tangled-up-in-blueToday, I conclude my tribute to Bob Dylan-Nobel Laureate, by discussing my personal favorite Bob Dylan song, Tangled up in Blue. The time shifts and jumps in the song have always resonated with me. Indeed, it is one of the most beautiful and truly haunting songs I have ever heard.

Neil McCormack, writing in The Telegraph described the song as “The most dazzling lyric ever written, an abstract narrative of relationships told in an amorphous blend of first and third person, rolling past, present and future together, spilling out in tripping cadences and audacious internal rhymes, ripe with sharply turned images and observations and filled with a painfully desperate longing.” He added that the song was “A truly extraordinary epic of the personal, an unreliable narrative carved out of shifting memories like a five-and-a-half-minute musical Proust.” 

Wikipedia said of the song, it is one of the clearest examples of Dylan’s attempts to write “multi-dimensional” songs which defied a fixed notion of time and space. Dylan was influenced by his recent study of painting and the Cubist school of artists, who sought to incorporate multiple perspectives within a single plane of view. Dylan himself said of this style of songwriting, “What’s different about it is that there’s a code in the lyrics, and there’s also no sense of time. There’s no respect for it. You’ve got yesterday, today and tomorrow all in the same room, and there’s very little you can’t imagine not happening.”

The song introduces today’s post which comes from an article in the MIT Sloan Management review by Lynda Gratton, entitled “Rethinking the Manager’s Role”, where she speculated on the role of technology in business and whether such technology will render managers obsolete. Her conclusion was not that technology would make managers obsolete but that they would need to be more skilled than before, going forward. She posits four potential changes for management which all apply to the compliance professional.

First, Gratton believes that “the manager’s role as a coordinator of work would come under increasing pressure. Constant improvements in robotics and machine learning, in conjunction with the automation of routine tasks, make management a more unclear practice. What is a manager, and what is it that managers do? Are we witnessing the end of management?”

Second, there will be a shift at the paternalistic view of what Gratton calls the “parent-to-child way of looking at the relationship between the manager and his or her team.” She goes on to state, “ultimately superseded by an adult-to-adult form. The nexus of this more adult relationship concerns how commitments are made and how information is shared. When technology enables many people to have more information about themselves and others, it’s easier to take a clear and more mature view of the workplace. Self-assessment tools, particularly those that enable people to diagnose what they do and how they do it, can help employees pinpoint their own productivity issues. They have less need for the watchful eyes of a manager.”

Third, Gratton foresees a structural change away from the vertical to the horizontal. Gratton begins by asking the question, “Why learn from a manager when peer-to-peer feedback and learning can create stronger lateral forms of coaching?” She then goes on to state that “technology-enabled social networking is capable of creating robust and realistic maps of influence and power — so no more hiding behind fancy job titles.” Finally, Gratton notes that the rise of platform based businesses such as Uber may well have very large implications for business management going forward, noting, people are “excited about platforms and how they can create a fertile arena for new businesses to be built while also acting as a conduit for flexible ways of working.”

So what does all of this mean for the business manager and even more explicitly the compliance professional? First and foremost, it clearly portends the end of the former model of compliance, which centered the function in the General Counsel’s (GC’s) office. That model has since been discredited as not structured for compliance to succeed. However, I think we are also past these structural changes which developed into Compliance 2.0 and we are now into qualitative changes which portend Compliance 3.0 and beyond. Compliance practitioners will need to be able to read a spreadsheet as compliance goes into the fabric of their organization. Failure to have this basic business skill will render the lawyer-cum compliance practitioner as a professional luddite going forward. Put another way, it is not simply understanding the law but applying it into an ongoing business organization that will separate those who succeed in compliance from those who are stuck in the past.

Gratton sees the skills managers will need in a similar vein. As companies truly become more worldwide in scope the US centric nature will give way to a more horizontal approach. When you add in the incoming millennial workforce you add a generational component as well. The skills called upon will be to manage across time and space all the while supporting “rapid knowledge flows across business units.”

Gratton ended her piece with “this is a very complex form of management — managing virtually rather than face to face; managing when the group is diverse rather than homogenous; and managing when the crucial knowledge flows are across groups rather than within. These are highly skilled roles in terms of both managerial capabilities (for example, how to build rapid trust, coach, empathize, and inspire) and management practices (for example, team formation, objective setting, and conflict resolution).”

The Department of Justice (DOJ) has consistently said that compliance programs must evolve to keep pace with not only changes in business and markets, but changes in technology which increase the manner in which companies actually do compliance. In the FCPA Pilot Program, the DOJ (and most probably its Compliance Counsel Hui Shin), in its section on remediation noted that the Chief Compliance Officer (CCO) would need to evolve far past a lawyer simply writing policies and procedures; to having a CCO and compliance function fully integrated into the business and managing compliance throughout the organization, even if the business units were taking the lead in doing compliance.

As the manager’s role changes in the corporate world, the role of the compliance professional will change as well. Or Bob Dylan said about Tangled up in Blue, “You’ve got yesterday, today and tomorrow all in the same room, and there’s very little you can’ t imagine not happening.”

 

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, 2016

7k0a0071This week I am considering the passion compliance professionals have for our profession. On Monday I wrote about being passionate about working in the field of compliance. Yesterday, I looked at some of the research and theoretical underpinnings of why employees’ find particular work meaningful which can lead to having passion about one’s profession. Today, I want to consider what business leader do that makes work meaningless. This series is based, in part, on a Summer 2016 MIT Sloan Management Review article, entitled “What Makes Work Meaningful – Or Meaningless, by Catherine Bailey and Adrian Madden.

In addition to often destroying the confidence, if not psyche, of employees by making work meaningless, it has real consequences, such as reduced efficiency and motivation, reduced levels of employee engagement, increased absenteeism and an overall downgrade in employee work performance. The factors which created a sense of meaninglessness were quite separate and apart from those which created a sense of meaningfulness. The authors discuss seven separate “experiences that actively led people to ask, “Why am I doing this?” were generally a function of how people were treated by managers and leaders.”

  1. Disconnect people from their values

The authors report this is the number one problem for employees in destroying the meaning at their work, even if there is a dis-congruence between their personal values and that of the company. The biggest factor cited was the senior management and leadership pushing employees to lessen on quality and professionalism due to the company’s bottom line. But it is more than focusing on cutting your quality due to the almighty dollar but can be found when companies so poorly manage risks that they become paralyzed due to complete risk aversion. 

  1. Take your employees for granted

What does common courtesy cost? Nothing, yet the simplest acts of kindness your mother and grandmother taught you go a long way towards worker satisfaction. The authors noted that “Lack of recognition for hard work by organizational leaders was frequently cited as invoking a feeling of pointlessness.” They found groups as disparate as stone masons to university professors who all noted that the simple courtesy of being told a job was well done went a long way towards putting meaning in their jobs. One interviewee said that even having a boss say “Good Morning” was helpful in bringing meaning to a job. The authors concluded this element by stating “Feeling unrecognized, unacknowledged, and unappreciated by line or senior managers was often cited in the interviews as a major reason people found their work pointless.”

  1. Give employees pointless work to do

This element goes beyond simply work assignments as the authors found “that individuals had a strong sense of what their job should involve and how they should be spending their time, and that a feeling of meaninglessness arose when they were required to perform tasks that did not fit that sense.” Employees often know the best, most efficient way to accomplish a task and being told by an even well-meaning supervisor who does not know what he is doing can work to make a situation untenable. This also extends to multiple and contradictory assignments where employees are left to “pick up the pieces” of an uninformed management decision.

  1. Treat employees unfairly

The Fair Process Doctrine is alive and well in workplace satisfaction and meaningfulness as “Unfairness and injustice can make work feel meaningless.” The authors found that “Forms of unfairness ranged from distributive injustices”, where employees were told they could not have a pay raise for several years due to a shortage of money but observe senior managers granting themselves pay raises. The authors also noted that being treated unfairly encompassed “Procedural injustices included bullying and lack of opportunities for career progression.”

  1. Override your employees’ better judgment

The role a manger takes can go a very long way to supporting or denigrating how an employee feels about their job’s meaningfulness. As the authors said, “a sense of meaninglessness was connected with a feeling of disempowerment or disenfranchisement over how work was done.”

Therefore, this element is more than simply not acknowledging employees, it is not understanding what tools and talents your employees bring to your organization and how they want to use those talents. When you do not listen to what employees have to say or imply their experience and opinions do not matter, it is more likely employees will find their work meaningless. One interviewee told the authors “People can feel empowered or disempowered by the way you run things.”

  1. Disconnect employees from supportive relationship

Unsurprisingly, “Feelings of isolation or marginalization at work were linked with meaninglessness” and the authors wrote, “This could occur through deliberate ostracism on the part of managers, or just through feeling disconnected from coworkers and teams.” Most employees want to not only be an accepted part of a team but enjoy the camaraderie of working with co-workers towards a common goal. All of this adds to a sense of meaningfulness. I was somewhat surprised to find this element important even in entrepreneurs who reported in interviews “about their sense of loneliness and meaninglessness during the startup phase of their business, and the growing sense of meaningfulness that arose as the business developed and involved more people with whom they could share the successes.” 

  1. Put employees at risk of physical or emotional harm

I have worked in industries that involved safety risks, specifically in the Gulf Coast petro-chemical industry. I accepted these safety risks when I had such employment and as you might guess these risks were mitigated or managed by the company. However, when employees were exposed to such risks and had not accepted those risks or they were exposed to unnecessary risk it was often associated with loss of meaningfulness. This can be as simple as placing employees at physical or emotional risk from aggression to putting them in situations where they do not have the training to manage safely.

The authors concluded this section by writing “These seven destroyers emerged as highly damaging to an individual’s sense of his or her work as meaningful. When several of these factors were present, meaningfulness was considerably lower.” You should check to see if any of your leadership behaviors do or even could fall into one of these categories. Finally always remember that it does not cost you anything to be courteous.

Tomorrow I will consider how a business leader, including a Chief Compliance Officer (CCO), can cultivate an “ecosystem for meaningfulness.”

 

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, 2016

IMG_3310Yesterday I wrote about my passion for the compliance profession and why, in many ways, I feel privileged to work in this field. Based on the comments I received, many others feel the same way about working in compliance; there is a real sense of making a difference because of what we do. I was therefore intrigued when I read a piece in the Summer 2016 edition of the MIT Sloan Management Review, entitled “What Makes Work Meaningful – Or Meaninglessby Catherine Bailey and Adrian Madden. The article summarized the authors’ research into what gives work meaning and, equally importantly, common management errors that can leave employees feeling their work is meaningless. This spurred me to write a multi-part series on why working in compliance is meaningful. Today I will focus on what the authors call “The five qualities of meaningful work.”

Initially the authors note “researchers have shown meaningfulness to be more important to employees than any other aspect of work, including pay and rewards, opportunities for promotion, or working conditions. Meaningful work can be highly motivational, leading to improved performance, commitment, and satisfaction.” The authors interviewed some 135 employees in 10 different industries. Their findings were different than they had initially postulated.

The first difference was around leadership. They had expected to find “meaningfulness experienced by employees in relation to their work was clearly associated with actions taken by managers, such that, for example, transformational leaders would have followers who found their work meaningful, whereas transactional leaders would not.” However, their research turned up the opposite, demonstrating “quality of leadership received virtually no mention when people described meaningful moments at work, but poor management was the top destroyer of meaningfulness.”

The second unexpected find was around factors leading to meaningfulness and those which led to dissatisfaction. The authors had expected they would be the same or at least similar factors. They found that meaningfulness was largely driven by employees themselves while dissatisfaction arose from others. The authors wrote, “Whereas our interviewees tended to find meaningfulness for themselves rather than it being mandated by their managers, we discovered that if employers want to destroy that sense of meaningfulness, that was far more easily achieved. The feeling of “Why am I bothering to do this?” strikes people the instant a meaningless moment arises, and it strikes people hard. If meaningfulness is a delicate flower that requires careful nurturing, think of someone trampling over that flower in a pair of steel-toed boots. Avoiding the destruction of meaning while nurturing an ecosystem generative of feelings of meaningfulness emerged as the key leadership challenge.”

Finally, the authors determined meaningfulness in a person’s job was found from the shop floor to the Board room. Yet they found it was more than simply absorbing work or receiving praise for a job well done which motivated employees. The authors developed five factors which they intoned “might explain the fragile and intangible nature of meaningfulness” in the workplace.

  1. Self-transcendent

Here the authors found that work was meaningful for employees who believed that their occupation mattered for more than simply themselves. The authors noted, “People did not just talk about themselves when they talked about meaningful work; they talked about the impact or relevance their work had for other individuals, groups, or the wider environment.” They provided three examples. First a garbage collector who found his work meaningful when refuse was sent to recycling and he saw how his work contributed to creating a clean environment. The second was a professor who “found her work meaningful when she saw her students graduate at the commencement ceremony”. Finally, was an employee who found meaning in “bringing an entire community together around the common goal of a church restoration project.”

  1. Poignant

This was an interesting point because the authors found that people who found work meaningful did not always have a sense of joy or even happiness around their job. The authors found “those moments when people found their work meaningful tended to be far richer and more challenging than times when they felt simply motivated, engaged, or happy.” They gave the examples of nurses who “found meaningfulness when they were able to use their professional skills and knowledge to ease the passing of patients at the end of their lives.” They also found a large group of employees who “found moments of meaningfulness when they had triumphed in difficult circumstances or had solved a complex, intractable problem. The experience of coping with these challenging conditions led to a sense of meaningfulness far greater than they would have experienced dealing with straightforward, everyday situations.”

  1. Episodic

Meaningfulness tends to be episodic rather than consistent. The authors labeled these as “peak experiences” which are profound in the working environment. These peak experiences are not sustainable day in and day out; yet they “have a profound effect on individuals, are highly memorable, and become part of their life narratives.” Such moments are usually not forced or even driven by leaders or managers. On this point the authors concluded the peak “moments such as these contain high levels of emotion and personal relevance, and thus become redolent of the symbolic meaningfulness of work.”

  1. Reflective

The authors found that “meaningfulness was “rarely experienced in the moment, but rather in retrospect and on reflection when people were able to see their completed work and make connections between their achievements and a wider sense of life meaning.”” It can come when one looks back on a specific job that was well done or even consider a career or parts of a career in the sweep of an employee’s tenure. The authors said, “The experience of meaningfulness is therefore often a thoughtful, retrospective act rather than just a spontaneous emotional response in the moment, although people may be aware of a rush of good feelings at the time. You are unlikely to witness someone talking about how meaningful they find their job during their working day.”

  1. Personal

The authors found feelings of meaningfulness tend to be intensely personal and therefore not relating to the company leadership or their manager. They stated this feature “of meaningful work suggest that the organizational task of helping people find meaning in their work is complex and profound, going far beyond the relative superficialities of satisfaction or engagement”. It also explains that meaningfulness extends past the specific duties or even job functions to an individual’s life experiences. There is the reflective component of Point 4 above, but it usually ties into the values the individual holds when a sense that a job has been well done and well received by others.

Do any of these five elements apply to you and your work in the compliance field? If so it may help explain why you find your work so meaningful.

 

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, 2016

StrategyOne thing that is often difficult for Chief Compliance Officers (CCOs) is to look at compliance strategy rather than the tactical aspects of compliance. This is because it is usually the day-to-day aspects of doing compliance that are your full time job. However, the more you can think strategically about your compliance program the more you and your company will benefit going forward. I thought about this as I read an article in the MIT Sloan Management Review, entitled “Mastering Strategy”, where editorial director Martha Mangelsdorf spoke with David Yoffie and Michael A. Cusumano who recently released a book entitled “Strategy Rules: Timeless Lessons From Bill Gates, Andy Grove and Steve Jobs. These men headed Microsoft, Intel and Apple, respectively.

One of the more interesting initial observations was “that strategic thinking is a capability that leaders develop over time — and that these executives, whom we know as having made some great decisions, didn’t necessarily start off as such accomplished strategists.” Grove began as a scientist, working in a laboratory, then moved into operations and became Intel’s Chief Executive Officer (CEO). The authors viewed Gates as a natural strategist, yet he learned about “execution and organization. He learned he couldn’t personally run whole areas of the company.” The authors viewed Jobs as having “great product instincts, but he had to learn to master strategy in a high tech world.”

The meat of the book is five important strategic lessons the authors learned from studying these individuals. I will use them as a jumping off point for their application for the CCO or compliance practitioner.

Strategy Rule #1: Look Forward, Reason Back

As a lawyer, I certainly understand studying the past to try and learn about the future or at least prevent the mistakes of the past. However the authors believe, “real strategists are like great chess players or great game theorists: They need to think several steps ahead towards the end of the game and then reason back to what that means about what they need to do today. As a strategist, you need to think about where you want your business to be two, three, five, seven years down the road and then figure out what are the priorities and boundaries of what you need to do as a company today to get there.”

Stephen Martin, now a partner at Arnold & Porter LLP, often talks about having a 1-3-5 year compliance strategic plan. He says this gives you a guidepost to aim for and a track record for documentation purposes. Martin believes this is a disciplined way of thinking through both several steps ahead and what they might mean for the company.

Strategy Rule #2: Make Big Bets, Without Betting the Company

The authors note that all three executives made “big bets, but they never really bet the company.” For the CCO or compliance practitioner, the corollary is that with an effective compliance program the business can move very fast and take risks it might not otherwise be able to do so safely. I once heard former Citibank CEO John Reed say the reason you have brakes on a car is so you can go fast, not simply to slow the car down. This is what compliance can provide if you not only think strategically but also manage your compliance program thoroughly.

Strategy Rule #3: Build Platforms and Ecosystems – Not Just Products

For the CCO or compliance practitioner, I can think of no better example here than to cite to Jon Rydberg, head of Orchid Advisers, and his innovations around the term Compliance Ecosystem. Rydberg developed a lifecycle of compliance around the integration of written policies and procedures, personnel and technologies. While this sounds close to a formulation such as the Ten Hallmarks of an Effective Compliance Program, Rydberg takes the concept into the realm of strategic thinking by demonstrating that by putting an entire ecosystem in place, a company could move towards replicating each step in the process without reinventing the wheel or with additional costs. The authors point to Gates who understood that a computer was a platform and Microsoft operating system was the key element of that platform.

The Volkswagen (VW) emissions-testing scandal is the most current example I can posit where if an effective compliance program had been in place it may well have helped to prevent, detect and remediate the issues, which came before the company. However, for any competitor, compliance would have been required to demonstrate, with transparency, compliance with applicable laws. That is using compliance strategically.

Strategy Rule #4: Exploit Leverage and Power – Play Judo and Sumo

I found this rule quite interesting as it might apply to the compliance arena. The authors noted, “If you’re going to be a great strategist, you’ve got to be able to execute at the tactical level. The things that you do every day, day-to-day with your customers, with your competitors, and with your partners become critical in your ability to execute your longer-term strategy.” For the CCO or compliance practitioner I think this translates into the requirement that you deliver on the tactical or day-to-day slogging of compliance. You have to work to put the written Code of Conduct, policies and procedures in place, train on them and monitor them going forward. This allows you to have the ability to move forward strategically because you will have the strength of credibility.

Strategy Rule #5: Shape the Organization Around Your Personal Anchor

Here the authors noted a distinct paradox, “You want to dive deep into the things you’re really good at, but at the same time stay at a high level and always keep the big picture in mind. You have to know yourself, know what you are good at, and know your weak spots. It doesn’t matter whether you’re an entrepreneur or running a $50 billion company; the key thing is figuring out how to compensate for your weaknesses in order to make the organization execute effectively. We think that’s true regardless of company size; any CEO has to do that. In the case of Grove and Gates, they knew very early on in their careers what they were good at and what they weren’t; their crisp execution depended on finding ways to get the right people around them to compensate for areas that weren’t their personal strengths.”

For many CCOs or compliance practitioners who came to the role from the in-house legal department or with a legal training this is particularly true. The legal department is more generally focused on protecting the company. The compliance department is more generally focused on preventing, finding and fixing problems. Second is the use of technology and more particularly data analytics. When asked about COSO 2013 Framework and its application, you cannot simply point down the hall and say something like “I am a lawyer, those people in internal audit use COSO, not me.” If you cannot or do not work well with numbers, pair up with someone in your organization or company who does work well with numbers. Usually that is finance, internal audit or some other corporate discipline. The same is true for the COSO Framework.

Last week, I wrote that management≠leadership. One of the other key differences is that managing is about executing tactical concerns. Leadership is more about strategy. As you move to leadership in your compliance function, these lessons on strategy from some very good leaders over the past 25 years are excellent guideposts for you to incorporate into your skill set.

 

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, 2016

Live at LeedsOn the 14th February 1970 The Who recorded what I consider to be the best, or at the very least my favorite, live album of all-time. They recorded their concert at the University of Leeds and the resulting album was named The Who – Live at Leeds. The accolades were almost immediate; Nik Cohn, music critic for The New York Times (NYT), praised the album as “the definitive hard-rock holocaust” and “the best live rock album ever made”. Jonathan Eisen, from Circus Magazine, wrote “that not since that album [Tommy] has there been one “quite so incredibly heavy, so inspired with the kind of kinetic energy that the Who have managed to harness” here.”

The album has stood the test of time. Writing for the CD reissue in 1995, Tom Sinclair, of Entertainment Weekly, noted, “Few bands ever moved a mountain of sound around with this much dexterity and power.” If you really want to feel the clout of rock and roll, by a band at the height of powers, simply fire up side 2 for Magic Bus and My Generation. 

Recording any concert and releasing it as a live album is always a risk because of the vagaries of live recording, outside the studio setting. However The Who planned to release the concert recording as a live album. This decision enabled the group to bring together the proper technology to create the great concert experience which was The Who.

Similarly, moving from the written standards of compliance into the realm of doing compliance can also be fraught with difficulties. I thought about this quandary when reading a recent article in the MIT Sloan Management Review, entitled “Getting Workplace Safety Right by Mark Pagell, Anthony Veltri and David Johnson. The authors basic thesis is that companies get safety wrong because they equate doing business safely with a loss in productivity. This is often heard in the compliance realm as well, usually along the lines that doing business in compliance with anti-corruption laws such as the Foreign Corrupt Practices Act (FCPA) costs companies not only doing business efficiency but costs companies business. As the authors note, this is a “false trade-off”. I have adapted their ideas around safety for the Chief Compliance Officer (CCO) or compliance practitioner.

The lion’s share of companies the authors studied can be summed up with the following unattributed quote, “There are times, of course, when certain things get tweaked to get results.” That sounds like the statement of business development that wants to get things done rather than do business in compliance. The starting point for education is that any company must emphasize compliance as a “defining value of the organization.” It does not do any good for a company to have a compliance program in place only to have senior management exempt out a transaction the first time a difficult choice comes up.

In the arena of compliance, similarly to the sphere of safety, the answer is to wed a culture and organizational capability around compliance. Do not segregate it but embed it into your organizational processes through a monitoring system with five qualities: “(1) contributing to a process for concurrently monitoring and improving safety and production; (2) identifying who is accountable for the monitoring and improvement; (3) directing the design of work that is [complaint] and productive; (4) facilitating communication between management and [employees]; and (5) informing human resources decisions about compensation, hiring, firing, and promotion” related to compliance issues.

In addition to the foregoing, there are four essential cultural values around compliance. They are (1) commitment, (2) discipline, (3) prevention and (4) participation.

Commitment

Almost all companies claim they are committed to doing business ethically and in compliance. The issue is really where compliance ranks among a plethora of priorities. If systems are sometimes tweaked to get work done, then compliance is clearly a priority only when it does not affect sales production. But as noted by the new Department of Justice (DOJ) Compliance Counsel, Hui Chen, commitment is also shown in the budgeting and resource process. Moreover, actions speak louder than words as a company’s HR decisions must prioritize, recognize, and reward both employees and managers who show accountability to compliance in their communications and behaviors.

Discipline

Of course it all starts with the Fair Process Doctrine. There must be a formal process in place so that everyone understands if they violate the company Code of Conduct or do business in violation of the FCPA, there will be even handed discipline put in place. Managers who hold employees accountable to formal processes are willing to discipline employees for deviation from the stated policy or procedure. In other words, if you violate a rule, you might lose pay, get sent home, or get demoted. In such organizations, when HR conducts performance reviews, doing business in compliance is a key performance indicator.

Prevention

Whether you use the FCPA Guidance formulation of prevent, detect and remediate; McNulty’s Maxim No. 1 – What did you do to stop it?, or some other formulation, you must have a strong prevent prong in your compliance regime. Companies simply cannot sit around waiting for a violation to occur and hope that either they will not get caught or they can remediate before any serious penalty is applied by the government. You need to have a long-term perspective and focus on both simultaneous and continuous improvement.

Participation

This means engagement of your employees in your compliance program. Companies that have moved compliance from simply a legal requirement to a capability are at a competitive advantage because they are better run companies. Ethisphere’s World’s Most Ethical Companies awards demonstrate this year after year. While certainly all employees should be responsible for compliance, it is also incumbent for a company to maintain an organizational wide accountability for compliance. But employees take their clues from management and if the compliance function is not part of the executive leadership function of the company or is provided with scant resources, employees will notice this and respond to what they perceive to be management’s priorities. Employees need to see the CCO, or compliance professional, out in the field, in training, in town halls with senior management or another mechanism to show that compliance has value for the company.

The concepts and acumens from the world of safety continue to provide insights for the CCO or compliance practitioner. Fostering the culture of compliance not only gives a company a business advantage, it makes a company a better-run organization.

While you are considering these points, you may wish to check out these YouTube postings of Magic Bus and My Generation from The Who – Live at Leeds.

 

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, 2016