This week I have explored, through a five-part blog post series, compliance as seen through the lens of Winnie the Pooh and the characters who live in the Hundred Acre Woods: Pooh, Eeyore, Tigger, Kanga & Roo, and Piglet. Winnie-the-Pooh, also called Pooh Bear and Pooh, was created by English author A. A. Milne. We began by introducing Tigger and the sales function role in compliance, then Kanga and Roo and the role of Human Resources in compliance, yesterday we considered perhaps the most beloved character (other than Pooh himself) Eeyore. Thursday, I discussed Piglet, Winne’s best friend and the role of finance in a best practices compliance program. I think I can say with full certainty is there are a lot of Winnie the Pooh fans out there in the compliance community. This blog post series has been one of the most popular of any series I have ever run. Compliance loves Pooh. As well they should as today, I want to conclude my series by looking at Pooh through the lens of the Chief Ethics and Compliance Officer (CECO).

Pooh may be a bit naive and slow-witted, but he is also friendly, thoughtful and steadfast. Although he and his friends agree that he is “a bear of very little brain”, Pooh is occasionally acknowledged to have a clever idea, usually driven by common sense. Pooh is also a talented poet and the stories are frequently punctuated by his poems and “hums”. Although he is humble about his slow-wittedness, he is comfortable with his creative gifts. When Owl’s house blows down in a windstorm, trapping Pooh, Piglet and Owl inside, Pooh encourages Piglet (the only one small enough to do so) to escape and rescue them all by promising that “a respectful Pooh song” will be written about Piglet’s feat. Later, Pooh muses about the creative process as he composes the song.

Pooh is very social. Christopher Robin is his closest friend as well as Piglet, and he most often chooses to spend his time with one or both of them. But he also habitually visits the other animals, often looking for a snack or an audience for his poetry as much as for companionship. His kind-heartedness means he goes out of his way to be friendly to Eeyore, visiting him and bringing him a birthday present and building him a house, despite receiving mostly disdain from Eeyore in return.

Some of my favorite Pooh sayings include:

  • “Think, think, think.”
  • “Think it over, think it under.”
  • “You can’t stay in your corner of the Forest waiting for others to come to you. You have to go to them sometimes.”
  • “Some people talk to animals. Not many listen though. That’s the problem.”
  • “Piglet noticed that even though he had a Very Small Heart, it could hold a rather large amount of Gratitude.”
  • “Bother.”
  • “When you are a Bear of Very Little Brain, and you Think of Things, you find sometimes that a Thing which seemed very Thingish inside you is quite different when it gets out into the open and has other people looking at it.”
  • “My spelling is Wobbly. It’s good spelling but it Wobbles, and the letters get in the wrong places.”
  • “There must be somebody there, because somebody must have said “Nobody”.”
  • “Just because an animal is large, it doesn’t mean he doesn’t want kindness; however big Tigger seems to be, remember that he wants as much kindness as Roo.”

We often forget that in the formulation of the US Sentencing Guidelines the role envisioned to head a corporate compliance program is called Chief Ethics and Compliance Officer not Chief Compliance Officer. The seven elements of an effective compliance program are a foundational start for creating ethics oversight in an organization. These are not talked about as much anymore but they do show any area that I think the Department of Justice (DOJ) has emphasized over the past couple of years; beginning with the 2017 Evaluation of Corporate Compliance Programs and continuing the theme in the 2020 Update. A quick review of the seven elements is in order. They are:

  1. Establish Policies, Procedures and Controls
  2. Exercise Effective Compliance and Ethics Oversight
  3. Exercise Due Diligence to Avoid Delegation of Authority to Unethical Individuals
  4. Communicate and Educate Employees on Compliance and Ethics Programs
  5. Monitor and Audit Compliance and Ethics Programs for Effectiveness
  6. Ensure Consistent Enforcement and Discipline of Violations
  7. Respond Appropriately to Incidents and Take Steps to Prevent Future Incidents

Senior leaders at both the DOJ, former Deputy Attorney General Rod Rosenstein, and Securities and Exchange Commission (SEC), Chairman Jay Clayton, have given speeches discussing the need for an ethical culture around compliance. What is an ethical culture? It is not simply a social science question as an ethical culture is foundational for an organization. An ethical culture is a foundational internal control, without which all your other controls are likely to be ineffective. While an ethical culture can be reflective of the core values of a company, this only occurs if a company operationalizes those values throughout the company.

What is an ethical culture? Eric Feldman has said it could “involve locations, languages, rituals of heroes and role models and other informal mechanism for building a particular culture. Yet even with subcultures in an organization and throughout the world, the significant thing is to have some overarching ethical themes of that culture.” This involves being consistent with the core values, integrity and ethical behavior. You must also work to serve your stakeholders.

It does not take long to see when there is a disconnect between what senior management says and what the employees take away as to whether there is an ethical culture in an organization. Indeed, one need only ask who gets promoted; the top sales person who cuts corners or the person who does business ethically and in compliance. Another indicia? How are whistleblowers treated? Are they discriminated against overtly or even subtlety?

We need to recall that the DOJ started from the position that the role of compliance and ethics in an organization was co-equal. Winnie the Pooh reminds us of that foundational building block. Pooh also reminds us that a CECO is a social animal. Just as he is friends with all the animals and characters we have visited this week, you as a compliance professional should make friends with all the corporate functions they represented this week: sales, HR, finance and legal. If you find you run out of hunny to pass around, you can always resort to the Russ Berland strategy of pizza.

Even though this is the final offering in this week’s blog post series on Compliance in the Hundred Acre Woods, do not feel blue. We will have another week of Pooh later this summer for more compliance lessons. And if you do feel blue in the interim, check out this YouTube clip of the Pooh theme song. And always remember, when all else fails;

“Think, Think, Think”

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, 2020