a feeling of being undercompensated.

4. Condemnation of the condemners.
“Business executives dispute the legitimacy of the law under which they are charged.”
Including questioning government motivation in bringing the charges.

5. Appeal to higher loyalties.
“I did it for my family” is one of the most popular excuses for occupational crime.
This can also mean “employees may sometimes feel that they are excused from any accusation of criminality so long as their actions were undertaken for the sake of the firm rather than for reasons of self-interest.”

6. Everyone else is doing it.
Considering illegal conduct can give an unfair competitive advantage to the perpetrator, rivals may feel pressured to follow suit.

7. Claim to entitlement.
“People point to how much ‘good’ a company does (e.g., the number of satisfied customers, happy employees, etc.) as an excusing condition for violation of law.”

Implications for business ethics:

People don’t especially commit crimes due to a lack of knowledge (of what is illegal or unethical). “They are more likely to commit crimes because they have talked themselves into believing some type of excuse for their actions, and they have found a social environment is which this sort of excuse is accepted or encouraged.”

Business leaders / ethics training must deal with these rationalizations, and create an environment in which such behavior are not accepted.

– Reference “Business Ethics and Moral Motivation: A Criminological Perspective” by Joseph Heath (Journal of Business Ethics, Vol 83, No 4)

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Key results from Ethics & Compliance Initiative’s Global Business Ethics Survey:

22% of employees have felt pressure to compromise standards
33% observed misconduct
59% of those that observed misconduct went on to report it
36% experienced some form of retaliation for reporting it

What it means for organizations: Invest sufficient resources to monitor behavior at every operating location and to develop ethics and compliance (E&C) programs designed around a common code of conduct. Include strategies to protect against retaliation – such as ready-access to an ethics hotline with a clear non-retaliation policy.

The Gallup Survey Report, “State of the American Workplace: Employee Engagement Insights for U.S. Business Leaders” defines engaged employees as those who work with passion and feel connected to their organizations.

How would your employees respond to these 12 statements?

1. I know what is expected of me at work.
2. I have the materials and equipment I need to do my work right.
3. At work, I have the opportunity to do what I do best every day.
4. In the last seven days, I have received recognition or praise for doing good work.
5. My supervisor, or someone at work, seems to care about me as a person.
6. There is someone at work who encourages my development.
7. At work, my opinions seem to count.
8. The mission or purpose of my company makes me feel my job is important.
9. My associates or fellow employees are committed to doing quality work.
10. I have a best friend at work.
11. In the last six months, someone at work has talked to me about my progress.
12. This last year, I have had opportunities at work to learn and grow.

source: Quality Progress, April 2016

Wow! What a difference an effective ethics and compliance program makes! According to ERC’s ‘The State of Ethics in Large Companies‘ report, “large companies with effective programs face half of the rules violations as those without effective programs.” And “87% who observe violations at large companies with effective programs report those violations for action by higher ups, compared to just 32% who report wrongdoing when programs are lacking.”

MYECCHO makes getting an Ethics Hotline affordable for smaller companies too!

Here’s a look at 2014 reporting stats culled from our client and industry Ethics Hotlines:
~1 report per 100 employees
~3/4 of reports are HR related
~3/5 of reports are anonymous
~2/5 of reports result in substantial action
~1 month closure time for reports

law

Business torts are civil wrongs that are committed by or against an organization.

INTENTIONAL TORT
Disparagement or Trade Libel or Product Disparagement or Slander of Title
“Business firms rely on their reputation and the quality of their products and services to attract and keep customers. That is why state unfair-competition laws protect businesses from disparaging statements made by competitors or others.”

Intentional Misrepresentation or Fraud or Deceit
“One of the most pervasive business torts is intentional misrepresentation.
Four elements are required to find fraud:
1. The wrongdoer made a false representation of material fact.
2. The wrongdoer had knowledge that the representation was false and intended to deceive the innocent part. (aka ‘scienter’)
3. The innocent party justifiably relied on the misrepresentation.
4. The innocent party was injured.”

UNINTENTIONAL TORT or NEGLIGENCE
Liability for harm as a result of foreseeable consequence.
Includes professional malpractice.

STRICT LIABILITY
Liability without fault “is imposed for abnormally dangerous activities” such as storage of explosives and keeping of pets.
Product Strict Liability given in Restatement (Second & Third) of Torts: One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability… A product is defective when, at the time of sale or distribution, it contains manufacturing defect, is defective in design, or is defective because of inadequate instructions or warnings…

Crimes prone to be committed by businesspersons are referred to as white-collar crimes.

FORGERY
Fradulent making or alteration of a written document that affects the legal liability of another person.
Examples: counterfeiting, falsifying public records, materially altering legal documents.

EMBEZZLEMENT
Fradulent conversion of property by a person to whom that property was entrusted.
(Note: differs from robbery, burglary, and larceny where property was not entrusted.)

BRIBERY or PAYOFF or KICKBACK
Bribery is one of the most prevalent forms of white-collar crime.
Giving of money, property, favors, or anything else of value for a favor in return.

EXTORTION or BLACKMAIL
Threat to expose something about another person unless that other person gives money or property.

DECEIT or FALSE PRETENSE or CRIMINAL FRAUD
Obtaining title to property through deception or trickery.

reference Business Law by Henry Cheeseman

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