Juuriharja blog

When a Company Breaks the Law, Management is Liable

[fa icon="calendar"] Apr 25, 2019 10:51:00 AM Erika Heiskanen

Erika Heiskanen

There are many risks involved in business operations that senior management and the members of the management team, in their own areas of responsibility, must identify and prevent. Illegal activities are a serious risk to a company and all management teams regularly discuss their prevention. The best way to shield your company from criminal activities is to invest in an ethical corporate culture and an operating model that will prevent misconduct.

 

Setting up whistleblowing channels can prevent a great deal of harm in the company

 

Complying with the law may sound self-evident but in practice this is not always the case. Misconduct occurs in all organisations and on all levels. They may be isolated accidents but intentional illicit activities that continue for extended periods do also happen in companies of all sizes. The damage they cause to business may be irreparable.

An ethical corporate culture will encourage approaches that promote success. Effective prevention of criminal activities and early intervention models help you to minimise risks. The main challenge is to discover misconduct and damage as early as possible. Clear reporting and investigative processes are also needed in case misconduct occurs.

 

Senior positions and risk of misconduct

A position of authority in a company brings temptation and opportunities to test legal boundaries. A company’s interest and personal interests may be in conflict. Status can also corrupt people: when you are in a position of authority, it is easy to get used to others agreeing with you. As a result, you may start to feel that your ideas are, in fact, the best possible.

Long days and personal sacrifice may make you feel that it is only reasonable for you to take a little extra for yourself. Pressure to produce results may lead to the falsification of performance and other data. When an organisation’s culture is excessively loyal towards its management, the risk of misconduct is very high. Problems are not discussed and the management is not questioned; people just do their job and may even contribute to criminal activities if the boss tells them to.

 

How to prevent illegal activities as a manager

Senior management can set an example that will help to build a corporate culture where the legality of operations is verified openly and where misconduct is not accepted on any level of the organisation. This requires constant dialogue within the organisation and with external parties because as business becomes more complicated, so do crime and risk.

Finland does not have laws protecting people who report misconduct, in other words, whistleblowers. Even if employees and colleagues notice misconduct, many are too scared to bring it up because they fear for their career or position. A person who reports an issue may become subjected to threats and pressure.

This is why it is of utmost importance that personnel are provided with an opportunity to report misconduct anonymously. Problems must also be addressed without putting the blame on the people who draw attention to them. This is in the company’s interest and it is the management’s duty to protect it.

Learn more about Juuriharja’s whistleblowing service.

Kategoriat: Whistleblowing, Ethical leadership

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