• The importance of a compliance system for business

    DATE: 01/15/2017

    Published by: Novonor

    “We are talking of a disruption and there’s no turning back. Companies either adapt themselves or they won’t have the opportunities for doing business with quality partners.” That is how Maria Cristina Lepikson, Leader of Compliance at Odebrecht, summarizes the adaptation that major companies are going through in the business environment.

    Cristina has been an external consultant for Odebrecht for 14 years and is part of the Group’s Compliance Team since 2014, when the department was created. Since then, she has dedicated herself to conceiving and implementing more reputable, ethical and transparent practices in the company, always connected with the goals of the business.
    “Initially, as with any other change, people feel uncomfortable. There’s always someone who’s going to say: ‘I won’t be able to do business.’ But that’s not true. In the end, you do higher quality business with greater security and transparency,” she explained.

    Why is Compliance in the interest of companies?
    Today, we are living the reflection of an evolution in society regarding the conduct expected. With easier access to information, society starts questioning more, demanding behaviors it previously didn’t. Society no longer tolerates wrongdoings, illegal activities or corruption because today there is greater awareness of the resulting damages, such as social inequality and competitive imbalance in the market.

    Therefore, Compliance is interesting for the business environment, because it increases competitiveness, security and stability in commercial relations. We are talking about an evolution in the way we do business; it’s not a specific process of any individual company. Sooner or later, every single company will undergo this transition.

    And why didn’t we hear of Compliance before?
    Compliance is a new topic. It emerged in the 1970s, but gained importance only recently – since the 2000s – because of a series of events around the world that caused impacts. In Brazil, the topic has been discussed more intensely since 2014, following the approval of the Anticorruption Law in 2013.

    Until then, companies that had compliance systems here were connected to foreign companies. In other words, it’s something very recent. Brazilian companies are starting this process; it’s an initial phase of implementation and understanding.

    How does a company create and implement a compliance system?
    To create a genuine system, you must first understand the characteristics of each business because there’s no one-size-fits-all solution. You have a theory defined conceptually but you have to think of the process that makes sense for each business, considering their specific practices. And you can do this only when you know the operation, know how decisions are made and live the daily routine at the company. This way, you start designing a process that can be embedded in the daily lives of people.

    And the role of the Compliance department is to understand the process and think how to integrate new practices in a way that it does not affect the performance of duties, while still covering the company’s exposure to risks. And always be careful about not going to extremes, because you cannot bring the company to a halt because of this process. This balance is key to implementing the compliance system.

    What is the secret to creating a compliance system that can actually change the way a company works?
    Everything starts with a legal framework, but that’s only a foundation. To have it working in companies as a system, you must include practices and processes in your routine. And to make it a habit in people, you must have the engagement of several areas. Engagement with the human resources team and business leaders is essential, because they are responsible for putting these processes into practice, as well as their dissemination and maintenance in the daily routines of their teams.

    One of the points to be assesses in order to understand the success of a system is the access that the Compliance department has to leaders, because this dialogue is crucial. If the Compliance department is separate from the business, it becomes a mere bureaucratic setup and that’s not the goal.

    How do these new processes and practices affect the company’s culture?
    We are not talking about implementing a new corporate culture. Companies that are able to turn around are precisely those that have a clearly defined culture and streamline their processes. It is the foundation of their culture that provides the support for their transformation.

    For example, there’s an internal cultural reference here in the Odebrecht Group that is very strong and already brings principles and values that talk about acting ethically, with integrity and transparency. In this context, the Compliance System works to redeem an essence that always existed, by creating practices to avoid misconduct.

    And how does this process end?
    The goal of the whole Compliance System is to create safer processes that enable decisions to be made with greater confidence and quality. Therefore, it is a never-ending process. The world is constantly changing and companies must adapt themselves.

    Here at Odebrecht, for instance, we are directing a lot of energy towards implementing new practices, but that’s not the end of it. Next year, we have to keep an eye on what happens, such as some technological evolution that speeds up the process or a new regulatory framework. A lot of things have an impact and require this constant adaptation and updating.

    How is this adaption process being for Odebrecht?
    If we look at the timeline, Odebrecht has made amazing progress over the last 18 months. In a year and a half, we were able to roll out a Compliance System, with the implementation of new controls and procedures in a universe of nine companies and thousands of team members.

    Our goal is to have active program that is incorporated in our daily activities. The most successful programs are those in which people are truly engaged; it is not just one team a or department that will resolve it.

    And how does this affect relations with partners and other companies?
    Nobody does business alone. When I decide to do business with you, we are sharing a responsibility. That’s why, the role of Odebrecht in this context is also transformational. From the moment we understand the value of Compliance and start to apply our practice, we also affect those that are connected to our value chain.

    An industry such as Engineering & Construction, for example, indirectly affects a very large network of companies and this entire network will be impacted. This is because, to do business with us, these companies must fulfill certain evaluation criteria. This naturally raises the standard of quality and integrity in other companies.

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