Over the weekend I saw Joel Coen’s The Tragedy of Macbeth on Apple TV. To say it blew me away would be putting it mildly. I have been reviewing the film this week and exploring my love of all things Shakespeare in this week’s blog posts. Today, I want to consider Frances McDormand in her starring role as Lady Macbeth and how her experiences of life point to learning curves.
McDormand herself said that she was destined to play the role. Stephen Schaefer, writing in the Boston Herald, quoted her for the following, ““The first thing that got me hooked on being an actor the rest of my life was the sleepwalking scene from ‘The Tragedy,’” she said of Shakespeare’s guilt-ridden murderess Lady Macbeth, who can never wash the blood from her hands. “I did it when I was 14,” she said. “Then I’ve been pretty much practicing and rehearsing for it for 50 years. It had kind of a fated inevitability to it.””
While other versions of Macbeth, notably Roman Polanski’s 1972 version, used younger actors in the lead roles, here Director Coen focused on older versions of the Macbeths. Schaefer also focused on the experience of the actors, McDormand and Denzel Washington, playing the lead roles. Both actors understand about the drive to achieve the next success, which for Macbeth was to take over the Kingdom of Scotland. Schaefer also noted, “McDormand, 64, agreed. “You might think they don’t understand. But guess what? We understand because when we first talked about the film, Denzel and I (it was our own private conversation), both understood about each other: There’s always been a fight. We fought it as gracefully as possible. The fight’s never going to be over. “So we brought that to it. We still know how to fight. Maybe we were limping a little bit. Maybe it took us a little bit longer to get there, but the fight was still there.””
In a recent Harvard Business Review (HBR) article, entitled “Managing Your Organization as a Portfolio of Learning Curves”, author Whitney Johnson, posited, “As people develop competence in a new domain of expertise, they move along an S Curve: Growth is slow and effortful at the outset, or launch point. It then progresses rapidly as people acquire new skills in a stretch known as the sweet spot. At the peak is mastery, when work becomes easier but the curve flattens. Understanding where your employees are on this S Curve of Learning will help you coach them appropriately, craft thoughtful succession plans, and build a team with diverse but complementary strengths.” I use the article as a starting point for the Chief Compliance Officer (CCO) to use it to aid in developing a strong compliance bench at your organization.
The ‘S’ learning curve has three components; (1) launch point, (2) sweet spot and (3) mastery. It was originally developed by Everett M. Rogers, “to show how new ideas and technologies spread.” However, Johnson also saw it as “the trajectory that people move along as they develop competence in a new domain of expertise.” She calls it the “S Curve of Learning;” where growth is slow and effortful at the outset, which is the launch point. The initial phase is “followed by rapid upward progress as people acquire new skills and overcome setbacks: a stretch I think of as the sweet spot. At the peak is mastery—when work becomes easier, but the curve flattens because there is little left to learn. When that happens it’s time to jump to the bottom of a new S Curve, put in the effort, and experience the thrill of climbing again.”
Johnson applied this concept to three areas which are also important to the corporate compliance team; talent development, succession planning and building an “A Team’. Many have said that talent development, acquisition and retention will be one of the most critical corporate endeavors going into the 2020’s. This is even more true for the compliance function. Our discipline is at a cross-roads with many non-legal concepts becoming more important. Such skills as data analytics, behavioral psychology and others are replacing the need to be able to recite the text of the Foreign Corrupt Practices (FCPA). The S Curve in talent development gives CCOs and their compliance team members a “common language for discussions about personal growth and talent development—about people’s progress in their roles and their future with the organization. When one of your reports says, “I’m at the launch point,” you’ll know that person is struggling to gain traction. When someone says, “I’m in the sweet spot,” he or she has momentum and is feeling competent and confident. And when you hear an employee say, “I’m in mastery,” the message is clear—“I know I’m good at this, but I can’t keep doing it—I need a new challenge.””
Under succession planning, it is not enough to plan what is next for the organization or even your compliance team; you also need to consider what is next for the individual. Johnson wrote, “Doing this well involves anticipating which people might move on and when, identifying team members who might assume this role, and then thinking about those who could backfill that role.” In other words, you need think of it as a multi-dimensional chess game; not only thinking several moves ahead but also on X, Y and Z axes. Such an approach allows you to “see when the high-contribution sweet spot is about to yield to mastery, and shortly thereafter, boredom and stagnation. Keeping people who’ve reached the mastery stage in a role for too long carries risks. An employee can become complacent or a flight risk. And if, as an organization or team, most of your people are in the sweet spot, humming along, you may be courting the danger that your entire team could suddenly be in mastery, setting off a wave of departures. Counter these risks with succession planning for each individual.”
Now think about all of the above in building out your ‘A’ compliance team. Johnson advocates diversity in talent on the ‘S’ curve so that some team members are on the sweet spot and some in the others. She stated, “You want people who have a variety of aptitudes and ambitions, and you want a balanced portfolio of people at different stages of growth. People in mastery have deep experience, people at the launch point bring fresh perspectives, and those in the sweet spot have both the enthusiasm and competence to breathe life into a project. Although every team is different, many look like a bell curve, with most members in the sweet spot at any given time and a small percentage of people at the launch point and in mastery. When putting together a team, smart leaders make sure they have people on all major phases of the curve—what I call a matched team.”
Just as McDormand’s portrayal of Lady Macbeth is thought-provoking so is Johnson’s piece. If you are looking for a low-cost way to improve your compliance team, this approach gives you several ways to think through talent development, retention and advance.
Tomorrow, the sisters.
Tag: CCO
Over the weekend I saw Joel Coen’s The Tragedy of Macbeth on Apple TV. To say it blew me away would be putting it mildly. I have been reviewing the film this week and exploring my love of all things Shakespeare in this week’s blog posts. Today, I want to consider Denzel Washington in his starring role as Macbeth.
Jourdain Searles, writing in okayplayer.com, said, Washington’s “acting style has always been theatrical, and he’s an obvious choice for any role that requires the ability to monologue while still keeping the audience engaged. Washington is definitely up to the task, making a meal out of every scene. And yet, his motivations in the film feel murky. Due to his age and visible exhaustion, it seems like Washington’s Macbeth would rather retire than vie for the Scottish throne. When his wife Lady Macbeth (Frances McDormand) urges him to seize the throne, it comes off more of a burden than a shining opportunity. Having the couple be older is an inspired choice, transforming the characters from youthful schemers to weary elders making their final grasps at greatness.” I noted this world-weariness, as well as the issue of succession. I want to use those twin concepts to introduce today’s subject of your compliance team leadership.
In a recent Harvard Business Review (HBR) article, entitled “Reinventing Your Leadership Team”, authors Paul Leinwand , Mahadeva Matt Mani, and Blair Sheppard, all with PwC, posited that “in our increasingly complex world, what companies really need to do is build new forms of competitive advantage and transform themselves for the future. And that requires fundamental changes in their top leaders—not just in individuals’ capabilities but in the way they collectively steer the ship. Drawing on their research at 12 prominent global firms, the authors note the contradictory-seeming skills that leaders are expected to have—being both great visionaries and expert executors.” I use their article as a starting point for the Chief Compliance Officer (CCO) to put together a top-notch compliance leadership team.
As legally trained CCOs continue to become less relevant to a corporate compliance function and with the new-found compliance framework focused largely on digitizing and digital analysis, what companies and their employees need from compliance leadership is evolving. CCOs must be able to reimagine a compliance function’s place in the world and transform the organization to live up to a more ambitious purpose. That will mean fundamental change not only in CCOs themselves but also in how they collectively manage and lead a corporate compliance function.
Within the broader context of corporate leadership, the authors stated, “Consider, for example, how the skills that leaders need for success have evolved—and the degree to which many executives are seen to struggle with these new demands. A recent survey conducted by Strategy&, PwC’s global strategy consulting business, highlighted the importance of balancing certain characteristics that on the surface look paradoxical. We used to accept, for instance, that leaders could be either great visionaries or great operators. No longer. Companies now need their top people to perform both roles—to be strategic executors, in other words. They’re also expected to be tech-savvy humanists, high-integrity politicians, humble heroes, globally minded localists, and traditioned innovators. Not only did large majorities of the survey respondents agree on the importance of those roles, but they also voiced alarming concern about leaders’ lack of proficiency in them. Addressing a company’s leadership gaps, however, is not merely a matter of building individual executives’ skills. Although that’s certainly desirable, the need to improve collective leadership is urgent.” That certainly holds true for the compliance function.
The authors identified four key components for leadership change, which I have adapted for the corporate compliance function.
Identifying the leadership roles needed to transform compliance for the future. For compliance to remain relevant, it will need distinct capabilities that allows it to deliver on its purpose, along with leaders who can envision its new place in the world and mobilize it to get there. What positions does your CCO need on their team to make that happen? Obviously, the basic legal skills of reading and writing are now only the basics. There must be digital talent, innovation talent, behavioral psychology talent, as well as communications. Moreover, all these roles will need to work collaboratively not simply with each other but with a much wider variety of internal and external stakeholders than ever.
Assembling the right people. Having the right roles is not enough as once you have identified the roles your compliance function needs, “you next have to think about who will best fill them. Which individuals should you bring together so that you have the necessary talent and diversity…to generate new ideas, challenge traditional thinking, and collaborate on meaningful change?” You will need team members who can not only see around corners but also respond to the ever-changing compliance landscape of today’s business as usual, through continually recalibrating the risks your organization faces.
Focusing your leadership team on driving your compliance transformation. Obviously as CCO, you and your compliance team “will need to advance the company’s agenda—and that means spending energy and time on the big priorities for the future, not just responding to the demands of the organization today. What structures and mechanisms will help you lead the company to its new destination?” How can compliance initiatives work to increase business efficiencies, drive greater employee engagement and move the need on overall company profitable? It is not simply business efficiencies you must master as you must build trust in your organization to create a true ‘speak-up culture’ so you can reap the benefits of this increased efficiency.
Taking ownership of your team’s behavior. At first blush this would seem like a natural for compliance. Afterall, compliance is all about taking ownership and transparency. However, the authors’ focus is a bit different, “Creating ownership around the vision isn’t enough. You must also create a shared purpose: Why does your team exist? What big issues is it here to solve? When defining their areas of responsibility, your people should believe that leading the company through its transformation is their most important task and that success will depend on the collaboration of team members rather than on the sum of individual units’ performance.” In other words, build on the trust you created by giving the credit out so that all will be invested in your compliance transformations.
No major corporate transformation can be successfully achieved by the compliance team alone. There must be engagement, buy-in and not simply acceptance but an embracing by the employees. The authors conclude that you should “Surround yourself with talented people who can balance seemingly paradoxical leadership behaviors and challenge one another to collectively accomplish big things. Most importantly, make sure your leadership team truly leads—setting aside the time and energy to define a bold agenda and launch the ambitious initiatives that your future relies on. Failing to do that will be a costly mistake. Succeed and you will have a powerful team that can position your firm to thrive in an increasingly complex world.”
Tomorrow, Frances McDormand and Lady Macbeth.
The college football season has ended with UGA finally defeating UA. Tom and Jay turn their full attention to the NFL playoffs now and also look at some of the week’s top compliance and ethics stories this week in the Georgia Finally Beats Alabama edition.
Stories
1. Carnival and Princess Cruise Lines violated DPA yet again. Matt Kelly in Radical Compliance. DOJ Press Release.
2. Prioritizing items from the Strategy on Countering Corruption. Worth McMurray in the FCPA Blog.
3. DOJ to look at short sellers. Jaclyn Jaeger in Compliance Week (sub req’d).
4. Proposed framework for CCO liability analysis. Mengqi Sun in WSJ Risk & Compliance Journal.
5. Manipulation on timing of FCPA enforcement action? Matthew Stephenson debunks a new article in GAB.
6. ComTech comes to financial institution compliance. Christian Wunderly in the FCPA Blog.
7. Phil Tetlock and Superforecasting come to risk management. Jim DeLoach in CCI.
8. Ethics and FCPA predictions for 2022. Mike Volkov with a double dose of Carnac the Magnificent. Ethics here. FCPA here.
9. Banks develop climate risk consortium. Aaron Nicodemus in Compliance Week. (sub req’d)
10. Liability of local representatives under GDPR. Kelly Hagedorn and Matthew Worby in Compliance and Enforcement.
Podcasts
11. Tom and Matt Kelly conclude a 2-part podcast series on issues they are following in 2022. On Compliance into the Weeds, Part 1 and Part 2.
12. In January on The Compliance Life, I visit with Valerie Charles, partner at StoneTurn. Val has one of the most interesting journeys in compliance. In Part 1, she discussed her academic background and early professional career. In Part 2, she discusses her move to ComTech.
13. The Compliance Podcast Network welcomes Professor Karen Woody and her new podcast, Classroom Insider. In this most unique pod, Karen interviews some of her student to tell the history of insider trading. In Episode 4, Colin Manchester discusses the evolution of the disclose or abstain rule.
14. Mikhail Reider-Gordon returns in Lies, Spies & Corporate Crimes: The Wirecard Saga, with Season 2, Episode 3 Shell Games.
15. Check out 31 Days to a More Effective Compliance Program returns, which runs for the month of January, from January 1 to January 31. Available on the Compliance Podcast Network, Megaphone, iTunes, and all other top podcast platforms.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.
Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. This week, Matt and Tom conclude a special two-part podcast series of several topics they will be following in 2022. Today in our concluding Part 2, we consider
- The time of reckoning is coming for SPACs funded in 2021 as their 18 month-deadline is fast approaching. Is the SEC looking at SPACs as an alternative form of IPO? What will the regulatory landscape look like going forward?
- CCO pay. Will it go up after several years of remaining flat? How did the Great Resignation impact compliance, if at all? What skills sets might a CCO need into 2025 and beyond?
- The SEC investigation into Facebook. Are a company’s public statements about having an ethical culture mere puffery or are they actionable for failing to live up to their public statements. Also, what does the Francis Haugen testimony mean for whistleblowers going forward.
- The SEC investigation into Activision’s toxic workplace and culture of misogyny. Are these new areas the SEC will be looking at in addition to its traditional role of financial reporting watchdog.
Resources
Matt in Radical Compliance
In today’s edition of Sunday Book Review:
- Win from Within: Build Organizational Culture for Competitive Advantage by James Heskett
- Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future by Paul Leinwand and Mahadeva Matt Mani
- Smart Leadership: Four Simple Choices to Scale Your Impact by Mark Miller
- Smart Growth: How to Grow Your People to Grow Your Company by Whitney Johnson
- We the Leader: Build a Team of Equals Who All Lead AND Follow to Drive Creativity and Innovation by Jeffrey Spahn
Aaron Nicodemus has been a reporter for over 30 years in the US and South Africa, having written for various notable publications including Bloomberg. He has been a writer/reporter at Compliance Week for the last 18 months. He is Tom Fox’s guest this week on the ESG Report. They discuss his recent article about the intersection of ESG and compliance, entitled “Compliance Must Carve Out Role in Company ESG Efforts.”
Inside the Mind of the CCO Survey
“Every year for the past three years Compliance Week has conducted an Inside the Mind of the CCO survey,” Aaron tells Tom. This year the focus was on ESG since it has been a hot topic, and they wanted to gauge what ESG initiatives looked like across industries and organizations. “Almost all of the compliance officers who took the survey felt that compliance should be involved in ESG initiatives at their company,” Aaron reveals. CCOs believe that compliance is best positioned to lead ESG since it intersects with so many of their core functions. “Putting [compliance] in charge of the ESG initiatives would help make sure that [the company] meets all the regulations that they should, and also that they are reporting on data that is both accurate and informative,” he comments. Now that the SEC is poised to issue new mandates regarding climate change disclosures, compliance will most likely have to be front and center for ESG going forward. “When regulators get involved that tends to push compliance to the fore,” Aaron remarks.
Key Findings
Tom and Aaron discuss some key findings outlined in the article. These include:
- The actual role of CCOs in ESG – 73% of CCOs have an active role in ESG, either as advisor, primary overseer, or advocate.
- Where they see their role – 23% of CCOs feel they should have more oversight over ESG than they currently have. Most persons surveyed feel that compliance should have a prominent role in ESG.
- Whether compliance should lead all 3 aspects of ESG – Most CCOs see governance as their core function, while environmental and social concerns are secondary roles.
- Compliance is the conscience of the company.
- Stakeholders are demanding more information on ESG to influence their investment decisions.
Growth of ESG
Tom sees ESG as the fastest moving corporate initiative. He asks Aaron if the survey confirms this view. “It’s been a gradual process that has come to a head in Europe and in the UK,” Aaron responds. Similar climate change disclosure mandates are likely to happen in the US in 2022. Companies have been pursuing sustainability and D&I initiatives for several years. “ESG collects up some of those things in a tight little bundle, and you can really pursue a lot of issues under the ESG umbrella,” he continues. He sees ESG accelerating over the next few years, starting with climate change.
Resources
Aaron Nicodemus on LinkedIn | Twitter | Email
Compliance Week: Compliance Must Carve Out Role in Company ESG Efforts
Categories
Wendy Badger-What is Bravery?
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 Wendy Badger, CCO at Tennant Company.
In this concluding episode, Wendy reflected on leaving her CCO position immediately preceding the pandemic and the time she had for reflection about that decision and what she learned about herself. She talked about her new role a Tennant and some key lessons learned she has been able to put into places such as the criticality of cross-functional collaboration, why technology should not be seen as the “cure all” to compliance woes and how to both layer and leverage data.
Resources
Wendy Badger LinkedIn Profiler
Digital Assets: Trading & Compliance for Cryptocurrency
In this episode, Director of Registered Investment Company Services, Allison Fraser and Director of Broker-Dealer Services & Private Funds, John Gentile discuss the latest on digital assets and cryptocurrency. Are they considered securities, what does the SEC’s risk alert mean for digital assets, and how should investment managers be thinking about cryptocurrency trading and compliance?
About Our Guest Speakers:
E.J. Yerzak CISA®, CISM®, CRISC™ assists firms in assessing and managing their cybersecurity risk – from network vulnerability scanning and penetration testing to onsite cybersecurity assessments and assistance in implementing the NIST cybersecurity framework. E.J. has authored articles and alerts on emerging regulatory and technology issues, and is regularly requested to speak as a cybersecurity expert at industry conferences.
Mike Farrell is a Certified Information Systems Auditor (CISA®) and Certified Information Security Manager (CISM®), and Cybersecurity Consultant at CSS. He analyzes data and conducts cybersecurity risk assessments, policy gap analyses, vulnerability scanning and social engineering testing. His Information technology experience includes network installations and management, hardware and software configuration, and troubleshooting.
Welcome to a special five-part podcast series on how to unlock the gold in your program, hosted by Tom Fox with guests Gio and Nick Gallo from ComplianceLine. One of the ongoing issues in compliance is how to demonstrate the Return on Investment (ROI) in your compliance program. One way to do so is by demonstrating the extended value of compliance literally across your entire company. When overlaid with an ESG component, you can begin to see the gold in your compliance hills. In addition to showing how you can unlock the gold in your own compliance hills, Gio and Nick walk you through how demonstrate ROI for your internal budgeting process which can provide to you the financial resource to strengthen and improve your compliance program.
Join us for the full 5 episodes and learn to see your compliance program in an entirely new light. In this Part 1, we consider how compliance can be seen as a corporate ROI multiplier by looking at the impact of compliance across your entire organization.
Some of the highlights of this episode include:
- The financial principles in unlocking the ROI of compliance.
- Why the alignment of compliance with other disciplines in your organization is not only critical but a key to unlocking compliance gold.
- Compliance budgeting is not simply about a cost center mentality. It requires a different type of discussion.
- Frameworks for improving your thinking about compliance.
- Building a complex and transparent case to OPEN the discussion about your assumptions rather than only including unobjectionable assumptions.
Resources
Gio Gallo on LinkedIn
Nick Gallo on LinkedIn
ComplianceLine
Special Episode with the Deputy Commissioner, Securities Division of the Vermont Dept. of Financial Regulation
In this special episode, CSS’s Director of Retail Wealth Manager Services Korrine Kohm and William R. Carrigan, Deputy Commissioner, Securities Division of the Vermont Department of Financial Regulation discuss the latest news for registered investment advisers, including what will be required in 2022 surrounding continuing education requirements, the implementation of the new Marketing Rule and what’s next for Form CRS.
About Our Guest Speakers:
Korrine Kohm is CSS’s Director of Retail Wealth Manager Services. Prior to CSS, Korrine was the Chief Compliance Officer and Head of Operations at Estabrook Capital Management where she was responsible for all compliance functions of this SEC-registered, $2.1B investment advisory firm. Korrine began her regulatory career while working at Allied Irish Bank (NY) in the Operations Department where she was a key member of AIB’s Compliance Committee, responsible for ensuring compliance with Federal and State regulations. An active member of the National Society of Compliance Professionals for over 10 years, Korrine earned her Investment Adviser Certified Compliance Professional (IACCPTM) designation in 2006, is a member of the Association of Certified Fraud Examiners, and obtained her Certified Fraud Examiner designation. In addition to her experience in compliance and banking, Korrine began the 16-week intensive training course in Quantico, Virginia, to become a Special Agent with the Federal Bureau of Investigation. She has particular experience in crafting customized policies and procedures, developing and implementing compliance programs, conducting on-site compliance reviews, acquisition due diligence reviews, risk assessments and mock SEC examinations. She routinely councils clients on various regulatory matters, including SEC registration issues, social media and advertising, policies related to diminished financial capacity, disclosures and the annual review process.
William R. Carrigan was appointed Deputy Commissioner of the Securities Division in July 2016. He has worked at DFR since 2007 serving as Director of Examinations and Enforcement and Investor Education Coordinator. A Certified Fraud Examiner, he worked closely with the FBI and IRS to expose the $28 million Mac Parker Ponzi scheme, which involved hundreds of investors, and he was a member of the team that investigated the recent Jay Peak EB-5 matter that resulted in federal and civil lawsuits. Carrigan also spearheaded the inquiry that led to the recent $5.9 million settlement with Raymond James and Associates. He has 20 years of experience in the securities industry and held various positions prior to joining the division. He holds a bachelor’s degree in business management from Johnson State College and a master’s degree in forensic studies from Stevenson University in Maryland. He is a member of the Association of Certified Fraud Examiners and the North American Securities Administrators Association.