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Reconciling Sales Strategy With FCPA Compliance

When Ethical Boardroom asked me to contribute an article on the Foreign Corrupt Practices Act (FCPA) and international sales strategies, I thought it might be interesting to include an organisational change dimension in addition to my own ‘voice from the field’. After all, sales strategy is the execution of business strategy, globally and regionally.

In understanding the FCPA dimension of international sales, it makes sense to examine a company’s approach to business strategy, as well as how strategy is developed and articulated to the sales teams. Understanding that dynamic will shed light on how FCPA risk might be mitigated and addressed on the international front line.

Accordingly, I asked Alison Taylor, a managing director at Control Risks who has written extensively on the organisational dimension of risk and compliance, to join me as co-author. As Alison states in her paper, Risk: An Organizational Perspective, “The traditional preventative approach to risk management is proving inadequate in the face of regulatory complexity, volatility and an environment of constant change. What should replace it is not yet clear.”

This article aims to raise organisational and strategic issues that need to be addressed in the context of corruption risk. If we want to address how to reconcile sales strategy with FCPA compliance, any effort that does not take into account organisational culture across divisions, locations and levels of seniority will never be ‘owned’ by the organisation. It cannot take root or succeed. All too often, compliance is a check-and-balance function set up to police commercial functions but not to question operating assumptions or financial projections. This quickly creates contradictions for overall business strategy. If these are not addressed, FCPA compliance efforts are rendered meaningless.

Culture is often ignored

Numerous studies (Interligi, Journal of Management and Organisation, May 2010) argue that risk does not exist in an organisational vacuum. Comprehension of a company’s risk management strengths and weaknesses is greatly enhanced by developing an understanding of its wider organisational culture, commonly summarised as “the way we do things around here”. The importance of culture is often underestimated because it appears to be a function of human irrationality and is difficult to measure and describe. But ignoring culture is a mistake. When mergers and acquisitions run into trouble it is often the product of nebulous ‘cultural factors’ – the difficulties that members of different organisations encounter working together – rather than poor planning, pricing or market strategy. Cultural factors also explain why 70 per cent of organisational change efforts fail.

“All too often, compliance is a check-and-balance function set up to police commercial functions but not to question operating assumptions or financial projections”

Organisational culture wields an enormous impact on employee behaviour. Edgar Schein, a pioneering scholar in the field of organisational culture, understood how an organisation’s underlying assumptions influence behaviour. Schein describes “unconscious assumptions” (Organizational Culture and Leadership, 2010) as including traits that are rarely, if ever, discussed and are inherently taken for granted. These may contradict stated policies and aims; for example, an explicit focus on internal processes may combine with implicit signals that it is OK to game the system in pursuit of new business. Over time, employees become acclimatised to such implicit signals – ‘basic assumptions’ – and may not even be conscious that they exist. Nonetheless, they are critical to understanding an organisation’s culture. This is where an organisational narrative of compliance can contradict the messages that international sales teams receive as to how they should build business and interact with third parties.


Discussion abounds regarding how companies should respond to and manage corruption risk. Pictured right is the emerging best practice framework promulgated by US and UK regulators.

As the chart demonstrates, the dominant approach is to treat corruption risk as employee behaviour that can be eliminated with the right internal processes, and the regulatory climate makes ‘zero tolerance’ the only appropriate public position for companies to take on bribery and corruption. It is logical and unsurprising that companies lean heavily on audit reviews and policy implementation to highlight gaps in process, while failing to incorporate consideration of strategy and company culture. Such an approach does not tackle the full scale of the corruption challenge, which cuts across every aspect of a multinational company’s business, including implicit and explicit messages to frontline international business teams.

Compliance conflict

While articulated ethical commitments from the C-Suite are critical, the meaningful management of corruption risk relies on senior and middle managers modelling, on a daily basis, appropriate behaviour in all aspects of their roles. If the compliance team is used as a bolt-on (set up to police a ‘business as usual’ approach), employees in lucrative, often highly corrupt regions will quickly find themselves experiencing contradictory messaging and direction about what is important. Messaging from the compliance team will conflict with a business strategy that demands dramatic growth and requires a ‘win above all else’ approach by the sales team. Once this tangled dynamic comes into play, there can be little doubt which message the sales team will hear.

When aggressive sales targets are reached in lucrative, low-integrity regions, is it all ‘high fives’ in the boardroom and C-Suite? Does anyone stop to ask, “How did we reach those goals in such a corrupt territory?” As sales strategies are finalised at the executive level, are companies making strategic decisions as to whether to enter some markets – accepting a certain level of inherent corruption risk – or staying out of them so they can maintain stated ethical commitments? Based on 15 years of consulting in this area, we would argue that most companies treat strategy and compliance as separate and unrelated. The contradictions this approach raises are most apparent in the pressures and challenges experienced by international sales executives. Confusion puts both compliance and sales functions at risk. Those at the front line will wonder: “What does management really want, compliance or sales?” They will tend to take compliance into their own hands, often making on-the-spot ethical and legal decisions in highly corrupt areas, with few witnesses and little oversight. Data from numerous FCPA investigations show exactly how this dynamic can play out for the company.


The business growth potential in certain high-risk markets is well known; some level of integrity risk may be considered an acceptable price to pay for first-mover advantage, access to new consumers and the opportunity to take market share from more cautious rivals. If frontline sales teams are given growth targets of 25 per cent in such markets, it is likely that they will feel the need to ‘grease a few wheels,’ as requests for small bribes are often baked into the local economic order (see Matteson Ellis, Chapter 8, How to Pay a Bribe, Wrage, 2014). Accordingly, when aggressive growth forecasts and ‘best practice’ compliance become incompatible goals in high-risk markets, companies need to make clear-eyed decisions as to which is more important.  They need to start asking if they are making a significant strategic commitment to anti-bribery compliance or if they are merely putting forth rules and procedures that might provide some mitigation to regulatory agencies – but which, if unenforced, allow the unstated co-existence of corruption and compliance in the silo of international sales.

Understanding the corruption premium

Worse, when compliance teams sit in head offices with little visibility of ‘real’ risks as they are experienced on the front line, an implicit strategy that keeps them in the dark creates an enormous disconnect between ‘rules and procedures’ and realities on the ground. For companies that want to succeed in high-risk markets over the long term, the ‘corruption premium’ (which could be time or money) needs to be understood and factored into decision-making, targets, individual incentives and regional sales strategies. Ultimately, accepting more realistic growth plans and planning for operational delays are critical elements of a meaningful response to corruption. In other words, consider that sales forecasts may have to be cut back in order to promote true compliance in the organisation. It is difficult to emphasise both growth and compliance in high-risk areas without embracing an inherently contradictory message.

What does this mean for an FCPA sales strategy? To start with, we should consider that good frontline business personnel are motivated by incentives. Consider how such incentives are developed and articulated through the prism of risk management, as opposed to the organisational silo of ‘individual sales success’. Examining this intrapersonal level of risk assessment and how it affects sales strategy involves understanding how employees are motivated and rewarded and how these incentives are communicated and understood.

Suppose employees who work on the front line in high-risk markets receive mandatory annual training on how to manage corruption risk. Can they then walk away from business opportunities that might compromise the company’s integrity without taking a ‘hit to bonus’ or, as they sayin the field, ‘an incentive haircut’. Behavioural metrics are often factored into performance reviews, but they are rarely given the same weight as commercial indicators of success. In other words, are sales teams merely informed in a pro forma fashion about bribery risk or are they reminded of it when they need to be held accountable?

Executives should look at regional sales forecasts on the international frontline and question if they are promoting both compliance and personal financial success as complementary goals? Ask if your international business teams review the business plan and think: “I can now deliver compliance and value to my employer.”

The compensation structures that best suit an international business team vary greatly, according to industry, market and an organisation’s overall risk appetite. Beyond the broad comments herein, it is difficult to generalise what will work best for an individual company. Still, a greater emphasis on the organisational dimension of risk management – how human beings interact with and respond to the risks they face – will always yield benefits.

In low-integrity regions, for example, an incentive plan indexed to corporate and group success, as opposed to ‘eat what you kill’, can embody a company’s long-term commitment to play by social and ethical rules and to deliver value without bribes. It is time to move on from checks and balances and to embrace innovative approaches that can help all employees address how risk plays out in their professional lives. With the external risk environment becoming exponentially more complex, companies cannot afford to ignore these issues.


Ethical Boardroom is a premier website dedicated to providing the latest news, insights, and analyses on corporate governance, sustainability, and boardroom practices.

Ethical Boardroom is a premier website dedicated to providing the latest news, insights, and analyses on corporate governance, sustainability, and boardroom practices.


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