There are many reasons the great state of Texas is just that – great. One Texas truism (Texas translation – true or not) is that everything is bigger in Texas. I was reminded of a certain truism in the area of business ethics when I read the obituary of Lonnie ‘Bo’ Pilgrim in the New York Times. Pilgrim was the founder of Pilgrim’s Pride “a tiny feed and seed store into one of the biggest chicken producers in the United States”.

Yet it was not this business vision that brought Pilgrim his most notable business achievement. It was for his unusual method of dispensing political ‘donations’. In 1989, during a Texas legislative special session, Pilgrim, actually walked onto the floor of the House of Representatives when it was in session, handing out $10,000 checks to legislators on the floor of the Senate, with the “Made To Order” section left blank. Outraged, at their votes being seen to be bought and paid for in public; the Texas Legislature banned campaign contributions begin passed out on the floor of the House. As one might say – only in Texas.

To say there might be cultural differences between Texas and the rest of the political world on what constitutes undue influence or even quid pro quo might seem to be stating the obvious, yet Pilgrim is now remembered as a business visionary. I thought about these cultural differences when I read a recent article in the Harvard Business Review (HBR) by Erin Meyer, entitled “Being the Boss in Brussels, Boston and Beijing”, where the author considered cultural differences which can negatively impact leadership. I found it had some interesting insights for the compliance professional as well.

The author identified four different cultures of leadership. Somewhat surprisingly, they are not segregated by geographic region. The author found that “attitudes toward decision making can range along a continuum from strongly top-down to strongly consensual; attitudes towards authority can range from extremely egalitarian to extremely hierarchical.” The four are: (1) Consensual and egalitarian; (2) Consensual and hierarchical; (3) Top-down and hierarchical; and (4) Top-down and egalitarian.

  1. Consensual and egalitarian 

This type of leadership is typically found in Scandinavian countries; Denmark, Netherlands, Norway and Sweden. The author notes, “Consensual decision making sounds like a great idea in principle, but people from fundamentally nonconsensual cultures can find the reality frustratingly time-consuming.” Some of the things you should expect are decisions to take longer, with more meetings and process which requires you, as a Chief Compliance Officer (CCO), to demonstrate patience in the process. As a CCO you will be seen as a facilitator and must “take the time to ensure that the decision you make is the best one possible, because it will be difficult to change later.”

  1. Consensual and hierarchical

The author notes this type of leadership is found in Belgium, Germany and Japan; where the groups favor a leader investing more time in winning support of his underlings before coming to a decision. This means that your group will expect you as the leader to be a part of the discussions  while being a part of the decision-making process. You should focus on the quality and completeness of information gathered and the soundness of the reasoning process because final decisions are seen as commitments and not “easily altered.” Yet there should be a consensus and you must “invest the time necessary to get each stakeholder on board.” 

  1. Top-down and hierarchical

This group has the widest geographic range, including countries as diverse as Brazil, China, France, India, Indonesia, Mexico, Russia and Saudi Arabia. It is incumbent to remember you are the boss and expected to make the decision. The key ingredient is to “Be clear about your expectations. If you want your staff to present three ideas to you before asking your opinion, or to give you input before you make a decision, tell them. Old habits die hard for all of us, so reinforce—with clarity and specificity—the behavior you are looking for.” Particularly as an American, you must be care as an analogy may be interpreted as a decision.

  1. Top-down and egalitarian

This will be the structure that Americans are most familiar with and it includes countries most like the US: Australia, Canada and United Kingdom. Meyer believes these can be seen as speak up cultures, “no matter what your status is. You might not be asked explicitly to contribute, but demonstrate initiative and self-confidence by making your voice heard. Politely yet clearly provide your viewpoint even when it diverges from what the boss seems to be thinking.” Yet the final point, and this is what drives many other cultures crazy under this type of structure, is that decisions are not typically set in stone, there is a continual feedback loop of information which can affect a change in the decision when warranted so you must remain flexible.

All of these cultures will impact your compliance program as well, in addition to your role as a leader. Simply think of your hotline and the reluctance of many cultures to ‘speak-up’ or even raise their hand when they see an ethical or compliance issue. You must work with your various cultures within your organization to overcome such reluctance. Understanding this cultural disconnect is important. For many businesses, “the greatest business opportunities lie in the big emerging economies, which include Bangladesh, China, India, Indonesia, Russia, and Turkey. In nearly every case, these are cultures where hierarchy and deference to authority are deeply woven into the national psyche.” The management style of pushing decisions down in the “organization does not fit easily into the emerging-market context and often trips up Western companies on their first ventures abroad on the business side and most certainly in the compliance realm”, particularly if there is a different perception of what might be termed ‘ethical’.

Learning how your employees in other countries will approach decision-making and leadership will give you, as the CCO, insight into how they will approach compliance. It will require you to get out into the field to talk with folks. If your company grows organically or through mergers and acquisitions (M&A) or goes the joint venture (JV) route, it will need to understand how your new employees will not only think through issues but how they will relate to instructions from the home office in America.

What about the culture of the Texas legislature in 2017? Just remember if you have a donation to make, present the money in the legislator’s office; not on the floor of the House. In Texas, that makes all the difference.

 

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, 2017

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