Sam SpenceSam Spence died last week. His was not a name that many folks were aware of generally and even in the sports world where he made his greatest mark. Yet he was a prime mover in the explosion of growth by the National Football League (NFL) from the 1960s up to today. What was his role in this? Spence was the composer for the soundtracks to NFL Films. Together with the pioneer and founder of NFL Films, Ed Sabol, his 35-time Emmy decorated son, Steve Sabol, and narrator John Facenda, a/k/a “the Voice of God”, they formed the core of the NFL Films team who worked to put together the story of professional football in America.

As Bruce Weber wrote in his New York Times (NYT) obituary, “Spence and his music helped fashion an identity for the game that made it seem more dramatic and inspiring.” Why was Spence so important to me? It was not the driving beats of today that he selected for his soundtracks but the wide variety of symphonic tunes that were both dramatic and inspiring. I watched NFL Films mostly in the 1970s and years later when I became a symphony aficionado I recognized music I had first heard in the NFL Films presentations. The one that struck me the most was Dvorak’s New World Symphony, which I first heard courtesy of Sam Spence.

The original quartet who started NFL Films is now in the great beyond. I am sure they are all creating some great films and videos for us all.

While Spence’s contributions to NFL Films were not as well known as the others mentioned above, they were a part of the fabric, DNA and what made the presentations so powerful. Indeed his music was so intertwined with the Films it became seamless with the visual presentations. I found this an interesting way to consider the difference in management and leadership.

In the NYT Corner Office section, Adam Bryant interviewed Walt Bettinger, Chief Executive Officer (CEO) of Charles Schwab Corporation, for an article entitled “You’ve Got to Open Up to Move Up”. In this article Bettinger talked about an idea rarely considered by a Chief Compliance Officer (CCO), which is the difference in leadership from management. Most CCOs are technically competent in the Foreign Corrupt Practices Act (FCPA) or other anti-corruption law. Put another way, they are technically competent at the management of a best practices compliance program. Yet they struggle not only to be seen as leaders but also to engage in leadership rather than simply managing.

Bettinger draws a sharp distinction between the two roles. He states the following: “There’s a contractual relationship with your manager. And you can do your job and fulfill the terms of that contract and never really have your heart in it.” He contrasted this with leadership, which he view as “something completely different.” He went on to note, “With leadership, you make a decision every day about whether you choose to follow someone. And you make it in your heart, not your head. The ability to inspire followership is so different than management, and it requires transparency, authenticity, vulnerability and all things that are completely unnatural to you when you are trying to build and achieve and accomplish.” Which does your employee base see you as, in your role as CCO?

As a perquisite for leadership, as opposed management, Bettinger had some interesting thoughts. He said that to be a leader, you have to open up. Moreover, you have to be vulnerable and be ready to share with people. Finally he indicated, “it was more important than anything to share with people the great failures in my life as opposed to the successes.” In other words, you have to get people to trust you.

Channeling his inner Dale Carnegie, Bettinger also spoke about the importance of learning about everyone. He gave a great example of a final exam he took in his final year of college, in a business strategies class. He was trying to maintain a 4.0 grade average and dutifully prepare for the final exam. When he got the test paper, it had one question, “What was the name of the lady who cleans this building?” Of course, Bettinger had no idea and failed the exam. It may seem harsh but it taught him a life-long lesson to know the name of that person in every position he has held since that time. Yet another difference between management and leadership.

As a final note about the difference between management and leadership, Bettinger has what can only be called an unorthodox approach regarding his approach to hiring. He said that one of the things to do is meet a candidate over breakfast. However, he gets there early and will “pull the manager of the restaurant aside, and say, “I want you to mess up the order of the person who’s going to be joining me. It’ll be O.K., and I’ll give a good tip, but mess up their order.”

He does this because he wants to see how the candidate will respond to that simple adversity. He wants to know if they will become upset, frustrated or simply deal with it in the course of the breakfast. Bettinger believes, “It’s just another way to get a look inside their heart rather than their head” because “We’re all going to make mistakes. The question is how are we going to recover when we make them, and are we going to be respectful to others when they make them?”

As a CCO you will be called on for several different roles in an organization. Certainly technical competence as a subject matter expert (SME) in your compliance program is a minimum. Yet never forget that the consumers of compliance are the company employees. The more leadership you show them, using some of the technics subscribed to by Bettinger, can be very useful to help foster that position for you going forward.

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

HemingwayOn this day in 1899, Ernest Hemingway was born. To me, he was the greatest Man of Letters the US has produced. Probably like most of you all, I was introduced to Hemingway in high school through The Son Also Rises. It remains my favorite of his works but I have enjoyed many more of his novels, short stories and non-fiction work. I particularly enjoyed his Nick Adams short stories as I found them crisply written and with a conciseness of language that is not often found today, or perhaps in any other time. Hemingway was awarded the Pulitzer Prize in 1953 and the Nobel Prize for Literature in 1954. He died via suicide in 1962.

I thought about Hemingway and his writing style when reading the most recent Corner Office column by Adam Bryant in the New York Times (NYT), entitled “To Work Here, Win the ‘Nice’ Vote”, where he profiled Peter Miller, the Chief Executive Officer (CEO) of Optinose, a pharmaceutical company. Miller has some interesting leadership concepts that are applicable to the position of Chief Compliance Officer (CCO) 2.0 and how a CCO 2.0 could use influence to lead, not only in the compliance function but also across an organization.

Miller talked about one thing you rarely hear in the corporate world, which is to be nice. He garnered this concept because as a “young sales manager at Procter & Gamble. I had five salespeople working for me, and one of the guys was 55 and another guy was 48. They were really successful salespeople, so I realized that I couldn’t teach these guys anything about selling. Since I couldn’t teach them anything, I tried to cultivate trust and respect by working really hard at figuring out how I could help them in a meaningful way.”

Yet this apparent inability to lead in precisely the area he was tasked in leading led Miller to formulate “a very important core value of mine, which is that you can and should try to create friends at your company.” But more than simply becoming friends, Miller came to the understanding that underlying the friendship “is this concept of trust and respect. When you get that as a team, that’s when great things happen. And that comes from creating a culture of openness, of authenticity, of being willing to have fearless conversations. It’s about being yourself, not being afraid to say what’s on your mind.”

As a CCO, you need to be able to have that type of conversation with those both up and down your chain of command. Certainly it is always beneficial to have type of relationship with your team that allows the full flow of communication. Miller said, “Think about how people are with their best friends. You want them to succeed. And sometimes that means having really hard conversations. If that’s what’s motivating you — and you’re really trying to help everybody around you in a company as if they were great friends of yours — that’s really powerful.”

I was interested in using some of Miller’s insights in the managing up role for any CCO. You have to be able to have some very frank conversations with your CEO and Board members about your compliance program and any issues that may arise under it. As CCO if you “cultivate trust and respect by working really hard at figuring out how I could help them in a meaningful way” as Miller used with his more senior sales team members, it should certainly help you going forward when you have to manage up your chain.

I also thought about this somewhat enlightened approach as contrasted with another style that I read about in a recent On Work column by Lucy Kellaway in the Financial Times (FT) entitled, “Wrong skillset excuse masks coup at the top of Barclays, where she discussed the recent termination of Antony Jenkins from Barclays Bank. The newly installed chairman of the company’s Board, John McFarlane, who simultaneously promoted himself to CEO, Jenkins former position, fired Jenkins. The reason Jenkins was fired; he no longer had the right “set of skills” for the organization. Chairman McFarlane explained to Kellaway that there were four skills going forward which (apparently) were lacking in Jenkins: “a) strategic vision; b) charisma; c) the ability to put plans in place that deliver shareholder value; and d) ability to ensure results were delivered.” Ironically, Kellaway noted that lawyers for Kleiner Perkins had said that Ellen Pao “was an employee who never had a skillset.”

Kellaway noted the obvious when she wrote “To invoke skillsets in hiring is not only ugly, but dangerous. Find the right person to run a very big bank is very hard, and having a list of skills that you are matching an applicant against is not necessarily the best way of going about it.” More ominously, she noted that the head of such bank would have to be able to reign in the traders and investment banker types who brought Barclays its unwanted regulatory scrutiny. More critically from the compliance perspective, I think it says much more about Chairman McFarlane that he did not say anything about a new CEO running the business ethically, in compliance or in any other manner which could help to prevent Barclays from another very large fine or penalty from the regulators.

McFarlane’s dictum is one that will certainly be noted by regulators on both sides of the Atlantic going forward. After the disastrous run by former Barclays’ head Bob Diamond, the bank was moving in the direction of regulatory compliance while securing the profits demanded by shareholders. However, McFarlane’s sacking of Jenkins could well derail the bank’s focus on ethics and compliance and engender the former attitude which led to the bank’s fine in the LIBOR scandal.

Unlike Peter Miller at Optinose, it does not appear that Chairman McFarlane appreciates the trust and respect style of leadership. I fear things may well turn out badly for Barclay’s yet again with the newly found emphasis on profits, profits and profits.TexasBarToday_TopTen_Badge_Large

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, 2015

Shoes at GettysburgLast year I did a three-day series on the Battle of Gettysburg and looked at some lessons that are applicable to a modern day compliance practitioner. As not only did I learn quite a bit about the battle, it seemed to strike a cord with many readers so this year I will continue the tradition. Today I look at Day 1 of this seminal battle of the Civil War.

One of the enduring myths about the battle is that it started over shoes. In the Encyclopedia Virginia, in an entry entitled “Shoes at Gettysburg”, it states, “One of the most persistent legends surrounding battle is that it was fought over shoes… Ten weeks after the battle, Confederate general Henry Heath a Virginian whose troops were the first to engage on July 1, filed a now-famous report in which he explained why he had sent a portion of his division into the small Pennsylvania town. “On the morning of June 30,” Heath wrote, “I ordered Brigadier General [Johnston] Pettigrew to take his brigade to Gettysburg, search the town for army supplies (shoes especially), and return the same day.” That parenthetical phrase “shoes especially” has taken on a life of its own over the years. A 1997 newsletter of the American Podiatric Medical Association is typical — it claimed, perhaps due to its interest in foot health, that footwear was the battle’s causa belli, adding, “There was a warehouse full of boots and shoes in the town.”

Historians have debated this issue ever since. There is no doubt that General Heath “stumbled into this fight” but over some shoes, as he was under orders from General Lee not to enter into a general engagement with Union troops. In the same Encyclopedia Virginia it ends with the following “The Battle of Gettysburg readily lends itself to being read as a three-act tragedy, dominated, as many have argued, by Lee’s hubris. (“The fundamental fault that disfigured his conduct of the campaign,” historian Brian Holden Reid has written, “was that Lee was overly confident and expected too much of his marvelous troops.”) That it started by accident, over something so “pedestrian” as shoes, is too perfect for writers to ignore.”

Whether the battle started over shoes or not, the Confederate Army did ‘stumble into a fight’. I thought about such randomness in the context of a Chief Compliance Officer (CCO) when I read a couple of recent articles in the Corner Officer section of the New York Times (NYT). In the first article, Adam Bryant interviewed Sabine Heller, the Chief Executive Officer (CEO) of A Small World, in an article entitled “Can You See the Whole Picture?” One of the points that Heller raised was that, at times, you need to step back to look at the bigger picture. She provided the following example, “You have to manage people based on results and set clear goals. It sounds like a simple thing, but people don’t do that often. When I was 22 and working at UGO, it didn’t matter that I had no experience and it didn’t matter what my process was as long as I hit my goal. It taught me how empowering it is to be treated like that. I am a great manager for people who are strong thinkers and motivated. I empower people. I promote people. I give them a lot of leeway. At the end of the day, I look at results, and that’s it. I feel very strongly that organizations infantilize employees. You should treat them like adults.”

In another Corner Office article, entitled “Joanne Rohde, on Knowing When to Get In, and to Get Out”, Bryant interviewed Joanne Rohde, CEO of Axial Exchange. Some of her thoughts on leadership would certainly apply to Confederate General Lee at Gettysburg. She talked about stepping back, breathing and re-assessing the situation. Bryant quoted her for the following, “I remember a day when the markets went crazy, and all of us were losing money because the volatility was going against us. The guy I worked for said, “You all need to get out of your positions.” We tried to explain to him that this was a temporary thing. He said: “No. You have to get out. A couple of days later, he said something that has really been an important life lesson: “If you get out, you can get in exactly the same way the next day, but you have a clear head.” It was such good advice, and so few people follow it. And it’s really important for both entrepreneurship and leadership — you’ve got to get in and take risks, but you also have to get out, reassess and modify. That, in my opinion, is how you get ahead. You may have a vision of where you’re headed, but it is never a straight line. You take a step and you reassess. That gives you courage.”

The key is that you step back and take another look, perhaps even put a second set of eyes on the issue. In the business world there is nothing that requires immediate assessment and a decision for a compliance practitioner. If there is, it is because there has not been any communication to the compliance function during the months and months of work by the business unit working on a deal. Any company that has that type of culture means the CCO has not developed relationships with the business unit personnel to foster adequate communication. If the China business unit head has never met the CCO, it is certainly time for the CCO to go to China, put on some training and introduce him or herself to Regional Manager (RM).

Both of the articles also had some very relevant points regarding the hiring function and compliance. Heller said that one thing she detests from a candidate is canned responses in the interview process. She wants people who “understand the larger space of the industry we’re in.” But I found her further comments considerably insightful. She said that “And I want to know if that person has been able to come up with an idea, build consensus for that idea and follow it through. I want to see if they are a leader in one way or another, because building consensus for something is very important in the world of business. You need someone who can manage laterally and who can get people on board with their ideas. So I always ask for a time in someone’s career when they have come up with an idea and were able to get people on board, and then executed the idea.”

Rohde had another approach to hiring and interviews which I found discerning. It involved preparing for an interview and how that preparation could lead to persons understanding the compliance function. She said, “The first thing I want to know is, “Why are you here?” Smart people can get lots of job interviews. So I want to know that there’s something unique about our opportunity. There are two reasons I do that. You quickly sort out people who haven’t even done their homework. I remember one person had not even looked at our website. He was mad that I didn’t hire him, but he didn’t even know what we did.

In a small company like ours — 14 employees — you have to be passionate about what we’re doing. Everybody who’s really done well at our company has had a passion for health care and, sadly, often has had a bad experience in the health care system with a family member and wants to change it. So, I’m really looking for that.”

But her next comments spoke to some of the leadership lessons from Gettysburg – Day 1. She was quoted as saying, “I also ask for examples of when you’ve chased a dream, whether you made it or not. Was there something you went for? If it worked, great, but if it didn’t work, how did you retrench? So I’m really trying to learn if the person has that ability or interest to do something that’s not there.” Imagine what might have happened if the Confederate Army had not gone looking for those shoes or General Heath had obeyed Lee’s orders and had not ‘stumbled into a fight’.

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, 2014


IMG_1196Yesterday, I used the assassination of Archduke Ferdinand and its continuing legacy even up until today to introduce a two-part series about ‘Blue Ocean Leadership’. The assassination and some of its legacies were detailed in an article in the March 22 edition of the Financial Times (FT) in a piece by Simon Kuper entitled, ‘The crossroads of history”. In this article, Kuper wrote about his return to modern day Sarajevo “to try and understand his act in its local context – the context both of 1914 and 2104.” I think that Kuper did come to some understanding through his reporting, which I found to be first rate.

Yesterday I reviewed the Harvard Business Review (HBR) article entitled “Blue Ocean Leadership”, which I found to be one of the most interesting and perhaps even game-changing discussions on how to be a more effective leader that I have ever read or heard about. In Part I I wrote about what ‘Blue Ocean Leadership’ is and how it differs from conventional leadership. Today, I will review the strategies of how to execute this type of leadership and explore its implications for the Chief Compliance Officer (CCO) or compliance practitioner.

I was extraordinarily gratified to see that the authors believe that something akin to the Fair Process Doctrine should be used to address over-coming resistance to changing over to ‘Blue Ocean Leadership’. The Fair Process Doctrine recognizes that there are fair procedures, not arbitrary ones, in a process involving rights. People are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair by employees. This means that that employees will commit to a manager’s decision—even one they disagree with—if they believe that the process the manager used to make the decision was fair.

 The authors write “the gift that fair process confers is trust and, hence, voluntary cooperation, a quality vital to the leader-follower relationship. Anyone who has ever worked in an organization understands how important trust is. If you trust the process and the people you work for, you’re willing to go the extra mile and give your best. If you don’t trust them, you’ll stick to the letter of the law that binds your contract with the organization and devote your energy to protecting your position and fighting over turf rather than to winning customers and creating value. Not only will your abilities be wasted, but they will often work against your organization’s performance.”

 The authors have a somewhat different formulation for fair process when they say that it includes “engagement, explanation and expectation clarity.” Further, the authors say “the leadership development context, the application of fair process achieves buy-in and ownership of the to-be Leadership Profiles and builds trust, preparing the ground for implementation.” The authors suggest four steps for implementing ‘Blue Ocean Leadership’.

Step 1 – Respected senior managers should spearhead the effort. Nothing speaks to company employees more than who is leading an initiative. The authors state, “strongly signals the importance of the initiative, which makes people at all levels feel respected and gives senior managers a visceral sense of what actions are needed to create a step change in leadership performance.”

Step 2 – Engaging the company’s rank and file in defining what leaders should do. This is the engagement prong of the fair process doctrine. If there is engagement, employees will “feel more deeply engaged with their leaders, because they have greater ownership of what their leaders are doing.”

Step 3 – Giving employees a say in the final decision. This allows a vertical slice of the organization, from the top to bottom to have a say in what the leadership profiles will be going forward. This comes though give and take and if senior management does not accept a proffered leadership profile, it must be prepared to defend its decision, through a “clear, sound explanation of their decision.”

Step 4 – Ease in assessment of whether expectations are being met and in monitoring progress. The authors suggest no less than monthly feedback “between leaders and their direct reports help the organization check whether it’s making headway.” The authors write that such a timeframe, will “keep leaders honest, motivate them to continue with change, and build confidence in both the process and the sincerity of the leaders. By collecting feedback from those meetings, top management can assess how rapidly leaders are making the shift from their as-is to their to-be Leadership Profiles, which becomes a key input in annual performance evaluations.”

There are many tangible benefits that the authors article discuss and those discussions can lead directly to the elimination of actions that senior management invest their time in. Even if some actions and activities cannot be entirely eliminated, they can be reduced. Conversely, these types of discussions can show senior management what acts and activities should be raised above their current level. Finally, this type of leadership protocol can show leaders the types of activities they should be engaging in that they are not currently undertaking.

For the compliance practitioner I think there are several important lessons and implications, which can be drawn from this article. Rather than start with the CCO, I want to take the opposite approach and begin with the compliance practitioner who is on the frontline. The clearest lesson from this scholarship is to “serve your customers, not the boss.” This means should try to eliminate your queries up the chain and try to handle direct issues yourself and reduce seeking approval for decisions. Frontline compliance practitioners need to raise more relevant compliance training and information to the business units or geographic areas they support. Finally, the frontline compliance practitioners should celebrate compliance successes locally.

For the mid-level compliance manager, they strive for ‘more coaching and less control’ from senior management. This means elimination of frequent requests for detailed progress reports on initiatives and programs. Further, there should be a reduction of requirements and review of justifications for decisions from the frontline compliance practitioners. Mid-level compliance practitioners should strive to not only understand but also explain compliance strategy clearly and empower frontline compliance practitioners to stretch themselves through more effective coaching. Finally, mid-level compliance managers should work to set performance goals together, share best practices across teams, business units and geographic regions and align rewards with performance.

The key for senior level compliance practitioners is to move from the day-to-day work to the bigger picture of compliance. As much as possible, senior compliance managers need to stop operational problem solving and putting out fires. If senior compliance managers cannot fully eliminate such actions, they should try and reduce the number of meetings dealing with operations improvement but also try and reduce the monitoring and coordination of middle management. Issues that senior compliance managers should try and raise up in activities awareness include dealing with poor performance, coaching and motivating their direct reports, creating a compelling strategy and then clearly communicating that strategy. Finally, senior compliance managers should develop a compliance agenda for the future (think Stephen Martin’s 1-3-5 year strategy) and advance a process for implementation of continual assessment and improvement of that strategy.

The authors write, “We never cease to be amazed by the talent and energy we see in the organizations we study. Sadly, we are equally amazed by how much of it is squandered by poor leadership. Blue ocean leadership can help put an end to that.” They put forward “a concrete, visual framework in which they can surface and discuss the improvements leaders need to make. The fairness of the process makes the implementation and monitoring of those changes far easier than in traditional top-down approaches. Moreover, blue ocean leadership achieves a transformation with less time and effort, because leaders are not trying to alter who they are and break the habits of a lifetime. They are simply changing the tasks they carry out. Better yet, one of the strengths of blue ocean leadership is its scalability. You don’t have to wait for your company’s top leadership to launch this process. Whatever management level you belong to, you can awaken the sleeping potential of your people by taking them through the four steps.”

I found their article to be quite compelling. I hope that you will consider some or all of these suggestions as a way to set up you and your compliance team to become Blue Ocean Leaders and un-tap the potential of your entire compliance team.

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, 2014

Marines as Devil DogsEver wonder where the US Marine Corp got its nickname of ‘hellhounds’? It came courtesy of the Imperial Germany Army from a battle that took place in the month of June 1918, the Battle of Belleau Wood. According to the Battle’s entry in Wikipedia, the Marines forces marched 10K to reach a site where the German Army had broken through against the French Army. After arriving on the site and turning back the German advance, the Marines were repeatedly urged to turn back by retreating French forces, Marine Captain Lloyd W. Williams of the 2nd Battalion, 5th Marines, uttered the now-famous retort Retreat? Hell, we just got here.” 

After the battle, the French renamed the wood “Bois de la Brigade de Marine” (“Wood of the Marine Brigade”) in honor of the Marines’ tenacity. The French government also later awarded the 4th Brigade the Croix de guerre. An official German report classified the Marines as “vigorous, self-confident, and remarkable marksmen…” General Pershing – Commander of the American Expeditionary Force – even said, “The deadliest weapon in the world is a Marine and his rifle!” Pershing also said “the Battle of Belleau Wood was for the U.S. the biggest battle since Appomattox and the most considerable engagement American troops had ever had with a foreign enemy.” But it was the Germans who gave the Marine Corp its most lasting moniker, when the called them ‘the dogs from hell.’ Tribute indeed.

I thought about this tribute to the Marine Corp when I recently read an article in the Corner Office section of the New York Times (NYT), entitled “Leading By Putting Your Followers First”, by Adam Bryant. In this article, he profiled Don Knauss, the Chief Executive Officer (CEO) of Clorox Company. Knauss joined the Marine Corp after college and this experience gave him some valuable leadership lessons that Bryant detailed in his article. One of the things that influenced Knauss’ philosophy on leadership was the Marine Corp process of thinking through an issue. Bryant wrote, “I learned in the Marine Corps that I really liked strategy. Every operation in the military is based on a five-paragraph order, and the acronym is Smeac — situation, mission, execution, administration and communication. It’s a very logical flow.”

Another key leadership lesson is defined by the age-old acronym KISS or Keep it simple, sir. Bryant wrote that Knauss said, “how are you going to focus the organization? And it had better be simple, and it probably should not be more than three things. You’ve got to communicate it about 100 times and align your incentive structure to it. It’s about distilling the complex to the simple, and I’ve seen leaders fail because they do the reverse, by trying to make things into some intellectual exercise. Whatever business you’re in, there are fundamentals, just like blocking and tackling in football. It always comes back to the fundamentals. You cannot let yourself get bored with the fundamentals.”

But more than simply communicating something about 100 times to get your message across, Knauss believes that you have to make sure that people believe that you care about them. That is certainly something a compliance practitioner needs to take to heart. Knauss reflected, “it’s all about your people. If you’re going to engage the best and the brightest and retain them, they’d better think that you care more about them than you care about yourself. They’re not about making you look good. You’re about making them successful. If you really believe that and act on that, it gains you credibility and trust. You can run an organization based on fear for a short time. But trust is a much more powerful, long-term and sustainable way to drive an organization.”

Knauss had some interesting insights relating to how he evaluates potential hires that I think makes a lot of sense for the compliance professional to consider.

  1. Passion – Knauss looks for energy and considers whether the person will have an impact on the business.
  2. Smarts – Can the candidate think analytically, creatively and strategically?
  3. Develop others – Is there any pattern in the person’s career that shows they can develop people or put inversely, did people move up through an organization because they were mentored by this person?
  4. Communication skills – Knauss considers if he can imagine this person on a stage, inspiring a large group? He also assesses whether the candidate has an easy, informal manner to conversely test if they are too formal and too focused on hierarchy, as Knauss believes formality and rigidity do not work.
  5. Use of power v. use of authority – Here Knauss believes “it is much more powerful to use authority than power. One of the things I’ve learned is that as you move up in an organization, you’re given more power. The less you use the power you’ve been given, the more authority people give you, because they think: “You know what? This guy’s O.K.” Persuading people to do things – come along with me because we’re going in the right direction – is much more powerful over time.”
  6. Values – Knauss said that the final thing he tries to evaluate is the values of a candidate. He considers that it is important that they are honest and will tell the truth. Moreover, “do they also stand up for what they think is right in the company? It starts with integrity, which is really the grease of commerce. You get things done much more quickly when people trust you.”

However, I found one of the most important lessons that Knauss intoned was about how a leader should treat people. He told the story about how he joined a group of Marines who had been in the field for several weeks and had been eating C-rations. When Knauss met them, they were having their first hot meal since going into the field. Knauss related, “I had been up since 5 in the morning, and I was pretty hungry. I started walking over to get in front of the line, and this gunnery sergeant grabbed my shoulder and turned me around. He said: “Lieutenant, in the field the men always eat first. You can have some if there’s any left.” I said, “O.K., I get it.” That was the whole Marine Corps approach – it’s all about your people; it’s not about you. And if you’re going to lead these people, you’d better demonstrate that you care more about them than you care about yourself. I’ve never forgotten that, and that shaped my whole approach to leadership from then on.”

That final lesson is the most important one for any compliance practitioner. Your gold-plated written compliance program is only as strong as the people you have in your company. If you can demonstrate, and lead in compliance, by showing your fellow company employees that you are there to assist them but you will also go the extra mile to make them understand you care about them, you will get much more out of them at the end of the day.

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M&AIf you are interested in learning about mergers and acquisitions under the FCPA I am involved in to upcoming events designed to give you the most up-to-date advice on this area of compliance. Both events are sponsored by The Network. The first event is a webinar entitled appropriately enough, “Mergers and Acquisitions Under the FCPA” and is scheduled for  Tuesday, June 17th, 2014 TIME: 2:00 pm EDT. For registration and additional information click here. On Tuesday, June 24th the always popular Tom Fox/Stephen Martin roadshow returns to Denver where I will speak live on Merger and Acquisitions Under the FCPA and Stephen will talk about risk assessments under the FCPA. For information on the Denver event, click here

 

 

 

World Cup 2014

I am putting on a four part podcast series on the World Cup, detailing issues of bribery and corruption, together with an ongoing discussion of Team USA and this year’s tournament. I am joined by Mike Brown, the Managing Director of Infortal. You can check out Part I by clicking here of the series where we discuss bribery of referees in the lead up to the 2010 World Cup held in South Africa and FIFA’s response. Mike and I then review Team USA and it’s draw in Group g-the Group of Death. I hope that you will check out this series and enjoy it as much as Mike and I enjoy recording the episodes. Also remember, my podcast, the FCPA Compliance and Ethics Report is available for download at no charge on iTunes so you can listen to Part I on your commute to work. So sign up for the podcast from WordPress or iTunes and enjoy our series.

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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, 2014