FCPA Compliance and Ethics Blog

April 19, 2013

Edgar Allen Poe and Innovation in the Compliance Function

Tomorrow, April 20 is the anniversary of a truly innovative work of literature. On April 20, 1841, Edgar Allen Poe’s story, The Murders in the Rue Morgue, first appeared in Graham’s Lady’s and Gentleman’s Magazine. The tale is generally considered to be the first detective story. The genre is distinctive from a general mystery story in that the focus is on analysis. The story describes the extraordinary analytical powers used by Monsieur C. Auguste Dupin to solve a series of murders in Paris. The character of Dupin became the prototype for many future fictional detectives, including Arthur Conan Doyle’s Sherlock Holmes and Agatha Christie’s Hercule Poirot. Like the later Sherlock Holmes stories, the tale is narrated by the detective’s roommate. Poe biographer Jeffrey Meyers sums up the significance of “The Murders in the Rue Morgue“: “[it] changed the history of world literature.” Poe’s role in the creation of the detective story is reflected in the Edgar Awards, given annually by the Mystery Writers of America. For both myself and the many worldwide fans of Sherlock Holmes, we owe a tip of the hat to Poe for inventing the genre.

As Poe demonstrated, innovation can come in many forms. Earlier this week I wrote about some of the innovative ways that Joel Katz, of CA Technologies, had improved his company’s compliance function. In this post, I will discuss how Katz was able to increase the participation of business leaders into the doing of compliance. He did so by the creation of ‘Regional Business Ethics Councils.’ I found the CA Technology creation and use of these Regional Business Ethics Councils as an innovative approach to help move compliance into the company’s DNA in a robust manner.

The Regional Business Ethics Councils are designed to “largely serve as a communication vehicle between our corporate compliance team in the United States, business leaders, and employees.” These Regional Business Ethics Councils were created in the company’s three major geographic regions which consisted of the Americas, Europe and the Middle East (EMEA) and Asia-Pacific (APAC). Each Regional Business Ethics Council is comprised of six to eight senior business leaders from each part of the company’s functional business, including legal, finance, HR, sales, development, administration, and others. The Regional Business Ethics Councils meet quarterly.

Katz believes that the Regional Business Ethics Council members play a critical role with compliance messaging to employees in their respective regions. Their meetings are used to “discuss current compliance issues and internal and external trends, significant legal or regulatory changes that impact the business, and upcoming compliance initiatives.” This structure allows the company to be more nimble and be in a position to respond more quickly to different external issues that may arise and impact the compliance function.

CA Technologies also uses the Regional Business Ethics Councils as a mechanism to “solicit feedback from the business on the current business environment, any concerns the business leaders may have about our business or our compliance program, and any other issues they wish to discuss.” One of the constant challenges for employees is getting foreign employees to trust and communicate with the compliance function. The Regional Business Ethics Council can provide another route by which information and concerns can be conversed up to the compliance function.

Katz acknowledged that the level of engagement of the individual council members varies from both person to person and Regional Business Ethics Council to Regional Business Ethics Council. Nevertheless, the company has found that the Regional Business Ethics Council initiative “has succeeded in creating more visibility into the compliance function for company business leaders and more visibility into the global business for our compliance team.” Additionally, the Regional Business Ethics Councils can assist the compliance group by focusing on issue-spotting and awareness-raising within their specific region. Katz believes that this is helpful because it “is consistent with our belief that if we can get people talking about compliance and asking questions, we can address most issues long before they become compliance problems.”

Katz ended his article by explaining that at CA Technology “compliance training and communication plan is and will always be a work in progress” which he believes is appropriate for “every organization, as such organizations and legal and regulatory landscapes will undoubtedly evolve and change over time.” His article helps to drive home the message that a company “should examine its plan at least annually to ensure it is still viable and continually look for opportunities to improve it. This iterative approach to training and communication will help ensure that messages are being heard, understood, acted upon and appreciated by your employees.”

I have often written about the need for some type of management oversight above the compliance function which sits below a company’s Board of Directors. The CA Technology approach of using the Regional Business Ethics Council provides another level of engagement by corporate functions. But just as a Regional Business Ethics Council can be used to communicate from areas outside the US back to the corporate headquarters, the Council structure allows the compliance function to communicate back into the regions. I believe that this can help companies to communicate the importance of compliance more thoroughly and more effectively throughout an organization.

Lastly, one of Katz’s themes is to help the company employees understand that compliance is there to help them do work business more efficiently and at the end of the day in a manner more consistent with the company’s overall ethical values. I believe that the use of the Regional Business Ethics Council program can be a key way to demonstrate this commitment to employees. I would suggest that this type of program may be something that you should consider for your company.

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

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