With the Bribery Act 2010 due to come into force on 1 July, bringing with it possible criminal sanctions for non-compliance, companies are increasingly turning their attention to improving their risk management framework. Many companies will already have drafted anti-bribery policies and set out in detail the rules surrounding gifts and hospitality. Stage two of preparation for the Bribery Act's implementation is likely to involve rolling out training to employees to ensure that they are aware of any new policies and of the behaviour expected of them.

But putting in place new policies and providing training will be insufficient to protect companies from risk. The key for any company wishing to minimise its risk exposure is to ensure that its policies are actually complied with, and this is likely to require a further step – a change in the culture and attitude of the organisation as a whole to risk.

Analysing and making improvements to the various strands from which the culture of a company is made up will be an important tool in effecting cultural change. Cultural change within an organisation is a challenge, but a useful place to start (and one which is likely to capture the attention of employees most effectively) is with the company's performance management and reward system.

Companies can target their reward and appraisal systems in a number of ways, for example, by:

  • ensuring that the remuneration of senior executives is aligned with the behaviour that the board wants to set for the company as a whole and that the remuneration committee has a clear understanding of the desired culture;
  • incorporating in the appraisal process a review of employees' awareness of relevant anti-bribery policies and the completion of risk management training;
  • linking remuneration levels to risk awareness and adherence to good risk management principles;
  • considering the introduction of clawback provisions into benefit schemes, which may be triggered in the event of inappropriate behaviour being uncovered in the future; and
  • ensuring that employees are aware of the factors that influence remuneration, and in particular that their attitude to, and awareness of, risk can impact on reward.

Some of these changes may be easier to introduce than others. Questions may arise, for example, about whether existing benefit plans are contractual and whether it is possible to effect unilateral changes. The introduction of clawback provisions is increasingly being considered by employers, although the practical application of these provisions can prove problematic. In practice a long deferral period combined with forfeiture provisions may prove easier to enforce than a clawback provision.

In addition to possible legal challenges, there will be employee relations considerations when effecting any changes to benefit plans and there may be obligations to consult with the workforce or employee representatives. Despite some potential obstacles in effecting changes to appraisal and reward systems, if proactive steps are taken to assess the legal risks, reward can successfully be used to drive cultural change. Cultural change will, in turn, be essential for companies keen to minimise their exposure to risk and the potential reputational damage and financial cost that could arise from the actions of their employees.

While the introduction of new policies and training to employees are both important steps in preparing for the Bribery Act's implementation, they should be viewed as a starting point and companies would be well-advised to turn their attention next to the more fundamental question of how to bring about a cultural change.

Caroline Stroud (pictured) is a partner and Holly Insley an associate in Freshfields Bruckhaus Deringer's employment, pensions and benefits practice.