Last week we lost Vin Scully, this week we lost David McCullough. McCullough was one of America’s greatest living historians. He worked in a variety of formats, including non-fiction books, television and movies. He was a great writer, winning numerous national awards for his books. According to his New York Times (NYT) obituary, “McCullough won Pulitzer Prizes for two presidential biographies, “Truman” (1992) and “John Adams” (2001). He received National Book Awards for “The Path Between the Seas: The Creation of the Panama Canal” (1977) and “Mornings on Horseback” (1981), about the young Theodore Roosevelt and his family.”
Many others knew him from his television work, most notably on Ken Burns The Civil War, and as the host of the American Experience. Not exactly John Facenda-like (i.e., the Voice of God) but as Gary North said, “not imperious, yet not exactly soothing, either — comes on, and we become more calm.” He also noted, “Incredibly, you don’t want him to shut up.” I heartily agree and could have listened to McCullough read the phone book (when there was such a thing).
As for my favorite books, probably No. 1 is The Path Between the Seas. Book about places are a notoriously tricky thing but it was great history, wrapped in a great biography all the while telling a great story. My co-favorite (1A) was his biography John Adams, first and foremost because of the love story between Adams and his wife Abagail, who was truly his partner in his entire life’s work. It also set a standard for telling the story of how Founding Fathers created a new nation in the midst of a bitter war.
I thought McCullough was a good introduction to start a two-part series on business approaches to create an effective compliance. I recently saw an article in the Harvard Business Review (HBR), entitled 10 Principles of Effective Organizations, by Michael O’Malley which also intrigued me about this topic. The effectiveness of a compliance program is an ongoing dialogue but what business strategies can you use to do so. Chief Compliance Officers (CCOs) are good at using the Hallmarks of an Effective Compliance Program, as delineated in the FCPA Resource Guide 2nd edition, as a guide but in this article, the author articulates a set of criteria and goals to meet to maintain the ability of companies to compete and grow. He identifies 10 research-backed principles from the field of organization development to guide companies and I have adapted them for the compliance professional. Today we take up his first five and we conclude tomorrow with his final five.
Encourage cooperation
The central objective of every compliance program is to achieve a cooperative ethical order in an organization to do business ethically and in compliance. From the organizational behavioral perspective, this means removing “divergent motives and antagonistic goals” in an organization. While getting everyone to row in the same direction is one part, the second part is to keep some group of employees, a business unit or geo-region, from breaking off and taking a short cut in your risk management protocol.
This means you as CCO need to channel your inner Russ Berland and buy lots of pizza for the business unit folks or others in the organization to create “strong social bonds among employees” that will drive all employees to do business in such a desired manner. The author notes, “They are affective bridges back to the organization that positively build relationships and influence performance.” That is certainly a key for every CCO and compliance professional.
Organize for Change
Many “once-great companies have found their final resting places in an expansive graveyard of slow-movers and has-beens. These companies failed because they were unable to adapt to changing conditions and succumbed to capitalism’s unapologetic truth that only the fittest will survive.” Now think about that intonation in the context of 2 years of a pandemic and the Russian invasion of Ukraine and its impact on business on a worldwide basis. Just as business has been buffeted by these winds, so has the compliance profession and its need to respond.
In effective compliance programs, CCOs “upend paralysis by generating a consensus of meaning and action. They build the case for change, create a positive mindset for change, convince others of the value and legitimacy of the change efforts, and battle against systemic forces of institutional inertia that lock companies into their current, misguided trajectories.” This is only truer in 2022 for the reasons I noted above. What the author said about companies applies to compliance even more, “Confidence, conviction, and courage are helpful companions in this journey, as not all change is readily apparent and must be made before there is an evident need for it and the window of opportunity has closed.”
Anticipate the Future
This is something I have talked more and more about, as the “preservation of an organization depends on its leaders having the navigational judgment and skill to prepare their companies for what lies ahead.” Once again this is even more so for the compliance function. The author noted that the “short term is undertaken with greater certainty of outcomes. The short term can be very rewarding. The short term provides executives with the continuing authority to lead by demonstrating their effectiveness in producing results.” Yet as we begin to plan towards mid-century, CCOs “must be able to look past nearby obstructions to see clearly what lies beyond.”
Part of that is anticipating your organizations needs both on the sales side and in the Supply Chain. Part of that is having resiliency built into your compliance program so that if China invades Taiwan, you will be able to respond to the inevitable changing landscape. Another part is technology or ComTech. A CCO needs to have tech savvy “people who collectively challenge the assumptions on which their current actions are based in order to imagine other possibilities. As Thomas Kuhn maintained, if your conception of the world is that it is flat, you will see things one way; if your conception is that it is round, you will see things in quite other ways. But you cannot see the implications of roundness until you suspend belief in flatness.”
Remain Flexible
Compliance must be at once disciplined, resilient and flexible, “reacting to the unexpected during turbulent times and flexibly bending when rushes of demand are placed on” it, then bounce back into shape “once the need for transformation has passed.” This can largely be achieved through improved use of ComTech and by aligning that tech to meet new challenges. Here the author also speaks to the need of “a simple creative additive of divergent thinking.” What you may not need on your compliance team is another lawyer but a data scientist, behavioral psychologist or a training expert. Compliance is changing and as a CCO you need to be ready to embrace the change to deliver the top compliance services to your customer, your company employees.
Create Distinctive Spaces
Interestingly, coming out of a two-year (and still ongoing) pandemic, the author believes there is a “link between the quality of a work environment and employees’ health, satisfaction, and performance.” This means if you are going to require your compliance team back in the office, the “basic dimensions of environmental indoor quality such thermal comfort, air quality, lighting, acoustic quality, and the ergonomic features of furnishings positively relate to enhanced performance.” Not only will it make your compliance team more effective, but it will also help in the competition for talent acquisition and retention.
Join us tomorrow where we conclude our review and note that Grease is the word.
