One area which most particularly lends itself to a 360-degree approach to communications is in the area of corporate culture. The more you can operationalize compliance, the more it works to operationalize culture in your organization. It works for all levels of a company, literally from the Boardroom to the shop floor. The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) recognized this when they noted in their 2012 FCPA Guidance that “A compliance program should apply from the board room to the supply room—no one should be beyond its reach.” Yet culture can provide more than simply an ethical foundation, it is also a part of the business foundation of an entity.
In “Corey E. Thomas of Rapid7 on Why Companies Succeed or Fail”, Adam Bryant interviewed Corey Thomas of the national security firm Rapid7. They considered why companies with smart, dedicated and motivated employees still fail. Unsurprisingly it all starts with culture. Thomas noted, “the culture of a company can make a huge difference. The culture can accentuate the collective, or it can be a distraction. If it’s a distraction, it can make everyone worse than they would be, either individually or in small groups.” Thomas believes this is because “smart and talented people have the capability to do some really phenomenal things or some really destructive things. And so culture ends up mattering to a huge degree.”
Yet it is even more sophisticated, as part of culture includes cohesiveness. Thomas noted, “Do the culture and the people and the company’s business line up and make sense? Sometimes you find significant inconsistencies. You might have a group of hard-charging, goal-oriented people, but what if their job is to figure out a market solution? Maybe they can’t do it because they’re better at executing than at being creative. So the teams need to be cohesive, but they can’t be monolithic, because teams with the same kind of people miss more. More diverse teams can see around corners because they have different perspectives.”
Using such a 360-degree approach to communication, allows a CCO to “see around corners” and can be one of the greatest strengths of a best practices compliance program. The reason is listening. Listening is a key leadership component and there are certainly many ways to listen. You can sit in your office and wait for a call or report on the hotline or you can go out into the field and find out what challenges employees are facing. From this you can work with them to craft a solution that works for the company and holds to the company’s ethical and compliance values.
Dun & Bradstreet CCO Louis Sapirman has often discussed his innovative use of a tool called Chatter, which he uses to engage D&B employees in a manner similar to Twitter in a virtual worldwide Tweet-up. He has created an internal company brand in the compliance space, using the moniker #dotherightthing, which trends in the company’s Chatter environment. He also uses this hashtag when he facilitates a Chatter Jam, which is a real-time social media discussion. He puts his compliance team into the event and they hold it at various times during the day so it can be accessed by D&B employees anywhere in the world.
He said that he ‘seeds’ Chatter Jam so that employees are aware of the expectations and to engage in the discussion respectfully of others. When they began these sessions he reminded employees that if they had specific or individual concerns they should bring them to Sapirman directly or through the hotline. However, he does not have to make this admonition any more, as everyone seems to understand the ground rules. Now this seeding only relates to the topics that each Chatter Jam begins with going forward. Sapirman emphasized that these events allow employees the opportunity to express their opinions about the compliance function and what compliance means to them in their organization. One of these discussions was around the company’s Code of Conduct. He said that employees wanted to see the words “Do The Right Thing” as the name of the Code of Conduct.
Using such tools a CCO can move towards Thomas’ next key ingredient of a successful corporate culture; which is trust. Thomas said, “I’m obsessive about the culture that we create specifically around trust, and this is an adjustment for some people when they come here. If you join our team, there’s trust by default here. That means you trust in the competence of your teammates. You trust in their intentions and what they’re saying. At some companies, the culture is that trust is earned over time, but that means if everyone in the organization says you have to earn trust, the amount of energy that actually goes into the trust-earning process is a distraction from our mission.”
This part dovetails into what Barbara Brooks Kimmel, Chief Executive Officer and Cofounder of Trust Across America - Trust Around the World, continually reminds us of from her site. Moreover, Kimmel finds that trust is good for the bottom line. As reported in, “Return on Trust: The “State of Trust” 2016”, Trust Across America found “During the three-year period from February 2013-February 2016 America’s most trustworthy public companies outperformed the S&P 500 according to the actual composite audited performance shown below and reprinted with permission of Facts Asset Management, LLC. This was not a “test” but rather “real” money under management, followed by an independent audit verifying the returns. Trust works as a business strategy.”
I found the Thomas interview fascinating as it moved corporate culture to the forefront of the business of an organization. A CCO can help to facilitate this moving forward by working to inculcate the right type of culture in their organization, which follows the DOJ’s Evaluation of Corporate Compliance Programs discussion of how operationalization of compliance is a further way of thinking about moving compliance and culture more deeply into a company.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
In this episode, I visit Jonathan Benson, Vice President of Product Development at ShoCard. Businesses must adopt solutions which keep information secure. Moreover, there is an ongoing need to ensure they are still in compliance. This episode provides a fascinating exploration of how innovation in one sector can impact the greater compliance profession.
We discuss ShoCard’s use of blockchain to facilitate identity management. We begin with a brief explanation of is blockchain. Benson explains how blockchain can help commercial businesses with identity management and help financial institutions in their KYC obligations. We explore how can it help to reduce fraud and improve overall AML management and the scalability of the ShoCard solution. Finally, Benson explains that when large databases of personal information need to be maintained, they are vulnerable to attacks.
For more information on ShoCard’s solution, go to their website, by clicking here.
Adam Bryant recently retired from the Corner Office column after 10 years on the post. Fans of this podcast know we use many of his articles as jumping off points for many of our podcasts. To commemorate his 10 years of studying business leaders, Bryant published a long-from piece in the New York Times for his final article. It was entitled, “How to be the Big Boss-Lessons form a Decade of Interviewing CEOs”. As a tribute to Bryant, Richard Lummis and I will explore many of the lessons Bryant has drawn. In this first podcast we discuss three keys that Bryant has observed: (1) applied curiosity; (2) enjoying discomfort; and (3) career management.
One of the greatest things about the compliance profession is that it is only limited by its collective imagination. If you can think it up, you can probably do it. This has led not only continuing evolution of compliance programs but continuing innovation in the compliance function. As compliance programs evolve and innovate, regulators take note and the cycle becomes almost a continuous feedback loop. One technique new to compliance but squarely in the 360-degree view of communication is internal crowdsourcing, to enlist new ideas from employees, to open new sources of compliance innovation.
Internal corporate crowdsourcing was explored in “Developing Innovative Solutions through Internal Crowdsourcing”, where the authors noted, “It allows employees to interact dynamically with coworkers in other locations, propose new ideas, and suggest new directions to management. Because many large companies have pockets of expertise and knowledge scattered across different locations, we have found that harnessing the cognitive diversity within organizations can open up rich, new sources of innovation. Internal crowdsourcing is a particularly effective way for companies to engage younger employees and people working on the front lines.” They came up with seven key elements companies should use to aid in moving such an effort forward, which apply forcefully to the CCO and compliance practitioner.
By internally outsourcing compliance function enhancements, a CCO can increase employee engagement in compliance. The entire process draws from your diverse employee base which brings both organizational learning and knowledge diffusion into the continuous improvement of your compliance program. Just as the data in your organization is your data, so you should not only utilize it but monetize it; your employee base can be a large and untapped source of information which can more readily be implemented and have a more rapid impact on your compliance program going forward.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
One of the ways that CCOs and compliance practitioners can better use 360-degrees of communication is through Twitter. In “How Twitter Users Can Generate Better Ideas”, authors Salvatore Parise, Eoin Whelan and Steve Todd found “employees with a diverse Twitter network – one that exposes them to people and ideas they don’t already know – tend to generate better ideas.” Their research led them to three interesting findings: (1) Employees who used Twitter had better ideas than those who did not do so; (2) There was a link between the amount of diversity in employees’ twitter networks and the quality of their ideas; and (3) Twitter users who combined idea scouting and idea connecting were the most innovative.
I do not think the first point is too controversial or even insightful as it simply confirms that persons who tend have greater curiosity tend to be more innovative. The logic is fairly-straightforward, good ideas emerge when new information received is shared with what a person already knows. In today’s digitally connected world, the amount of information in almost any area is significant. Yet by using Twitter, “the potential for accessing a divergent set of ideas is greater.”
The key concept for the compliance profession are the roles of Idea Scout and Idea Connector. An idea scout is “an employee who looks outside the organization to bring in new ideas. An idea connector, is someone who can assimilate the external ideas and find opportunities within the organization to implement these new concepts.” It is the ability to identify, assimilate and exploit new compliance ideas, which makes this concept so powerful. However to improve your compliance innovation, “you need to maintain a diverse network while also developing your assimilation and exploitation skills.”
For the compliance practitioner, Twitter is a gateway to solution and a way to obtain different perspectives and to challenge the status quo in one’s thinking. The key is not your number of followers on Twitter but rather the diversity within your Twitter network, as “Diversity of employee’s Twitter network is conductive to innovation.” An Idea Scout will “identify external ideas from experts and resources on Twitter.” The compliance practitioner can take advantage of experts within the anti-corruption compliance field, but there is an equally rich source of innovation from those outside this arena.
Even with modern social media tools, the first key to good leadership is to listen. Listening can be enhanced, through the “breadcrumb” approach of finding innovation leaders and thought-provokers. This entails listening to colleagues and industry leaders who are Twitter “including what they are tweeting about, who they are following and replying to on the platform, who is being retweeted often”.
Equally important to this Idea Scout is the Idea Connector, who is putting the disparate strands from tweets together. For the compliance function, this will be someone who identifies compliance best practices or other information from Twitter ideas, can then put them together and direct the information to the relevant company stakeholders. Finally, such a person can “Curate Twitter ideas and matches them with company resources needed to implement them.”
There are a variety of ways an Idea Connector can use Twitter. One is to try to sift through your Twitter feed and look for trends and relationships between topics. You bring value when you stamp your own analysis and interpretation on it. Another method is to focus on analytics and one user “filtered specific subsets of the topic for different stakeholders” at his company. Another method was to create “social dashboards or company blogs based on the insight” received thought Twitter. Interesting, one of the key requirements for successfully mining Twitter was in finding ways to share its content “since many employees, especially baby-boomers don’t use the platform themselves.” Conversely by mining information from Twitter and presenting it, this can allow these ‘technologically challenged’ older employees to ascertain how they can target millennial’s.
But as much as these concepts can move a CCO or compliance practitioner to innovation in a compliance program, it can also foster additional communication through the following of your own employees. It is well known that Twitter can facilitate greater communication to and between the compliance function and its customer base, aka the company employees. The use of Twitter to enable this same type of innovation because it “is different than email and other forms of information sources in that it enables continuous engagement”.
Twitter was created to allow people to connect with one and other and communicate about their activities. However the marketing potential was immediately seen and used by many companies. Now a deeper understanding of its use and benefits has developed. For the compliance practitioner one thing you want to consider is to align your Twitter and great social media strategy with your compliance strategy; match your Twitter strategy to your compliance strategy.
Twitter can be powerful tool for the compliance practitioner. It is one of the only tools that can work both inbound for you to obtain information and insight and in an outbound manner as well; where you are able to communicate with your compliance customer base, your employees. You should work to incorporate one or more of the techniques to help you burn compliance into the DNA fabric of your organization.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
We have a bit of a compliance smorgasbord of topics this week. I was in London and sat down to be interviewed by Jonathan Armstrong, a partner at Cordery Compliance, at the law firm offices in London. We consider when disruptive companies should institute a compliance program, even during its start up phase. Does the simple fact it is disruptive make compliance antithetical to its business approach. We both believe that disruptives and start-ups need to institutionalize compliance sooner rather than later. We then consider the disruptions of political events such as the ongoing antics of the Trump Administration and continued non-negotiations in the Brexit miasma. We discuss where might compliance be going in the future. We conclude with a discussion of the internationalization of anti-corruption investigations and enforcement and why compliance is the key to wading through the minefield of multiple jurisdictions and regulators.
Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories of the week, including:
Other than the skill of listening, asking questions is about as important to the compliance practitioner as any other that can be employed. Yet, equally critical is to ask the right question, which is an issue explored Brian Grazer and Charles Fishman explored this concept in their book “From a Curious Mind: The Secret to a Bigger Life”.
Grazer is a well-known and successful Hollywood director who has directed such movies as Splash, A Beautiful Mind and Cinderella Man. He believes that much of the success he has achieved is because he asks lots of questions and that “Questions are a great management tool.” This is because “Asking questions elicits information” and it also “creates the space for people to raise issues they are worried about that a boss, or colleagues, may not know about.” By asking questions, you allow “people to tell a different story than the one you’re expecting.” Finally, and perhaps most significantly, “asking questions means people have to make their case for the way they want a decision to go.”
Getting your employees to not simply talk to you but tell you the truth about how they feel or what they may be thinking is a key skill for any leader. As a CCO, you may find this particularly difficult in far-flung reaches of an international company, which is subject to the FCPA, UK Bribery Act or other anti-bribery/anti-corruption law. Whether you are performing a risk assessment or simply getting out of the corporate home office, you need to be able to engage employees across the globe and from a variety of cultures.
Ask open-ended questions so you will not receive back a simple Yes/No answer. Some key foundational questions include, “What are you focused on? Why are you focused on that? What are you worried about? What is your plan?” By asking these or other questions, such as “What are you hoping for? What are you expecting? What’s the most important part of this for you?” as a CCO, you can get much more engagement from the people with whom you work.
Consider pursuit of a high profit deal in a high-risk geographic area. You might want to sit down with the business unit person in charge of the project and ask them, what is your plan to sign this contract and execute it, consistent with your obligations within the company’s compliance program? In doing so you are communicating two key concepts, using a 360-degree approach. First, you make clear there should be a plan in place. Second, you are make clear the employee is in charge of that plan. Therefore, by simply asking the question, you are communicating the employee has both the responsibility for the problem and the authority to come up with the solution. This type of approach allows those who so desire to step up to do so, as “It’s a simple quality of human nature that people prefer to choose to do things rather than be ordered to do them.”
Equally important are the values you can transmit by asking questions. If you do have to fly to China or some other local office, you do not want to be seen as the US corporate executive coming to deliver some bad news or that costs need to be cut. By asking questions you can solicit ideas to help solve problems. This is because asking questions creates the authority in people to come up with ideas, coupled with the responsibility for moving things forward. Questions create space for all kinds of ideas and the sparks to come up with those ideas. Most important, questions send a very clear message: We’re willing to listen, even to ideas or suggestions or problems we weren’t expecting.” This is not about being warm or fuzzy, it is demonstrating curiosity in the employee.
You should also consider asking questions in the context of 360-degrees of communication. Louis Sapirman has made clear this concept is more than simply a two-way; up and down approach. It really demonstrates not only a level of knowledge but the communication itself important in every other direction in the workplace. People should ask their bosses questions. If employees feel comfortable enough to ask these questions, it allows CCO to be clear about things that they think are clear, but more importantly which may not be clear at all. Finally, if a person asks a question, they most usually listen to the answer. This is because “People are more likely to consider a piece of advice, or a flat-out instruction, if they’ve asked for it in the first place.”
You too can use this simple and straight-forward technique to improve not only your leadership qualities in the compliance function but your organization’s compliance function as well. The reason that asking questions is so much better than simply giving orders is that you have a vast talented workforce you can tap into it help you do business in compliance. But the how of doing a business process that is, or should be, burned into your company can be facilitated by possibilities that are out there in your employees’ minds. 360-degrees of communications allows you to create an atmosphere where nobody is afraid to ask a question. Perhaps equally importantly no one is afraid to answer a question.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
In the episode, I consider two different issues around communication skills. The first is communicating across cultural boundaries. The second is the technique of asking questions to boost leadership. One of the things most critical issues to a compliance function is breaking through a company’s internal cultural boundaries. In an article by Erin Meyer, entitled, “Getting to Si, Ja, Oui, Hai and Da; How to negotiate across cultures”, she explained that “managers often discover that perfectly rational deals fall apart when their [business] counterparts make what seem to be unreasonable demands or don’t respect their commitments.” She laid out a five-point solution for communicating across a multi-national organization.
Initially look for as many cultural bridges as you can find as it will help you understand what your international audience is communicating to you, in both verbal and non-verbal formats, during a wide variety of activities familiar to any compliance professional such as training, investigations or simple meetings where the compliance perspective must be articulated in any business setting. If you fail to have an understanding or even a person who can navigate these signs for you, here are five steps to help you out: (1) Adapt the way you express disagreement; (2) Know when to bottle it up and let it all pour out; (3) Learn how the other culture builds trust; (4) Avoid yes or no questions; and (5) Be careful about putting it in writing.
Asking Questions
Other than the skill of listening, asking questions is about as important to the business leader as any other that can be employed. Yet, equally critical is to ask the right question, which is an issue explored Brian Grazer and Charles Fishman explored this concept in their book “From a Curious Mind: The Secret to a Bigger Life”.
Grazer is a well-known and successful Hollywood director who has directed such movies as Splash, A Beautiful Mind and Cinderella Man. He believes that much of the success he has achieved is because he asks lots of questions. Indeed, the authors write, “Questions are a great management tool.” This is because “Asking questions elicits information” and it also “creates the space for people to raise issues they are worried about that a boss, or colleagues, may not know about.” Further, by asking questions, you allow “people to tell a different story than the one you’re expecting.” Finally, and perhaps most significantly, they said, “Most important from my perspective, asking questions means people have to make their case for the way they want a decision to go.”
Getting your employees to not simply talk to you but tell you the truth about how they feel or what they may be thinking is a key skill for any leader. Ask open-ended questions so you will not receive back a simple Yes/No answer. Some key foundational questions include, “What are you focused on? Why are you focused on that? What are you worried about? What is your plan?” By asking these or other questions, such as “What are you hoping for? What are you expecting? What’s the most important part of this for you?” as a CEO, you can get much more engagement from the people with whom you work.
A 360-degree approach to communications entails looking at all forms of interactions as a way to interconnect. This means both verbal and non-verbal and in clues, hints in addition to directly. This concept can be particularly helpful in relating to and with cultures outside the United States as one of the things most critical issues to a compliance function is breaking through a company’s internal cultural boundaries. In “Getting to Si, Ja, Oui, Hai and Da; How to negotiate across cultures”, Erin Meyer explained that “managers often discover that perfectly rational deals fall apart when their [business] counterparts make what seem to be unreasonable demands or don’t respect their commitments.” She laid out a five-point solution that I have adapted for the CCO or compliance practitioner in communicating a compliance program across a multi-national organization.
Initially look for as many cultural bridges as you can find as it will help you understand what your international audience is communicating to you, in both verbal and non-verbal formats, during a wide variety of activities familiar to any compliance professional such as training, investigations or simple meetings where the compliance perspective must be articulated in any business setting. If you fail to have an understanding or even a person who can navigate these signs for you, here are five steps to help you out: (1) Adapt the way you express disagreement; (2) Know when to bottle it up and let it all pour out; (3) Learn how the other culture builds trust; (4) Avoid yes or no questions; and (5) Be careful about putting it in writing.
Adapt the way you express disagreement
Simply because someone disagrees with you, it is not a sign that the discussion is going poorly but that it is an invitation to engage in a lively talk. The key is to listen for verbal cues when interacting. These sources are “what linguistics experts call “upgraders” and “downgraders.” Upgraders are words you might use to strengthen your disagreement, such as “totally,” “completely,” “absolutely.” Downgraders - such as “partially,” “a little bit,” “maybe” - soften the disagreement.” It is incumbent to understand upgraders and downgraders within their own cultural context.
Know when to bottle it up and let it all pour out
Some cultures have very demonstrative ways of speaking and gesturing. However other cultures are not comfortable with such displays. You need to understand this key difference. Meyer writes, “So the second rule of international negotiations is to recognize what an emotional outpouring (whether yours or theirs) signifies in the culture you are negotiating with, and to adapt your reaction accordingly. Was it a bad sign that the Swedish negotiators sat calmly across the table from you, never entered open debate, and showed little passion during the discussion? Not at all. But if you encountered the same behavior while negotiating in Israel, it might be a sign that the deal was about to die an early death.”
Learn how the other culture builds trust
Most Americans think that building trust in a business setting is gained by demonstrating your usefulness and competency in providing solid information. However, this type of approach is not always the most effective across the globe. There are two different approaches to building trust: cognitive and affective.
In the cognitive approach, you gain trust by “the confidence you feel in someone’s accomplishments, skills and reliability.” In short, you know your stuff and for the compliance practitioner there is usually not much higher a compliment. This type of trust is more valued by Americans, Germans, Australians and Brits. Meyer says this is the trust that comes from the head. Conversely, affective trust may be termed to come from the heart. But it is not simply emotive. It derives from “emotional closeness, empathy, or friendship.” It means that you see each other on a personal level. In the BRIC countries, Southeast Asia, trust of this type is not likely to be achieved until this type of connection can be made.
Some of the techniques you can employ to build trust are to, “Invest time in meals and drinks (or tea, karaoke, golf, whatever it may be), and don’t talk about the deal during these activities. Let your guard down and show your human side, including your weaknesses. Demonstrate genuine interest in the other party and make a friend. Be patient: In China, for example, this type of bond may take a long time to build. Eventually, you won’t have just a friend; you’ll have a deal.”
Avoid yes or no questions
This is something Americans have an innate amount of trouble getting our heads around. Most generally when we ask a direct question requiring a direct Yes-or-No answer; we expect that whichever the answer is, it will be adhered to going forward. In many other cultures that may not always be correct. In some cultures, it is rude to tell someone you respect and have trust for ‘No’ directly. While they may say ‘Yes’, they may really mean ‘No’. Conversely, even when the verbal response is a strong or even a multiple ‘No’ answer, it may simply mean that the party needs more time to respond.
This means you should try to avoid a simple Yes-or-No response, by asking a more open question that elicits additional information that will help provide the context for the answer. You should also watch body language and other signals more closely, “Even if something is affirmative, something may feel like no: an extra beat of silence, a strong sucking of breath” or a muttering. Be watchful and listen closely.
Be careful about putting it in writing
This last point may be the most difficult for the CCO and compliance practitioner, especially if you accept my mantra to Document, Document, and Document. In many cultures, even the follow up to a conversation with something in writing could well seem like a slap in the face, the lack of trust or even communicating that the listener did not comprehend what you were communicating. You may need to do some additional amount of explanation around your written compliance documentation. Do not be dogmatic about it, but emphasize the need for written materials in the appropriate situation.
Communications in compliance must be largely drawn around trust. For any compliance practitioner, this is a key to working with your employee base across the globe. Implicit in building trust is that you get out of your home office and travel to your other office locations. While you can build cognitive trust through demonstrating your usefulness to an overseas business unit from your home office in America, you will never build affective trust sitting in the corporate office. Get out and about and meet your employees and build the trust that will allow a successful a 360-degree approach to communication.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
What if you could multiple the impact and effectiveness of your compliance program throughout your company? That would be a great boon to any compliance practitioner and compliance program. It is also something that is very possible by considering a 360-degree view of communications in compliance using multipliers.
Liz Wiseman is the co-author with Greg McKeown of Multipliers: How the Best Leaders Make Everyone Smarter, which is a book about the various types of leaders. They focus two different types of leaders, Diminishers and Multipliers. Multipliers are leaders who encourage growth and creativity from their workers, while Diminishers are those who hinder and otherwise keep their employees’ productivity at a minimum.
These techniques not only beneficial for every Chief Compliance Officer to use as a business leader within your organization, but also for every compliance practitioner to more fully operationalize corporate compliance programs. The also help you to understand more fully the concept of 360-degrees of communication because in every interaction you can multiply the power of your communication by using a variety of simple and even straight-forward tools and techniques.
Multipliers increase, often exponentially, the intelligence of the people around them through communication. They lead organizations or groups that can understand and solve hard problems rapidly, achieve their goals, and adapt and increase their capacity over time. On the other hand, diminishers literally drain the intelligence, energy and capability from the employees or team members around them. They lead groups that operate in silos, find it hard to get things done, seem unable to do what’s needed to reach their goals.
Multipliers break down into five disciplines in which they differentiate themselves from diminishers. The first is the Talent Magnet, who attracts and optimizes talent; the second is the Liberator, who creates intensity that requires an employee’s best thinking; next is the Challenger who extends challenges by having others do the hard lifting so that they can stretch themselves; next is the Debate Maker who facilitates a debate between his or her team which leads to a decision improving a process or issue; and finally is the Investor, who instills ownership and accountability with his/her employee base. Interestingly Wiseman believes that multipliers increase efficiency and productivity by two times.
Diminishers also break down into five different prototypes. They are the Empire Builder, who is only interested in collecting very talented people around themselves so that they look good; next is the Tyrant, whose name is almost self-disclosing but ruins all those around them with their insistent criticisms; next is the Know-it-all who give directives simply to showcase how much they know limiting what their teams can achieve to what they themselves know how to do. This means the team must try to deduce, literally in the dark, the soundness of the decision instead of executing it; and finally, there is Micromanager, who generally believes they are only person who can figure something out and approach execution by maintaining ownership, jumping in and out of a project and reclaiming responsibility for problems which they have delegated. Diminishers usually reduce efficiencies by up to 50%.
Wiseman presented several ways that a leader could use multiplier effects and I found many of them would work particularly well for the compliance practitioner who is working to operationalize a best practices compliance program. This is particularly true because it is through persuasion that compliance works best by getting other corporate disciplines to embrace compliance.
Some of the specific multiplier techniques are to identify not only what the skills are for those on your team, but also what comes easily and natural to them. By doing so you can more effectively utilize their talents in implementing a compliance regime. Interestingly you can get employees to stretch through a technique called ‘supersizing’ where you give someone a task that may be “one size too big” for them, but allows them to grow into it. This is certainly applicable when working to operationalize compliance in business units outside the United States which may only have been dictated to previously but where not involving in doing compliance.
As the CCO or compliance leader working to more fully operationalize your compliance program, you should work to limit your direct comments to a minimum going forward. This will allow the non-compliance team members to not only stretch themselves but also allows for more impactful intervention when necessary but the simple fact is you are intervening less. Louis Sapirman, the CCO at Dun & Bradstreet said that while he holds the office, he is not the face of compliance at the company. It is him employee base. He has literally multiplied the influence of the compliance function both inside and outside the company in this manner.
Mistakes are going to happen in any implementation. The same is true when you are operationalizing your compliance program. To overcome this there are a couple of strategies. The first is to talk up your mistakes within the team for debriefing and analysis. The second is to actually make room for mistakes (think of a sandbox) where your team can experiment, take some risks and recover from the mistakes.
I found her next point fascinating, which was to lead by asking questions. Every question is answered by another question. Her technique of leading with questions works with all five categories of multipliers. The reason it is so successful is that people are smart, the not only want to get things right but they want to build and eventually they will figure out how to do it. It is not simply a case of getting out of their way. It is about guiding them with your compliance expertise to come up with not only the right answer but a solution which will work.
Now imagine applying this leadership technique as you are trying to more fully operationalize your compliance program. If you take this approach of leading by asking questions, you not only guidance the functional unit but you get greater buy-in to the entire concept and process as it becomes their process. The non-compliance team may design it and have ownership over it.
Wiseman concluded by challenging each of us to multiply our influence to make those with work with and even work for better. You can use these skills to more fully operationalize your compliance program. If you do so, you will not only fulfill the requirements of the Department of Justice, laid out in the Evaluation of Corporate Compliance Programs, you will bake compliance into the DNA of your company by making it a part of the way you conduct your business.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
Welcome to Episode 5 of Compliance Man Goes Global podcast of FCPA Compliance Report International Edition. In this episode, we focus on typical concepts (or probably myths) of ways a Compliance professional might become a more valuable member of the management team rather than becoming most hated person in the organization.
Tom: To start with, Tim, probably we should explain to our listeners why we called our today’s episode ‘You Really Like Me’?
Tim Khasanov-Batirov: We call today’s episode “You Really Like Me!” remembering Sally Field’s gushing acceptance speech at Oscar ceremony. The funny thing is that sometimes even in-house Compliance people have a strong wish to exclaim after her something like: “I haven't had an orthodox career, and I've wanted more than anything to have your respect. The first time I didn't feel it, but this time I feel it—and I can't deny the fact that you like me, right now, you like me!"
Tom: OK, Tim, let’s see if this is possible in reality or would remain just a dream of Compliance officers globally.
Myth #1 There is a chance that Compliance officer could avoid being named the most hated person in the organization. Tim, do you agree with this statement?
Tim Khasanov-Batirov: Let’s try. I think we have some pros here:
Argument #1.
A Compliance professional can avoid being the most hated person if personnel along with top management understand the role of Compliance function in the organization. Unless a Compliance professional delivers a clear message about risks he or she manages and value they bring, they are dependent on subjective views of other team members. We have depicted this situation in the attached release of Compliance Man illustrated series.
Argument #2.
You might think about setting KPIs based on respective regulatory requirements referring for instance to 10 Hallmarks of the Effective Compliance Program or the Evalution of Corporate Compliance Programs. This will allow you to set criteria, which could be used for unbiased and verifiable evaluation of your efforts.
Tom: I think, Tim that there are some cons here as well:
Argument #1
As we know, there is no way people will like a Compliance officer all the time. Subject to particular situation or position, the Compliance professional’s managers might change their minds. So we should not have illusion of being most loved person constantly.
Argument #2
There is a big risk if Compliance person becomes too friendly with the employees and becomes co-opted by the business folks. This could lead to losing impartiality. Therefore, there is a very thin line between being business-oriented ethics professional and attempts just to ‘get likes’ from management.
Tim: Tom, I agree with you.
Tom: Let’s go, Tim. We can formulate the next concept or maybe misconception in the following way:
Myth #2. In real life, Compliance officer de-facto is not able to become a member of managerial team (or just “team” so to say) being isolated from it by virtue of his “business prevention” mission. Tim, will you agree with this concept?
Tim: I strongly disagree with this concept.
Argument #1.
In my view, Compliance department in many cases is called a “Business prevention unit” not because of being very strict and picky. It is because of not fully understanding the business processes involved. As soon as compliance officer starts to hear other team members, he will be able to suggest solutions, which are compliant, and business oriented in the same time.
Argument #2.
It is about priorities. Management team should clearly see that Compliance officer is focusing on real regulatory risks and priorities rather than creating a useless bureaucracy regarding minor issues, which in many cases could be easily resolved.
What are your views, Tom?
Tom: I have some pros to support the concept that in reality Compliance officer is not just another member of the business team.
Argument #1.
We have a special mission to assess business from external, in majority of cases regulatory prospective. Thus, many things, which at first glance might look as being good for business, could pose regulatory risk in the future. Thus, Compliance person is in charge of demonstrating a high-level or strategic view rather than solely looking at momentary business advantages.
Argument #2.
Compliance is a relatively new job in comparison to well established corporate functions such as a Legal Department or even Internal Audit. So even just by mere fact of being a “newcomer” the Compliance Officer differs from almost all members of the management team which represent “traditional” occupations.
Tim: Agreed, Tom. As key takeaways from today discussion, I think we can mention the following:
Many compliance professionals in the corporate world work long and hard to rise to the senior management level in their organizations. It takes subject matter expertise, hard work and sometime propitious good fortune to get to the C-Suite level in a large company. However, many of the skills which work to get you there do not always serve you in the context of a 360-degree view of communication at the senior management level.
One thing many compliance practitioners have in common is self-reliance. Not every lawyer and compliance practitioner is a Type A driven personality but many are. In many ways, it is what makes us a success. However, in the corporate world, just like any other, there are limits to self-reliance. Put another way, if you do not have a culture where everybody appreciates the importance of their role in showing the type of behavior that is expected within your organization; then you are probably not doing a very good job of driving culture. Adam Bryant explored this theme in a New York Times (NYT) Corner Office column where he interviewed Lori Dickerson Fouché, the Chief Executive Officer (CEO) of Prudential Group Insurance.
A key lesson is to ask for help. Fouché said it “stemmed from the fact that I had been used to thinking, “I can get through the brick wall. I can make this happen.” I was very self-reliant, and I figured that if I could do it, so could the team. So, I overworked some teams early on, and that led to an early lesson around asking for help. It’s O.K. not to have all the answers and not to be able to do everything and to put your hand up and say, “I need help.” I was so surprised by how people really wanted to help. They loved being invited into the process.” Building on the Wiseman concept of multipliers, you see how you can expand the influence only yourself and your corporate compliance function.
From these experience, Fouché also learned to prioritize. She noted, “You simply can’t do everything. There were times I would walk into a new job, and my eyes would be huge and I would feel like a kid in a candy shop. I’d think, “Let’s just get after it,” instead of, “O.K., let’s pause. What’s the most important thing to really get after?” Being able to say “No” or “Not now” were important lessons for me.”
Another interesting lesson concerns transparency. Fouché related “to share my thoughts so that other people could follow them. I learned an important lesson from a colleague when I was C.E.O. at another company, who said: “Lori, this is a little bit like being on the train and you’re in the front of the train and we’re in the dark. You can see the light at the end of the tunnel. But there are people who are toiling in the back, and they’re throwing coal in the engine, and they’re working the cars, and that’s all they know. You should be at the front of the train, but your job is to shorten the distance between you and the back of the train so that we can all see what you see at the front.””
In other words, prioritize and start the slogging work of going through the issues in front of you. It not only gives you some semblance of control but also helps you to focus on doing the next right thing. As a business leader, others in your team and cascading down will take their clues from you and begin to operate in the same analytical manner. This also ties into one of Fouché’s key points about her leadership style.
Not only does she strive for personal transparency, she expects it from others. She said, “I expect my leaders to listen. I expect them to ask questions. I expect them to understand what’s going on. I am somewhat infamous for saying, “So how’s it going?” And they’ll say, “Great.” Then I’ll say, “How do you know?” It’s one thing when people start telling you anecdotes and it’s another thing when they can say, “Well, because we track this and we measure that.” We make sure we’re analytical in our approaches.”
If you couple this with two characteristics Fouché looks for when hiring: resilience and perseverance; it gives you a hint on some key characteristics. This is because she believes that when “working in big companies, and you have to find a way to navigate and negotiate to an end result. It could be a winding path. Make sure that people feel like they know how to do that, and do it in a way that is respectful of the system.” You will have more success in communications and in use of social media if you first start with a relationship, particularly in getting to know the leaders in a given geographic market within your organization.
Aesop noted many eons ago that the race is not always won by the fastest but often the strongest and the steadiest. Many of the characteristics which allow you to rise within a corporation may need to be ameliorated somewhat at the C-Suite. Fouché’s lessons around a 360-degree approach to both leadership and communications give you some good starting points.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
In this episode, Matt Kelly and I take a deep dive into the Cardinal Health corporate governance imbroglio. In it, a disgruntled shareholder, the Teamsters Pension fund brought a motion to have the CEO stripped of his title as Chairman of the Board. Although the motion failed, the Teamsters prevailed as the company took the requested step and separated the position. This matter included complaints about GC/CCO pay where those roles were held by one person who received a sizeable bonus even though the company did not meet its financial goals.
We consider the joint role of a GC-CCO and the potential corporate governance issues involved when the roles are held by one person. Does this create an irreconcilable conflict? What are the different functions of the General Counsel and the Chief Compliance Officer and how should we interpret a bonus payment? Should it be for one role or both roles. How does a joint GC-CCO role impeded the work of each corporate function individually? Finally, we consider how shareholder activism may now impact not only corporate governance but also corporate structures in functions such as compliance. What does this mean for the compliance function and Chief Compliance Officers going forward.
We also touch on the role of compliance in drug distribution companies which have been drug into the opioid crisis. Cardinal Health shipped drugs totaling up to 55 pills for every person in the state of West Virginia to one town in that state. What, if anything, should the compliance function do in such a situation?
This case makes a fascinating case study in corporate governance and much more.
For more information, see Matt Kelly’s blog posts
Compliance Lessons in the Cardinal Governance Fight and
Teamsters Blast Cardinal Health Compliance Efforts
Does the merger of the GC-CCO role create an irreconcilable conflict in corporate functions?
In this episode, I am interviewed by Jonathan Armstrong, a partner at Cordery Compliance in London on the implications of the Paradise Papers and Saudi Arabian corruption crackdown for the compliance practitioner.
What every international business person should absolutely remember that there is no country in the world which makes bribery and corruption legal by statute. That means if and when a government decides to clamp down on what may have been a long-standing accepted business practice, of which you have been an active participant, there is nowhere to hide and very few places to hide. Witness GlaxoSmithKline PLC (GSK) in China in 2013 and 2014 where the Chinese subsidiary unit President returned to China to be criminally charged and convicted. He was summarily deported back to the UK where GSK almost as quickly summarily terminated him from his employment. Now we have the omens of a potentially equally seismic event, this time from Saudi Arabia.
For more information, see my blog post Saudi Arabia Has a Corruption Crackdown - What is Your Response?
The life of a Chief Compliance Officer (CCO) can be intense and the one of the most powerful tools you have is persuasion. Jenny O’Brien, CCO at United Health Care, has talked about the techniques that a CCO can use to influence decision making in a company to do business in ethically and in compliance. She has called these techniques of persuasion “Seven Steps of Influence” and advocates a CCO employ them help influence decision-making within an organization.
Influencing and using persuasion is not a one-time activity. It is ongoing. If you consider it within the context of the 360-degree approach to communication, it means calibrating every which manner of influence and with all your stakeholders, both inside and outside your organization. Persuasion touches all forms of communications whether those are formal communications, informal communications, or simply accidental communications. It includes using all the right methods of communications to maximize the influence you can bring to bear.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
What is the most famous line in Shakespeare about lawyers? That is an easy one because lawyer-haters across the world (and lawyer-lovers as well) know it - First thing we do is kill all the lawyers. It comes from Henry IV, Part II. Most lawyers understand that by killing all the lawyers, it will create an atmosphere that would allow for tyranny and anarchy. Unfortunately, this clear import is not as widely seen by civilians (i.e. non-lawyers).
The debate about whether the compliance function should be located in a company’s legal department or in a separate compliance function has largely concluded that it should be independent because of the difference in the two discipline’s mandates; many in a corporate compliance function came from the General Counsel’s office or have legal training. The lack of law schools providing training in leadership skills has led to a paucity of such proficiencies in my legal brethren.
I was intrigued by an article in MIT Sloan Management Review, entitled “Leading by the Numbers”, by Byron Hanson, where he discussed the sometimes difficult transition which financial professionals have to make when moving to broader leadership roles. I found some of his insights to be useful to the lawyer moving from a corporate legal department or large law firm into a leadership role in a compliance department. He listed five changes needed which I have adapted for lawyers.
Transition 1 - From Expert to Leveraging Expertise
Most lawyers feel they are experts in the law, which can be thought of as a technical expertise. Hanson quoted the experiences of Colin Pavlovich, who said, “When I came into a senior leadership role, in the first six months I had to get used to just letting go…that you’re not in a technical role day to day with a set agenda, that you’re a professional manager and need to step away from being the expert to [being] a leader in strategy development and execution.” The key is to recognize that “leadership does not mean a loss of expertise but rather an opportunity to leverage your…skills in a more valued way.”
Transition 2 - From Apprenticeship to Coaching
Many lawyers still learn in the old-fashioned apprenticeship model where you learn through working with and for more “senior professional, who provide a heavy degree of oversight of their subordinates’ work to ensure that mistakes are minimal.” That is certainly true at most large law firms. It is also true that many legal assignments are so large, they can become too complex or even too complicated for a junior lawyer to handle so there is fair degree of oversight involved by senior practitioners.
Clearly this model can build up technical expertise but when a lawyer moves into a Chief Compliance Officer role, they take on a broader remit. Hanson wrote, “Delegating, trusting, and empowering are all part of a coaching framework” which must be used for lawyers to add value once they move into a CCO role. You can use your technical expertise to help guide but you will need to allow your compliance team to grow for you to become an effective leader.
Transition 3 - From Reporter to Translator
Every lawyer worth his or her salt can perform triage on a contract, an acquisition or you name the legal issue and report his or her findings from the legal perspective. However, as a leader in the compliance function, your analysis must change from simply reporting on the legal aspects to a mindset of prevent, detect and remediate compliance risks before they arise and after they have arisen. Chief executives rarely need a recitation of the Foreign Corrupt Practices Act as a law; they want to know what the compliance risks are going forward. If the risk is moving into a higher category, can that risk be managed? Your ability as a CCO is to create meaning and simplicity around risk.
Transition 4 - From the Right Answer to Multiple Possibilities
Many lawyers tend to see one right answer for a complicated legal issue. Yet as a CCO you must “navigate complex problems that have multiple plausible answers.” In compliance, there will be a wide variety of factors that legal analysis will not consider. Hanson quoted Paul Sims for the following, “You’ve got to understand your environment and the context in which you’re presenting these numbers [legal analysis] and is that really the right answer? You need to unleash your thinking a bit.” Clearly as risk goes up the management of that risk will need to increase. As your risk management increases you will need to find ways of auditing or monitoring that risk which will aide you in making any adjusts you might need to go forward.
Transition 5 - From Value Protector to Value Creator
This one is probably the biggest challenge for lawyers, particularly those who move from an in-house corporate legal department to the CCO chair. The mandate of the legal department is to protect the company. The mandate of the compliance function is to prevent, detect and remediate. These are quite different. As Roy Snell has said, if lawyers could do compliance, we would not have needed to create a whole new profession.
Yet moving to a CCO role also means seeing the world not simply through a legal lens but also through a business lens. For it is in the value created by compliance that will assure its success going forward. Lawyers must transition their thinking from conservative and risk-averse to how can we get something done in compliance. Moreover, most in-house lawyers have been assigned roles that are essentially legal risk mitigation and stewardship. If a CCO focuses too much on those areas, value creation opportunities will be missed going forward.
The ability to think critically is still the gift that most US law schools bestow on their graduates. That ability can serve you well as an in-house lawyer and as a CCO. However, the mandates of the legal department and the compliance department are so different and in many ways divergent that the transition from one to the other is not always guaranteed to be smooth.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
The first 100 days. Franklin D Roosevelt’s first term is the standard by which all other Presidents are measured for their first days in office. Why? It is because not only did FDR hit the ground going full speed but also passed legislation, which changed the shape of America for years to come. While the first thing he did was declare a Bank Holiday to save the nation’s banking system, he also passed significant legislation to try to stem the effects of the Great Depression. These bills included the Agricultural Adjustment Act, the Federal Emergency Relief Administration, the Civilian Conservation Corps, and, finally, the National Industrial Recovery Act. He also enacted the Truth-in-Lending and Glass-Steagall Acts to help regulate the stock market, whose collapse had heralded the economic downturn. Even if these acts did not turn the tide of the Great Depression, it gave people hope because at least it appeared FDR was doing something to fight the economic calamity.
Now imagine that you finally have been able to secure a new position as Chief Compliance Officer in the compliance field. Every company believes that they are ethical and that they certainly do business ethically but what are some of the things that you can do in your first 100 days? Hopefully you will not be dropped into a corporate situation as dire as the one FDR faced for the US in 1933 but the reality is that many new heads are still judged on these mythical first 100 days.
The key is to try and make a clear transition. The best situation is if you can take some time off to prepare yourself between your old and new positions. You should try and use this time to learn more about your new employer and supplement the information you were able to garner during the hiring process. If you cannot take time off, the article suggests studying every night to prepare for your new position. If you want to hit the ground running, you must be ready to do so.
You will be required to learn quite a bit on the job, very, very quickly. Some key areas for immediate inquiry, which include your new company’s investigations and hotline issues; the internal audit documents relating to compliance; the annual reports for any notes about investigations or other Securities and Exchange Commission issues; and a general review to see what is happening the industry to see if there are ongoing Foreign Corrupt Practices Act (FCPA) investigations or recent enforcement actions. I would suggest meeting many of your new colleagues in the organization to interview them about the company’s existing compliance program. From these interviews, you can reach out to begin to build a network for further interviews.
You need to first identify the highest compliance risks and then try to focus on the risks which are not being managed effectively. A new CCO must work quickly to determine where the highest risks are and which of these risks will have the biggest effect on the business. The part that is more challenging as managing risk while focusing on the areas that have the biggest business value can be a tricky proposition. Business value can be measured in country value, profit or reputation. It can also be measured in reducing potential exposure in fines or prosecutions, or growing revenue and profits.
You do not need to try and fix the company’s entire compliance program in the first 100 days. But you do need to find a way to identify opportunities to build both personal credibility and credibility for the compliance function within the organization. You can take on an issue, which seems to have the highest profile within the company and work towards resolving it. Some of your work may come with instituting good process and may be as simple as focusing on adding value, removing obfuscation and helping to grow the business, rather than being Dr. No from the Land of No.
One obvious thing to generate success in the corporate world is to have a good relationship with your boss. You should have important conversations around expectations, working style, resources and your personal development. To facilitate these discussions the following points are posited:
If you have not done so through the hiring process, you should have a clear understanding of what compliance means at your new company and what your role will be. While you were hired for FCPA or other anti-bribery legislation compliance, does compliance means something broader in your new role? Are there other areas for compliance intervention such export control, anti-money laundering, harassment, data protection or third party risks?
You will probably be called on to make some difficult personnel decisions in this area but one that is necessary. Your ability to select the right people for the right positions is among the most important drivers of success during your transition and beyond. You also need to hold onto the right people. The focus for every solid manager is to concentrate on the best people and only those people – the rest should quickly be managed up or out. If compliance is seen as ‘The Land of No’ populated by one or more Dr. No characters, it is time to make a change and the sooner the better.
One of the biggest keys for any successful compliance program is the ability to influence people outside your direct line of control. Supportive alliances, with all compliance stakeholders, are necessary if you are to achieve your goals. You will need to try and identify those persons and develop relationships, then create coalitions with them. This means you will need to get out of the office and get overseas as quickly as possible. While your manager, be it the Chief Executive Officer (CEO) or other, will probably want you in the office, you need to get out of your office and build relationships in the field.
These first 100 days will be a time of very high stress. This may well be compounded by your travel schedule and working very long hours to try and fulfill the concepts. The right advice-and-counsel network is an indispensable resource. Use your outside network of mentors, coaches and friends which you have developed over the years, to discuss your part at the company and what you have been experiencing. The key is to use whatever resources are available to you during your first 100 days.
Just as FDR accelerated his actions during his first 100 days, a large part of his success was that he accelerated those around him. You should take this key component of FDR’s success to heart in your new role. Get your direct reports, bosses, and peers to accelerate their own transitions. The fact that you are in transition means they are too. The quicker you can get your new direct reports up to speed, the more you will help your own performance.
It is difficult to imagine today a harder situation than the country faced when FDR came to power in 1933. The task must have seemed overwhelming. Starting a new compliance leadership position at a new company can seem equally daunting. You need to not only think through your steps going forward but also how to execute them for maximum performance in this early part of your corporate career.
Jay and I return for a wide-ranging discussion on some of the top compliance and ethics related stories of the week, including:
The 360-degree approach to compliance works with all the stakeholders in a compliance program, even the Document Document Document stakeholders; IE., the regulators. By using innovative techniques, one law firm came up with mechanism to present verifiable evidence to regulators, using the basic techniques of social media in operationalizing compliance as a solution to a difficult compliance issue around, of all things, honey. This example shows how creative thinking by a lawyer, in the field of import compliance, led to the development of a software application, using some of the concepts of social media. Once again demonstrating the maxim that compliance practitioners (and lawyers) are only limited by their imagination, the use of this software tool demonstrates the power of what a 360-degree view can bring to your compliance program.
Gar Hurst, partner at the law firm of Givens and Johnston PLLC in Houston, faced an issue around US anti-dumping laws for honey that originated in China. The US Government applies anti-dumping trade sanctions to goods from a specific list of countries. They do this when a domestic interest group alleges and proves, at least theoretically, that the producers in certain foreign countries are selling their goods into the US market at below fair-market value. By doing this, they are harming the US domestic industry. The dumping duties, which can result from this, can easily be 100, 200, even up to 500% of import duties. To get around the anti-dumping laws, importers would ship Chinese originated honey to Indonesia, Vietnam or some other country and pass it off as originating from one of those locations.
The problem that faced was how to prove the honey did not originate from China. Hurst said, “We were working with a Southeast Asian honey producer. They were in this situation where Customs was essentially treating them as though they were a Chinese producer. We’ve provided them documents. We’ve provided them invoices. We’ve provided them production documents but there was nothing that we could give them documentary that they didn’t believed could be faked. That was the problem, documents on their face are just a form of testimonial evidence. Meaning, somebody somewhere said, this honey is from the Philippines. It’s only as good as the word of the person who wrote it on. We needed something that would get beyond that problem.”
Using awareness around communications through a smart phone, Hurst and his team came up with an idea “that with the explosion of smartphone technology which is in the hands of basically everybody in the United States and soon to be everyone in the world, these devices basically allow a person to take a picture that is geo-tagged and time and date stamped and then upload that picture to a database in the cloud. Effectively, that’s what we did.” As Hurst explained the process which they came up it was amazingly simply, “We basically created an app that resided on Android phone that they could then go around and document the collection of all these various barrels of honey and its processing. Every time they take a picture, it would be time and date stamped with geo-tagging as well. You know when and where a picture of a particular barrel of honey which we would label with some special labels so you could identify it when and where that was taken.” The product they came up with is called CoVouch.
From there the information is uploaded into a secure database that Hurst and his team created in the cloud. His firm then took all the evidence they had documented that the honey originated in Indonesia, not China, and presented it to the US Customs service to show his client had not sourced its honey in China. In version 2.0 Hurst and his development team are creating a searchable database which US Customs can use to make spot checks and other determinations.
Recognizing the level of technical sophistication of honey farmers in Asia, CoVouch is amazingly simply to use. It takes pictures, puts time stamps on them and puts geo-tags that show the location where the picture was taken and with glued or pasted on bar codes, you can trace the shipment of honey throughout its journey. But it does so in a way that tells a story. Hurst said, “you’re telling the story but the provenance, of one imported barrel of honey and how did it get to where it’s at. It’s different. That’s exactly what we’re trying to do and trying to do it in a way that is easy enough so that, as you put it, a fairly, uneducated farmer in Indonesia can do it and a busy Customs agent in the United States can review it.”
Such a software system uses the concepts around social media to make a honey farmer a provider of documents evidence, through photographs, to meet US anti-dumping laws. But I see the application as a much broader tool that could be used by anyone who needs to verify information on delivery, delivery amounts, delivery times and delivery locations. This could be a field hand who is delivering chemicals even West Africa and does not know how to speak English. Hurst pointed to uses around whether something might be eligible for special import or export regulations due to NAFTA, whether restricted trade goods, such as those used in the oilfield industry, worked their way into Iran and even applicability under the Buy American Act around the US content in goods.
For the compliance practitioner, you could use such a tool to not only receive information, and more importantly photographic evidence, but you could also deliver information. But the key is that you are only limited by your imagination. CoVouch could be a tool that you use internally for delivery of information and receipt of information inside your company.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
In this episode, I have New Yorker writer and reporter Adam Davidson on his recent article entitled, "Piercing the Veil of Secrecy Shrouding the Trump Deal in the Republic of Georgia”. In this article Davidson looks at some of the business practices of the Trump organization. It is a look the Silk Road Group, a mysterious holding company that set out, several years ago, to build a Trump Tower in the Republic of Georgia. Davidson found it to be a diffuse container holding at least several dozen corporate entities who, legally, at least, were registered in different countries around the world and had uncertain relationships to each other. In light of the recent indictments from Mueller’s office, it makes fascinating reading. Davidson is the author of “Trump’s Worst Deal” one of the most significant articles on the Trump organizations business dealings outside the US.
One of the more difficult things to predict in a merger and acquisition context is how the cultures of the two entities will merge. Further, while many mergers claim to be a ‘merger of equals’ the reality is far different as there is always one corporate winner that continues to exist and one corporate loser that simply ceases to exist. This is true across industries and countries; witness the debacle of DaimlerChrysler and the slow downhill slide of United after its merger with Continental.
In the compliance space this clash of cultures is often seen. One company may have a robust compliance program, with a commitment from top management to have a best practices compliance program. The other company may put profits before compliance. Whichever company comes out the winner in the merger, it can certainly mean not only conflict but if the winning entity is not seen as valuing compliance, it may mean investigations and possibly even violations going forward.
These cultural differences were discussed by Erin Meyer in the Harvard Business Review article “Being the Boss in Brussels, Boston and Beijing”. The author identified four different cultures of leadership. Somewhat surprisingly, they are not segregated by geographic region. The author found that “attitudes toward decision making can range along a continuum from strongly top-down to strongly consensual; attitudes towards authority can range from extremely egalitarian to extremely hierarchical.” The four are: (1) Consensual and egalitarian; (2) Consensual and hierarchical; (3) Top-down and hierarchical; and (4) Top-down and egalitarian.
Consensual and egalitarian
This type of leadership is typically found in Scandinavian countries; Denmark, Netherlands, Norway and Sweden. The author notes, “Consensual decision making sounds like a great idea in principle, but people from fundamentally nonconsensual cultures can find the reality frustratingly time-consuming.” Some of the things you should expect are decisions to take longer, with more meetings and process which requires you, as a Chief Compliance Officer (CCO), to demonstrate patience in the process. As a CCO you will be seen as a facilitator and must “take the time to ensure that the decision you make is the best one possible, because it will be difficult to change later.”
Consensual and hierarchical
This type of leadership is found in Belgium, Germany and Japan; where the groups favor a leader investing more time in winning support of his underlings before coming to a decision. This means that your group will expect you as the leader to be a part of the discussions while being a part of the decision-making process. You should focus on the quality and completeness of information gathered and the soundness of the reasoning process because final decisions are commitments and not “easily altered.” Yet there should be a consensus and you must “invest the time necessary to get each stakeholder on board.”
Top-down and hierarchical
This group has the widest geographic range, including countries as diverse as Brazil, China, France, India, Indonesia, Mexico, Russia and Saudi Arabia. It is incumbent to remember you are the boss and expected to make the decision. The key ingredient is to “Be clear about your expectations. If you want your staff to present three ideas to you before asking your opinion, or to give you input before you decide, tell them. Old habits die hard for all of us, so reinforce—with clarity and specificity—the behavior you are looking for.” Particularly as an American, you must be care as an analogy may be interpreted as a decision.
Top-down and egalitarian
This will be the structure that Americans are most familiar with and it includes countries most like the US: Australia, Canada and United Kingdom. Meyer believes these can be seen as speak up cultures, “no matter what your status is. You might not be asked explicitly to contribute, but demonstrate initiative and self-confidence by making your voice heard. Politely yet clearly provide your viewpoint even when it diverges from what the boss seems to be thinking.” Yet the final point, and this is what drives many other cultures crazy under this type of structure, is that decisions are not typically set in stone, there is a continual feedback loop of information which can affect a change in the decision when warranted so you must remain flexible.
These cultures will impact your compliance program as well, in addition to your role as a leader. Simply think of your hotline and the reluctance of many cultures to ‘speak-up’ or even raise their hand when they see an ethical or compliance issue. You must work with your various cultures within your organization to overcome such reluctance. Understanding this cultural disconnect is important. For many businesses, “the greatest business opportunities lie in the big emerging economies, which include Bangladesh, China, India, Indonesia, Russia, and Turkey. In nearly every case, these are cultures where hierarchy and deference to authority are deeply woven into the national psyche.” The management style of pushing decisions down in the “organization does not fit easily into the emerging-market context and often trips up Western companies on their first ventures abroad on the business side and most certainly in the compliance realm”, particularly if there is a different perception of what might be termed ‘ethical’.
Learning how your employees in other countries will approach decision-making and leadership will give you, as the CCO, insight into how they will approach compliance. It will require you to get out into the field to talk with folks. If your company grows organically or through mergers and acquisitions or goes the joint venture route, it will need to understand how your new employees will not only think through issues but how they will relate to instructions from the home office in America.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
In this episode, Matt Kelly and I take a deep dive into the Justice Department’s Evaluation of Corporate Compliance Programs, released in February 2017. We consider this document in light of the wide-ranging review by the Justice Department of the various Memos from DAG’s over the past 15 years or so to determine if there should be consolidation or clarification into a new “Rosenstein Memo” or if there should be updates to the US Attorney’s Manual. Will the DOJ simply declare the Evaluation is no longer operative because it came out of the Obama Administration’s Justice Department? We consider the information presented in the Evaluation and how its value works in numerous ways for the compliance practitioner.
For more reading see Matt’s blog post “Future of the Effectiveness Questions”
Looking for one of the top Master Classes in Compliance? Join myself and Jonathan Marks of Marcum LLC at the FCPA Master Class will be held on November 28 and 29, 2017 at the offices of Marcum LLC, 750 3rd Avenue, 11th Floor, New York, NY 10017. A Certificate of Completion will be provided to all who attend in addition to the continuing education credits that each state approves. The cost to attend is $1,495 per person. Breakfast, lunch and refreshments will be provided both days. For registration information, click here.
Next in 360-degrees of communication is the sharing of information, which Bryan Kramer discussed in his book “Shareology: How Sharing is Powering the Human Economy”. It is a study of how, what, where, when and why people and brands share.
The answer comes down to one thing: connection. He found that “People all have the desire to reach out and connect with other people, whether it’s through sharing content and having someone reply back or by sharing other people’s content and helping them out.” Kramer identified six types of people who share:
All of these categories are relevant to a CCO or compliance practitioner in considering the use of social media in a compliance program. They describe not only the reasons to use social media but they can also help you to identify who in your organization might be inclined to use social media and how it can facilitate your compliance program going forward.
The Altruist, Hipster and Careerist speak to how a CCO or compliance practitioner can be seen in getting out the message of compliance throughout your organization. Whichever category you might fall into, it is still about the message or content going forward. There is nothing negative in being one or the other if your message is useful. There is certainly nothing wrong with incorporating a little Hipster into your communication skills. As my daughter often reminds me, Dad you are so uncool that you are retro, but that is cool too. Applying that maxim to your compliance regime, if you can communicate in a manner your workforce sees as interesting or even hip, it may well help incorporation of that message into corporate DNA.
The Boomerang, Connector and Selective categories as good ways to think about how your customer base in compliance (i.e. your employees) might well use social media tools to communicate with the compliance function. The use of social media is certainly a two-way street and every compliance practitioner must be ready to accept those communications back to you. Indeed, some comments by your customer base could be the most important interactions that you have with employees as their comments or questions could lead you to uncovering issues which may have arisen before they become Code of Conduct or compliance violations. More importantly, it could allow you to introduce a proscriptive solution which moves your program beyond even the prevent phase.
A key message is that companies do not write the way they speak, and do not speak the language of their employees. [Even more true for lawyers!] Compliance can be seen as a brand and “brands and the people representing those brands need to change their language. If they focus on the title and the quality of the content, among other things, it’ll resonate more with their audience.”
Sharing is a primary method to communicate and connect. In any far-flung international corporation this is always a challenge, particularly for discipline which can be viewed as home office overhead at best; the Land of No populated by Dr. No at worst. Work to hone your message through social media. Part of this is based on experimenting on what message to send and how to send it. Another aspect was based upon the Wave (of all things); its development and coming to fruition in the early 1980s. It took some time for it to become popular but once it was communicated to enough disparate communications, it took off, literally. “It’s the same thing with social media. On social media, we think something will go viral because the art is beautiful or the science is full of deep analytics, but at the end of the day it really takes time to build the community.”
This means that you will need to work to hone your message but also continue to plug away to send that message out. The Morgan Stanley Declination will always be instructional as one of the stated reasons the Department of Justice (DOJ) did not prosecute the company as they sent out 35 compliance reminders to its workforce, over 7 years. Social media can be used in the same cost effective way, to not only get the message of compliance out but also to receive information and communications back from your customer base, the company employees.
Three Key Takeaways
This month’s podcast series is sponsored by Dun & Bradstreet. Dun & Bradstreet’s compliance solutions provide comprehensive due diligence reporting and analysis to reduce your risk of working with fraudulent companies by accessing a company’s beneficial ownership, reputation risk and more. For more information, go to dnb.com/compliance.
In this episode, I visit Lauren Briggerman and Dawn Murphy-Johnson on the Fall 2017 issue of Executives at Risk. It is newsletter put out by the law firm of Miller & Chevalier, where they both work. Some of this quarter’s highlights which discuss are:
For a copy of Executives at Risk: Key Developments - Fall 2017, click here.