FCPA Compliance and Ethics Blog

January 16, 2013

Glengarry Glen Ross and the Internal Marketing of a Compliance Program

One of the great plays and movies that I enjoy is ‘Glengarry Glen Ross’. As you might expect with anything that David Mamet pens the dialogue is absolutely spot on, fast paced and non-stop. The action generally revolves around the desperate attempts of a company’s sales man to sell parcels in two real estate developments named Glengarry Highlands and Glen Ross Farms. The movie cast is outstanding with Al Pacino, Jack Lemmon, Kevin Spacey, Alec Baldwin, Ed Harris and Alan Arkin. One of my favorite lines in the movie comes from the corporate motivator, the Baldwin character who says “ABC – Always Be Closing”.

One thing which tends to bedevil many compliance practitioners is the internal marketing of a compliance program. Most compliance professionals came to this area of practice from the legal profession, internal audit, or some other discipline which did not include a marketing background. But in many ways teaching, training and informing employees on compliance is marketing. I thought about the concept of marketing and the signature line of “Always Be Closing” from Glengarry Glen Ross when I read a recent article in the January-February issue of the Harvard Business Review (HBR), entitled “Rethinking the 4 P’s”, by authors Richard Ettenson, Eduardo Conrado and Jonathan Knowles. In this article, the authors posit that the “4 P’s” of marketing need to be changed for “today’s B2B reality.” I believe that a best practices compliance program can use these concepts to help internally market a compliance program.

The old “4 P’s” of marketing are product, place, price and promotion. The authors conducted a five-year study involving over 500 managers and customers across multiple countries and industries. From this study, the authors found that the old 4 P’s of marketing undercut the B2B markets in three key areas. First, the old paradigm asked marketing and sales teams to “stress product technology and quality even though these are no longer differentiators” but are now simply the cost of entry. Second, the old paradigm “underemphasized the need to build a robust case for the superior value of their solutions.” Third, the prior paradigm distracted the sales and marketing teams from “leveraging their advantage as a trusted source of diagnostics, advice and problem solving.” I believe that these three issues also beset the compliance practitioner as well.

The authors developed four new concepts for marketing in the B2B space. These four used the acronym SAVE and they were: (1) solution, (2) access, (3) value, and (4) education, the author’s defined them as follows:

  1. Solution – Define offerings by the need they meet, not their features, functions or technological superiority. There are multiple anti-corruption and anti-bribery laws in place across the world. From the Foreign Corrupt Practices Act (FCPA) to the UK Bribery Act and beyond. A compliance solution meets the needs of a company to comply with these laws. It can be seen as a market-based solution to a legal requirement and can be defined as such.
  2. Access – Teams should develop a cross-channel presence that considers customers’ entire purchase journey instead of emphasizing individual purchase locations and channels. Here it is important to bring the business unit folks into the discussion. It not only allows buy-in by the business unit but invests them in the overall compliance solution. There is nothing better than a Regional Vice President (VP) explaining to a business relationship how seriously the company takes compliance and they expect that from the business relation as well.
  3. Value – Here the sales and marketing teams should articulate the benefits to price, rather than stressing how price relates to production cost, profit margins or competitors’ pricing. Compliance may be thought of as simply a cost center but I would advocate that it actually brings business to the table. A compliance solution can be a selling point for any company which does business with a US company internationally. Every contract requires (FCPA) compliance and often a new vendor is audited for their compliance program. This is also true in any mergers and acquisition (M&A) transaction.
  4. Education – Under this final prong sales and marketing should provide relevant information to customers’ specific needs at each point in the purchase cycle rather than relying on advertising, PR and personal selling that covers the waterfront. I started this piece by talking about internal marketing and that is what education is. I would change Always Be Selling to Always Be Marketing.

These four concepts are coupled with certain requirements to make the switch over, which I believe are also applicable to the compliance practitioner. Initially, management must encourage a solutions mind-set throughout the organization. If your company comes from an engineering or tech background, it may be difficult to shift over from thinking about technological superiority to a customer-centric perspective. But the key is the tone at the top. Is management willing to make this a priority throughout the sales chain? Is management committed? These are questions that not only a compliance practitioner must answer but ones that the Department of Justice (DOJ) will ask.

The next premise which must be in place is that the design of the sales and marketing team must reflect the customer-centric focus. In the sales and market world, this led one company, Motorola, to reorganize the marketing function into complimentary specialties, allowing a clear focus on each element of the SAVE concept. Here this concept would appear to have been presaged in the Pfizer Deferred Prosecution Agreement (DPA) in the Enhanced Compliance Obligations; the DOJ spelled out what it expected in the company’s compliance department. It listed three separate functions, each designed to deliver a different compliance solution to the compliance department’s internal client, the company.

The final premise I found very significant is that management must create collaboration between the sales and marketing teams and the development and delivery teams. This is important because specialist teams in development and delivery need to concentrate their approaches to specific customer needs. By doing so “this ensured that functional boundaries did not determine” a company’s solutions.

Here I think that the key for the compliance practitioner is to engage business unit employees. Leonard Shen, Chief Compliance Officer (CCO) of PayPal used this approach when and his compliance team traveled to multiple company locations, across the globe, to meet with as many employees as possible. A large number these meetings were town hall settings, and key employee leaders, stakeholders and employees identified as high risk, due to interaction with foreign governmental official touch-points, were met with individually or in smaller groups. Shen and his team listened to their compliance concerns and more importantly took their compliance ideas back to the home office. From this engagement, the team received several thousand employee suggestions regarding enhancements to the company’s compliance program. After returning to the US, Shen and his team winnowed down this large number to a more manageable number, somewhere in the range of a couple of hundred. These formed the basis of a large core of the enhancements to the existing company compliance program.

This was also part of the approach used by Peter Löscher who was hired as the Chief Executive Officer (CEO) of Siemens in 2007. Löscher went on a round the world tour of the company’s facilities, including meetings with customers, local governmental officials and Siemens employees. He accomplished this final component through meetings with local leadership teams, town hall-style meetings with all employees and dinners with top leadership teams in specific locations. He basically learned that Siemens employees were “shocked and ashamed, because they were very proud to be a part of Siemens.” He used these forums as a basis to begin to change the culture of the company which was then enmeshed in what became the world’s largest and most costly bribery and corruption scandal to date.

Many compliance practitioners and lawyers do not think about marketing. The HBR article provides some interest parallels to what compliance practitioners need to communicate. However, if you really want to go all out, check out this clip from the movie of Alec Baldwin with “Always Be Closing” on youtube.com.

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, 2013

Blog at WordPress.com.