Do what you can

Few things are as disheartening to an ethics & compliance officer than to feel powerless against a senior management team who doesn’t walk the talk.

In an ideal world, the ECO could simply say to senior management “Wait. You say that X is important but you don’t put any resources into it. Either we admit that this is not important or we allocate the necessary resources.”

But we don’t live in an ideal world. So what are other actions an ECO can take? Here are some suggestions:

Use a real case. Present the findings of a recent investigation to senior management. In a non-accusatory way, show how the organization could avoid another violation if more were to be done. Don’t blame them for their failure to act more aggressively in the past. Instead, present this as an opportunity to become better.
Find an ally in the c-suite. If they don’t listen to you, they might listen to one of their own. Can you have a candid conversation with one of them, one you know could take the baton?
Create demand. Discuss the issue of concern with as many middle managers as you can. Don’t point the finger at senior management. Instead, genuinely try to identify ways by which middle management can solve the issue on their own. Because a solution is unlikely, these sessions will agitate the crowd and senior management could be forced into action.
Use the helpline. Force senior management to respond to your concern by using your anonymous helpline. You’ll want to make sure they can’t trace it back to you. You may not get a real answer, or you might get empty promises, but at least you will create a discussion in the c-suite and put them on notice that not everyone is fooled by talk that doesn’t match the walk.

You don’t have to be successful in any of these attempts. You simply need to keep trying.

Caring and leadership

A recent post by Thomas Fox reminded me of this quote by Colin Powell:

Leadership is solving problems. The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help or concluded you do not care. Either case is a failure of leadership.

This quote used to be taped on my computer monitor. It helped me stay centered when I otherwise felt overwhelmed by the all the calls and emails from the colleagues that I support.

I have since gone on the offensive. Today, I make it an almost-daily practice to call one or two of my 500 ethics & compliance officers to see how they are doing and if there is anything I can do to help.

Not that I’m looking for more work. I simply want them to know that I care.

Obstacles

The fraud triangle shows how inflicting emotional or financial pressure on employees can cause them to break the rules.

What makes any level of pressure worse is the failure of management to remove obstacles preventing employees to do their work.

Employees who can’t meet their goals because management is not willing to remove obstacles will choose one of the following paths:

They will tell management that they cannot meet the goals until the obstacles are removed. This can be career-limiting.
They will shift their focus from meeting the goals to removing the obstacles – the right way. This is rarely successful because these employees do not have the requisite authority or influence. If they succeed, there is little time left to work on the original goals.
The will break the rules to go around the obstacles. If they get caught, they will be blamed. If they get away with it, they will be emboldened. If they are not emboldened but rather disgusted with how they had to reach their goals, they will leave the organization and go work where management cares.

A good question for team leaders to ask is: “What obstacles can I remove for you today?”

Play, purpose and potential

Today is my quarterly “connect meeting” with my boss.

We sit down and discuss how things are going. It is meant to be more than an evaluation of my performance against objectives. The objectives themselves are up for discussion.

More importantly, it is an opportunity for me to reflect on why I go to work, to identify my drivers, and to adjust as necessary. My goals are:

To remove inertia at all costs. If I don’t know why I’m doing something, I must stop doing it immediately.
To remove economic and emotional pressures to the extent possible. Am I doing something simply because others expect me to do it or because my bonus is tied to the task? When there is no other purpose, this type of work rarely benefits the organization.
To maximize my sense of play, purpose and potential. I want to craft a job so exciting that when I go to bed at night I am looking forward to getting up the next morning. A job where I can try things, where failure is considered learning, where I help others and grow in the process.

Come to think of it, these connect meetings are filled with play, purpose and potential.

A new definition of compliance professional

These are my reading notes and thoughts on the book titled Influence by Robert Cialdini.

Introduction

I did not expect the first paragraph of this book to stop me in my tracks but it did. After admitting that he is an easy prey for people selling magazine subscriptions and raising money for charities, the author writes this about compliance:

Probably this long-standing status as sucker accounts for my interest in the study of compliance: Just what are the factors that cause one person to say yes to another person?

In my 13 years in the E&C sphere, I had never thought of compliance as a process leading others to say yes to me. Compliance had always been about the question “Can I?”, while ethics was about the question “Should I?”. Compliance was about the law, about the rules. I had always looked at compliance from the perspective of the one being ruled – the employees ruled by the company, itself ruled by the regulators. Cialdini, it seems, is approaching compliance from the perspective of the ruler.

This mindshift comes on the heels of another concept I heard for the first time recently: most compliance failures do not result from a lack of awareness or understanding but from others not believing what we – the compliance officers – believe.

Put together, these two notions suggest that a successful compliance officer is one who, using the influence principles, communicates her beliefs in such a way that causes others to say yes the compliance program.

Imagine organizations where E&C professionals possess such skills.

This approach to E&C is interesting, to say the least.

Don’t sell a better future

In his post today, Seth Godin explained why it’s almost impossible to sell the future. “When [humans] buy a stake in the future, what we’re actually buying is how it makes us feel today.”

This helps explain why it can be difficult to sell business leaders on the importance of improving the culture of an organization. What we are selling is the promise of a better workplace in the future, a future that is often years away. And, we add, it’s going to get worse before it gets better. Not a great sales pitch.

Here’s an example. You work for an organization that goes to market via agents that are compensated exclusively with commissions that are only payable if they hit a stretch goal by year-end. Everyone in the industry works that way. This process eventually leads to a bad outcome and you (correctly) suggest that it needs to be changed. At the same time, you admit that many of the agents might quit and sales will go down in the short term. If you work for a publicly traded company, this won’t make anyone feel good. But, you say, after the bad agents leave and we consolidate our sales with the good agents and we create a reputation in the market for doing things right, then sales will pick up and we won’t need to spend money on fines and penalties, and we’ll have a workforce that feels good about how they do business.

Few companies take that path. Most who do are forced into it by a regulator – at great expense.

This is why writing a policy, providing training, adding internal controls, conducting audits are easier to sell after a failure. Business leaders can feel the immediate results. But none of these things actually change how we do things.

I had a boss who used to tell me “You need to explain how this is going to help them do their job.” I understood why this was important but I could never find a good answer. Now I realize that it’s because I was only selling them future, and even I was left on my appetite.

As E&C professionals, we need to figure out how to make our business leaders immediately taste the benefits of what we are selling.

Playful agenda

In their book Primed to Perform, authors Neel Doshi and Lindsay McGregor demonstrate that “why people work determines how well they work.” Somewhat surprisingly, we learn that play is the strongest driver of performance.

In the workplace, play refers to an employee’s ability to be curious, to experiment, and – more importantly – to survive failures. When employees are given the opportunity to try new ways to get the work done, they perform better. This concept works even in highly-tactical environments like assembly lines. Just add an andon cord and see what happens.

Several years ago, before I understood this idea, I started to use play by allowing employees to set the agenda for meetings and presentations. I had noticed greater employee participation with this approach. You can call it a micro-application of the play concept. Here are two specific examples:

When I’m invited to present to a group, I reserve at least two-thirds of my allotted time for Q&As, which means that two-thirds of my presentation is driven by their curiosity.
This month, I will be in Europe to meet with 100 of my team members over 2 days. Using Tricider.com, I invited them to identify many of the topics to be covered during the meeting.

I believe it was Stephen Covey who said (or repeated) that “the key to commitment is involvement”. Play is something we willingly get involved with. We do it out of pure enjoyment.

Lucky for us, it also increases performance.

Book report: Primed to Perform – Compensationism

Book by Neel Doshi & Lindsay McGregor

Reading notes by Yan Tougas

Compensation is the most misunderstood key to culture. Too many managers believe that performance-based pay is the key to motivation. The reality is that this is true only in some cases. If the compensation threatens adaptive performance and cooperation, the whole company can suffer. A better compensation system rewards people for learning new skills.

Money is a poor motivator but it can be an effective “activator”, overcoming one’s inertia, convincing someone to leave his/her current job for a better one. At the same time, performance-based rewards tend to cancel out the natural sense of play. People hesitate to experiment because failure means less money. Performance reviews linked to compensation create a blame-oriented culture. It’s better to focus on learning skills and mitigating weaknesses.

Below are nine questions to help you determine if performance-based compensation is good for your organization. The more times you answer no, the more damaging it can be to your business:

Are adaptive behaviors important?

1. Is the job routine, with very little VUCA?

2. Do your people face no conflicts of interest?

3. Is your company insulated from the financial and reputational risks that come from an individual’s distraction, cancellation, and cobra effects?

4. Is teamwork unimportant to drive the highest levels of performance?

Will your compensation system reduce total motivation?

5. Can you fairly measure important behaviors, especially adaptive behaviors?

6. Can you determine the value of the behaviors you care about?

7. Are your people resistant to emotional pressure, economic pressure, and inertia?

8. Is ToMo naturally high in your company?

9. Is it easy to align incentives between your customers, your employees, and your company?

If you answer no too many times, you may find that an investment in culture building yields higher performance dividends than pay-for-performance.

We don’t need more rules

As business scandals continue to surface, we see more companies looking to hire compliance officers. So we must ask: do we really need more employees whose job it is to ensure that other employees are following the rules?

Thinking about the recent Volkswagen scandal, would more compliance officers have prevented the deployment of its cheating software? Compliance officers do their job within a set of corporate values. If those values don’t include honesty, integrity, and trust, then what exactly is the role of a compliance officer? The time has come for organizations to discover the values they want to live by, instead of the rules they want to follow.

Ethics Officers more naturally consider culture and values when addressing compliance failures. Values provide guidance not only in interpreting a rule but in deciding what to do when no rule governs. That’s why values-based organizations will always outperform, and outlive, those that are rules-based. In the aftermath of an ethical scandal, organizations regain none of the public trust by hiring a large outside law firm. To regain trust, organizations must publicly commit to live by a set of clear values. And they must be willing to lose business rather than compromise those values.