Ignorance is no excuse


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In the “phone hacking scandal”, News International managers appear to have assumed that the gaoling of Goodman and Mulcaire, had ended any illegal practices amongst their staff. But did those managers make efforts to confirm that illegal practices had not only ceased but did not reappear, or did they simply assume the answer they wanted? Do you know how the law relates and affects your business practices? Do your employees know and understand how the law relates and affects their activities in getting and retaining business? How do you know?

There is so much law involved in all commercial transactions, that it has become a veritable minefield for the unwary manager responsible for getting and maintaining business. Although buyers and sellers should be free to engage in business as they please, the law is there to make a reliable framework in which business may be transacted for their mutual benefit. Many managers would consider that they know how the law affects their business activities, but this is potentially a dangerous assumption. Not only should a manager responsible for producing the income of the business be aware of all the laws that affect that process, but they also need to ensure that employees and contractors are equally aware of the relevant regulations that impinge on their actions.

While managers responsible for getting and retaining business may not be responsible for the manufacture of the product that they sell, they need to be aware of the law relating to their business. Legal regulation may relate to the sourcing and use of material, or in the case of the food industry a whole specialist area of food and hygiene regulations. Any transgression of legal regulation in the production area could result in the interruption of product supply, and damage to the reputation and image of the business. In the food industry, any failure under food and hygiene can have catastrophic results for the producer, especially if they are a small business. Similarly, managers need to be aware of legislation relating to product labelling as well as how the Health and Safety of the product might affect the customer.

Legislation also affects how products are presented to the marketplace, regarding the type and material of packaging used, and its future disposal. But probably the biggest areas for potential legal problems lie in advertising, promotion and customer relations.

In Britain, while standards in advertising are policed by the Advertising Standards Authority, much of the legislation regarding advertising relates to specific product groups such as alcohol tobacco and financial services. But when trading in other countries, it is important to be aware of the legal practices and constraints which may be very different from those in Britain.

With many businesses operating via the internet, using “social marketing” tools, as well as more traditional methods such as direct mail, many businesses will have amassed a considerable amount of customer information. All such data and information is likely to be covered by the Data Protection Act, regarding its storage, security, and access. Infringement of the Act can result in a criminal prosecution and fine.

Two recent acts of Parliament may set considerable and expensive traps for the unwary; the
new Bribery Act of 2010, and the Olympic 2012 Act.

While there have been anti corruption laws in Britain since the 1880’s, the new Bribery Act of 2010 is far reaching. The Act makes companies liable for the actions of their employees as well as agents and intermediaries worldwide, even if none of its employees knew about bribes being paid out on its behalf by an associated person. The company’s only defence is to show that it had ‘adequate’ anti-corruption procedures to prevent bribery. Companies will have to have clear policies regarding gifts and corporate hospitality, both of which will have to be carefully controlled. Meanwhile the Olympic Act which is set up to protect corporate sponsorship, severely limits non sponsoring businesses using the Games to further their business. The Act means that for a business, even using the words, Games, medals, gold, 2012, sponsor and summer which while innocuous in themselves, if combined in any form of advertising could result in a statutory £20000 fine.

Managers responsible for getting and maintaining business income must be aware that they will be held responsible for the manner and process of obtaining business, regardless of the level of their involvement. Managers in such positions would be wise to elicit a survey to cover all their activities involved in getting and maintaining business income, to ensure that all their procedures and products meet legal requirements and to identify any weaknesses where legal problems may arise. If the company has its own lawyers then it should be dealt with internally, otherwise external help should be sought. Having established in detail, the legal framework in which the business operates, the manager must ensure that all staffs involved in getting and retaining business income are aware of how the law affects their work and operation, perhaps with the provision of a relevant checklist or aide-memoire.

When things go wrong, managers must be prepared. Ignorance of the law is no excuse, neither is turning a blind eye to illegal or unacceptable practices. By keeping abreast of relevant law and ensuring that employees and contractors are fully aware of their legal responsibilities, managers will have a strong defence for themselves and their employers should the worst happen. When managers fail to be aware of the legal obligations in getting and maintaining business, the results can be seriously damaging to the business its brands and workforce, and in the most serious cases may, like the News of the World. force the closure of the business,

Republished with author's permission from original post.

Nicholas Watkis, AE MA DipM CMC FCIM
Nicholas Watkis set up Contract Marketing Service in 1981, providing professional interim marketing management for a wide variety of businesses. Over 30 years practical experience in organizations, large and small, national and international, led to the development of Business Performance Maximized specialist in marketing performance measurement.


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