FCPA Compliance and Ethics Blog

July 21, 2015

Hemingway and Trust and Respect for Compliance Leadership

HemingwayOn this day in 1899, Ernest Hemingway was born. To me, he was the greatest Man of Letters the US has produced. Probably like most of you all, I was introduced to Hemingway in high school through The Son Also Rises. It remains my favorite of his works but I have enjoyed many more of his novels, short stories and non-fiction work. I particularly enjoyed his Nick Adams short stories as I found them crisply written and with a conciseness of language that is not often found today, or perhaps in any other time. Hemingway was awarded the Pulitzer Prize in 1953 and the Nobel Prize for Literature in 1954. He died via suicide in 1962.

I thought about Hemingway and his writing style when reading the most recent Corner Office column by Adam Bryant in the New York Times (NYT), entitled “To Work Here, Win the ‘Nice’ Vote”, where he profiled Peter Miller, the Chief Executive Officer (CEO) of Optinose, a pharmaceutical company. Miller has some interesting leadership concepts that are applicable to the position of Chief Compliance Officer (CCO) 2.0 and how a CCO 2.0 could use influence to lead, not only in the compliance function but also across an organization.

Miller talked about one thing you rarely hear in the corporate world, which is to be nice. He garnered this concept because as a “young sales manager at Procter & Gamble. I had five salespeople working for me, and one of the guys was 55 and another guy was 48. They were really successful salespeople, so I realized that I couldn’t teach these guys anything about selling. Since I couldn’t teach them anything, I tried to cultivate trust and respect by working really hard at figuring out how I could help them in a meaningful way.”

Yet this apparent inability to lead in precisely the area he was tasked in leading led Miller to formulate “a very important core value of mine, which is that you can and should try to create friends at your company.” But more than simply becoming friends, Miller came to the understanding that underlying the friendship “is this concept of trust and respect. When you get that as a team, that’s when great things happen. And that comes from creating a culture of openness, of authenticity, of being willing to have fearless conversations. It’s about being yourself, not being afraid to say what’s on your mind.”

As a CCO, you need to be able to have that type of conversation with those both up and down your chain of command. Certainly it is always beneficial to have type of relationship with your team that allows the full flow of communication. Miller said, “Think about how people are with their best friends. You want them to succeed. And sometimes that means having really hard conversations. If that’s what’s motivating you — and you’re really trying to help everybody around you in a company as if they were great friends of yours — that’s really powerful.”

I was interested in using some of Miller’s insights in the managing up role for any CCO. You have to be able to have some very frank conversations with your CEO and Board members about your compliance program and any issues that may arise under it. As CCO if you “cultivate trust and respect by working really hard at figuring out how I could help them in a meaningful way” as Miller used with his more senior sales team members, it should certainly help you going forward when you have to manage up your chain.

I also thought about this somewhat enlightened approach as contrasted with another style that I read about in a recent On Work column by Lucy Kellaway in the Financial Times (FT) entitled, “Wrong skillset excuse masks coup at the top of Barclays, where she discussed the recent termination of Antony Jenkins from Barclays Bank. The newly installed chairman of the company’s Board, John McFarlane, who simultaneously promoted himself to CEO, Jenkins former position, fired Jenkins. The reason Jenkins was fired; he no longer had the right “set of skills” for the organization. Chairman McFarlane explained to Kellaway that there were four skills going forward which (apparently) were lacking in Jenkins: “a) strategic vision; b) charisma; c) the ability to put plans in place that deliver shareholder value; and d) ability to ensure results were delivered.” Ironically, Kellaway noted that lawyers for Kleiner Perkins had said that Ellen Pao “was an employee who never had a skillset.”

Kellaway noted the obvious when she wrote “To invoke skillsets in hiring is not only ugly, but dangerous. Find the right person to run a very big bank is very hard, and having a list of skills that you are matching an applicant against is not necessarily the best way of going about it.” More ominously, she noted that the head of such bank would have to be able to reign in the traders and investment banker types who brought Barclays its unwanted regulatory scrutiny. More critically from the compliance perspective, I think it says much more about Chairman McFarlane that he did not say anything about a new CEO running the business ethically, in compliance or in any other manner which could help to prevent Barclays from another very large fine or penalty from the regulators.

McFarlane’s dictum is one that will certainly be noted by regulators on both sides of the Atlantic going forward. After the disastrous run by former Barclays’ head Bob Diamond, the bank was moving in the direction of regulatory compliance while securing the profits demanded by shareholders. However, McFarlane’s sacking of Jenkins could well derail the bank’s focus on ethics and compliance and engender the former attitude which led to the bank’s fine in the LIBOR scandal.

Unlike Peter Miller at Optinose, it does not appear that Chairman McFarlane appreciates the trust and respect style of leadership. I fear things may well turn out badly for Barclay’s yet again with the newly found emphasis on profits, profits and profits.TexasBarToday_TopTen_Badge_Large

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, 2015

Blog at WordPress.com.