Hemingway and Trust and Respect for Compliance Leadership

On 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.

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

Gettysburg Day 1 – Stepping Back to See the Whole Picture

Last year I did a three-day series on the Battle of Gettysburg and looked at some lessons that are applicable to a modern day compliance practitioner. As not only did I learn quite a bit about the battle, it seemed to strike a cord with many readers so this year I will continue the tradition. Today I look at Day 1 of this seminal battle of the Civil War.

One of the enduring myths about the battle is that it started over shoes. In the Encyclopedia Virginia, in an entry entitled “Shoes at Gettysburg”, it states, “One of the most persistent legends surrounding battle is that it was fought over shoes… Ten weeks after the battle, Confederate general Henry Heath a Virginian whose troops were the first to engage on July 1, filed a now-famous report in which he explained why he had sent a portion of his division into the small Pennsylvania town. “On the morning of June 30,” Heath wrote, “I ordered Brigadier General [Johnston] Pettigrew to take his brigade to Gettysburg, search the town for army supplies (shoes especially), and return the same day.” That parenthetical phrase “shoes especially” has taken on a life of its own over the years. A 1997 newsletter of the American Podiatric Medical Association is typical — it claimed, perhaps due to its interest in foot health, that footwear was the battle’s causa belli, adding, “There was a warehouse full of boots and shoes in the town.”

Historians have debated this issue ever since. There is no doubt that General Heath “stumbled into this fight” but over some shoes, as he was under orders from General Lee not to enter into a general engagement with Union troops. In the same Encyclopedia Virginia it ends with the following “The Battle of Gettysburg readily lends itself to being read as a three-act tragedy, dominated, as many have argued, by Lee’s hubris. (“The fundamental fault that disfigured his conduct of the campaign,” historian Brian Holden Reid has written, “was that Lee was overly confident and expected too much of his marvelous troops.”) That it started by accident, over something so “pedestrian” as shoes, is too perfect for writers to ignore.”

Whether the battle started over shoes or not, the Confederate Army did ‘stumble into a fight’. I thought about such randomness in the context of a Chief Compliance Officer (CCO) when I read a couple of recent articles in the Corner Officer section of the New York Times (NYT). In the first article, Adam Bryant interviewed Sabine Heller, the Chief Executive Officer (CEO) of A Small World, in an article entitled “Can You See the Whole Picture?” One of the points that Heller raised was that, at times, you need to step back to look at the bigger picture. She provided the following example, “You have to manage people based on results and set clear goals. It sounds like a simple thing, but people don’t do that often. When I was 22 and working at UGO, it didn’t matter that I had no experience and it didn’t matter what my process was as long as I hit my goal. It taught me how empowering it is to be treated like that. I am a great manager for people who are strong thinkers and motivated. I empower people. I promote people. I give them a lot of leeway. At the end of the day, I look at results, and that’s it. I feel very strongly that organizations infantilize employees. You should treat them like adults.”

In another Corner Office article, entitled “Joanne Rohde, on Knowing When to Get In, and to Get Out”, Bryant interviewed Joanne Rohde, CEO of Axial Exchange. Some of her thoughts on leadership would certainly apply to Confederate General Lee at Gettysburg. She talked about stepping back, breathing and re-assessing the situation. Bryant quoted her for the following, “I remember a day when the markets went crazy, and all of us were losing money because the volatility was going against us. The guy I worked for said, “You all need to get out of your positions.” We tried to explain to him that this was a temporary thing. He said: “No. You have to get out. A couple of days later, he said something that has really been an important life lesson: “If you get out, you can get in exactly the same way the next day, but you have a clear head.” It was such good advice, and so few people follow it. And it’s really important for both entrepreneurship and leadership — you’ve got to get in and take risks, but you also have to get out, reassess and modify. That, in my opinion, is how you get ahead. You may have a vision of where you’re headed, but it is never a straight line. You take a step and you reassess. That gives you courage.”

The key is that you step back and take another look, perhaps even put a second set of eyes on the issue. In the business world there is nothing that requires immediate assessment and a decision for a compliance practitioner. If there is, it is because there has not been any communication to the compliance function during the months and months of work by the business unit working on a deal. Any company that has that type of culture means the CCO has not developed relationships with the business unit personnel to foster adequate communication. If the China business unit head has never met the CCO, it is certainly time for the CCO to go to China, put on some training and introduce him or herself to Regional Manager (RM).

Both of the articles also had some very relevant points regarding the hiring function and compliance. Heller said that one thing she detests from a candidate is canned responses in the interview process. She wants people who “understand the larger space of the industry we’re in.” But I found her further comments considerably insightful. She said that “And I want to know if that person has been able to come up with an idea, build consensus for that idea and follow it through. I want to see if they are a leader in one way or another, because building consensus for something is very important in the world of business. You need someone who can manage laterally and who can get people on board with their ideas. So I always ask for a time in someone’s career when they have come up with an idea and were able to get people on board, and then executed the idea.”

Rohde had another approach to hiring and interviews which I found discerning. It involved preparing for an interview and how that preparation could lead to persons understanding the compliance function. She said, “The first thing I want to know is, “Why are you here?” Smart people can get lots of job interviews. So I want to know that there’s something unique about our opportunity. There are two reasons I do that. You quickly sort out people who haven’t even done their homework. I remember one person had not even looked at our website. He was mad that I didn’t hire him, but he didn’t even know what we did.

In a small company like ours — 14 employees — you have to be passionate about what we’re doing. Everybody who’s really done well at our company has had a passion for health care and, sadly, often has had a bad experience in the health care system with a family member and wants to change it. So, I’m really looking for that.”

But her next comments spoke to some of the leadership lessons from Gettysburg – Day 1. She was quoted as saying, “I also ask for examples of when you’ve chased a dream, whether you made it or not. Was there something you went for? If it worked, great, but if it didn’t work, how did you retrench? So I’m really trying to learn if the person has that ability or interest to do something that’s not there.” Imagine what might have happened if the Confederate Army had not gone looking for those shoes or General Heath had obeyed Lee’s orders and had not ‘stumbled into a fight’.

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

An Event That Changed the World and Fostering Compliance Leadership – Part II

Yesterday, I used the assassination of Archduke Ferdinand and its continuing legacy even up until today to introduce a two-part series about ‘Blue Ocean Leadership’. The assassination and some of its legacies were detailed in an article in the March 22 edition of the Financial Times (FT) in a piece by Simon Kuper entitled, ‘The crossroads of history”. In this article, Kuper wrote about his return to modern day Sarajevo “to try and understand his act in its local context – the context both of 1914 and 2104.” I think that Kuper did come to some understanding through his reporting, which I found to be first rate.

Yesterday I reviewed the Harvard Business Review (HBR) article entitled “Blue Ocean Leadership”, which I found to be one of the most interesting and perhaps even game-changing discussions on how to be a more effective leader that I have ever read or heard about. In Part I I wrote about what ‘Blue Ocean Leadership’ is and how it differs from conventional leadership. Today, I will review the strategies of how to execute this type of leadership and explore its implications for the Chief Compliance Officer (CCO) or compliance practitioner.

I was extraordinarily gratified to see that the authors believe that something akin to the Fair Process Doctrine should be used to address over-coming resistance to changing over to ‘Blue Ocean Leadership’. The Fair Process Doctrine recognizes that there are fair procedures, not arbitrary ones, in a process involving rights. People are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair by employees. This means that that employees will commit to a manager’s decision—even one they disagree with—if they believe that the process the manager used to make the decision was fair.

 The authors write “the gift that fair process confers is trust and, hence, voluntary cooperation, a quality vital to the leader-follower relationship. Anyone who has ever worked in an organization understands how important trust is. If you trust the process and the people you work for, you’re willing to go the extra mile and give your best. If you don’t trust them, you’ll stick to the letter of the law that binds your contract with the organization and devote your energy to protecting your position and fighting over turf rather than to winning customers and creating value. Not only will your abilities be wasted, but they will often work against your organization’s performance.”

 The authors have a somewhat different formulation for fair process when they say that it includes “engagement, explanation and expectation clarity.” Further, the authors say “the leadership development context, the application of fair process achieves buy-in and ownership of the to-be Leadership Profiles and builds trust, preparing the ground for implementation.” The authors suggest four steps for implementing ‘Blue Ocean Leadership’.

Step 1 – Respected senior managers should spearhead the effort. Nothing speaks to company employees more than who is leading an initiative. The authors state, “strongly signals the importance of the initiative, which makes people at all levels feel respected and gives senior managers a visceral sense of what actions are needed to create a step change in leadership performance.”

Step 2 – Engaging the company’s rank and file in defining what leaders should do. This is the engagement prong of the fair process doctrine. If there is engagement, employees will “feel more deeply engaged with their leaders, because they have greater ownership of what their leaders are doing.”

Step 3 – Giving employees a say in the final decision. This allows a vertical slice of the organization, from the top to bottom to have a say in what the leadership profiles will be going forward. This comes though give and take and if senior management does not accept a proffered leadership profile, it must be prepared to defend its decision, through a “clear, sound explanation of their decision.”

Step 4 – Ease in assessment of whether expectations are being met and in monitoring progress. The authors suggest no less than monthly feedback “between leaders and their direct reports help the organization check whether it’s making headway.” The authors write that such a timeframe, will “keep leaders honest, motivate them to continue with change, and build confidence in both the process and the sincerity of the leaders. By collecting feedback from those meetings, top management can assess how rapidly leaders are making the shift from their as-is to their to-be Leadership Profiles, which becomes a key input in annual performance evaluations.”

There are many tangible benefits that the authors article discuss and those discussions can lead directly to the elimination of actions that senior management invest their time in. Even if some actions and activities cannot be entirely eliminated, they can be reduced. Conversely, these types of discussions can show senior management what acts and activities should be raised above their current level. Finally, this type of leadership protocol can show leaders the types of activities they should be engaging in that they are not currently undertaking.

For the compliance practitioner I think there are several important lessons and implications, which can be drawn from this article. Rather than start with the CCO, I want to take the opposite approach and begin with the compliance practitioner who is on the frontline. The clearest lesson from this scholarship is to “serve your customers, not the boss.” This means should try to eliminate your queries up the chain and try to handle direct issues yourself and reduce seeking approval for decisions. Frontline compliance practitioners need to raise more relevant compliance training and information to the business units or geographic areas they support. Finally, the frontline compliance practitioners should celebrate compliance successes locally.

For the mid-level compliance manager, they strive for ‘more coaching and less control’ from senior management. This means elimination of frequent requests for detailed progress reports on initiatives and programs. Further, there should be a reduction of requirements and review of justifications for decisions from the frontline compliance practitioners. Mid-level compliance practitioners should strive to not only understand but also explain compliance strategy clearly and empower frontline compliance practitioners to stretch themselves through more effective coaching. Finally, mid-level compliance managers should work to set performance goals together, share best practices across teams, business units and geographic regions and align rewards with performance.

The key for senior level compliance practitioners is to move from the day-to-day work to the bigger picture of compliance. As much as possible, senior compliance managers need to stop operational problem solving and putting out fires. If senior compliance managers cannot fully eliminate such actions, they should try and reduce the number of meetings dealing with operations improvement but also try and reduce the monitoring and coordination of middle management. Issues that senior compliance managers should try and raise up in activities awareness include dealing with poor performance, coaching and motivating their direct reports, creating a compelling strategy and then clearly communicating that strategy. Finally, senior compliance managers should develop a compliance agenda for the future (think Stephen Martin’s 1-3-5 year strategy) and advance a process for implementation of continual assessment and improvement of that strategy.

The authors write, “We never cease to be amazed by the talent and energy we see in the organizations we study. Sadly, we are equally amazed by how much of it is squandered by poor leadership. Blue ocean leadership can help put an end to that.” They put forward “a concrete, visual framework in which they can surface and discuss the improvements leaders need to make. The fairness of the process makes the implementation and monitoring of those changes far easier than in traditional top-down approaches. Moreover, blue ocean leadership achieves a transformation with less time and effort, because leaders are not trying to alter who they are and break the habits of a lifetime. They are simply changing the tasks they carry out. Better yet, one of the strengths of blue ocean leadership is its scalability. You don’t have to wait for your company’s top leadership to launch this process. Whatever management level you belong to, you can awaken the sleeping potential of your people by taking them through the four steps.”

I found their article to be quite compelling. I hope that you will consider some or all of these suggestions as a way to set up you and your compliance team to become Blue Ocean Leaders and un-tap the potential of your entire compliance team.

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

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

 

 

 

 

Compliance Leadership Lessons from Captain Kirk

As 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

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

Some Thoughts On Leadership

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.

 

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 199^th anniversary of Napoleon’s exile to Elba (although he did make somewhat of a comeback) it is also the 62^nd 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

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

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 50^th 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