Compliance and ethics programs for small businesses?

Are compliance and ethics programs only something appropriate for giant businesses with the personnel and resources to handle an enormous and expensive process? Does a company need to have at least hundreds of millions of dollars in revenue to make this happen?  Is it just the case that small companies do not have the money to buy an effective compliance and ethics program? 

Certainly at the beginning of the compliance and ethics revolution there were people who made this argument. One prominent commentator even stated that the Sentencing Guidelines would get big companies off the hook, whereas smaller companies would be unable to follow the Guidelines standards. 

The reality is quite different.  No amount of money or other resources can “buy” compliance.  It takes something much more difficult to get:  commitment.  Money spent by companies without commitment is wasted money.  But any small company or other organization that wants an effective compliance and ethics programs can have one if they have this one element:  commitment.  It is the key ingredient missing in the huge companies that get in trouble despite an impressive payroll supposedly devoted to compliance. 

For a small company, if the boss makes it clear that there is only one way to conduct business – following the rules and doing the right thing – that will have more power than an inflated budget.

A commitment, however, means more than a flowery statement written for the CEO by a ghost writer.  It means a determination to have all the steps in place to ensure everyone in the organization knows what the right thing is, and actually follows that path.

Can this be done without a huge budget?  Absolutely.  Years ago, when the field was younger, I had heard too many people make the hollow claim that small companies could not afford compliance and ethics program.  I had had experience in both ends of this, dealing with huge companies and actual mom & pop shops. (And people tend to forget that even big companies have small, sometimes tiny units with them.)  What I had seen in smaller companies was that when the boss wanted things done, they happened.  My sense was that when a company said it was unable to have a compliance program, what that really meant was that they did not want to bother to make any effort.  It was not a failure of resources; it was a failure of imagination.

So working with my friends at SCCE I created a simple guide for any company anywhere. To get the point across we used a simple and direct title: “A compliance and ethics program on a dollar a day.”  In this guide I spelled out how this could be done, dollar for dollar.  (When my European friends suggested I do a version referring to a “Euro a day,” I said no, it was not that expensive – it was only a dollar.) 

In this guide we offer quite a few suggestions.  One starting point is that people in the field of compliance and ethics believe in sharing experiences and resources.  You can contact compliance people at other companies for ideas and even materials they are willing to share.  Another form of sharing can come from any trade associations you are in.  For example, an association might be willing to have a speaker address a compliance issue for your industry – this could provide you with a form of training and risk assessment.  You can have a compliance officer without adding to your payroll.  In small companies it is appropriate to have one of your existing officers add this title – as long at they take it seriously.  Want another form of training?  Likely today you can get at least some of this on the Internet.  Government agencies, such as the FTC, will have material on their sites explaining the law in basic terms.

In other words, there are plenty of resources available and ways to use your existing resources, to get the job done. 

The European Commission, in its guidance on competition law compliance, understood the shallowness of the argument that small companies could not do this.  In its published guidance on compliance programs, “Compliance Matters,” it observed this obvious point: “Small and medium-sized companies have the advantage that the ‘tone from the top’ can more easily be disseminated to the employees, who are fewer in number.”  Compliance Matters, at 17.

Recently I was informed by Adam Turteltaub of SCCE that the Center for International Private Enterprise was distributing the “dollar a day” white paper around Africa.  I had heard that at one time the US Department of Commerce had distributed it to embassies as part of the anti-corruption effort.  I had, in fact, done some speaking for the Department as part of that anti-corruption effort. 

What can you do if you would like to try this out?  Well, since the paper says you can have a program for so little money, of course we could not charge for the guide, so it is available from SCCE for free, here, in 7 languages:   www.corporatecompliance.org

If you have any ideas to add to this, please pass them along.  We’d be happy to share them with our readers.