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 Gwen Hassan, Managing Counsel and Director of Compliance at CNH Industrial.
In this second episode, we take up the tricky issue of balancing a role as a legal eagle for the company as well as her role in compliance. We explore the different skill set needed for each of these careers and how it is possible to have both in one person. Gwen tells us her favorite part about being a compliance professional and then give us her “elevator speech” about the compliance profession she used at pre-pandemic cocktail parties.
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One of the areas that many companies have not paid as much attention to in their compliance programs is compensation. However, the DOJ and SEC have long made clear that they view monetary structure for compensation, rewarding those employees who do business in compliance with their employer’s compliance program, as one of the ways to reinforce the compliance program and the message of compliance. As far back as 2004, then SEC Director of Enforcement Stephen M. Cutler noted that integrity, ethics and compliance needed to be part of promotion, compensation and evaluation processes: “At the end of the day, the most effective way to communicate that “doing the right thing” is a priority, is to reward it.”
The 2020 FCPA Resources Guide stated the “DOJ and SEC recognize that positive incentives can also drive compliant behavior. These incentives can take many forms such as personnel evaluations and promotions, rewards for improving and developing a company’s compliance program, and rewards for ethics and compliance leadership.”
Obviously, the power of a compensation plan is to motivate employees to not only to sell more but to act in ways that support your company’s business model and overall culture and values. For the compliance practitioner, one of the biggest reasons is to first change a company’s culture to make compliance more important, and then integrate it into the DNA of your organization. But you must be able to evolve in your thinking and professionalism to recognize the opportunities to change and then adapt your incentive program to make the doing of compliance part of your company’s everyday business process.
Three key takeaways:
- The DOJ and SEC have long advocated compensation as a way to motivate employees into ethical and compliant behaviors
- Keep the compliance aspects of your compensation structure simple and easy for your employees to understand
- Have full transparency in the framework of your compensation structure
In this podcast I am joined by Jay Rosen, VP of Business Development for Affiliated Monitors, Inc. In this episode, we consider to what extent the Chief Compliance Officer (CCO) should be involved in shaping a culture of ethics and driving ethical behavior. Highlights include:
- Who bears the responsibility for culture?
- The duty most often falls to the CCO, so both the CCO and the entire compliance function need to be able to coordinate the various inputs and support mechanisms that guide employee behavior.
- The CCO is often the face of the ethics program for the company – kind of the spokesperson for the company who helps to drive behavior.
- In hiring and recruiting, a CCO can create a culture where an organization would only hire the right type of people as employees.
- When managing upward, the CCO has an equally critical mandate through unfettered access to provide information to the Board regarding the compliance and ethics posture at the company, specifically including the culture.
- What are the warning signs of an unethical culture?
- It is up to the CCO to understand and have their finger on what the culture is, where the challenges are and what needs to be done to continually strengthen the culture.
For more information see Jay’s blog post What is the CCO’s Role in Strengthening the Organization’s Culture of Ethics? on Corporate Compliance Insights.
For more information on Affiliated Monitors, Inc. check out their website here.
Tom Fox and Nick Gallo talk about decision-making and what influences the process. Humans like to think of themselves as rational beings, but we are really emotional decision-makers who rationalize our decisions with logical arguments. Influence is also a large factor in how you make decisions, Nick adds – it’s how you get people to change their minds without coercion. Tom discusses one of his key takeaways from Cialdini, which is the theory of reciprocity, also known as reaping what you sow.
The six principles of influence are: reciprocity, commitment and consistency, social proof, similarity, authority, and scarcity. Nick gives a brief definition for each principle and shares his takeaways from Cialdini.
Listeners can read Nick’s notes on this book at his LinkedIn page.
Resources
Tom Fox on LinkedIn | Twitter
CompliancePodcastNetwork.net
Nick Gallo on LinkedIn
ComplianceLine.com
Influence: The Psychology of Persuasion by Robert Cialdini
One of the key goals of any compliance program is to train employees in awareness and understanding of the FCPA; your specific company compliance program; and to create and foster a culture of compliance. While it seems axiomatic that compliance training is a mainstay of any best practices compliance program, the conversation around training has evolved over the years.
The importance of determining effectiveness of your compliance program has been enshrined by the DOJ. The 2020 Update confirmed that the DOJ wants to see evidence of the effectiveness of your compliance program. This is something that many CCOs and compliance professionals still struggle to determine. Both the simple guidelines suggested herein, the more robust assessment and results provide you with a start to fulfill the precepts set out by the DOJ, as you will eventually need to demonstrate the effectiveness of your compliance training going forward.
Three key takeaways:
- How and why have you tailored your compliance training?
- The DOJ has mandated demonstrating the effectiveness of compliance training
- How is your training presented: both in languages and media?
Tom Fox and Nick Gallo discuss the writings of the ancient Roman philosopher Marcus Aurelius and how to apply them to business leadership. Tom shares the impact that these writings had on him as a teenager with no consistent mentor, and how it provided him with a philosophy to guide his life. Nick talks about how Meditations teaches readers to change their mindset. Oftentimes we cannot control the outcome of situations, but we can control our adherence to the process, he says.
Marcus Aurelius was the most powerful man on earth in his time, yet he adopted the ancient Greek philosophy of stoicism to discipline himself and develop self-control. For this reason, he is known to modern scholars as one of the last good Emperors of the Roman Empire.
Listeners can read Nick’s notes on this book at his LinkedIn page.
Resources
Tom Fox on LinkedIn | Twitter
CompliancePodcastNetwork.net
Nick Gallo on LinkedIn
ComplianceLine.com
Meditations by Marcus Aurelius
In the Episode, I visit with Doreen Edelman, chair of the Lowenstein Sandler Global Trade & Policy practice. She leads a unique team that combines global trade and policy expertise with cross-border M&A, technology, government contracts, white collar investigations, and business counseling practices to help clients develop strategies to minimize global business risks, increase compliance with U.S. requirements, and mitigate matters raised by U.S. regulatory agencies and the U.S. Department of Justice. Doreen joins me to bring us up-to-date on all things Committee on Foreign Investment in the United States (CFIUS) and where it is headed under the Biden Administration.
Some of the highlights include:
- Why do you want everyone in compliance to have some familiarity of CFIUS?
- Isn’t it just about foreign ownership?
- Is this just about China?
- Do you expect Biden to come in and have lots of changes?
- What if you have investors that are Limited Partnerships?
- When should company or investor start to consider CFIUS issues?
- Are there any exceptions? Is there a de minimus exception for small deals?
- What are the rules on a real estate purchase under CFIUS?
Resources
Doreen Edelman LinkedIn page
What is the message of compliance inside of a corporation and how it is distributed? In a compliance program, the largest portion of your consumers/customers are your employees. Social media presents some excellent mechanisms to communicate the message of compliance going forward. Many of the applications that we use in our personal communications are free or available at very low cost. Why not take advantage of them and use those same communication tools in your internal compliance marketing efforts going forward?
Louis Sapirman, Vice President and Chief Ethics & Compliance Officer for Panasonic Corporation of North America – Panasonic USA, often talks about the integration of social media into compliance. You should start with the tech-savvy nature of the today’s workforce. It is not simply about having a younger workforce but a workforce whose primary tool for communication is social media. If your company is in the services business, it probably means your employee base is using technological tools to deliver business solutions. Finally, consider the data-driven nature of business today so using technological tools to deliver products and solutions is something your company most probably does now.
Finally, never forget the social part of social media. Social media is a more holistic, multiple-sided communication. Not only are you setting out expectations but also these tools allow you to receive back communications from your employees. The D&B experience around the name change for its Code of Conduct is but one example. You can also see that if you have several concerns expressed it could alert you earlier to begin some detection and move towards prevention in your compliance program.
Three key takeaways:
- Incorporation of social media into your compliance communications can pay big dividends
- Focus on the ‘social’ part of social media
- Use internal corporate social media to facilitate a 360-degree conversation