FCPA Compliance and Ethics Blog

April 29, 2014

Tales From the Crypt-Rule No. 9-Don’t let the revolving door hit you on your way in (and out)!

Tales from the CryptEd. Note-today we continue the series from the Two Tough Cookies. Today, they have a cautionary tale about not letting that revolving door hit you …

One of the toughest things to gauge about a potential employer is the culture of the organization. While plenty of job search sites like Salary.com, Payscale, Career Builder, and Indeed all have self-help sections geared to interviewing, I have yet to come across any really helpful advice regarding the organizational culture you might be considering for your next career move.   Most Integrity and Compliance professionals would agree that the hardest part of their job is cultivating a culture of integrity at their organization, one that has teeth, and not just “for show”. When they roll out all those good deeds done over the year for various awards and honors, like “Best place to Work” etc., know that most of these metrics are self-reported, giving a self-serving sense of belle weather, and hence, should be regarded as a subjective view from the cat bird seat. Glass Door gives a better sense of what you may be facing, but comments are limited, with lower level employees vocalizing various axes to grind, and the other spectrum, leadership, being conspicuously silent. Sometimes you can get real insight by looking at the yahoo message boards about a company, and those that don’t have many posts (positive or negative) are either model citizens, or quite adept at serving up take-down notices to the site administrators. I’ll leave you to judge.

What you really, really want to get your hands on are “exit interviews” and culture surveys, such as those that Kenexa offers, which give a real sense of the health of the organization’s morality play. Fat chance of getting them, but those would provide an unfiltered view of how much work you have ahead of you. While some of our Tales talk about hostility and arrogance emanating from the highest level in the organization, this Tale from our Crypt is actually a compilation of several additional actions that should give any Integrity and Compliance professional pause to consider whether to take a new position, or jump ship….

1)     After realizing that the company was facing a potential unlawful termination charge based on biased application of discipline for similar “offenses,” the company elected to send out mandatory arbitration clauses to all employees, highly encouraging each and every one to sign the clause as part of their employment terms. Several employees, typically high performers, who refused to sign the arbitration clause were arbitrarily found to be “below target” on their next performance appraisal, thus hitting them in their raises, as well as becoming part of their permanent record. Ouch! That one hurt.

2)     You realize that “Ethics & Compliance” is in name only when you examine the history of your predecessors and find an accordion procession of qualified and experienced professionals sandwiched between unqualified and inexperienced “yes” men. Upon closer examination, you realize those experienced professionals were pushed through the revolving door after questioning “sweetheart” deals with consultants who had no defined statement of work, kept no record of hours and had no measurable deliverables for high six figure contracts, or sought substantiation of 14k gold project results that were in fact merely gold leaf.

3)     Recently, I caught wind of a covert operation to hold employees to non-compete terms. In lieu of actually calling it out in conspicuous terms as a term of employment for those in a position of trust as most companies would do, the employer put the non-compete terms in fine print that were only available on line when routing employees through the annual stock awards cycle. By accepting the ‘bonus’ of stock grants and options, the employees became bound to the non-compete terms, without advance notice, or even giving an opportunity to see who the competitors were. When a senior level employee turned in his notice, and advised his boss that he was going to work for one of these “competitors,” he was later advised by legal that he had in effect “resigned,” his stock incentives were forfeit, and he was precluded from starting to work for the competitor. To add insult to injury, the company called in outside counsel to send nasty grams to the former executive (now left without a job, and unable to claim for unemployment because he “resigned”), reminding him in strongly worded legalese of the non-compete. Even the employee’s boss was unaware of the non-compete provisions, so all were taken by surprise. Wham! The nasty revolving door strikes again with a vengeance!

4)     Reporting relationships are another red flag “culture” indicator for Ethics & Compliance professionals. While it’s hotly debated whether the function should lie in legal, audit, or somewhere else, we can all agree that it should not report to operations, since that’s akin to the fox watching the hen house. Ideally, the function should be “independent” of executive influence, with at least a dotted, if not solid, line report to the board’s audit committee. Many companies get around this by having the CECO in an executive function (such as the General Counsel, or Chief Financial Officer), but they are not the ones with their ear to the ground, relying instead on director or VP level personnel to manage the day-to-day duties, and reserving the “executive privilege” of access to the board for themselves. Given their place on the company’s “executive” committee, one could argue that’s hardly the “independence” Department of Justice was thinking of in their sentencing guidelines. It’s all well and good if the “day to day” personnel do not have executive presence, but if they do, and are still kept at arms’ length from the board? That’s a telling sign that there’s an entitlement culture afloat and you will have to swim against a very strong tide of resistance to break into the “inner circle.” The promised “free and unrestrained” access to the Board is only as good as the relationship you are able to build with them especially when the Chairman is also the CEO and you are only “allowed” to see them 4x per year in a structured (and monitored) meeting environment while executive management shares informal meals and time on “the links” with the board members. Keep your antennae up when contemplating a new environment to ply your craft.   Ask to meet with all constituents to ensure the open door is really open before you commit to a move that ends up requiring you to “share” your presentations and discussions in advance. And heaven’s sake, if the CEO describes his tenure as “his reign”, run, don’t walk, to the nearest emergency exit!

5)     Bring your own device can be the device of your undoing… I routinely refuse to use my personal cell phone for work. Of course, that means I have to juggle multiple mobile computing devices, but for me, it’s important that I don’t mix business with pleasure. Most companies nowadays encourage employees to use their own device for a multitude of reasons. Many of them are sound, such as cost savings, as well as tech support, making lots of sense if the employee is going to update their own personal phone every two years anyway. It gives the company access to the latest technology, without the investment in devices which might be obsolete a month from now. It’s also good for morale in many instances, particularly if the company agrees to pay the data charges if the employee agrees to underwrite the cost of the device – that’s where the real costs to the employee come into play, and it’s a fair trade overall. The drawback, however, is that more than 20% of companies apply an “all or nothing” rule – leveraging the tools that come standard with Microsoft Exchange servers to remote wipe these devices. You either take it all with you (by backing up your device nightly – seriously, who does that?!?) or you take nothing with you when you are terminated without notice and the company “wipes” your device clean, including those precious baby photos of your first born you took last weekend. There’s a rip tide in the cultural norms of a company that won’t buy or pay for your device or data charges, yet insists on 24/7 accessibility. One company I am aware of would not provide mobile devices for anyone but the higher ups, leaving everyone else to BYOD. Legal and HR refused to consider implementing a formal BYOD policy, notwithstanding Privacy’s urging to do so. The reasons became clear within a couple months, when several employees were terminated for accessing emails from their private accounts via their smart phones relating to job interviews with other companies. The company viewed their interest in other opportunities as a “breach of trust” and wiped their smart phones clean of everything, including their contact lists, personal photos, text messages – EVERYTHING gone in the time it took for them to say “you’re fired.” How could they get away with this? Well, the InfoSec “policy” was a clickwrap agreement that warned folks that any pairing of personal devices to company systems granted full access rights (without limit as to purpose or time. The company was surreptitiously monitoring server traffic to/from mobile devices, including personal email traffic routed through the company’s Wi-Fi. Steer clear of BYOD, my dear, because your head will spin like Linda Blair trying to recover the last two years of your phone’s life as you are ushered out that revolving door.

6)     The dilemma of wearing two hats can wear a compliance professional down. When the position sits in the general counsel’s office and is staffed by an attorney, oftentimes the professional’s time is “cannibalized” to perform “lawyer” duties in addition to running the day to day operations of the integrity and compliance function. I personally was asked to tackle more and more “lawyer” duties during my tenure at one company, to “justify” a higher rate of pay which should have been mine to start with. The tipping point came when I was tasked not only with all the legal duties of one subsidiary (which was failing miserably, so there was a lot of ‘clean up’ work to be done), all the environmental, health & safety work for the entire global manufacturing enterprise, as well as the day to day operations of the Integrity & Compliance function, but was told that I also had to assume transactional work, since I had done such a ‘good job’ that the I&C function was on “auto-pilot” and didn’t need my rapt attention any longer. That conversation resulted in “conflicting career goals” between me and the organization, and I was laid off shortly after expressing my reservations about putting the I&C function on “auto-pilot” while I tackled commercial transactions, a skill I did not confidently possess. Mice will play when the cat’s away….. Contrast that with another organization, where I became aware of an illegal activity as part of my “legal” duties to the organization while serving as Compliance officer. I raised my concerns to the general counsel, but the CEO would not back down, insisting we “find a way” to preserve that part of the business. Due to “attorney-client privilege” rules, I was duty-bound to keep my mouth shut about the illegal activities, even though we were currently under investigation for a separate, equally illegal activity. I so desperately wanted out of my relocation assistance payback obligations when the General Counsel instructed me to “find a way” to legitimize what we both knew would never be sanctioned by the government – what I really needed was unfettered access to the board to discuss my concerns openly as an “independent voice of reason.”  Luckily (or NOT), that dilemma was solved for me when I was escorted through the revolving door within hours of signing their settlement agreement with the government for the FCPA case I was hired to resolve under extremely favorable terms for the company – I later learned from a very reliable source the company had only intended for my position to be “project-based” until the case was out of their hair. There are no whistleblower protection provisions for in-house counsel, and in fact, you could lose your license to practice law should you opt to do what’s right. When the CEO insists you find a way to do the unthinkable, it’s time to head for the revolving door ….

7)     Some additional signs that the revolving door is a well-oiled machine (and that perhaps your number is up)….

  1. Employees share that they will not use the hotline because they fear retaliation.
  2. Severance agreements routinely put in non-disparagement clauses, but only in favor of the company, and references are not permitted “per policy.”
  3. In spite of your repeated requests to have your function’s location placed somewhere convenient to all to take advantage of numerous opportunities to immerse yourself in the middle of the action, you are shunted off to the hinterlands where no one can find you, and where you will be sure to miss valuable informal communications and observe the culture in action.
  4. You (and your other “compliance” colleagues) are placed in a bullpen cube that lends no privacy, thereby discouraging confidential communications (and sending a strong signal of “irrelevance” to the organization).
  5. Your requests for at least a closed cube or dedicated private meeting space for confidentiality purposes is met with blank stares of incomprehension, or worse yet, the dreaded comment “we have nothing to hide here….”
  6. You are not invited to key strategy meetings as part of temporary cost saving measures (and then later, held “accountable” when you aren’t aware of what was decided at the meeting).
  7. Leadership establishes a new scope for your work, redefining your mission to tactical, transactional and organizationally “safe” activities, instead of viewing what you do as “strategic” to the health of the organization.

As noted by Jack Kelly, publisher of The Compliance Exchange, 60% of the Society for Corporate Compliance and Ethics (SCCE) members are women. That’s a double-edged sword, he asserts, as it means women are benefitting from a “growing and dynamic field.” The drawback? These very compliance professionals are still held at arms’ length from senior executives, stunting career growth, and blocking critical opportunities to engage as an executive peer. Companies that truly want to pursue a diverse leadership path need to permit women direct exposure to the C-suite, and placing the CECO position on the executive leadership team as an independent slot (distinct from the GC or CFO) with a dedicated mission for Integrity will go a long way to eroding that traditional barrier. Women are, by their very nature, nurturers, and will take progressive, proactive steps to preserve and protect. Battered corporate reputations can be rebuilt, trust can be restored…

If you have additional cultural “insights” to share, we’re sure everyone would love to see your comments……

Who are the Two Tough Cookies?

Tough Cookie 1 has spent the more than half of her 20+ legal career working in the Integrity and Compliance field, and has been the architect of award-winning and effective ethics and compliance programs at both publicly traded and privately held companies.  Tough Cookie 2 is a Certified Internal Auditor and CPA who has faced ethical and compliance challenges in a variety of industries and geographies and recently led a global internal audit team. Their series “Tales from the Crypt: Tough Choices for Tough Cookies” are drawn largely from real life experiences on the front line of working in Integrity & Compliance, and personal details have been scrubbed to protect, well, you know, just about everyone… 

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