This blog post opens a short series on Shakespeare’s Problem Plays. There are plays where the structure of comedy ends the plays; i.e. everyone gets married at the end of the day. Yet these were really not happy endings. Equally they are not tragedies either. Usually in the middle is some very dark part, which tests the reader, play-goer or listener with some very difficult subjects. The three we will consider for the remainder of this week are “All’s Well That Ends Well”; “Troilus and Cressida”; and, finally, “Measure for Measure”.

In “All’s Well That Ends Well” Helena is a low-born ward of a French-Spanish countess. She chases Bertram across Europe, sends another woman into bed with him and then captures his heart by all this aggressive stalking. Dr. Michael Delahoyde, in his summary of the play, wrote, “George Bernard Shaw called it a “bitter play with a bitter title”. He further cites, “Shakespeare’s satire upon the male propensity scarcely to distinguish one woman from another” (Bloom 354). But attempts to account for the play itself typically founder: what are we to make of the assertion that this is a play “in which people’s behaviour is explicitly related to abstract concepts and in which moral conflicts are explored though not necessarily resolved” (Wells 234)? Critical dissatisfaction stems from “the bitterness of the satire in a comedy, the disagreeable nature of the hero, and the forced, mechanical nature of the plot that ends unconvincingly” (Whalen 104).”

I thought about All’s Well That Ends Well when I read a recent article in the Harvard Business Review (HBR) by Roger L. Martin, entitled The High Price of Efficiency. In this article, he posited that the relentless pursuit of business process efficiency can actually make an organization less resilient. As they become less resilient, they are more at risk for a catastrophic failure or a likelihood of a control failure which could lead to something akin to a major ethical violation or even legal violation such as under the Foreign Corrupt Practices Act (FCPA). Most interestingly, for the compliance professional, the author’s prescription is what we would call operationalizing compliance through pushing out the structure to allow greater resilience, largely from a diverse group of stakeholders.

I was also intrigued by Martin’s ideas about moving a company toward resilience. This allows a more adaptable response but also has redundancy which can operate to stop anything which might get through the monoculture of too great efficiencies. The first is to limit scale. Here for the compliance professional, I think the clear message is that compliance needs to be in the regions not simply headed from the corporate headquarters on high. Dynamic power out in the regions would prevent this redundancy both in the regions going out and in the corporate headquarters coming back.

The second is to introduce friction. This is the situation where a company creates an artifice so clean that if something untoward enters the system, it can wipe it out. It comes from staring at your own navel so long, to the exclusion of all else. Another way to put it is to bring in someone from the outside to review your compliance program on a two- or three-year basis. If you are performing your own risk assessments on a continuous basis it may well become friction-free. You need to have not only an outside perspective but also some sand in your shoes at times.

The third prescription should be high on every Chief Compliance Officer’s (CCO’s) game plan. It is to “create good jobs.” From the compliance perspective, this was mandated in the Department of Justice’s (DOJ’s) 2017 FCPA Corporate Enforcement Program, where one of the factors listed around the compliance function of a best practices compliance program was , “The compensation and promotion of the personnel involved in compliance, in view of their role, responsibilities, performance, and other appropriate factors”. Additionally, the 2017 Evaluation of Corporate Compliance (Evaluation) asked, “How has the compliance function compared with other strategic functions in the company in terms of stature, compensation levels, rank/title, reporting line, resources, and access to key decision-makers? What has been the turnover rate for compliance and relevant control function personnel? What role has compliance played in the company’s strategic and operational decisions?”

Yet CCOs must also work to teach resilience in their organizations. Some may call this simply a “Can-do” spirit but I think the better approach is that as a compliance professional, you are only limited by your imagination. The Evaluation mandated, “How have decisions been made about the allocation of personnel and resources for the compliance and relevant control functions in light of the company’s risk profile? Have there been times when requests for resources by the compliance and relevant control functions have been denied? If so, how have those decisions been made?” In short, the compliance function must have well-received, well-compensated jobs and those in compliance cannot be shunted off to the same corporate function forever.”

From the CCO perspective, a key component of your corporate capital is the use of your compliance resources. Delivering a compliance solution to the front lines of the business is another manner of saying operationalization of compliance. From the corporate capital perspective, Martin see it as “the optimal capital structure for this year’s operating environment is what defines the efficient employment of capital.” Martin ends his piece by citing to democratic capitalism. He, like I, believes that a combination of both democracy and capitalism can make countries, businesses and people better over time. The ideas Martin sets out suggest that the ability to adapt through resiliency is one of them.

Just as Shakespeare’s problem plays hold a dark middle to a usually comedic beginning and end, the continued resiliency of the corporate compliance function, even if it is not always as efficient as may be desired, can be a valuable lesson going forward.

Tomorrow, Troilus and Cressida.

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, 2019

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