Semper Fi and Compliance-Leadership Lessons from the Marines

Ever wonder where the US Marine Corp got its nickname of ‘hellhounds’? It came courtesy of the Imperial Germany Army from a battle that took place in the month of June 1918, the Battle of Belleau Wood. According to the Battle’s entry in Wikipedia, the Marines forces marched 10K to reach a site where the German Army had broken through against the French Army. After arriving on the site and turning back the German advance, the Marines were repeatedly urged to turn back by retreating French forces, Marine Captain Lloyd W. Williams of the 2^nd Battalion, 5^th Marines, uttered the now-famous retort “Retreat? Hell, we just got here.” 

After the battle, the French renamed the wood “Bois de la Brigade de Marine” (“Wood of the Marine Brigade”) in honor of the Marines’ tenacity. The French government also later awarded the 4th Brigade the Croix de guerre. An official German report classified the Marines as “vigorous, self-confident, and remarkable marksmen…” General Pershing – Commander of the American Expeditionary Force – even said, “The deadliest weapon in the world is a Marine and his rifle!” Pershing also said “the Battle of Belleau Wood was for the U.S. the biggest battle since Appomattox and the most considerable engagement American troops had ever had with a foreign enemy.” But it was the Germans who gave the Marine Corp its most lasting moniker, when the called them ‘the dogs from hell.’ Tribute indeed.

I thought about this tribute to the Marine Corp when I recently read an article in the Corner Office section of the New York Times (NYT), entitled “Leading By Putting Your Followers First”, by Adam Bryant. In this article, he profiled Don Knauss, the Chief Executive Officer (CEO) of Clorox Company. Knauss joined the Marine Corp after college and this experience gave him some valuable leadership lessons that Bryant detailed in his article. One of the things that influenced Knauss’ philosophy on leadership was the Marine Corp process of thinking through an issue. Bryant wrote, “I learned in the Marine Corps that I really liked strategy. Every operation in the military is based on a five-paragraph order, and the acronym is Smeac — situation, mission, execution, administration and communication. It’s a very logical flow.”

Another key leadership lesson is defined by the age-old acronym KISS or Keep it simple, sir. Bryant wrote that Knauss said, “how are you going to focus the organization? And it had better be simple, and it probably should not be more than three things. You’ve got to communicate it about 100 times and align your incentive structure to it. It’s about distilling the complex to the simple, and I’ve seen leaders fail because they do the reverse, by trying to make things into some intellectual exercise. Whatever business you’re in, there are fundamentals, just like blocking and tackling in football. It always comes back to the fundamentals. You cannot let yourself get bored with the fundamentals.”

But more than simply communicating something about 100 times to get your message across, Knauss believes that you have to make sure that people believe that you care about them. That is certainly something a compliance practitioner needs to take to heart. Knauss reflected, “it’s all about your people. If you’re going to engage the best and the brightest and retain them, they’d better think that you care more about them than you care about yourself. They’re not about making you look good. You’re about making them successful. If you really believe that and act on that, it gains you credibility and trust. You can run an organization based on fear for a short time. But trust is a much more powerful, long-term and sustainable way to drive an organization.”

Knauss had some interesting insights relating to how he evaluates potential hires that I think makes a lot of sense for the compliance professional to consider.

1. Passion – Knauss looks for energy and considers whether the person will have an impact on the business.
2. Smarts – Can the candidate think analytically, creatively and strategically?
3. Develop others – Is there any pattern in the person’s career that shows they can develop people or put inversely, did people move up through an organization because they were mentored by this person?
4. Communication skills – Knauss considers if he can imagine this person on a stage, inspiring a large group? He also assesses whether the candidate has an easy, informal manner to conversely test if they are too formal and too focused on hierarchy, as Knauss believes formality and rigidity do not work.
5. Use of power v. use of authority – Here Knauss believes “it is much more powerful to use authority than power. One of the things I’ve learned is that as you move up in an organization, you’re given more power. The less you use the power you’ve been given, the more authority people give you, because they think: “You know what? This guy’s O.K.” Persuading people to do things – come along with me because we’re going in the right direction – is much more powerful over time.”
6. Values – Knauss said that the final thing he tries to evaluate is the values of a candidate. He considers that it is important that they are honest and will tell the truth. Moreover, “do they also stand up for what they think is right in the company? It starts with integrity, which is really the grease of commerce. You get things done much more quickly when people trust you.”

However, I found one of the most important lessons that Knauss intoned was about how a leader should treat people. He told the story about how he joined a group of Marines who had been in the field for several weeks and had been eating C-rations. When Knauss met them, they were having their first hot meal since going into the field. Knauss related, “I had been up since 5 in the morning, and I was pretty hungry. I started walking over to get in front of the line, and this gunnery sergeant grabbed my shoulder and turned me around. He said: “Lieutenant, in the field the men always eat first. You can have some if there’s any left.” I said, “O.K., I get it.” That was the whole Marine Corps approach – it’s all about your people; it’s not about you. And if you’re going to lead these people, you’d better demonstrate that you care more about them than you care about yourself. I’ve never forgotten that, and that shaped my whole approach to leadership from then on.”

That final lesson is the most important one for any compliance practitioner. Your gold-plated written compliance program is only as strong as the people you have in your company. If you can demonstrate, and lead in compliance, by showing your fellow company employees that you are there to assist them but you will also go the extra mile to make them understand you care about them, you will get much more out of them at the end of the day.

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If you are interested in learning about mergers and acquisitions under the FCPA I am involved in to upcoming events designed to give you the most up-to-date advice on this area of compliance. Both events are sponsored by The Network. The first event is a webinar entitled appropriately enough, “Mergers and Acquisitions Under the FCPA” and is scheduled for  Tuesday, June 17th, 2014 TIME: 2:00 pm EDT. For registration and additional information click here. On Tuesday, June 24th the always popular Tom Fox/Stephen Martin roadshow returns to Denver where I will speak live on Merger and Acquisitions Under the FCPA and Stephen will talk about risk assessments under the FCPA. For information on the Denver event, click here. 

 

 

 

I am putting on a four part podcast series on the World Cup, detailing issues of bribery and corruption, together with an ongoing discussion of Team USA and this year’s tournament. I am joined by Mike Brown, the Managing Director of Infortal. You can check out Part I by clicking here of the series where we discuss bribery of referees in the lead up to the 2010 World Cup held in South Africa and FIFA’s response. Mike and I then review Team USA and it’s draw in Group g-the Group of Death. I hope that you will check out this series and enjoy it as much as Mike and I enjoy recording the episodes. Also remember, my podcast, the FCPA Compliance and Ethics Report is available for download at no charge on iTunes so you can listen to Part I on your commute to work. So sign up for the podcast from WordPress or iTunes and enjoy our series.

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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, 2014

 

 

 

 

Private-to-Private – How Business is Driving FCPA Compliance

Today we celebrate greatness. On this day in 1950, Texan Ben Hogan fully returned to the world of professional golf by winning the US Open, just 16 months after sustaining near fatal injuries in a car crash. His injuries were indeed horrific. Hogan suffered a broken collarbone, ankle, ribs and a double fracture to his pelvis. While in the hospital, a blood clot appeared in his leg, forcing doctors to tie off the surrounding veins to keep the clot from reaching his heart. Hogan’s legs atrophied, and doctors worried he would never walk again, let alone play golf at a professional level. Yet Hogan was able to walk 36 holes on the final day of regulation play and win the tournament the next day in an 18-hole playoff. Hogan is one of two golfers to win three of golf’s major championships in one year, won after his 1949 automobile accident.

A few weeks ago I wrote and put out a podcast about how the Houston energy community had developed a business solution to Foreign Corrupt Practices Act (FCPA) compliance. In the energy industry, the exploration and production companies (E&P) are usually thought of as existing at the top of the food chain (i.e. Mega-Big). Below them are the service companies, which actually do the work of exploration (i.e. Very-Big). The next level down are companies who work with the service companies, from the multi-billion chemical production firm down to the $15MM company which has a piece of software which does something useful. All of these companies down the chain are required to have a compliance program.

In practice it works something like this. A service company needs a product or service. As part of the regular contracting process, the service company will inquire into the contractor’s compliance function and policy. If the contractor provides a service which deals with a foreign government in any way or has foreign government touch points, the service company may well come and audit the contractor’s compliance program prior to executing the contract. Thereafter the contractor is subject to being audited for not only the execution of the contract but also the continued maintenance of its compliance program. All of this is done for business reasons. It is a business response to a legal issue, that being compliance with the FCPA.

Last week I received a copy of a paper by Scott Killingsworth, one of the true great practitioners in the field of compliance. Last year, he was listed by Ethisphere as one of its “Attorneys Who Matter” in ethics and compliance. His 2013 paper, “article, “Modeling the Message: Communicating Compliance through Organizational Values and Culture”” received a 2013 Burton Award for Distinguished Legal Writing. Killingsworth’s latest article is entitled “The Privatization of Compliance” and in it he sets out the legal and theoretical underpinnings for what I call the business solution to FCPA compliance. In his introduction he stated, “Embodied in contract clauses and codes of conduct for business partners, these obligations often go beyond mere compliance with law and address the methods by which compliance is assured. They create new compliance obligations and enforcement mechanisms and touch upon the structure, design, priorities, functions and administration of corporate ethics and compliance programs. And these obligations are contagious: increasingly accountable not only for their own compliance but also that of their supply chains, companies must seek corresponding contractual assurances upstream. Compliance is becoming privatized, and privatization is going viral.” And he calls this “private-to-private or P2P compliance.”

Killingsworth says this is a change from a “vertical, state-imposed” mandate to “an integral adoption of best practices both as a cultural norm and critically, as a path to profit”. [Italics mine] He notes that when such obligations come from a business partner, “This message has the potential to re-orient some attitudes and remove some ethical blinders. As more businesses are forced by their counterparties to examine their compliance processes and routinely accept business and legal consequences for them, we can expect increases in overall investment in compliance, in the scope and robustness of the average compliance program, and in ambient awareness of compliance issues outside the compliance, audit, and legal staffs. The viral nature of the process, in which each participant can exert pressure on a large number of direct and indirect upstream or downstream parties, while simultaneously fielding demands from other members of its value chain, suggests that the trend will continue and its influence will grow.”

Specifically in the area of anti-bribery/anti-corruption compliance programs, he writes “The debates about best practices are settled, save for skirmishes over when they can be practically applied.” Such best practices can be seen in the area of third-party due diligence and anti-bribery provisions, which are written into contracts with “domino-style flow-down requirements.” These obligations can arise through directly incorporating anti-corruption compliance obligations or by reference to one party’s compliance regime, or both. Such contractual provisions can cover a variety of issues, such as “ethical rules governing relationship issues such as conflicts of interest and gifts and entertainment; requirements to obey specific laws of concern and laws generally; and procedural rules such as the right to audit the partner’s records or train its personnel. Process and structural rules may be imposed on the partner’s compliance activities, such as requirements to establish management accountability, develop appropriate policies and procedures, maintain an anonymous reporting system and an anti-retaliation policy, train employees, conduct periodic audits, risk assessments and remediation, and of course, sometimes to cascade these program elements to downstream associates.”

Killingsworth details several areas that compliance professionals and contract lawyers should look for when confronted with P2P clauses and he does warn that some negotiators “will always be zero-sum business partners whose prime goal is risk transfer and who will do everything within their power to achieve it through contracts and P2P Codes.” However, he ends his paper with an upbeat note that he believes P2P codes and contract clauses can further the goals of greater compliance with anti-corruption laws.

I found his paper to be a ‘must read’ for anyone in the compliance field. He lays out a theoretical framework, coupled with some of the practical issues which need to be addressed moving forward for what I believe is a business solution to a legal problem. Kudos to Killingsworth for his continued contributions to the field of compliance and ethics where he is truly one of the greats.

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, 2014