by Martin Milita, Esq.
Corporate monitorships are an increasingly important tool in the arsenal of legal and regulatory enforcement authorities, and, given their widespread use, they appear to have staying power. Thus this series of articles to help both the experienced and the uninitiated understand this increasingly important area of public policy practice.
By the early 2000s, the role of the monitor expanded beyond simply reporting on facts, and began to include the responsibility for making affirmative recommendations about how to address ills at an embattled company. Not every instance of corporate wrongdoing leads to a monitorship that will require efforts to reform the company’s culture. The monitor must also look at the existing compliance framework and the organization’s proposed strategies to remediate any misconduct. The monitor should also evaluate the employees – not just who caused the misconduct but also who tried to rein it in. In addition to determining whether cultural change is necessary, this assessment helps to pinpoint which aspects of the company’s culture potentially need to be addressed.
Changing Corporate Culture:
With that assessment complete, a monitor can then go about the difficult task of counselling the organization through cultural change. In doing so, a successful monitor must develop a deep understanding of the company’s business and financial objectives. Obviously an organization will not embrace cultural change if that means abandoning all hope of profits and growth. To the extent that some in the organization complain that remediating the issues identified by the monitor will bankrupt the business, a monitor who understands the company’s business will be best equipped to parry these charges, or help the company find suitable alternatives. A successful monitor can then obtain internal buy-in on the goals and means of cultural change, particularly from the leadership of the business itself. This includes leveraging and building upon pre-existing structures that can be used to foster compliance, as well as reinforcing consistent (and repeated) communication about compliance. These tactics will help management ingrain a new compliance-focused culture in a company by encouraging employees to become more personally invested in the process – a recipe for lasting change.
A successful monitor knows that cultural reforms will have a short shelf life if they are imposed on an organization against its will, hamstring the company’s financial goals or never gain traction with the employees who remain at the company long after the monitor has moved on to the next engagement.