FCPA Compliance and Ethics Blog

October 24, 2012

Marshall on Leadership – A Guide for the Compliance Practitioner

General George Marshall was not only one of the greatest generals that this country has ever produced but he served as US Secretary of State, Secretary of Defense and was the architect of the European recovery plan which bears his name, the Marshall Plan. Nominated by President Franklin Roosevelt to be Army Chief of Staff, Marshall was promoted to General and sworn in on September 1, 1939, the day German forces invaded Poland, a post he held until the end of the war in 1945. As Chief of Staff, Marshall organized the largest military expansion in US history, inheriting an outmoded, poorly equipped army of 189,000 men and, partly drawing from his experience teaching and developing techniques of modern warfare as an instructor at the Army War College, coordinated the large-scale expansion and modernization of the US Army. Though he had never actually led troops in combat, Marshall was a skilled organizer with a talent for inspiring other officers.

Many of the American generals who were given top commands during the war were either picked or recommended by Marshall, including Dwight Eisenhower, Leslie McNair, Mark Wayne Clark and Omar Bradley. Indeed Marshall is well known for having promoted Eisenhower over 300 higher ranking generals to lead the American Expeditionary Forces. Scholars have long debated whether Marshall kept a ‘little black book’ of promising young officers who might merit future promotion. One thing that is more certain is that Marshall did have a very clear idea of the qualities he looked for in promoting someone to officer. In a letter he wrote to General John Pershing in November 1920, Marshall listed his views on the qualities of a successful leader. I found many of these qualities transcend the military officers and are useful when evaluating employees to become compliance practitioners or Chief Compliance Officers (CCO). The qualities Marshall listed are as follows:

  1. Good Common Sense. In this area, Marshall favored character over raw intellect. In the compliance world today, the compliance practitioner must know not simply how to work with a business unit, but use compliance to create value. In other words, as Mike Volkov is want to say, do not be ‘Dr. No’. Additionally Marshall did not seek the outlier, the individualist, the eccentric or the dreamer but a person well-grounded in good old American know how.
  2. Have Studied Your Profession. Marshall wanted officers who had studied the science of not only military operations but all areas appurtenant thereto, such as logistics and other branches of services. The same is true of the compliance practitioner, particularly with the evolving nature of a minimum best practices compliance program.
  3. Physically Strong. Here Marshall is not talking about simply being physically fit, which is requirement in the armed forces, but rather having the fitness to get out into the field. Marshall wanted men who would be in the middle of things. In other words, put ‘boots on the ground’ and learn what is going on in the field, outside of the corporate office.
  4. Cheerful and Optimistic. While Marshall based this requirement on the specific circumstances of the American democracy and a two-ocean protection, I believe that his traditional reasoning that American soldiers needed to be led by officers who were optimistic and resourceful is equally valid in the compliance context. Sometimes, the compliance practitioner is required to do less with more and given the dearth of case law available, decision making calculus based upon a solid reasoning is often required.
  5. Display Marked Energy. This is related to the physical fitness component cited above. However, it also relates to finding solutions in the face of rapid action. In the compliance world ‘NO’ is not always the best answer but for many it’s the easiest answer. Compliance practitioners are being called upon more frequently to supply answers to complex business situations and they must not simply say ‘that is an FCPA violation’ if it is in reality a high risk proposition, yet one which can be managed effectively with the proper controls in place.
  6. 6.      Extreme Loyalty. This is where Marshall specified a ‘team player’. I recognize that the compliance practitioner must stand apart to provide objectivity and I am not talking about US company’s which actually force compliance practitioners to change well-reasoned decisions on what may constitute a Foreign Corrupt Practices Act (FCPA) violation. Here Marshall wanted level headed team players who were both competent and cooperative.
  7. Determined.  Here Marshall wanted men who were steady and level headed. This meant that in the face of a rapidly shifting battlefield they could be counted on to soldier on and, more importantly, avoid gross errors of judgment which would cost American lives. Fortunately in the compliance arena, we rarely face anything so catastrophic but if compliance practitioners do not do their jobs, large amounts of a company’s time, resources and money can be put at risk if a FCPA is alleged and an investigation ensues. One needs look no further than Wal-Mart on this score.

General George Marshall was a transformational leader of the US Army. He accomplished this largely through focusing on people. This is also true for a CCO or other senior leader who has to set up a team to deal with a high profile area in a business. It is often said that the true mark of a person is how he or she does in tough situations. One of the best quotes I have ever heard about the US Army Officer Corp from World War II is by the historian Bernard Lewis who said “what was really new and original [about American officers] was the speed with which they recognized their mistakes, and devised and applied the means to correct them.” If you can imbue your Compliance function with people who have this trait, or can learn this skill, you will go quite a long way towards having a world class program.

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, 2012

Global Innovation for Your Compliance Program

One of the areas where the best practices for Foreign Corrupt Practices Act (FCPA) compliance programs is evolving is in the area a less US centric approach and incorporating the diversity across the globe. Many companies are now realizing that there should not be a one size fits all compliance program and that there is a treasure trove of ideas and capabilities in the compliance arena around the globe. This is also true regarding compliance talent as there is much talent outside the US which can and should be utilized by a company in constructing and developing their compliance group. Once found this diversity and talent must be groomed and integrated into an overall compliance structure for success.

A recent article in the Harvard Business Review, entitled “10 Rules for Managing Global Innovation” by Keeley Wilson and Yves L. Doz, explored some of these challenges and provided insight into how to tackle this issue from the corporate innovation angle. I found their article a good road map for the Chief Compliance Officer (CCO) to tap into and develop compliance talent. Wilson and Doz believe that many enablers of innovation occur naturally in a single location because “single location projects draw on large reservoirs of shared tacit knowledge and trust” but when these “projects span multiple locations, many of those natural benefits – often taken for granted –  are lost.” The authors formulated ten principals for successfully managing such global innovation projects across multiple locations which I believe translates into actions that a CCO or compliance group should institute when implementing or enhancing FCPA or Bribery Act compliance regimes.

  1. Start Small. The authors believe that to be effective, dispersed teams have to develop a “new set of collaboration competencies and establish a collaboration mind-set.” This can be done by running one or more small projects before the entire system rollout. In this way, a consensus can be developed on working practices and protocols. Additionally systems bugs can be worked out.
  2. Provide a Stable Organizational Context. Periods of major change in an organization present their own set of problems, so the authors advise, to the extent possible, a global innovation program should be initiated during times of relative stability.
  3. Assign Oversight and Support Responsibility to a Senior Manager. In addition to the usual key of having strong senior executive support as a factor for success, the authors believe that given disparate locations and teams, a strong senior leader will be needed to arbitrate disputes and generally be the ultimate decision maker.
  4. Use Rigorous Project Management and Seasoned Project Leaders. The authors believe that for global innovation to succeed there must be “a strong project management team to drive the project on a day-to-day basis and strong team leaders supported by robust tools and processes.” Often times, there are no off-the-shelf tools available so that they must be created to fulfill this role.
  5. Appoint a Lead Site. It is important that there be one person at each implementation site who can focus on the bigger picture, the overall integration of the solution. The authors believe that a key to overcoming localized support for their own initiatives is to task one lead to liaise so that he/she can have an understanding of the bigger picture and work towards appropriate resource allocation.
  6. Invest Time Defining the Innovation. When an implementation or innovation project is split over several time zones, the authors believe that there “is little latitude for iterative learning.” This means that the goals must be clearly defined and specified from the outset of the project. This definition process also helps but up trust and overall relationships between multiple locations.
  7. Allocate Resources on the Basis of Capability, Not Availability. The authors believe that the staffing of a global innovation or implementation project “requires a great deal of attention in order to select and integrate the best possible knowledge and capabilities.” Companies usually staff projects with the resources on the ground that are available. The authors believe that this is a mistake and companies should rather “bring together distinctive and differentiated knowledge and capabilities from around the world to create unique innovations.”
  8. Build Enough Knowledge Overlap for Collaboration. Without some overlap, the authors believe that “critical interdependencies between modules may not be apparent until the integration phase” when the cost is too great to change something. The authors cite to the Siemens example where one team member was tasked with liaising with other teams to ensure some overlap.
  9. Limit the Number of Subcontractors and Partners. The authors believe that in such global innovation initiatives, the lead should be driven by the company’s own workforce and not led by professional consultants or other third parties. Clearly for employee buy-in it is important for there to be employee involvement, additionally the authors believe that the coordination of third parties may be more time consuming and at the end of the day, more trouble than it is worth.
  10. Don’t Rely Solely on Technology for Communication. After the project is completed, it is critical that it be communicated effectively throughout the workforce. The authors believe that many managers “tend to underestimate the challenge of scaling communications globally.” Without robust communications, all of the good work to-date may not be fully disseminated throughout the company. So the human element is important and the authors advise as many communications as possible where there is an opportunity for employee interaction with the project sponsors publicizing the initiative.

The authors focus has been on global innovation initiatives. However I think these ten points are an excellent resource for the compliance practitioner to utilize when developing or rolling out a major compliance initiative. Even Mike Volkov recently saw the light and advocated the decentralization of the compliance function throughout an organization. This decentralization may well bring compliance initiatives from areas or regions not traditionally seen as a hotbed for such ideas. This article establishes a framework for the compliance practitioner to use for such compliance innovation.

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, 2012

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