Although this topic tends to receive more attention around the holidays, how a company handles the exchange of gifts and entertainment is clearly important throughout the entire year.
This is a tricky topic to navigate, primarily because there are few black and white rules that govern its management. Certainly, some industries, like health care and pharmaceuticals, have more clear guidance around what they can and cannot do and therefore, have carefully drafted policies and effective controls in place. There is less clarity within industries that are not subject to specific rules, but are bound by the principles and reputational benefits of ethical behavior.
For this reason, it is especially important that internal risk managers work closely with compliance officers to ensure that they are providing clear guidelines around the exchange of gifts and entertainment, that employees know where to find these guidelines, and employees know who to contact if they have questions and concerns in this area.
Here are some questions that risk managers should ask when evaluating company policies and controls:
Is it “spelled out?’’: Organizations should establish guidelines which help employees determine whether a gift is ok. A good set of guidelines often breaks gifts into three categories: gifts that you may NEVER give or accept, such as cash or gift certificates; gifts that you may USUALLY give or accept, like small promotional items such as calendars and pens; and gifts that are SOMETIMES ok, but that you should seek guidance before giving or accepting, such as tickets to a popular sporting event. Companies should make these guidelines easily accessible (in print and online) and need to periodically remind employees that they exist.
Is it clear who’s on point?: Organizations should designate an internal resource for employees to contact with questions about gift giving and receiving policies. In some organizations, this may be a corporate compliance officer. In others, this could be someone on the legal team. Organizations should make sure employees have contact information and easy access via email, phone or in-person meetings.
Is the company encouraging employees to ask questions?: Companies need to make it clear that employees who are unsure of policies are responsible for asking their manager or the designated internal resource before accepting or giving gifts. This is important for employees regardless of industry, but especially important in healthcare, life sciences and government contracting organizations, which often have more stringent policies compared to other industries.
Is the company emphasizing the importance of good judgment? Even with good policies in place, employees must rely on their own good judgment and avoid giving or receiving gifts that instinctively do not feel right. Provide employees with examples of how to think about their actions. One simple question employees may ask themselves is this: “If my actions were fully known by all, would I need to be concerned?” If the answer is yes, then that should serve as the first warning flag.
Is the company educating employees about this topic? Organizations can often best educate employees on gift giving and receiving policies through training courses, periodic reminders or other ongoing communications. Interactive communication is an excellent way to provide employees with the information they need, in an engaging way that holds their attention and enforces the importance of adhering to their company’s gifts and entertainment policies.
Has the company created a clear process for tracking the exchange of gifts and entertainment? Organizations must create a clear process for the registration and recording of gifts. This helps create an internal trail should something questionable take place.
Fortunately, more and more people at all levels understand that good judgment plays an important factor in business conduct. An organization’s most important job is to provide employees with the best possible guidelines, resources and communications in the area of gifts and entertainment to make it easier to play by the rules.