On Compliance Leadership: From Edward VIII to LeBron James

On this day in 1936 King Edward VIII became the first English monarch to voluntarily abdicate the throne. He chose to abdicate after the British government, public and the Church of England condemned his decision to marry the American divorcée Wallis Warfield Simpson. On the evening of December 11, he gave a radio address in which he explained, “I have found it impossible to carry on the heavy burden of responsibility and to discharge the duties of king, as I would wish to do, without the help and support of the woman I love.” Despite these protestations of love requiring his abdication, recent scholarship has suggested the King was forced out because of his sympathy to Hitler’s Germany. Indeed I recently saw a documentary, which went so far as to say that the King had agreed to re-assume the monarch’s throne if Germany had successfully invaded England. Whatever the reason or reasons, on December 12, 1936 his younger brother, the Duke of York, was proclaimed King George VI. England was certainly better off for it.

I thought about this excellent example of extremely poor leadership and what a Chief Compliance Officer (CCO) or compliance practitioner might be able to learn from it in the context of a couple of articles I recently came across in the Financial Times (FT). The first was by Andrew Hill in his ‘On Management’ column and was entitled “The dangers of a rising C-level for the business environment”. While the focus of the article was on chief executives, I found some of Hill insights also applicable to a CCO. Hill expressed concern about how chief executives embody “the fallacy of infallibility.” He decried that “The corporate world is similarly deluded in thinking that individual chief executives are a wonder drug that can be injected into ailing businesses. It is better to think of companies as systems. They may not work at all without some sort of hierarchy. But they work much better if managers and leaders recognise that they are merely a single, if important, component and that effective procedures and clear designation of individuals’ roles and responsibilities help the whole work smoothly.”

He cited to the example of one un-named chief executive who “said he had just two ways to influence the company: by setting the tone and culture and by “building the machine”.” I would translate this into process. Hill recognized that “Reliance on mechanical process alone is clearly dangerous. It could “induce mindlessness.” Rigorous procedures and training should instead free innovators to take the necessary risks and leaders to react in the right way to inevitable challenges.”

This means that training employees and giving them the tools to succeed should be a more important skill than simply following orders. If you train your business team in the basics of compliance and then provide the right support to them, it can help bake compliance into the DNA of a company. Simply put a top-down compliance program dictated from the corporate office in the US or UK will not be as effective as a CCO or compliance practitioner getting out into the field and getting the business team to view themselves as compliance colleagues and assume responsibility for doing compliance in everyday transactions.

The second article was by psychologist Naomi Shragai and was entitled “Bloated and shrunken egos both prove bad for business”. Shragai began her article with the following observation, “We are rarely the best judge of our own skills and achievements. Even with the best intentions, we tend to overrate or underrate our abilities. Deluding ourselves that we are better than we are boosts our confidence and helps us to recover from setbacks. Identifying faults in others, the company or circumstances is easier on the ego than believing any deficiency lies within. The problem with this attitude is that it is rooted in a misguided belief that there is nothing to learn or correct.” She also described the contradictory when she wrote, “At the opposite end of the continuum are people who underplay their abilities and tend to see the fault in themselves rather than in others. They might overcompensate for what they perceive as deficiencies in themselves by working hard, but, stuck in a cycle of negativity, they generally fail to take responsibility for their own development.”

Shragai suggests dealing with the former is important because in the long run “their behaviour needs to be managed early before it becomes self-reinforcing and harms the business…Let him or her know that you are not judging the person but the work.” For the latter behavior, she suggests, “The underconfident need to take more responsibility for listening to what others are saying by consciously tuning into reality rather than slipping into negative thoughts…Help them to recognise their skills by presenting them with concrete evidence of their accomplishments.”

From these two articles, I synthesized the importance of the process of compliance. The more that you can make compliance about process, the more you can take out the egos, the over-confident and under-confident out of the equation. But it is much more than a process, as it requires training and providing tools to the employee base and those employees on the front lines in high risk countries, areas, products and services so that they can deal with the situations which they might confront.

As a CCO or compliance practitioner, that means you have to get out of the corporate headquarters, put boots on the ground and learn what your business team’s challenges might be going forward. It also means to instruct them specifically on how to deal with situations where they may be faced with requests to pay bribes and the difference between bribes and extortion. If an employee is faced with a danger to his or her health, safety or liberty it is encumbent on you not only explain the difference but also absolutely support them to remedy or rectify the situation. As Hill said in his article, “building the machine” is a key way to influence a company. But once you build that machine, you have to support it and keep it running.

So today I would ask you to reflect on what the abdication of Edward VIII meant for the UK and even up until today with the current monarch, Queen Elizabeth II. You might even consider Prince William and Princess Kate hanging out with LeBron James.

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