Corporate Culture 2Yesterday, I began an exploration about some of the issues around communicating corporate culture to business units located outside the US and away from the corporate office. This series is based on a recent article in the MIT Sloan Management Review, entitled “Fighting the “Headquarters Knows Best” Syndrome” jointly written by Cyril Bouquet, Julian Birkinshaw and Jean-Louis Barsoux. In this piece the authors discuss how you can move from a top-down US centric approach to a more global mindset. Today I discuss how to move forward.

The authors began by listing some of the solutions that have been tried. Under the category of “The Anatomy of the Organization” the authors focused on structural solutions, which included setting up hubs with global mandates. This allows a wider group of employees from multiple countries to gather in a true third party location to leverage cross-sharing of know-how. Under what the authors called “The Physiology of the Organization” they gave examples of companies that facilitated both online and in person brainstorming sessions across multiple boundaries. One company holds an internal forum to showcase and exchange ideas. Finally, under the category of “The Psychology of the Organization” they pointed to “solutions are designed to reshape the outlook and behavior of individuals. Your company could set up a global advisory group or better yet send a senior team into a new geographic region for a longer term, such as four weeks.”

The article then focused on the specific solution of one company, the Irdeto B.V., a Netherlands-based developer of security software for digital media providers, who were eager to increase its market share in the Asian market. The company tried some specific techniques, which you could certainly use in your own program. Most interestingly, the company moved to make conference calls less US time centric, “splitting what had been previously a one-way burden.” The company also required senior management to travel to the regions more often. Regional meeting agendas were expanded to include discussions of what was going on in other regions across the globe. Finally, transfer of executives from the corporate headquarters to a region matched a transfer of executives from the regions back to the home office. All of these changes led to more attention from top management about what folks in the regions were saying, greater contributions from employees in the region and better bi-lateral exchanges throughout the company.

What are some of the lessons for the Foreign Corrupt Practices Act (FCPA) compliance practitioner on how they might translate this into your spreading your culture of compliance outside the corporate office? The authors list several approaches in addition to their case study of Irdeto. They suggest openness to a different structure of assigning people and activities. Consider sending a senior executive out of the US to be an ambassador for your company’s culture. The authors note, “Relocating headquarters’ activities forces people not only to think differently but to act differently.”

Moreover, if you move a senior executive out to a region and assign him or her a compliance ambassador role, they could help to drive the cultural message down to the fabric of that region through constant interactions and reinforcement. Putting your team out in the regions is not only a great learning experience but allows you to put your corporate culture into action. By acting globally “People tend to act their way into new attitudes more than they think their way into new behaviors.”

Near and dear to my heart is a commitment to fairness because, as the authors note, “The perception of fairness is critical to reducing resistance to painful change.” Yet this is beyond simply following the Fair Process Doctrine with uniformity in how you treat employees in the region as you would treat people in the corporate office. The authors believe “One reason many restructuring efforts flounder is that they demand sacrifice from everyone except those at the top.”

It is more than simply accepting sacrifice, as those sacrifices must be delivered in a fair manner. The authors conclude “Fair processes can help render these difficult outcomes more palatable by making the case for change and engaging reluctant participants in discussions about how to achieve it and mitigate the downsides.” A Chief Compliance Officer (CCO) should consider sending one of the team abroad or better yet rotate a regional compliance officer back to the corporate headquarters.

Interestingly, the authors believe that the ease of virtual communications has led to more complicated collaborations. They note, “executives must make a conscious effort to connect with others regularly, often by scheduling appointments that span multiple time zones. It’s all too easy for the top team to neglect interactions and get swamped by the operational side of managing the business. If meeting times aren’t set in advance and respected, the demands of the moment invariably win out.” This is no different for the CCO or compliance practitioner but I feel this extra commitment to communications is the most critical aspect to bring a richer and fuller understanding of corporate culture across the organization.

Dockery’s series in the Wall Street Journal’s (WSJ) Risk & Compliance Journal, clearly demonstrates that not only is the government looking more closely at culture but also companies are struggling with how to translate this requirement into action. This seems to be precisely the point of the article, with the authors concluding that it is not where you do business but how you do business that counts. Focusing on where you do business mistakes a global footprint for a global culture. If you truly want to help drive culture across your organization you must not only communicate that message but put people in your regions who will model that message in their behaviors. Just as importantly is to bring representatives from the regions back to the corporate headquarters so they might see what culture means in the home office.

 

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 tfox@tfoxlaw.com.

© Thomas R. Fox, 2016

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