Today I continue a five-part series on the soft skills a Chief Compliance Officer (CCO) needs to employ when working through the remediation component of a potential Foreign Corrupt Practices Act (FCPA) compliance violation. I am joined in this exploration by Dan Chapman, well-known in the compliance community for his in-house compliance roles at Baker Hughes Inc. and his CCO roles at Parker Drilling and Cameron International. Today I will consider step three: communications with stakeholders in the execution phase of the remediation.
You need to think through the timing of your communications and what is in those communications. Communications with stakeholders have multiple functions, but two key functions are (1) to report facts on the ground so the stakeholders are not surprised and (2) “to establish your credibility and build a level of trust.” Regarding the second point, Chapman notes, “The frequency of significant progress reports will slow as the ‘quick win’ opportunities become more scarce in the longer term. Therefore, your credibility and their level of trust in your ability to make progress will become more important over time.”
If you are engaged with highly focused gatekeepers, with a high level of compliance understanding, you can start off with relatively frequent meetings. Chapman noted, in the “beginning, as you are working through some of the short-term items, I think it may make sense to have more frequent meetings, whether it’s weekly, bi-weekly or monthly.” Here you once again must be respectful of the level of focus of your Board and C-Suite executives, and your communications should always be meaningful and substantive.
However, as you begin to move into the later phases of the remediation, your rate of specific project closures may slow as you move from the short to medium and longer term projects. Your frequency of meetings should probably lessen as well. One thing you do not want to have is a meeting where you essentially have little or nothing in the way of progress to report. There may be little benefit to both you as the CCO and the stakeholders. Chapman cautioned that too frequent meetings with too little progress to report could lead to the stakeholders wondering, “Is the CCO asking the stakeholders to do the CCO’s job? Are you asking them to make the decisions of a compliance expert? I found that it’s much healthier if the day to day running of the compliance function remains with the compliance experts, and Board members should receive reports and provide general oversight. In other words, they hold the CCO accountable, at a very high level, for the compliance function and, if they see something to which they object, they should object.”
Chapman cautioned he would “be conservative” in terms of frequency of communications. You want to make certain you have enough information to support a weekly call, but the pace will probably slow as you move through your remediation as you discover new issues, and they begin to consume more of your time. This can cause your rate of change to slow due to a number of issues that you are addressing in remediation. So, if you begin with 5 issues but then they expand to 15 or 20, this will require more substantive remediation, leaving less time for communications.
Once again, Chapman believes it is critical to set expectations that your rate of communications will slow during the pendency of the remediation. If you do so, this “will give confidence to your Board because they will look at the compliance officer and say, “He saw this coming. We now know that what he tells us is going to happen in the future will happen.”” You develop that credibility by correctly predicting what will happen.
Another issue which can arise in the communications area occurs when a Board member or C-Suite executive insists that an issue is high-priority where you have assessed it as low risk. If you move to remediate what you believe is clearly a secondary issue at best, it will consume both time and resources that you believe could have been used for more high-risk and high-priority remediation items. Yet, as the CCO you are required to address their concerns. Chapman suggested a couple of approaches to employ in this situation.
The first is “to let people know of your concern as politely as possible. Don’t stop reminding people of your concern. It is important to say something along the lines of “I understand that your compliance issue is critical, but this also is inhibiting our ability to deal with our FCPA remediation efforts.”” Because this requirement will take you away from more important high-risks that you have identified, “you must make tough decisions and be highly persuasive if you feel that you may be forced to spend time or resources on a non-risk-based basis.”
Another approach would be to try and address their concerns more directly but in a manner which does not detract from your time as CCO. This could mean additional resources be placed on the topic, such as training or another solution where you might be able to bring in an outside resource to try and deal with concern in a quick and efficient manner, while not diverting you too much from your higher assessed risks. But, as Chapman noted, “Ultimately, you will be held accountable, regardless of what the reasons or the excuses may have been, because in the real-world people do not care about the excuses, they care about performance.”
The frequency of communications and their quantum can be fluid throughout the remediation process. As a CCO, you will have multiple pulls and tugs on your time and resources. You will be required to navigate through many different paths and personalities. Managing your communications will be critical for both the long-term success of your remediation efforts and your efforts to move the compliance program forward.
Tomorrow I will consider the question of ‘how do you know when you are done’ in the remediation process.
Dan Chapman can be reached at firstname.lastname@example.org.
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© Thomas R. Fox, 2017