Corporations operating in the 21st century complex and globally interconnected economy are required by US Federal and State laws to develop and effect compliance programs which comply with the laid down laws and regulations in addition to ensuring that directors, employees, suppliers and other interested stakeholders are acting in a lawful manner to avoid any appearance of impropriety (Cross & Miller, 2009; Ernst & Young, 2008). The compliance programs are indeed an essential component of interstate and multinational corporations by virtue of the fact that they shield the businesses from the high legal costs and loss of reputation involved in the event that a prohibited business conduct is unearthed. By critically evaluating the corporate compliance programs of Coca Cola, Nike, McDonalds, Abercrombie & Fitch, Dell, and Southwest Airlines, this paper purposes to identify some of the salient areas that modern organizations are focusing on with regard to corporate compliance.
According to Kral (2010), “…a corporate compliance program is generally defined as a formal program specifying an organization’s policies, processes, procedures, and actions within a process to help prevent and detect violations of laws and regulations” (para. 6). One of the salient areas that the sampled companies are focusing on with regard to corporate compliance is to ensure that they operate under international best practices in terms of ensuring transparency and accountability. To achieve this end, the corporations have put in place effective standards of corporate governance and ethics, and all employees, suppliers and other stakeholders are expected to abide by the standards. Indeed, companies such as Coca Cola and Abercrombie & Fitch have initiated training programs for all employees, suppliers and business partners to ensure they abide by the standards. This is after the realization that corporations can be held criminally liable under various Federal and State laws for any criminal act perpetrated by its employees or agents if it is established that the act occurred within the scope of the employee’s or agents contractual obligation for the benefit of the company (Cross & Miller, 2009).
Nearly all of the compliance programs sampled stress ethical business conduct, honesty and integrity in all matters undertaken by the company. It should be remembered that unethical business practices led to the demise of huge corporations such as Enron and Lehman Brothers. As such, the sampled companies regularly monitor and update their compliance programs to ensure compliance with the Constitutional law. Third, the analysis identified that all compliance programs lay a great emphasis on employee rights, especially in relation to fair compensation, fair working hours, legislation against workplace discrimination, sexual harassment, and employee safety. According to Cross & Miller (2009), the observance of these rules is of critical importance to avoid legal reprimands and to sustain the good image of corporations.
Forth, it has also been noticed that many of the compliance programs sampled have an area on global anti-bribery compliance program. This is in line with the U.S Foreign Corrupt Practices Act, which forbids corporations against giving money or anything of value to foreign governmental officials or foreign political contenders so as gain business-related mileage or circumvent from paying any legally-binding taxes (Cross & Miller, 2009). Fifth, a majority of the compliance programs stress the need for environmental protection through undertaking corporate social responsibility (CSR) programs. Again, corporations are required by various Federal and State laws to ensure that they don’t degrade the environment by engaging in prohibited business practices. Stiff penalties are always handed to corporations that engage in environmental destruction. Lastly, it has been observed that most compliance programs include a global or local toll-free telephone lines for employees, suppliers, and the general public to report in confidence any violations of the law as set out in the corporations’ codes of ethics. The bottom-line is to remain ethical, accountable, fair, truthful and dependable.
Reference List
Cross, F.B., & Miller, R.L. (2009). The legal environment of business: Text and cases – ethical, regulatory, global, and e-commerce issues, 7th Ed. Mason, OH: South Western Cengage Learning
Ernst & Young. (2008). Corporate compliance. Web.
Kral, R. (2010). Effective corporate compliance programs. Corporate Compliance Insights. Web.