Joseph ConradThe Horror! The Horror! Those are the seminal words of Mr. Kurtz, Manager of the Inner Station, in Joseph Conrad’s novel Heart of Darkness. Today we celebrate Conrad, Józef Teodor Konrad Korzeniowski, who was born on this date in 1857 in Berdychiv, Ukraine. Conrad published several other novels about men who faced ethical challenges and moral dilemmas, include Lord Jim, The Secret Agent and Nostromo. Conrad died in 1924.

I thought about the book and movie versions of Kurtz (Colonel Kurtz in Apocalypse Now) which I consider the intersection of succession planning and Foreign Corrupt Practices Act (FCPA) compliance. I am a huge fan of Human Resources (HR) and believe that HR can fill many key roles in any best practices FCPA compliance program, including succession planning. Each time HR has a significant touch point with a future, current or past employee is an opportunity around compliance.

Another area where compliance can play a key role is in succession planning. A.G. Lafley and Noel M. Tichy, writing in the Harvard Business Review (HBR), in an article entitled “The Art and Science of Finding the Right CEO”, discussed the issue of succession planning during his tenure as the Chief Executive Officer (CEO) of Procter & Gamble (P&G). Many of the concepts and issues that Lafley discusses within the context of succession planning in general are applicable to the concern of compliance within this area.

Lafley makes clear that succession planning is just as important as governance, enterprise risk and strategic oversight. In other words, it is just as important. Sadly, many companies fail to give it the attention it requires. Indeed, in a PricewaterhouseCoopers survey, cited in the foreword, nearly one-half of the more than 1,000 directors gauged reported dissatisfaction with their companies’ succession plans. Imagine what that number would be if they took into account the compliance aspect of succession planning.

Borrowing from Lafley, I have adapted his box for an analysis of some of the characteristics that should be considered in succession planning from the compliance perspective.


Personal Judgment Team Judgment Organizational Judgment Stakeholder Judgment
People Personal judgments about overall compliance goals Judgments regarding your team members regarding compliance Judgments on organizational systems for assessing compliance with the organization Judgments about how to engage stakeholders regarding compliance
Strategy Personal judgments regarding compliance in your career Judgments about how your team evolves in its compliance approaches as new compliance challenges arise Judgments about how to engage and align all organization levels in compliance Judgments in leading stakeholders to execute compliance strategies
Crisis Personal judgments regarding compliance in times of crisis Judgments in how your team operates regarding compliance in times of crisis Judgments about how to work with your overall organization in compliance in times of crisis Judgments about dealing with key stakeholders regarding compliance in times of crisis

Lafley makes clear that succession planning does not begin at the time a CEO decides to retire. It should being at the time that a CEO is hired. This is to prevent a decision at the last minute or, worse yet, “to be left with effectively no decision.” As well as the process being started at the time of the hiring of a new CEO it must also fully engage the Board of Directors. Lafley provides several key points, all of which are applicable to the compliance component of succession.

 Lafley defines the criteria that the evaluation process is an ongoing, not episodic process. In addition to a “broad and deep pipeline of qualified leaders” the candidates should be put through a variety of roles. In the compliance context, this would provide an opportunity to review the initiatives and responses in several different areas. In addition to running large and small business units, such candidates should oversee several different functions, as broadly as the Chief Financial Officer (CFO) to HR.

 In many ways, evaluating a compliance criterion is as much an art as it is science. However, Lafley states that a specific list of “must-haves” is appropriate. It is not as simple as whether there was a violation or not. It is broader than that calculus. I often write about Paul McNulty’s three Maxims which he would use when evaluating a corporate compliance program: (1) what did you do to prevent it; (2) what did you do to detect it; and (3) what did you do when you found out about it? Compliance for the CEO candidate is more than the third prong. How did you inculcate compliance into the business unit that you are managing? What controls did you put in place? And then what did you do when you found out about it? Indeed Department of Justice (DOJ) Compliance Counsel Hui Chen, recently remarked about the importance of ‘facetime’ by a Chief Compliance Officer (CCO) with a President or Chief Executive.

Moreover, this past summer’s BNY Mellon’s FCPA enforcement action points towards the need to follow establish protocols, even in HR. If you have a process in HR for evaluation around succession planning, that process should be followed. If any exception is made, it is encumbent the exception be documented, justified, then reviewed and approved by an appropriate level of management.

Lafley defines this as “how the future might look”. You might explore a new geographic market with a candidate or a new product line, either of which might bring new compliance challenges. Being a part of a team to perform a risk assessment might indicate that new or different compliance safeguards need to be considered. Should monitoring, through continuous controls monitoring or other more sophisticated tools, be utilized as the compliance program evolves be considered?

 Lafley points out that the choice of “a successor isn’t a done deal until the votes are cast and the announcement is made.” He advocates continuing to provide challenging projects, which would include those in the compliance arena, which can continue to provide feedback and guidance from the compliance perspective. As one division President told me “You are always being evaluated.” And so it should be. The selection of a new CEO is a substantial investment by a large company. Having the right person in the position from the compliance perspective is an important element in an overall evaluation. Remember – it all starts with the “Tone from the Top”.

Every time I perform a risk assessment and speak the company’s HR lead, they immediately understand the role than can play in moving forward a company’s compliance program. Even if the HR role is limited in the hiring process, they can ask potential candidates their views to determine underlying business ethics. HR can also begin the compliance inculcation process, even pre-hiring, by talking about the company’s values in the interview process. This sets an expectation that can be built upon if a candidate is selected and in every HR touch point going forward, including looking at employees in the succession planning process.

HR is out there for you to use in your compliance program, I suggest you make use of this valuable resource.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at

© Thomas R. Fox, 2015