To properly incentivize your global sales team, how should you structure your sales commission plan and where do you need to focus your attention for potential misconduct?
Video 10: Special Issues Under the FCPA
To properly incentivize your global sales team, how should you structure your sales commission plan and where do you need to focus your attention for potential misconduct? In terms of running your day to day business, how does the FCPA impact setting commission rates for third party representatives; overall pricing and discounts strategy; contracts and the treatment of samples?
Third Party Representatives Commission Rate
In addition to the due diligence vetting process, equal care must be given to the commission rate. It cannot be so high that a third party can generate enough money to fund a bribery scheme. Your commission rate for commissioned sales agents need to be uniform with a range. If there are variances in this commission range, you must document the reason why such a variance exists.
Pricing and Discounts
One of the overlooked areas of FCPA concern is pricing. If your company uses a distributor model, it must be able to justify the discount it gives to distributors. Your discount should be uniform or at least within a certain range. All of your distributor discounts need to be evaluated and approved by a committee within your company, which has the expertise to properly evaluate all discounts and the absolute authority to deny a discount that is too great or outside the range you normally provide.
Any contract that you enter into with a person or entity which represents your company must have appropriate FCPA compliance terms and conditions in the contract. Some of the key provisions include an acknowledgment that the person or entity will comply with the FCPA, that the third party will annually certify in writing that the third party has not violated the FCPA, the right to audit the third party, assistance in any FCPA investigation, whether internal or external and that if there if a FCPA, it will constitute a material breach of contract.
Traditionally one of the ways to do business has been to give out samples of one’s products. This tradition is not prohibited under the FCPA. However there are certain guidelines which must be followed. First and foremost samples should never be confused with cash, gift cards or items which are treated as cash such as BIT coins. Your FCPA compliance policy should have monetary limit on the value of samples, such as up to $250. Above this, your policy should require approval of your company’s compliance department. Finally and most importantly, you must document who all samples are given to show that no one person has received an illegal amount.