Editor’s Note: Mike Volkov, CEO of The Volkov Law Group, was a federal prosecutor and veteran white-collar defense attorney for more than 25 years with extensive trial experience. He also served as the chief crime and terrorism counsel for the Senate and House Judiciary Committees. Volkov has published numerous books on ethics, compliance, and white-collar enforcement defense topics and is an invited speaker at various conferences around the globe. In addition, he has an award-winning blog and podcast on his website called “Corruption, Crime and Compliance.” The Volkov Law Group is a premier boutique law firm specializing in corporate compliance, internal investigations, and white-collar defense, with more than 40 years of combined experience in government, federal prosecution, corporate monitoring, and corporate consulting.
Read Part 1 of this professional spotlight in the October 2020 Global Payroll issue.
Compare and contrast the nature of the positions between U.S. domestic and global payroll.
Global payroll operations face an exponential number of risks, primarily from application of local (even country-specific) laws governing labor and employee relations, data privacy laws, and other relevant considerations. In these operations, myriad regulatory requirements may dictate operational solutions that allocate technology, staff, and resources in specific countries for operation. For example, it is important to understand application of data privacy requirements if a global payroll system is headquartered in a specific country for business and technology reasons. U.S. payroll systems are easier in comparison to manage but still include state-by-state requirements that may apply depending on a specific situation. Again, it is critical to identify specific legal and regulatory requirements for U.S. operations.
What have been your experiences on successfully navigating cultural and other differences on a worldwide stage?
This is an important issue. Cultural differences can be significant in addressing payroll issues. Employee expectations differ across cultures, and collective bargaining or organization units (e.g., workers’ councils) can create important requirements that apply in one country while not in another. It is important to take these cultural issues and perspectives into account when communicating with employees and making sure that sensitivities and expectations are respected.
Comment on the consequence and value of effective communications in global payroll—internal and external.
Global payroll communications must be crafted with respect to internal and external audiences with sensitivity and care. A global payroll leader must promote the company’s culture, commitment to ethical values, and fairness in dealing with internal and external audiences. Regular communications from senior payroll management to internal audiences are critical and should be emphasized.
Comment on the value and limits to emerging technology, robotics, and artificial intelligence in managing a global payroll.
New technologies are an important and valuable trend in the payroll industry. If managed properly, they can advance monitoring of activities, payroll calculations, and ensuring accuracy and compliance with all laws and regulations. But new technologies must be adapted carefully—they are not a panacea or magic bullet to otherwise important priorities of culture and compliance. New technologies can be harnessed to operate effectively but must be used carefully in the overall payroll program.
What are some essential practices and strategic choices to manage risk and compliance?
Payroll professionals must manage the various risks to protect the company and the employees from fraud, data breaches, and incorrect tax reporting. Controls and processes are developed to mitigate the reputational and regulatory risks such as board-approved policies and developed procedures with defined separation of duties to avoid conflicts of interest.
The COVID-19 epidemic has impacted business operations, and that comes with significant challenges and changes to the work environment. First and foremost, is the safety of employees. Government agencies have issued new guidelines to effectively provide a safe and healthy environment in the workplace. The company must demonstrate ethical business decisions for the benefit of employees and stakeholders. It is a balancing act to reinforce trust and safety. The tone from the top should be honest and transparent to gain the trust of all stakeholders.
Companies should understand the risk environment and build the proper controls and processes to mitigate the risks for an effective compliance program to proactively address the changing regulatory and reputational risk in areas such as the following:
- Code of conduct and ethics
- Anti-corruption laws
- Anti-money laundering laws
- Antitrust laws
- Cybersecurity protection
- Sanctions regulation
- Privacy data protection
This entails updating your policies and procedures as the laws and regulations change, training employees to understand their roles and responsibilities to own and managing the risks, documenting your processes, conducting due diligence on third-party relationships, and conducting an independent test and review of your compliance program on a periodic basis.
I can’t stress enough the importance of the board of directors and management to establish a tone that supports the compliance program and communicates the expectations to all employees in a manner that exemplifies integrity and transparency. In June 2020, the U.S. Department of Justice (DOJ) issued revised guidance on corporate compliance programs. In the event a company is under investigation for fraud and misconduct, the DOJ would evaluate three areas of the company’s compliance program:
- If the compliance program is well-designed
- If the program is being applied earnestly and in good faith
- If the compliance program works in practice
If a company’s compliance program does not meet the listed criteria, this would greatly impact the DOJ’s decision when applying fines and penalties on a criminal/fraud case against the company.
It also is beneficial to implement an automated platform to maintain the compliance program, such as sanctions screening, conducting due diligence on third parties, and reviewing adverse news. An automated system will also document actions conducted and produce reports to monitor your compliance program.
Managing the risk allows a company to move forward in meeting its strategic growth in a way that is safe and sound, while adhering to the laws and regulations that establish boundaries of operations to avoid criminal and corrupt acts. Such acts can hurt the reputation of an organization and result in enforcement penalties that include civil and criminal fines.
What are the emerging trends in data management and data security to address growing global regulations?
This is a critical priority now for global and U.S. payroll operations. Many practitioners in this area, however, market the need for effective data compliance and management with scare tactics designed to cause payroll leaders to purchase compliance services when not necessary. Most global payroll systems rely on effective technology solutions. To ensure compliance with global data requirements requires care and focus but does not require overhaul of payroll systems or massive expenditures. Companies must sift through the noise and stay focused with practical and realistic solutions.
How did you get started in your career?
I worked for 25 years as a federal prosecutor and learned about compliance programs from the enforcement perspective. When I started in private practice, I immediately gravitated to support company efforts to prevent misconduct and promote ethical cultures. As I always say, the best control for a company is an ethical culture.
What are some of pieces of learned wisdom from your on-the-job experience that you can share regarding being effective and efficient?
It is important to treat others with respect and compassion and to listen. If open to new ideas and hearing concerns, people are inherently good and will join you in projects designed to improve company morale and performance.
What were some of your early career lessons?
I learned early in my career to put things in perspective—family, friends, and doing the right thing bring great joy and happiness. Selfish advancement to the detriment of others is doomed to fail.
What are the most important qualities of effective leadership?
Leadership requires empathy, compassion, listening, honesty, and transparency. Lead with a vision of commitment to accomplishment as a team and people will always respond.
How do you personally manage to balance work and pleasure?
My life includes a variety of interests and experiences. I love my beautiful wife, our family, and friends. We enjoy spending time with people, traveling, exercising, and pursuing the arts and community interests.
Share some stress management techniques you have found useful.
Love, exercise, deep breathing, yoga, Pilates, and positive visualization.
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Frank J. Mendelson is Acquisitions Editor for the Global Payroll Management Institute (GPMI) and the American Payroll Association (APA).