The Compliance Life details the journey to and in the role of a Chief Compliance Officer. How does one come to sit in the CCO chair? What are some of the skills a CCO needs to success navigate the compliance waters in any company? What are some of the top challenges CCOs have faced and how did they meet them? These questions and many others will be explored in this new podcast series. Over four episodes each month on The Compliance Life, I visit with one current or former CCO to explore their journey to the CCO chair. This month, my guest is Kortney Nordrum, Regulatory Counsel and Chief Compliance Officer at Deluxe.
Back in MN, Nordrum opened her own practice focusing on animal rights, where she saved a bunch of horses and cows from starving. She next worked at Thompson Reuters, working on WestLaw. From there she went to SCCE, where she found her true calling, compliance. At SCCE, Nordrum helped pioneer many initiatives such as the conference the social media lounge/booth/wall, she founded the SCCE blog and the SCCE podcast. She became an expert in social media and compliance. One of her great joys was working with Adam Turteltaub and flying literally around the world evangelizing compliance.
Day: August 24, 2021
The US sanctions an international oil smuggling network for acting as intermediary to support Iran’s illicit activities. The Kitchen is there to take a closer look.
An Analysis of Firms’ Self-Reported Anticorruption Efforts”. In this academic paper, the authors looked at the issue of not simply the profitability of companies with more robust anti-corruption compliance programs but also the direct effect on the companies’ return on equity (ROE) in countries that were perceived to have a high incidence of corruption. Not surprisingly, in countries with a low risk for corruption, there was not much difference in the sales growth for companies with robust anti-corruption compliance programs and those businesses in the authors’ ‘cheap talk’ category. However, there was a dramatic difference when it came to growth in countries with a high propensity for corruption. When quantitative types say, “The magnitudes of the estimated coefficients are economically interesting,”; it is a HUGE deal. These findings are equally large and important for the CCO or compliance practitioner. The authors conclude by making several observations. First, companies with more robust compliance programs are from countries with more robust enforcement and monitoring. Second, the more robust your compliance program is, the lower your sales growth may be, but the higher your overall return in a high-risk country will be going forward. Finally, even if a company sustains high sales growth in a high-risk country, if it does not have a robust compliance program, its sales will drop dramatically and lead to negative ROE. This information points to companies on the Ethisphere list of the World’s Most Ethical Companies and their financial performance. They have better than average financial performance because they are better run. They are on this list because they have robust internal financial controls, which include internal compliance controls. To mix metaphors, robust internal controls around compliance do not slow you down but allow you to move faster and safely into high-risk countries. So the next time some business type tries to say that following the law by having a robust FCPA anti-corruption compliance program, you can correct him. Spikes in sales in high-risk countries do not translate into sustained growth, and without an effective compliance program in place, your company may lose money.
Key Takeaways:
- Demonstrating ROI is the Holy Grail of compliance-use it.
- Compliance helps drives sales in high-risk countries.
- Long-term sales and profitability drop off when bribes are paid in high countries.
For more information, check out my book Doing Compliance: Design, Create and Implement an Effective Anti-Corruption Compliance Program, which is available by clicking here.
Companies with more internal reports and complaints benefit from lesser problems occurring inside. In his paper, Dr. Kyle Welch shared that overall litigation settlements of non-material matters dropped almost 20% over three years as well. It is, therefore, made clear that speak up culture is not simply about compliance and violations but building up the trust that it is safe to raise your hand and express concerns and give feedback.
Key points discussed in the episode:
✔️ Speak up culture is built on trust. Employees must trust that when they report wrongdoing, or potential misconduct, that those reports will be investigated and, if needed, actions will be taken. Without this trust, speak up culture is a pipe dream.
✔️ There is a disconnect between the employees on the front line and the senior management in most organizations; therefore, trust is part of the psychological safety that we all must work to create. Whistleblower policies and generic communications about hotlines are not good enough.
✔️ The middle managers are going to be the most influential culture builders in your organization. Create a model of engagement with middle managers – and engage with them. Hold town hall sessions, encourage transparency, and listen regularly. Remember, the flow of information and cadence is important.
✔️ Include as many ways as possible for people to reach out and speak up – formally and informally. Hotlines tend to be a “last resort,” and employees use them when they’ve exhausted other options. Let’s create opportunities to have concerns addressed faster and possibly less formally.
✔️ Be proactive – ask for feedback, concerns, and complaints. Open the lines of communication, so when there is something to report, it is already second nature for employees to report it.
✔️ Take concerns seriously and have a high say-do ratio. The basis for speak up culture is that we want employees to raise concerns. That means when they raise those concerns, we must do our part and act on them. Employees need to see things change as a result of their speaking up.
✔️ Make sure you have a clear anti-retaliation policy and that employees reporting concerns in good faith are not retaliated against.
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Welcome to SURVIVE AND THRIVE, the newest addition to the Compliance Podcast Network. This is a podcast where we unpack compliance, crisis disasters and walk you through all the red flags which appear, and give you some lessons learned going forward. This show is hosted by Compliance Evangelist Thomas Fox and Kortney Nordrum, Regulatory Counsel & Chief Compliance Officer, Deluxe Corporation.
Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.
Kristy Grant-Hart, Joe Murphy, and Kirsten Liston are Tom Fox’s guests on this week’s episode of the Innovation in Compliance Podcast. Kristy is the CEO and founder of Spark Compliance Consulting, as well as an author and keynote speaker. Joe is currently the editor of the Compliance & Ethics Professional magazine, and the Director of Public Policy. Kirsten is a certified Compliance and Ethics Professional, an author, and a keynote speaker. They join Tom to talk about their book ‘The Compliance Entrepreneur’s Handbook’, and what insights compliance professionals can use from it in their organizations.
The Genesis
The Compliance Entrepreneur’s Handbook is about helping people who want to go into business in the compliance and ethics field. Kristy explains that there was an initial presentation and that the three of them were assigned sections of the book to write. “Each one of us wrote an original draft of those sections, switched them so that each person made comments on them, and then I did the edit where we put it all together. So it had essentially one voice but you can still pretty clearly hear the dynamics and the interesting stories of each individual person, and that’s how it came to be,” she tells Tom.
What Do You Need
“Most people who begin businesses in our field, are in-house or are working for some sort of vendor. They’re not people who’ve already started some other type of business,” Kristy begins. The first question is always about how to transition, and what is needed to prepare for that transition. The book is structured to answer the questions of ‘What do I do now?’ ‘What decisions can I make?’ and ‘Who should I partner with?’ It shows entrepreneurs how to execute a compliance startup, as well as critical marketing, sales, and exit strategies. An exit strategy is especially important, and something entrepreneurs don’t think about in the beginning. “If your plan doesn’t include an exit, then it’s the wrong plan. You don’t have to exit in five years but you should be thinking about making your business ready to sell,” Kristy stresses. The book is meant to delve into the mindset of where you go forward and your end goal so that prospective entrepreneurs can have an overview of the tools necessary to become successful.
An Entrepreneur’s Advice
Tom asks Kristy, Kirsten, and Joe to share their top pieces of advice to individuals who wish to start the entrepreneurship journey. Kirsten emphasizes nailing down the money, setting up your account, and knowing how to read a balance sheet. “You need to make sure you’re selling something for a profit, and that that profit is reaching you soon enough to pay for the work to deliver it,” she remarks. She adds that you should want to do the work of being an entrepreneur, and that you wake up every day excited about it. Kristy stresses on planning to have a business. Most people get caught up in the idea of having a business but do not plan for it, nor do they take into account all the legal documents that are needed or putting their website together. Joe shares some insight for entrepreneurs who are introverts. “Don’t think just because you’re an introvert you can’t do this. You just need to team with people who have complementary skills. One [other] piece of advice I have for anybody going into business is read the Wall Street Journal every day,” he says.
The Best and Worst Parts of Being an Entrepreneur
The best part of being an entrepreneur to Kirsten is owning the business. All the profit and all the successes are yours, and all the decisions are your own to make. On the other side, one of the worst parts of being an entrepreneur is that you own the business. Meaning that any losses or failures are yours to bear, and that your employees look to you to fix the problems that may occur. An advantage of being an entrepreneur to Kristy is the freedom to develop strategy, and the freedom to make choices without anyone telling you no. Alternatively, a disadvantage to her is managing the emotional aspect of it all. That is managing the emotions of clients and employees. For Joe, the best and worst parts of being an entrepreneur is the freedom and control over what you do professionally but being treated like you don’t belong [in the compliance realm] because you’re a vendor. “I think there’s a need to recognize that we’re all in the field together, and the vendors are there to add value… they’re not some alien or some thief who’s trying to steal your money,” he adds.
Resources
Kristy Grant-Hart | LinkedIn | Twitter
Compliance Kristy
Spark Compliance Consulting
Joe Murphy | LinkedIn | Twitter
Society of Corporate Compliance & Ethics
Kirsten Liston | LinkedIn
Rethink Compliance
The Compliance Entrepreneur’s Handbook
In today’s edition of Daily Compliance News:
- NLRB GC Calls for new agenda. (com)
- Fate of Conferences in 2021? (Houston Chronicle)
- College football gets honest with itself. (WSJ)
- What is tone at the top? (Bloomberg)
