Compliancewith company laws is important for the survival of a firm. Thecompany needs to carry out its functions with the utmost integrity.Every employee has to act in an ethical manner regardless of theirstatus or position. According to the video, the company needs to havea thoughtful policy that addresses issues related to compliance (NYUSchool of Law, 2015). For example, it would be wrong for a firm toallow its subsidiaries to give out irregular compensation packages tostakeholders in different countries. Although no one has a right todictate how the company makes decisions, such a move could be viewedwith suspicion by the compliance department. Another important factlearned from the video is communication (NYU School of Law, 2015).Because companies need to stay in compliance with the law, themanagement should create an open environment for communication withinthe organization to help their employees report cases of misconductand make ethical decisions.
Inthe case of Pfizer & Eli Lilly, these two pharmaceuticalcompanies were charged with bribery after its internationalsubsidiaries paid large amounts of money to third parties. Pfizer hadto pay close to sixty million dollars to the Securities and ExchangeCommission, while Eli Lilly paid over twenty nine million dollars. Itmay be tempting to put the blame on the compliance committees orofficers for the misfortunate allegations brought against thesecompanies. After all, these people are in charge of the complianceprocedure within the companies and it is up to them to ensure thatnothing goes wrong. However, communication failure could have madethe compliance officers stay away from the issue. Nobody in thefinance department told the compliance committee or officer about theillegal payments because perhaps the companies did not have a properwhistle blower system.
Insum, a good way for companies to ensure that their employees complywith the law and make ethical decisions is to establish opencommunication systems. Pfizer and Eli Lily is an example of howfailure to comply can result in severe consequences for the company.If a company does not establish a good communication system,employees will shy away from reporting misconduct to the complianceofficers and the firm may end up being in trouble with the law.
NYUSchool of Law. (2015, Nov 13). Roundtable discussion with AndrewWeissmann and Hui Chen. YouTube.Podcast retrieved from
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