FCPA Compliance and Ethics Blog

March 10, 2014

Compliance Leadership Lessons from Captain Kirk

Captain KirkAs readers of this blog know, I am an über Star Trek maven. Last week, in Episode 41 of  my podcast, the FCPA Compliance and Ethics Report,  I visited with John Champion, one of the co-hosts of the Mission Log podcast. Mission Log will eventually review all of the Star Trek television episodes and movie franchise entries. John and his co-host Ken Ray began their journey summer of 2012 and have managed to get through all 79 episodes of the original Star Trek television series. They will next turn to the Star Trek movies, the animated television series, then to Star Trek – The Next Generation and on down the line of the world built by Gene Roddenberry.

I met John at the NMX Annual Conference earlier this year. I heard him talking about his podcast and checked it out. I also asked him if I could interview him for my podcast, specifically on the leadership lessons that a compliance practitioner might draw from the original captain of the Enterprise, James T. Kirk. John graciously took time out of busy schedule to visit with me on leadership, Star Trek and his podcast, Mission Log.

Champion views the leadership style of Captain Kirk as one that greatly depends on the inputs from the group that surrounds him; specifically Lt. Commander Spock and the ship’s physician, Dr. Leonard McCoy (Bones). In other words, his senior management team. More insightfully, Champion noted that it is the interplay of these three characters, Kirk, Spock and McCoy that not only makes the television series work so well but it also informs what he termed the “leadership psyche” of ethos, pathos and logos.

In the Greek world, these three were believed to be the key to successful leadership. Ethos is the Greek word for ‘character’. Through ethos, a leader stands as an authority figure, through credibility, competence and/or special expertise. Pathos is the Greek word for both ‘suffering’ and ‘experience’. It is generally recognized as the more compassionate side of humanity. Logos generally refers to the more rational side of humans. The best definition I have found for logos is on the site, PathosEthosLogos.com, which says that “Logos is the Greek word for “word,” however the true definition goes beyond that, and can be most closely described as that by which the inward thought is expressed and the inward thought itself”.

In the original Star Trek all three of these traits are identified in one character. Kirk, the ship’s captain, is the authoritarian figure. Spock, the half-human, half-Vulcan subscribes to the Vulcan ideology of suppressing one’s emotions in favor of logic. Finally, Bones is the romantic of the three and clearly speaks for the Greek concept of pathos. Champion’s dissection of Kirk’s leadership is that he takes all three of these concepts and uses them in his analysis. While clearly, at the end of the day, the decisions are the final responsibility of Kirk, he does actively seek input from his trusted advisors before coming to his final choice.

For the compliance practitioner, this means that you should seek a wide variety of inputs for your decision-making calculus. The Machiavellian trait of seeking trusted advise from experienced advisors, (Subject Matter Experts – SMEs) is certainly in play here. But by incorporating these three very different concepts into the way you might think through an issue can help you to evaluate a greater range of considerations. Monitoring, auditing and similar oversight techniques can bring you the logical examinations through data. But data is, in the final analysis, a product of human actions so the data must be read with some measure of humanity or human character. Values are not numbers but how we assign actions to that raw data? Finally, the ethos must be taken into account. Obviously there must be an ethical component to any decision made, but ethos also speaks to the character of the decision. Was the decision made using all the facts that were, or should have been, available to the decision-maker?

I thought about Champion’s remarks when I read the New York Times (NYT) Corner Office column by Adam Bryant, entitled “When Ideas Collide, Don’t Duck”. In this article, Bryant reported on his interview with Jeff Lawson, Chief Executive Officer (CEO) of Twillio, a cloud communications company. Lawson spoke about all three Greek leadership concepts in both his education in being a company head. From the ethos perspective, he spoke about his grandfather who built and sold a hardware company in Detroit. Then in his 70s, his grandfather took a job as a manufacturer’s representative, selling paint accessories to hardware stores that had previously been his competitors. His grandfather did this for another 20 years and when he died, Lawson said, “The Owner of every hardware store in Detroit came to the funeral. It was amazing.”

Lawson had another insight, which related to pathos and it revolved around feedback. He said, “This is especially important with millennial workers, who really want feedback. They want to always be learning, always be growing, and they’re looking for that constant feedback. It’s not that they’re looking for constant praise, but rather they want to keep score. They want to know how they’re doing.  Part of it is the short cycle of Internet feedback, and people who grew up with the Internet just expect quick feedback on things. That’s just part of the changing ethos, especially with younger workers. If you get into the habit of regular feedback, it’s not confrontational; it’s just the ebb and flow of conversation and a constant tweaking of how you work with somebody.”

Lawson incorporates the logos concept into his leadership set as well. He does this in the context of empowering employees to come up with new ideas but requires these employees to validate them to move forward. He said, “A lot of our values are about empowering employees. “Draw the owl” is a favorite. It’s based on the Internet meme of how to draw an owl. It says: “Step 1, draw some circles. Step 2, draw the rest of the owl.” That’s what it takes to be an entrepreneur — you have to put aside all the reasons you think you can’t do something or figure it out. Our job is to come in every day and take a vague problem that we don’t know how to solve and figure out the solution.”

Does art imitate life or does life imitate art? I am never too sure. But from my chat with John Champion, it is clear that even such a cultural marvel as Captain James T. Kirk can provide leadership lessons for the compliance practitioner.

If you have not yet done so, I hope you will go over and check out my podcasts at the FCPA Compliance and Ethics Report. I am up to Episode 41 and should have a couple more up this week. 

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

January 6, 2014

A Lot of Pain in KC and Leadership in Compliance

This past weekend saw some great football. However, if you are a Kansas City Chiefs fan, you are probably not feeling too positive about the game on Saturday as the Chiefs blew the second largest lead in a National Football League (NFL) playoff game, 28 points, in losing to the Indianapolis Colts. The Chiefs long suffering fans have not seen a playoff win in 20 years. However, I did see the Chiefs last playoff win, in 1994, when they upset the now defunct Houston Oilers in Houston. That devastating loss was only exceeded by the loss the previous year in Buffalo, where the Oilers set the record for losing the largest lead in a playoff game, that being 35 points. For you Chief fans out there, while the pain never goes away at least you have the possibility of winning a playoff game at some point in the future.

While sports fans can relive the triumphs and tragedies of their team’s ad naseum corporate leaders cannot not afford to do so. One key resource I have found, for not only the ideas of what a leader needs to do but the practical aspect of how leadership works in an organization, is through the New York Times (NYT) Sunday column Corner Office by Adam Bryant. In this week’s paper, Bryant wrote about his new book, scheduled to be released on Tuesday, entitled “Quick and Nimble: Lessons From Leading C.E.O.’s on How to Create a Culture of Innovation”. In the article Bryant highlighted “six key drivers that every organization needs to foster an effective culture that will encourage everyone to do their best work”. I think these six concepts are excellent areas for a compliance practitioner to consider in moving forward a compliance regime.

A Simple Plan

Bryant wrote about Tracy Streckenbach, the Chief Executive Officer (CEO) of Hillview Consulting LLC. She believes that you should have defined and measurable goals. From there, “you make sure each and every department knows them, and how their work will support the overall goals.” Streckenbach called them ‘Key Result Areas (KRAs)” and advocated that they be used up and down, “from senior managers to file clerks”, within the organization with complete transparency. By doing so, employees understand how they are helping the company to move forward.

Rules of the Road

Mark Templeton, CEO of Citrix Systems Inc, believes that “guidelines for behavior can help employees concentrate on the work at hand, rather than on navigating the stressful politics that arise when all sorts of bad behaviors are tolerated.” The company has a culture based on three core values, “respect, integrity and humility.” Templeton believes that people want, as employees, to be a part of an organization that believes in something positive. He said that Citrix has “clarity around where we’re going, and then they get to fill in how we’re going to get there — with the right kind of management, of course, and leadership, and the right kind of processes and metrics.”

A Little Respect

Here Bryant looked to Richard R. Buery Jr., CEO of The Children’s Aid Society, who sustained such a bad experience with a former supervisor that the experience provided extra motivation to be in a leadership position so that he could influence culture. That value is respect. Another CEO, John Duffy of 3Cinteractive, said that by making respect a core value of the company, “it frees up colleagues to challenge one another.” This allows employees to talk to and challenge one another more easily so that you can have “the ability to arrive at the right decision so much quicker and so much easier.”

It’s About the Team

Bryant notes that respect should be only one part of the equation, as he sees it. There must also be performance and accountability. He wrote, “Call it trustworthiness, or dependability. What it means is that you recognize your role on the team. When everyone does that, the team can focus on executing the strategy, instead of worrying whether colleagues will do what they’re supposed to do. (And such concerns, multiplied across an entire organization, can add up to a lot of wasted energy and lost momentum.)” This can be particularly true in a small organization, which, due its size, can be more nimble but, as quoted by Steve Stoute, CEO of Translation LLC, “the threat is that when one person catches a cold, everybody catches a cold.”

Adult Conversations

One of the problems in any organization is that subordinates are afraid to bring less than sterling news to superiors and so the frank discussions about resolving problems which needs to occur, does not occur. Bryant termed these “adult conversations”. He quoted Seth Besmertnik, CEO of Conductor Inc., who related that “A lot of my growth as a manager has been around conquering my own insecurity and gaining confidence.” Besmertnik went on to state that “When you’re confident, you can give people feedback. You can be candid. You feel secure enough to say what’s really on your mind, to bring someone in the room and say: ‘You did this. It really made me feel XYZ.’ Having good conversations is really 80 percent of being an effective manager.”

The Hazards of Email

Bryant believes that “Email is a hot-button issue, and clearly a source of endless frustration”; the reason being that they can be so easily misinterpreted “with often-disastrous consequences for the culture of an organization, because they can damage whatever connective tissue exists between colleagues.” Bryant believes that what people really need to do is talk. Bryant wrote about the experiences of Nancy Aossey, CEO of International Medical Corps, who said that “People change when they talk in person about a problem, not because they chicken out, but because they have the benefit of seeing the person, seeing their reaction, and getting a sense of the person. But arguing over email is about having the last word. It plays into something very dangerous in human behavior. You want to have the last word, and nothing brings that out more than email because you can sit there and hit ‘send,’ and then it just kind of ratchets up and you don’t have the benefit of knowing the tone.”

This problem of interpretation of email only compounds in an international organization where there are multiple business unit across many different geographic and cultural areas. What may be seen as acceptable in the United States may be far from acceptable in Europe, Asia or anywhere else. So by talking in person or over the phone, you can not only not only avoid dangerous misunderstandings, but you can also develop relationships and a sense of trust with colleagues. These are essential ingredients in fostering the kind of high-performing culture that drives compliance.

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

January 3, 2014

Some Thoughts On Leadership

Filed under: Culture,Ethical Leadership,Ethics,Gini Dietrich,Leadership — tfoxlaw @ 7:05 am
Tags: ,

Ed. Note-I read the below post by Gini Dietrich,CEO of  founder and CEO of Arment Dietrich . It is one of the most powerful posts I have ever read on what it means to be a leader. It gave me the novel idea that perhaps leaders of companies which commit FCPA violations could actually take responsibility for their companies actions, rather than try to claim the ubiquitous ‘rogue employee(s)’ were responsible. I asked Gini if I could repost her piece which she graciously allowed me to do. 

When I was a kid, I remember my dad coming home from work one day and saying a guy had been fired.

The image I had in my head was the guy literally on fire. I couldn’t understand a) why anyone would do that to another person and b) why that was okay.

In retrospect, I was probably eavesdropping on a conversation between my parents so it served me right to have that image and all those questions.

What I later learned – much, much later – is being a business leader isn’t always rainbows and sunshine.

You sometimes have to fire people. You sometimes have to have conflict-filled conversations. You sometimes have people who end up hating you. And you always have to take responsibility when something goes wrong.

Embezzlement and the IRS

In 2009, as the economy was crashing around us and organizations were shutting their doors, I learned the accountant we used had embezzled money from us.

We owed the IRS a lot of money we thought we had already paid. As it turned out, we had paid it to the accountant who never sent the check, but managed to cash it himself.

It was a great, big mess and it took a long time to figure out what had happened and how he had managed to get a check made out to the government cashed.

But he did.

And, as the leader, I was responsible.

Even though I did everything I was supposed to have done and I had no idea this was going on, it was my responsibility.

There were lots of tears shed and I’m pretty sure I said, “This just isn’t fair” about six thousand times.

But, in the words of my mom, “Life isn’t fair.”

We got the whole thing straightened out and we ended up having to pay quite a bit of money to the IRS, but it could have been a lot worse. There could have been jail time. It could have been really, really bad.

Being a Leader isn’t Always Fair

Sometimes the people you trust to do their jobs do bad things. And you have to take responsibility.

It isn’t right. It isn’t fair. But it’s part of being a leader.

A few months ago, we had a situation where an employee was accused of doing a bad thing. We took the appropriate measures to look into the accusation. We also had conversations with the accused and the accuser. We came up on the side of the employee.

But a couple of weeks ago, new evidence came to light and it pointed in favor of the accuser.

Imagine the panic I felt when this was brought to my attention. Not only did I defend the accused when the issue first came up, I did so very publicly. I completely and wholeheartedly trusted this person. But now the cold, hard facts in front of me proved otherwise.

Hindsight is 20/20

In hindsight, 20/20 vision, it’s easy to now see the one thing we missed when the situation occurred.

We missed it initially. I missed it.

I live and die by my ethics. The culture here is one of honesty, transparency, and accountability. We hire people who demonstrate those same characteristics.

But sometimes things go awry.

I don’t think this person is bad. I don’t think this situation was done intentionally. It could have been a case of too much work or being overwhelmed or simply wanting to put a best foot forward without thinking through the consequences.

It happened. What’s done is done. I missed – or blissfully ignored – the facts.

When you discover someone on your team has been unethical, untruthful, or downright criminal, you not only have to take action, you have to take responsibility.

With being a leader comes great responsibility…and sometimes that means falling on your sword.

A version of this first appeared on Spin Sucks.

Gini Dietrich is the founder and CEO of Arment Dietrich, a Chicago-based integrated marketing communication firm. She is the lead blogger at PR and marketing blog, Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR, a weekly podcast about  communications and social media.

 

April 11, 2013

Compliance: Having Everyone Join In – From the Board Room to the Shop Floor

Today in history should be known as “End of Military Leaders Day” as not only is this the 199th anniversary of Napoleon’s exile to Elba (although he did make somewhat of a comeback) it is also the 62nd anniversary of Truman’s sacking of Douglas MacArthur (although MacArthur did get to address Congress). Whatever you think of these two men as human beings, you cannot under-rate them as great leaders of armies. They both were able to get men to achieve far beyond what they believed were their capabilities. I thought about great generals and other leaders when reading a recent article in the New York Times (NYT), Corner Office section where reporter Adam Bryant interviewed Dr. David Rock, in an article entitled “A Boss’s Challenge: Have Everyone Join the ‘In’ Group”. In this piece, Bryant highlighted some of the mechanisms which Rock, who is the director of the NeuroLeadership Institute (NLI), believes that it is important for managers to make employees feel like they are on the same team.

Generally speaking Rock believes that the brain categorizes everything into one of two categories: threat or reward. He thinks people are driven unconsciously to stay away from threat and are driven unconsciously to go toward reward. This decision about threat or reward happens five times every second. But this can all be very subtle as employees are making this decision about everything good or bad all the time. He has based this theory on research in the last 10 years or so which he believes demonstrates that things that create the strongest threats and rewards are social. Social threats and rewards activate what’s called the brain’s primary threat-and-reward center, which is actually the pain-and-pleasure center. This was a big surprise, to see that someone feeling left out of an activity, for example, would activate the same regions as if they had put their hand on a hot plate.

He breaks these concepts down with the acronym SCARF; which stands for status, certainty, autonomy, relatedness and fairness. I found that these concepts had some useful analogies for the compliance practitioner in not only how to engage employees, but also to have them buy into and become a part of a company’s compliance regime.

Status

Rock believes that status is your perception of where you are in the pecking order around you, and it’s a feeling of being better or worse than others. People feel uncomfortable until we work out our status with people. We are more comfortable and we’re more effective when there is a clear status arrangement between people. When we feel a higher status, we get a slight reward. When we feel lower status, we get a strong threat. The challenge is that if somebody continuously fights for high status, all the other people around them might be getting a strong threat response.

For the compliance practitioner, I think that the key here is to get out of the office and into the field. The more employees see you, the more they will move away from seeing compliance in an ivory tower and more towards compliance being part of the overall business process. This can also mean embedding compliance department members in high risk projects or high risk geographic areas. The more compliance is seen, the more comfortable employees will feel in bringing matters to you.

Certainty

Certainty is critical. Rock believes that the feeling of uncertainty feels like pain, when you can’t predict when the lights will come back on and you’re holding multiple possible futures in your head. That turns out to be cognitively exhausting. And the more we can predict the future, the more rewarded we feel. The less we can predict the future, the more threatened we feel. As soon as any ambiguity arises in even a very simple activity, we get a threat response. So we are driven to create certainty.

For the compliance practitioner, I think this is where the ‘we all wear the same color shirt’ concept is important. When compliance looks into something or looks at how processes are being followed in business units, it should not be perceived as a threat to employees but how to work better and more efficiently in the context of compliance.

Autonomy

For Rock, autonomy is a sense of control. While it is similar to certainty he believes that there are differences. Certainty is prediction. Autonomy is control. And it’s a very important thing for us to feel a sense of control, so much so that a small stress where you have no control generally is in fact a very big stress. When autonomy goes down, it’s a strong threat. So when the boss walks in the room, they’ve got the final say, so suddenly your autonomy goes down.

For the compliance practitioner, I think that setting clear expectations can help employees in this area. The more that they understand what is required of them the more that they understand their obligations. This includes any compliance component of evaluations or bonuses. The more you can explain, teach and educate, the more employees will recognize what is required of them.

Relatedness

Rock next spoke about ‘relatedness’ which he believes is the decision about each person we interact with, for example other employees, which impacts basic processing. This decision boils down to “Are you in my ‘in’ group or in my ‘out’ group?” If an employee decides that they are part of your “in” group, they will process what you say using the same brain networks as thinking your own thoughts. Conversely, if they decide they are in your “out” group, you use a totally different brain network. So the very level of unconscious perception has a huge impact based on the decision of: “Is this person similar to me? Are they on my team? Do we have shared goals, or are they in my out group?” This is also the same of teamwork and collaboration. It feels good to be with “in” group members. But we basically treat everyone as foe until proven otherwise, with the exception of really attractive people or if you’ve had a moderate amount to drink.

The important question for the compliance practitioner becomes, “How do we create an ‘in’ group for compliance?” If you can create shared compliance goals among people, you can create quite a strong “in” group fairly quickly. When you can find a shared goal, you turn an “out” group” into an “in” group. But this requires a company leader to create shared goals across an organization; otherwise an organization will be a series of silos.

For the compliance practitioner I think the domain where leaders can have the biggest impact is relatedness. Many people have had a boss they really wanted to work hard for because they respected them. It doesn’t have to be love, but it does have to be a sense of respect. And I think that those bosses have worked hard to have a sense of relatedness with people, which comes from having shared goals and making sure there’s a feeling of being on the same team, not a sense of “us” and “them.”

Fairness

The final one is fairness, Rock says that it is “very fundamental.” A fair exchange of anything is intrinsically rewarding. An unfair exchange of anything is intrinsically threatening – and not just threatening, but very intensely threatening. Fairness is about several things. First and foremost the compliance practitioner must treat everyone fairly, from the ‘board room to the shop floor’ so that if someone violates the compliance program they are promptly investigated and disciplined, if warranted. But it also means transparency so that employees understand what their obligations are and what rewards they will receive if they meet those obligations.

Bryant’s article has some interesting insights for not only compliance leadership but also for compliance engagement. While you may not get the blind devotion that Napoleon and MacArthur were able to engender, you may be able to obtain better buy-in and strength for your compliance program.

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

January 7, 2013

Leadership in the Compliance Function – Do You Encourage or Stifle?

There are many ways for a Chief Compliance Officer (CCO) to exercise leadership in not only the compliance function but also across the many disciplines in which compliance impacts in any corporation. In this Sunday’s New York Times (NYT), there were two diametrically opposite styles of leadership and management discussed in two articles. The first was found in the Corner Office Column, in an article entitled, “The Six Steps of Leadership (Plus Courage)” in which reporter Adam Bryant interviewed G.J. Hart, Chief Executive Officer (CEO) and President of California Pizza Kitchen. The second was found in the Off The Shelf Column where Fred Andrews, in an article entitled “The Military Machine as a Management Wreck”, discussed the recent book “Bleeding Talent” by author Tim Kane. I found that both of these articles provided some interesting techniques which the CCO or compliance practitioner could use in helping to set compliance as not only a key goal for any company, the articles also offered practical tips for day-to-day use in bringing the compliance perspective to the myriad of issues a compliance practitioner faces on a daily basis.

Hart related that his leadership style has evolved for the better because he has learned more patience and tolerance. He admitted that he used to “want things yesterday and would be very anxious about moving things along faster. But now I understand that tomorrow’s another day and that things will move along.” I have worked in industries where the joke was “If I want it today, I will ask for it tomorrow.” The reality, as put by Hart, is to think “about whether something really matters and how it will make a difference, versus thinking that everything matters and everything makes a difference.”

Hart said that the most important lesson he has learned is leadership qualities. He calls them “the six steps of leadership, surrounded by courage.” He believes that courage is always implicit because in any leadership role, you are stepping out, having the courage to be different “because you have to be different to be a leader.” Hart’s six steps are:

  1. Be the best you can be. Hart relates that you cannot “lead anybody if you can’t lead yourself. So you have to be honest with yourself about your good qualities, your bad qualities and the things you need to work on.”
  2. Dream and dream big. Hart recognizes that there is a “world of possibilities for yourself and for your organization.” You must have a dream and you must move towards it. This does not mean that you will “ever necessarily get there, but if you don’t dream, you’ll never even get started.”
  3. Lead with your heart first. Hart believes that your employees need to see that you are human and that you have a “human side” by showing people that you have compassion. It is all about being real. He states “It doesn’t mean that you don’t set expectations and standards. But if you lead with your heart, people figure out whether you’re genuine, whether you’re real.”
  4. Trust the people you lead. Hart recognizes that this may be the hardest trait for a leader to develop because this trait is all about letting go as a leader and allowing your employees to grow into their own style of leadership roles. Hart believes that only by allowing your employees to learn by making their own mistakes or falling down and picking themselves up and moving forward will they grow professionally. He believes that your role as a leader is to pick them back up.
  5. Do the right thing, always. Hart recognizes this is easy to say but as a leader this is where the rubber meets the road. In leadership Hart emphasizes that if your choice is following a rule or doing the right thing, you should do the right thing. He believes that this is particularly true “as it relates to people, and you genuinely believe in that person, sometimes it takes courage to do the right thing and give that person a second chance. Because we’ve all made mistakes and somebody picked us up.”
  6. Serve the people you lead. Hart believes that leadership is ultimately “about serving the people you lead.” It means that you should put a cause before yourself and to lead to make a difference. He ends noting that his role as a leader is to be “a catalyst for change, to create an environment where people can grow and prosper.”

In Andrews’ article, he wrote that the US military is now an “institution which is idiotic.” Andrews writes that Kane believes that “it dictates the jobs, promotions and careers of the millions in its ranks through a centralized, top-down, one-size-fits-almost-all system that drives many talented officers to resign in frustration. They leave, he says, because they believe that the military personnel system — every aspect of it — is nearly blind to merit.” This is in spite of the fact that Kane believes that “America’s armed forces are a leadership factory. He goes on to say that “former military officers are three times as likely to become corporate C.E.O.’s as their raw numbers would suggest.”

So what is the problem? Kane believes that “the root of all evil in this ecosystem” which is the Defense Officer Personnel Management Act, enacted by Congress in 1980. Andrews writes that this Act “binds the military into a system that honors seniority over individual merit. It judges officers, hundreds at a time, in an up-or-out promotion process that relies on evaluations that have been almost laughably eroded by grade inflation. A zero-defect mentality punishes errors severely. The system discourages specialization — you can’t expect to stay a fighter jock or a cybersecurity expert — and pushes the career-minded up a tried-and-true ladder that, not surprisingly, produces lookalikes.” Kane’s revolutionary idea to overcome this inertia is to create “an internal labor market for job assignments and promotions.” This change would allow a commander to choose a subordinate rather than having the Pentagon make the decision for him or her.

I have worked in both types of organizations. I can personally attest to the greater creativity and flexibility which led to greater innovation, where leaders viewed themselves as stewards such as Hart believes himself to be. I have also worked in military like organizations where the thing that got one promoted was be as similar to the next level up the rank and where innovation was definitely not viewed as a plus. The difficulty for a CCO may be that he or she works in such an organization. But even if a CCO or compliance practitioner does work in a military style organization, Hart’s six elements of leadership can be used to create a more vibrant, and ultimately successful, compliance program.

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

November 20, 2012

Rachael Carson, Silent Spring and Compliance Leadership

One of the constant tensions in any corporate compliance department or legal department is when to exercise leadership. While many corporate executives fall into the “lawyers are better seen than heard from” camp there are times when we must say ‘No’. While Mike Volkov continually sounds the horn against compliance practitioners becoming ‘Dr. No’ to which I would add inhabiting ‘the Land of No’ it’s a component of the job. The question is twofold; when to say no and how to say no.

This year is the 50th anniversary of the publication of Rachael Carson’s seminal and transformative work “Silent Spring” which in many ways directly led to the modern environmental movement. Rachael Carson’s “life shows that individual agency, fueled by resolution and hard work, has the power to change the world.” The first Earth Day, on April 22, 1970; the creation of the Environmental Protection Agency (EPA), which began operations in 1972; the banning of the use of the pesticide DDT in the United States and the enactment of both the Clean Water Act in 1972 and the Endangered Species Act in 1973; all of which began with Carson’s book.

I thought about this question of when and how to say no when reading a recent article in the New York Times (NYT) by Nancy Cohen, entitled “From Calm Leadership, Last Change. In this piece Cohen looked at the life of Rachael Carson, her seminal work “Silent Spring” and leadership. Silent Spring was on the seminal works that I read during college. I was absolutely overwhelmed by the wealth of information and data that Carson packed into her book. While I had some sense of the importance of the book as one of the first on what we now call environmentalism, at that time I was not aware that the book and Carson played a central role in starting the environmental movement, by forcing government and businesses to confront the dangers of pesticides.

What are the compliance leadership lessons that Carson’s experience demonstrate? Cohen initially noted that “As a professor at Harvard Business School, I encountered the great depth of her work when I was creating a course on the history of leadership.”
Cohen learned that Carson wrote “Silent Spring” as she battled breast cancer and after her niece died cared for her young child. Additionally, while “Unmarried and living in Silver Spring, Md., she also cared for and financially supported her ailing mother.” More importantly, after the book was published, Carson “faced an outburst of public reaction and a backlash from chemical companies. Yet throughout her personal and public struggles, she was an informed spokeswoman for environmental responsibility.”

Cohen gave three topical examples of Carson’s leadership which I believe are important for the compliance practitioner which speak to the question of ‘how’ to say ‘No’ when required to do so. The first is the importance of persistence in pursuing an objective. Business executives are usually struck by the ability to stay focused on goals in the face of obstacles.

Second, Cohen wrote about “the importance of doing thorough research and taking the long view. This means more than simply knowing the facts but also an understanding of history and culture are essential to understanding what is at stake in difficult and uncertain situations.” Cohen believes that this has the advantage of conferring “a sense of authority on the person who has acquired this knowledge.” In the compliance arena, this means more than simply understanding the obligations under the relevant anti-corruption and anti-bribery laws which apply to your company, such as the Foreign Corrupt Practices Act (FCPA) or UK Bribery Act, but applying them in jurisdictions across the globe.

The third lesson that Cohen writes about is that “the juggling of personal demands and professional ambitions in dealing with obligations to others while following professional drive. Carson’s story shows that times of great productivity can be followed by fallow periods when ambitions must be put aside for personal reasons.”

In addition to these three, others lessons can be drawn from Carson’s work. As noted by Cohen, Carson’s “life shows that individual agency, fueled by resolution and hard work, has the power to change the world.” For the compliance practitioner it is that leadership can come in all forms, in all shapes and sizes, even in an introvert. While most people assert leadership with traits such as charisma and aggressive, Cohen quoted Susan Cain, author of “Quiet: The Power of Introverts in a World That Can’t Stop Talking”, for the proposition that leadership can come in less obvious forms.

Leadership does not always come from the alphas of the world but sometimes from the introverts. The world might have been very different today if this most soft-spoken woman had not been so determined. As compliance practitioners we can not only draw inspiration from Rachael Carson’s work but leadership lessons as well.

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, 2012

August 28, 2012

Leadership in the Compliance Department

One of the dynamic tensions in any corporate Compliance, or Legal, Department is when to lead by fiat and when to lead by consensus. I was reminded about that dichotomy when reading a recent article in the New York Times (NYT) Corner Office section, entitled “Before the Meeting Adjourns, Tell What You’ll Do Next”. In an interview by Adam Bryant with Bill Flemming, President of Skanska USA Building Inc., said that the former is “not leadership; that’s a boss.” Flemming used a quote from Russell Ewing to capture some of his thoughts on the difference: “A boss creates fear; a leader, confidence. A boss fixes blame; a leader corrects mistakes. A boss knows all; a leader asks questions. A boss makes work drudgery; a leader makes it interesting. A boss is interested in himself or herself; a leader is interested in the group.”

Flemming believes that organizations where the boss makes all the decisions are not as strong as those where the leaders listen and works with a team or person to come up with a solution. He explained that he did not want someone to simply announce a problem to me and expect him to solve it. Flemming articulated what he desires from an employee as follows: “You tell me what the problem is, you tell me what your proposed solution is, and I’ll give you feedback. I don’t always want to give you an answer on what to do. I want you to think about what your answer’s going to be. I’ll always have an opinion about something, but I want people to form their own opinions.”

Flemming believes that this technique is more powerful because if an employee is deeply immersed in the problem or the issue, that employee probably knows a lot more about it than Flemming is going to know. While a leader can provide some insights based on experience, and perhaps give a different view, most probably the employee who brought the issue will be more intimately involved with the issue. The employee will have thought through a resolution to the potential issue as well.

All of the above is driven by an interesting maxim that he works for the people under him. Or as Flemming was quoted, “First, I work for the people below me. They don’t work for me; I work for them.”  From this starting point, Flemming believes that teamwork is the key to good leadership. Business is “not an individual sport.”

Almost every lawyer I know has worked for, or perhaps with, a senior person who qualifies as a boss rather than a leader. I can certainly count a few bosses that I have worked for who were quite “dynamic” as bosses. However, I found that Flemming’s viewpoint not only helps bring consensus to any problem that you might face but also provides a personal commitment to his team and facilitates responsibility to others on the team. I think that these concepts could be very useful to the compliance practitioner whether working internally within the compliance department or with business unit personnel. If consensus can be reached on any important compliance related decision, it can certainly change the perception that a Compliance Department is “the Land of No” populated by “Dr. No.”

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, 2012

June 25, 2012

Breaking the Enigma Code: Creating a Functioning Compliance Culture

Sunday June 23rd was the 100th anniversary of the birth of Alan Turing, a man regarded as one of the most influential mathematicians of the 20th Century. He is viewed as one of the pioneers of computer technology. However, he is probably best known for leading the British effort at Bletchley Park where the Germans top secret codes were broken during the Second World War (WWII), including the code they believed to be unbreakable, the Enigma Code. His work during WWII was completed before he was 35 years of age.

I thought about Turing and his success at a relatively young age whilst reading a ‘Corner Office’ article in the Sunday New York Times (NYT), entitled “Let Everyone Swim, But Just Make Sure You’re in the Pool”, by reporter Adam Bryant. In the article Bryant profiles Angie Hicks, one of the co-founders of Angie’s List and its current Chief Marketing Officer. Hicks had some interesting observations on leadership that I found applicable to creating a functional compliance effort within an organization, from compliance professionals to ethical leadership.

Make Sure You’re in the Pool

Hicks firmly believes that you have to give people a chance to succeed if you want your organization to grow. But such a focus means that you are going to fail sometimes. To use a football analogy, you usually don’t win by playing not to lose. People will make mistakes. Hicks believes that one of her roles as a leader is to give employees the confidence that if a mistake is made, she is the first to find out because her employees will come in and tell her without fear. Her group will test things and will sometimes make mistakes, but the point is that the mistakes are corrected. It sort of sounds like McNulty Maxim #3, “What did you do to remedy it?” So she lets her employees swim in the pool of new ideas and concepts but she stays within “arm’s length” so she can be there to grab them back if needed.

When in Doubt Talk to People

Hicks believes that you cannot over-communicate with your employees. Not only to praise and give employees feedback; but to develop that sense of trust which will lead to the types of communications outlined above. From the compliance perspective her views give rise to several thoughts. Remember the Morgan Stanley declination received in conjunction with the Garth Peterson Deferred Prosecution Agreement (DPA) for violations of the Foreign Corrupt Practices Act (FCPA) in China? Several of the facts set forth by the Department of Justice (DOJ) were the routine communications by Morgan Stanley’s compliance group to Peterson regarding the FCPA. These were as simple as email reminders and included other techniques such as an annual Acknowledgment by employees that they had not violated the FCPA and were aware of the company’s Code of Conduct.

Create the Right Culture

Bryant ended his piece by discussing with Hicks how she builds an effective culture. Hicks believes that it is important to get not only the right mix of people but that you should start with the right type of person for your company. In other words, if you want to have an ethical culture in a company, you should strive to hire people who begin with a desire to do business ethically. But the step in your company’s evolution is to not only encourage people to get involved but to get them involved. Think about the power of compliance if you involve the business unit folks in the design, implementation and ongoing practice of your company’s compliance program. They should not be by-standers; you need to have them involved in your compliance program.

So how does this relate to Alan Turing and compliance? Remember, he led the team that broke the Enigma Code. It was a team motivated and focused. It seems to me that he put many of the concepts that Angie Hicks uses at Angie’s List into practice. We should all celebrate the code-breakers of Bletchley Park and recognize that by aligning a company towards creating a functioning ethical culture, a company can move forward successfully.

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, 2012

June 15, 2012

Bill Gates, the Perfect Game and Continuous Evaluation of Your Compliance Program

I am currently attending the State Bar of Texas Annual Convention. In a talk by Merrilyn Tarlton, she opened with the following quote from Bill Gates “Success is a lousy teacher. It seduces people into thinking they can’t lose.” I thought about that quote in the context of two things. The first was the perfect game, pitched by Matt Cain of the San Francisco Giants against the Houston Astros on Wednesday night. It was Major League Baseball’s 22nd perfect game. However, on Thursday, in a matinee performance, the Astros rebounded to win 6-3. The second was an interview with Jim Collins in the June issue of Inc. magazine, entitled “Be Great Now”.

Collins has been looking at corporations for over 25 years to “unlock the mystery of what makes a great company tick.” In the article Collins discussed twelve questions that he believes leaders must grapple with if they “truly want to excel.” I found this list to be a good summary of questions that you can and should be posing to your compliance team. The twelve questions are:

1.      Do we want to build a great company and are we willing to do what it takes? Collins believes that it all begins with making a commitment and having a clear understanding of what that commitment entails.

2.      Do we have the right people on the bus and in the key seats? Collins believes that before you even move forward you need to decide who you “do and don’t want with you.” I would suggest that in the compliance context you need to not only get buy-in from as many other disciplines in the company but you should also have them invested in compliance.

3.      What are the brutal facts? Stating the obvious which is that “You can’t make good decisions if you don’t confront the facts” Collins emphasized that you need to believe in your team and believe in the process all “without losing faith.”

4.      What is our hedgehog: What can we be the best at, with an economic engine, and for which we have unbounded passion? As Collins says “The Fox knows many things, but the hedgehog knows only one thing.” While this issue would appear to focus on the economic side of things, I believe for the compliance practitioner you can use this point to focus on your highest risk as assessed by your risk analysis and risk ranking.

5.      What is our 20-Mile March, and are we hitting it? In this point Collins focuses on “what is the performance specific goal you’ve made a commitment to meeting year in and year out, in good times and bad, and how are you doing with it?” This point would seem to be self-evident but I think it means to stay on target.

6.      Where should we place our big bets, based upon empirical validation? Here Collins advocates not only aiming before you fire but getting ready by practicing. The same can be true in the compliance arena, if you are rolling out a new initiative; I suggest that you conduct some market testing on your core audience before rolling it out companywide.

7.      What are our core values and core purpose on which we want to build this enterprise for 100 years? Collins states that the “Challenge is not just to build a company that can endure, but to build one that is worthy of enduring.” To achieve this your company should have core values which resonate on a level ethical plane and have withstood the vagaries of time.

8.      What is our 15 to 25 year BHAG? Collins believes that to build a great, enduring company you need to have a BIG HAIRY AUDACIOUS GOAL. This should be something that can be explained easily in just a few words and just as easily understood. So how about “Do The Right Thing”.

9.      What could kill us, and how do we protect our flanks? Here Collins anticipates risk intelligence by advocating studying what you know can go wrong and studying things that you don’t necessarily know may go wrong for your company. It’s not predicting disasters but being prepared for them, whether they are in the economic realm or the compliance arena.

10.  What should we stop doing, to increase discipline and focus? Collins believes that “it’s as important to determine what you should not be doing as it is to know what you should be doing.” Clearly this presages the appropriate written compliance program, which sets out not only your procedures but also your internal controls to prevent conduct from occurring.

11.  How can we increase our return on luck? Collins believes that is not necessarily having good luck but what do you do with it that counts. But equally important is what your response to bad luck is? Paul McNulty would ask if you detected something what was your response and what did you do to remedy it? Both are questions you should keep at the ready in the compliance department.

12.  Are we becoming a Level 5 leadership team and cultivating a Level 5 management culture? Fittingly, Collins ends by noting that leadership builds enduring greatness with personal humility. This can come in many forms but I would say that the most important is listening.

Collins’ advice is to use these questions in a systematic manner. He advocates that one of these questions be discussed by a company’s leadership team each month. This process should continue until you go through the entire list and then “repeat the process annually for five years.” If you follow this prescription, you may be able to avoid the problem that Bill Gates raised when you have too much success. As for the Astros, I don’t think having too much success is their problem. At this rate, they are only 2 games off their worst season of losses ever that being the 106 losses they sustained last year. Perhaps they might use some of these questions as discussion points. Jim Crane, are you listening?

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, 2012

May 7, 2012

Star Wars Day and Leadership Lessons for the Compliance Professional

Last Friday, May 4 was Star Wars Day. According to Wikipedia, “May 4 is called Star Wars Day because of the popularity of a common pun spoken on this day. Since the phrase “May the Force be with you” is a famous quote often spoken in the Star Wars films, fans commonly say “May the fourth be with you” on this day.” So if you are like me and still consider “Star Wars IV-A New Hope” to be the first Star Wars movie or if you are of a different age as is my 15 year old daughter who says that the first Star Wars movie was “Star Wars I-The Phantom Menace”, I hope the force was with you last Friday.

I thought about this generational dispute in the context of leadership when I read an article in the Corner Office Section of the Sunday New York Times (NYT), entitled “How to Adopt Mentors Without Really Asking”. In the article reporter Adam Bryant interviewed Shellye Archambeau, the Chief Executive Officer (CEO) of MetricStream, which presented some of the leadership lessons that Archambeau has learned in her business career. I found that some of her points could be used by a compliance professional not only for his or her career but to further the goal of compliance leadership in your company.

Mentoring

Archambeau related that she had “a lot of mentors, and I just adopted them.” Rather than making a formal request for a person to be her mentor, she began to treat people like her mentors and she said that “it worked very well for me.” To begin such a relationship, she said that she would end a conversation with something along the lines of “I’ve just got a quick question for you. Any thoughts on how…” But they key is to use the information that is presented to you and then to acknowledge the assistance. By telling the person you are trying to recruit as a mentor that the advice was helpful, it gives the mentor a sense of the positive impact of their role and it is more likely that they will be open to having a more formal mentoring relationship.

Luke Skywalker may not have sought out Obi-Wan but he certainly sought out Master Yoda.

Leadership

Archambeau provided some examples of her leadership style which you may find useful to incorporate into her ideas about leadership into your company’s compliance program. The first is hire the right team but even with the right personnel in place, there must still be an emphasis on leadership. Archambeau discusses a leadership topic at the regular meetings of her senior staff. She stated that “it makes a difference, because through these leadership topics, I get to reinforce our culture, the style and what’s expected.”

She provided two examples of leadership challenges that she has addressed. The first is “don’t be a mama bear.” She explained that, “when people come to you with problems or challenges, don’t automatically solve them. As a mama bear, you want to take care of your cubs, so you tend to be protective and insulate them against all those things.” However, Archambeau does not believe that such an approach is helpful for an employee because if “you keep solving problems for your people, they don’t learn how to actually solve problems for themselves.”
To remedy this ‘mama bear’ tendency, she tries to ask the question or present the issue back to them, saying: “What do you think we should do about it? How do you think we should approach this?”

The second leadership issue that she discussed was one that she called “who’s got the ball?” Archambeau explained “that in sports, and the ball is thrown to you, then you’ve got the ball, and you’re now in control of what happens next. “ This means that not only are you in charge but you own it as well. It is important to establish “who’s got the ball. If you’re in a meeting and you’ve had a great conversation and then everybody leaves, who has the ball? It becomes a very visible concept for making sure that there’s actually ownership to make sure things get done.” However, as important is it is to know who has the ball it is equally as important how you got the ball in the first place? Because it is “one thing if you always catch the ball if people toss it to you. It’s another thing if you are proactively going after that ball. As leaders, you’ve got to make sure that you’re actually going after that ball.”

(SPOILER ALERT) Luke and Han Solo may not have initially sought out to destroy the Empire but by the end of the series they certain were the ones ‘asking for the ball’ when it came to attacking the Death Star.

Leading by Fear

Archambeau ended by noting that she does not believe that employees do well if the company environment is too harsh. She does not believe that people “when there’s fear. Maybe people aren’t physically afraid, but they feel fear. And when people are afraid, the whole chemistry in their body changes. You just can’t be as successful in that kind of environment. I think the best environments are when you enable people to actually perform their best, but you’re still clear about what’s expected.”

That sounds very much like the Darth Vader School of Leadership where each failure, ahem, ‘ended poorly’ for his direct report.

So depending on what generation you are, you may have a different idea about the lessons you might learn from the Star Wars series. For my money, Episodes IV-VI is what Star Wars is all about. But as my 15 year old daughter might say, “Dad, you are just too retro.”

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, 2012

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