Compliance Culture

Practical insights for compliance and ethics professionals and commentary on the intersection of compliance and culture.

TOMS and CSR

TOMS is a well-known California-based retail company.  The company sells footwear, eyeglasses, coffee, clothing, and handbags.  Its most iconic item is the alpargata shoe, a casual style based on a traditional Argentine shoe.  The TOMS business model began with this shoe, and every time TOMS sold a pair, a new pair was given to a child without adequate footwear.  As the TOMS product line expanded, this philanthropic mission was extended to each of the new business items.  With each pair of glasses sold, TOMS uses part of the profit on vision projects in the developing world.  In honor of each purchase of TOMS coffee, the company works with partner organizations to provide water to communities in need.  Handbags sold benefit maternal health and safe childbirth initiatives.

Corporate social responsibility (CSR), therefore, is a significant driver of the TOMS business strategy and purpose.  The company was started by entrepreneur Blake Mycoskie with the entire purpose of serving as a philanthropic project to provide shoes to children in developing nations.  Throughout the company’s history since, raising awareness of the importance of having shoes for best health and safety practices.  The TOMS “one for one” business model where a charitable contribution is made for each purchase imbeds CSR in the commercial strategy of the company.

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Top 10 FCPA Resolutions

The Foreign Corrupt Practices Act (FCPA) is a United States federal law which addresses accounting transparency and bribery of foreign officials. The US Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are both responsible for FCPA enforcement – the SEC, for those companies under its regulatory jurisdiction, and the DOJ, for all other companies.  This enforcement famously leads to large settlement payments by offending companies, the resolution of which is often reached by collaboration among numerous governments and supervisory entities.

The ten largest FCPA resolutions as of the writing of this blog post are listed below, with links to more information and business case studies on each.

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Kamala Harris and false choices in ethical decision-making

Kamala Harris is the junior United States Senator from California and was previously the Attorney General of California and the District Attorney of San Francisco. Throughout her career as a prosecutor and now legislator, Harris has been well-known for her advocacy of restorative justice initiatives and her progressive engagement with a wide variety of social issues.

In speeches and interviews, Harris frequently rejects simple interpretations of her record and urges people to consider more nuanced views on political and cultural topics rather than seeing various interests or goals as mutually exclusive or conflicting when they actually could be aligned. On this subject, Harris often refers to advice she received from her mother: “Reject false choices.”

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Starbucks and CSR

Starbucks is one of the best-known companies and brands in the world. The success of Starbucks in the global market is not just, or even mainly, about the popularity of the coffees, teas, and snacks it serves to guests. Customers want to know where companies like Starbucks stand on social and political issues too. They’re eager to engage with the business values and cultural strategy of the company, in order to distinguish the choice for Starbucks over any of its many other competitors they could patronize for a drink or a pastry instead.

Corporate social responsibility (CSR) is a prominent strategic consideration for many companies. Authentic and convincing expression of CSR values can gain the attention and appreciation of consumers, competitors, and stakeholders. For a broad overview on the importance of inspiring this engagement for organizations seeking to use their interest in activism or social justice issues, check out this post on CSR tips for compliance programs.

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Integrity of game play: Unethical leadership by coaches

This is the fifth in a series of five posts on the topic of integrity of game play. The first post in the series was about the negative impact of player misconduct on sportsmanship and game outcomes. The second post pondered whether tanking can ever be ethical and judged numerous examples of the practice in different sports to assess potential morality of these actions. The third post covered referee bias in different sports, analyzing its prevalence or presumptions of it and how this type of bias may relate to overall ethical decision-making and choice theory.  Last week’s post discussed examples of organizational cheating operations by teams.  Today’s post, the fifth and final in the series, will delve into examples of unethical leadership by coaches.

Coaches are some of the most popular, visible, and influential leaders in society. Their tone and conduct can have a ripple effect on the behavior by and achievements of the players and teams they influence. To the public, coaches often provide the institutional identity for the team, expressing their mission and values in the media as well as defining the terms on which the organization wishes to compete and be known. Within team organizations, coaches are the most important people managers, tasked with both developing individuals and demonstrating operational commitment to the team’s strategy for the game, season, and beyond.

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Integrity of game play: Institutional cheating

This is the fourth in a series of five posts on the topic of integrity of game play. The first post in the series was about various types of player misconduct and its implications for sportsmanship and game outcomes. The second post discussed the moral character of different types of strategic tanking and looked at various examples of tanking from a variety of different sports. Last week’s post was about referee bias in diverse sports and how it relates to overall decision-making and judgment.  Today’s post looks at examples of organizational cheating operations by teams.  The fifth and final in the series, on March 21, will analyze examples of unethical leadership by coaches.

Institutional cheating by sports teams has sparked repeated scandals in the media and inspired outrage from observers who perceive sustained operations by teams to cheat or gain unfair advantage as an assault on the competitive objective of game play. These cheating campaigns can have a dramatic, and disastrous, impact on both reputation of teams and their future competitive possibilities or the sustainability of their prior achievements that may have been reached dishonestly.

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Integrity of game play: Referee bias

This is the third in a series of five posts on the topic of integrity of game play.  The first post discussed the impact of various types of player misconduct on sportsmanship and game outcomes.  Last week’s post debated whether tanking can be ethical and looked at numerous examples of tanking across different sports to compare how it happens and what its effect is. Today’s post is about referee bias and how it affects games, players, and teams.  The fourth post, on March 14, will be about organizational cheating operations by teams.  The fifth post and the last in the series, on March 21, will be about unethical leadership of coaches.

Teams and their fans often accuse referees of being biased or making unfair calls. Whenever players or spectators disagree with the call made or penalty assessed – which, for those on the wrong side of the outcome of the decision, is not all that rare – bias is often suspected or assumed.

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Insights from behavioral economics for compliance officers

This is the third in a series of four posts on insights for compliance officers from different fields of study.  The first post in the series was about lessons from psychology regarding motivation and choice, from prominent figures such as Viktor Frankl and Barry Schwartz.  Last week’s post discussed insights from self-development and coaching, including the works of people like Brene Brown and Byron Katie.  Today’s will be about insights from behavioral economics.  The fourth and final post in this series, on March 13, will focus on the application of theories of business management theories to corporate compliance programs.

Behavioral economics is a multi-disciplinary field of academic study which integrates themes from psychology, sociology, and neurology, among others, to analyze and predict economic decisions and markets behavior of individuals.  Given that behavioral economics shares so much theoretical inspiration with other areas and covers such a wide array of human behavior, it is naturally quite insightful for compliance officers.  Like compliance, behavioral economics focuses heavily on factors to decision-making and conduct.  Behavioral economics also takes great interest in risk tolerance and assessment, the management of which is also important for compliance.

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Integrity of game play: Ethics of tanking

Editor’s note: Check back in the coming days for additional content to this post which will feature a deep-dive discussion on the moral code of tanking and the practice’s themes and applications between me, from a compliance and ethics perspective, and my husband, Bill Afonso, from a sports management and strategy perspective.

This is the second in a series of five posts on the topic of integrity of game play.  Last week’s post discussed player misconduct, such as penalty embellishment, like diving and flopping, and equipment cheating.  Today’s post is about the ethics of tanking and will question the morality of the practice across various sports and situations.  Next week’s post, on March 7, will be about how instances of referee bias impact games, players, and teams.  The fourth post, on March 14, will be about institutional cheating by team organizations.  The fifth and final post, on March 21, will be about coaches who have demonstrated unethical leadership practices.

Tanking is loosely defined as relying upon poor performance in order to ensure future benefit or competitive advantage based upon bottom of the table results. Internal decisions within the team organization can be planned and intended for the purpose of gaining future advantage via sustained losses or refraining from employing the most competitive strategies.   This can include roster manipulations such as sitting key players or keeping others in the minor leagues or farm systems, as well as actually instructing players actively in the game to underperform or to pursue strategies they expect to be unsuccessful or unproductive in order to deliberately lose the game(s).

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