FCPA Compliance and Ethics Blog

August 16, 2011

Don’t Fold ‘Em: Making the Case for Ethical Leadership

In an article published in the June issue of ACC Docket, entitled “Playing the Cards You’re Dealt”, James Nortz raised the interesting issue of the lack of company leadership to “create an ethical vision, the moral courage to pursue that vision and the ability to effectively communicate the vision to others.” I think that most of us will recognize ‘Tone at the Top’ as a key component of any successful compliance program. It is certainly recognized by the Department of Justice (DOJ) in its best practices for a Foreign Corrupt Practices Act (FCPA) Compliance Program. Nortz propounds that a “root cause” for many compliance failures is that management is not fully committed to a strong ethical culture. He noted that according to the “Ethics Resource Center’s 2009 National Business Ethics Survey, only 18 percent of US corporations have a strong ethical culture.”

He posed the question of what can you do as a Law or Compliance Department member to facilitate the creation, implementation and sustainment of a strong ethical culture, where such initiative is not found in the company leadership, and play with the weak compliance hand you may have been initially dealt. He laid out four steps to think through this process.

  1. Engage in the research and study necessary to develop a clear and realistic vision of what “good” or, better yet, “great” would look like for your firm. This vision can be developed by tapping into the vast body of literature on compliance and ethics. An additional resource is to reach out to other legal/compliance professionals who are usually very willing to share the experiences of their companies.
  2. Plan your internal marketing efforts carefully. My colleague Howard Sklar often talks about the internal sales efforts that a compliance officer must make to obtain additional funding for compliance programs. Here your challenge may be greater as you are marketing a new concept or program. According to Nortz, “you must identify, and be able to articulate, concrete benefits your company will realize as a consequence of investing time and money in pursuing your vision.” This should translate into the following business concepts: enhancement of your company’s reputation, a lowering of conduct which may violate anti-corruption proscriptions, improvement of workforce engagement and productivity, lowering of overall enterprise risks, all of which will lead to a measurable return to the bottom line.
  3. Develop a strong game plan. Nortz suggests using three questions based on Machiavelli’s “The Prince”. They are: (a) Have I done all I can to secure my position and the strength and stability of my organization? By this he means that “if you have no power or influence over others, you have no chance of affecting organizational change. (b) Have I thought creatively and imaginatively about my organization’s role in society and its relationship to its stakeholders? This requires that your vision for a compliance and ethics program must be attuned to your company’s overall mission. (c) Should I play the lion or the fox? Nortz believes that this necessitates fluidity in your approach, strong as lion at times and wily like my four-legged brethren when need be.
  4. Think long term. This means you must consider something beyond, weeks, months or the next quarter. The transformation of a corporate culture takes time. This may be truer if this change comes from the legal/compliance department rather than the Chief Executive Officer (CEO). Even if you can obtain CEO buy-in and leadership, you may likely be the driving force, do not be discouraged as no one among us has attached perfection in this area.

Nortz ends by noting that taking on the challenge of helping your leaders develop the skills necessary to build and sustain a strong ethical culture is not an easy task. He believes that such “work requires unrelenting determination, extraordinary shrewdness and guts.” However, the results can be well worth it. He has laid out several steps that you can incorporate into your overall compliance strategy, whether or not you are seeking to implement an initial compliance program or enhance an existing program. I would recommend that you consider some or all of the steps that he has proposed and to “play the cards you’ve been dealt as best you can.”

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, 2011

1 Comment »

  1. In reading your post, I was reminded of my experience in working with clients at NASA. Safety and attention to detail are so important to the success of their mission. And the workforce is strongly motivated by the mission of the organization. As soon as I drive on the NASA campus, I can feel the focus on safety. People drive slowly through the campus, even on long, wide straightaways. They stop if they see a pedestrian approaching a crosswalk. They don’t talk on their cell phones while driving. When walking, they stop to clean up a spill or to report something that could cause an accident. If there is any kind of accident, including a simple slip and fall, they investigate the cause and seek to prevent it from happening again. Yes, there are rules about these behaviors, but people don’t say, “I better do that or I’ll get in trouble.” They speak of safety like a sacred trust. They do it because it’s the culture of the organization, and that way of being supports their inspiring mission.

    In connection with your Step 3, while “thinking creatively and imaginatively about [your] organization’s role,” I say: strive to create a compelling and inspiring vision of how behaving ethically can help the company achieve great things. So often we use fear and threats to motivate others, instead of inspiring them to do better. People take shortcuts and behave unethically because they lack confidence that they can succeed otherwise. How can ethical behavior instill pride in the company and its employees, and make success and personal fulfillment more likely?

    Comment by Debra L Bruce — August 16, 2011 @ 8:07 pm | Reply

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