Editor: Steve, would you provide our readers with something about your
background and experience?
Lauer: I spent six years in private practice and then, in the mid 80s,
I went in-house for the first time. I spent over thirteen years as an in-house
lawyer for several real estate organizations, the last of which was the
commercial real estate investment units of the company now called Prudential
Financial.
I left Prudential in 1997 to start a consulting practice. Since then, I've
worked for a variety of law departments on various aspects of managing a
company's legal service, such as litigation management and outside counsel
management. I also spent over two years as deputy editor and publisher of The
Metropolitan Corporate Counsel.
Earlier this year, Integrity Interactive approached me after they'd created
the new Integrity Research Group. The mission of that group - to assist the
company's clients to stay ahead of developments in the areas of ethics and
compliance - represented a very farsighted approach that intrigued me. I joined
as Director of Integrity Research several months ago.
Editor: How did you become involved with ethics and compliance training?
Lauer: My first significant experience with compliance came up during
my tenure with Prudential. For seven years, I was the in-house environmental
lawyer for the commercial real estate investment units of the company. I devised
and implemented environmental compliance procedures within the context of the
company's real estate operations.
In my consulting practice later, compliance became a more centralized focus
of the projects I handled for law departments. While those projects were not
compliance projects per se, their relationship to the clients' compliance
efforts was increasingly clear.
During my tenure with your paper, I observed a continuing and growing focus
on compliance, especially after enactment of Sarbanes-Oxley in 2002. By joining
Integrity Interactive, I've made compliance my full focus, especially the
training related aspects of an effective compliance program.
Editor: Please tell us about Integrity Interactive. Its origins. Its
evolution.
Lauer: Some of the principals of Integrity Interactive, especially
Kirk Jordan, have been involved in compliance since the early '90s. Kirk formed
Compliance Systems Legal Group in 1992 after he had acquired an expertise in
assisting companies develop good compliance programs. In 1999, Kirk and the
other founders of the company began to develop compliance training that would be
delivered over the Internet. That delivery method enabled Kirk and the others to
offer a more complete training solution for companies with multiple locations,
especially those with international operations.
Editor: And your particular role?
Lauer: As I mentioned, the basic mission of the Integrity Research
Group is to assist our clients to stay "ahead of the curve" with respect to
developments regarding ethics and compliance programs. In order to provide that
assistance, we will conduct research, prepare "white papers," analyze ethics and
compliance developments and prepare material for those clients based on that
research and analysis. I participate in all those activities.
Editor: How have Integrity Interactive's product lines changed in recent
years?
Lauer: We've seen our relationships with our clients become closer and
more collaborative over the years. Those clients have, in many instances,
requested that we develop additional courses or services that will enable their
compliance programs to remain effective.
An example of a new service is our recently introduced Integrity WebLineTM.
That service is a Web-based means by which our clients can enable their
employees and others to submit issues or concerns, or even complaints, regarding
financial, accounting or other issues. That capability addresses expectations of
Congress (in Sarbanes-Oxley), the United States Sentencing Commission (in the
recent changes that it adopted for the federal Sentencing Guidelines) and the
stock exchanges (in their listing requirements).
Editor: The corporate scandals in recent years, and Sarbanes-Oxley and the
regulatory regimes that derive from it, have had a dramatic impact on your
company's business. Will you tell us how Integrity Interactive has responded to
what has been referred to as the crisis in corporate governance?
Lauer: Those scandals, of course, were the impetus for the enactment
of Sarbanes-Oxley, and they form the backdrop for many other recent developments
in the area of corporate governance. For example, in 2003 the Justice Department
issued what is called the Thompson memo, setting out what United States
Attorneys should weigh when considering whether a corporate compliance program
should be deemed "effective" under the Sentencing Guidelines. The focus in that
memo on how well a company's program reflects an appropriate "tone from the top"
clearly reflects the impact of those scandals. Courts certainly will determine
sentences under the Sentencing Guidelines in light of those scandals.
We at Integrity Interactive have long advocated that companies be sure to
have clear support at the most senior levels of the organization when they set
up their compliance programs. Accordingly, we work with our clients to establish
the foundation for the program and to integrate the correct message from senior
management when we design the online training that our program delivers to a
client's employees.
Anyone who reviews the recent changes to the Sentencing Guidelines, the new
listing requirements of the stock exchanges, the SEC's regulations, the Justice
Department's views and other developments (even including the Caremark
case in 1996) will recognize that not only are corporate directors in the
spotlight as never before, but they face new responsibilities, and potential
liabilities, with which they are unfamiliar. We are now developing tools that
are appropriate for delivery to senior management and members of the board of
directors of a corporation.
Editor: How does the company go about educating the senior management
of corporate America, and particularly corporate counsel, about the need for
effective ethics and compliance training?
Lauer: At Integrity Interactive, we are focused on helping our clients
understand how to meet the expectations created by those developments in
corporate governance in concrete terms. For our clients, our tools include
direct presentations, our annual client conference, online dialogues, white
papers and a continuing exchange of views and ideas between our clients'
compliance and training personnel and our Compliance Services representatives
and our Account Managers. All of us at Integrity Interactive, not just the
Integrity Research Group, work with our clients closely in that regard.
Potential clients hear from us in a variety of ways also. In addition to the
usual presentations that we make on a one-on-one basis, we write articles for
many different publications (including, of course, The Metropolitan
Corporate Counsel), make presentations at various conferences and
industry meetings and work with various organizations that are active in or have
an interest in this field.
Editor: Is there a distinction to be drawn between ethics training and
compliance training, or are they part of one equation?
Lauer: I believe that the line between the two is less crisp than it
might have been a few years ago. The Sentencing Commission has virtually
eliminated that distinction in the changes to the Sentencing Guidelines, which
now call for "the promotion of an organizational culture that encourages ethical
conduct and a commitment to compliance with the law." This compares with the
prior language, which spoke of "an effective program to prevent and detect
violations of law."
More and more people recognize that compliance training alone is too
confining. An ethics program, on the other hand, is more pro-active and
empowering. Rather than telling the employees what standards of behavior exist
in laws and regulations, ethics training provides them a framework within which
to approach the myriad decisions that they must make on a day-to-day basis,
along with tools such as reference materials and names of individuals to contact
with questions or issues. With effective ethics-based training, the employees
are better able to deal with numerous issues that likely will arise that
compliance training cannot anticipate.
Editor: Determining what works, what is "effective," is a subjective
process. How does Integrity Interactive go about defining what is effective for
corporate America?
Lauer: Integrity Interactive, of course, is not the arbiter of what
constitutes an "effective ethics and compliance program." The true test of a
company's efforts in that regard will be the aggregate views of a number of
audiences, both internal and external to the organization. In the worst case, of
course, that might be a judge called upon to pronounce sentence after a guilty
verdict.
We at Integrity Interactive are developing a "best practice" for a corporate
ethics and compliance program. That "best practice" will evolve as developments
dictate, and it will inform our advice to our clients on an ongoing basis.
Editor: Would you tell us about the connection between compliance training
and the organizational sentencing guidelines that go back to the early 1990s?
Lauer: When the United States Sentencing Commission issued the
Sentencing Guidelines for Organizational Defendants in 1991, it listed seven
elements of an "effective" compliance program. One of those elements was the
effort to communicate effectively its standards and procedures to all of its
employees. The Commission identified training as an example of how an
organization might communicate those standards and procedures. In the changes to
the Sentencing Guidelines that it approved in April 2004, the Commission made it
clear that training is a necessary part of a compliance program, rather than one
of multiple possible means of communicating those standards. Another change
adopted in April expands the scope of such a program by reinforcing the need to
cover ethics in addition to compliance. For companies that had not realized it
previously, then, ethics and compliance training cannot be omitted from
compliance efforts if they want their programs to be viewed as effective under
the Guidelines or simply consistent with the developing "best practice" in this
area.
Editor: To what extent does Integrity Interactive try to tailor its
services to particular groups of people, e.g. senior management, middle
management, financial executives, and so on?
Lauer: When our Compliance Services representatives work with clients,
they assist those clients to design appropriate curricula for their employees.
While some courses, such as a code of conduct course or "Mutual Respect," might
be appropriate for all employees, others are tailored to the risk factors
inherent in different types of activities and job functions. Their collaborative
analysis of a client's employee population results in a series of risk-based
curricula for particular groups of employees.
While Integrity Interactive has advocated such a risk-based approach for
years, the Sentencing Commission endorsed such an approach in the April 2004
changes to the Guidelines. The training that must comprise an element of a
compliance program must be, in the Commission's words, "appropriate to such
individuals' respective roles and responsibilities."
Editor: What about the future? Are there new products and services in
the pipeline? Where do you see the needs at this point?
Lauer: The offering for members of a corporation's board of directors,
which I briefly described before, represents an important addition to our
services for our clients. I believe that it should provide considerable value to
the individuals who, as directors, face such new and unanticipated
responsibilities in the post-Enron era.
I expect that Integrity Interactive will provide a more and more consultative
service to its clients as time goes on. The field of corporate ethics and
compliance program will grow ever more complex in the years to come. Our work
with multiple clients enables us to identify the practices that
work.
Published September 1, 2004.
