On this day, 50 years ago began the most famous of all rock and roll music festivals, the Woodstock music festival that opened on 600 acres of farmland owned by Max Yasgur, in not in Woodstock NY but near White Lake, a hamlet in the upstate New York town of Bethel. Promoters John Roberts, Joel Rosenman, Artie Kornfield and Michael Lang originally envisioned the festival as a way to raise funds to build a recording studio and rock-and-roll retreat near the town of Woodstock, New York. The longtime artists’ colony was already a home base for Bob Dylan and other musicians. Despite their relative inexperience, the young promoters managed to sign a roster of top acts, including the Jefferson Airplane, The Who, The Grateful Dead, Sly and The Family Stone, Janis Joplin, Jimi Hendrix, Creedence Clearwater Revival and many more.

The ticket price was $18 for the three days but the promoters had no idea either how many tickets they sold nor the size of the crowd coming to the event. Early estimates of attendance increased from 50,000 to around 200,000, but by the time the gates opened on Friday, August 15, more than 400,000 people were clamoring to get in. Those without tickets simply walked through gaps in the fences, and the organizers were eventually forced to make the event free of charge.

Though Woodstock had left its promoters nearly bankrupt, their ownership of the film and recording rights more than compensated for the losses after the release of a hit documentary film in 1970. Later music festivals inspired by Woodstock’s success failed to live up to its standard, and the festival still stands for many as an example of America’s 1960s youth counterculture at its best. Unfortunately that era of good feelings ended less than six months later at Altamont.

The Woodstock music festival informs today’s topic of succession planning from the compliance perspective and is another area where compliance can play a key role. A.G. Lafley and Noel M. Tichy, in a 2011 Harvard Business Review (HBR)article,The Art and Science of Finding the Right CEO”, discussed the issue of succession planning at 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 significant 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 (PwC) 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 Chief Executive Officer (CEO) decides to retire. It should be at the time 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 hiring 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 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 Human Resources (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 binary calculus.

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, can continue to provide feedback and guidance from the compliance perspective. As one division President once 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 to 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.

Woodstock Day 1 (the folk day) Set List (all from YouTube)

Richie Havens – Freedom

Joan Baez – Joe Hill

Tim Harden – If I Were a Carpenter

Brett Sommer – Jennifer

Arlo Guthrie – Coming into Los Angeles

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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