Vendor Compliance

What constitutes a bribe? A quick, inexpensive lunch at the local diner with your insurance sales representative or an elaborate dinner at a five star restaurant with 7 fellow colleagues and a pharma rep? 4 tickets to an Atlanta Braves game for you and your family or an invitation to attend a Braves game in a corporate suite with a vendor and several colleagues and clients of the supplier for education purposes?

These examples seem innocuous to some and blatant violations of ethical standards to others. And while you may have a clearly defined ethical lines that guide your decisioning on a daily basis, without a clear, comprehensive policy, your employees and colleagues may never know where to draw the lines.

Going through the process of determining what is acceptable and what is not can uncover complex ethical and moral dilemmas for debate. Some organizations are taking a hard look at gift policies as the American Medical Association and The Journal of American Medicine ask the question “…is it time for physicians to draw a brighter ethical line and totally refuse any gifts from industry?”

Developing a clear gift policy is critical to manage the risk of tarnishing your reputation based on someone’s interpretation of your employee’s actions or worse suffering legal attacks.

For over 12 years my wife, Greer, worked for 2 of the world’s largest telecommunications providers. Entertaining clients and giving branded trinkets and gifts was part of the job. She even sent a client to a PGA golf tournament that her company sponsored in Hilton Head, SC and had her client play in the Pro-Am the Wednesday before the tournament. It goes without saying that she won all bids.

When she moved from corporate sales to state government sales in early 2000, there was a dramatic shift in the way state government employees viewed gifts and customer entertaining. One client in particular rolled out very strict gift policies due to a highly publicized incident of vendor fraud. The incident involved a sales representative, a lobbyist, and a mid-level state employee who was responsible for awarding one of the largest telecommunications contracts in state government history. These folks had colluded and committed fraud by providing exotic gifts and trips for favors and information that resulted in awarding the contract to these insiders. These folks were caught, indicted and convicted, but what other malfeasance was unaccounted for?

In addition to developing and circulating this policy within your company, you need to communicate it to your vendor community. The majority of your vendors are ethical, honest business people that want to maintain a positive relationship with you. With concise guidelines they understand exactly what is acceptable and what is not.

Even honest and ethical vendors fall into the trap of trying to keep up with the “Jones’”. They would prefer to be on an even playing field winning business based on merit not politics, gifts and favors. But without a consistently communicated, highly visible policy nobody is certain what their competitor is doing to get your attention.

As noted in the article “Steering Clear of Vendor Bribes” by Joan Indiana Rigdon ‘Ethics experts say companies are better off with such policies than without them. But in the end, policies don’t keep deals ethical, people do.” I would say in addition to working with your legal department and ethics consultant to draft these policies, having a means to systematically deliver to all employees, and existing and potential vendors; and track acceptance with an auditable database are just as important.

Developing a policy with protective legal language is only half the work. Ensuring receipt and acknowledgement of the policy by all is the other and sometimes more difficult half.

-Andy Monin