Compliance Mindsets and Practices for More Protective Outcomes
Successful compliance is made difficult by our humanness and natural predispositions. Even though we are taught the importance and expectation of honesty, ethics and self governing of ourselves and our organizations, outcomes are regularly mixed, with shortcomings and failures more common than expected. There is a smarter, safer path through the wilderness of our thinking and behavior.
The problem described above is made additionally difficult because often the people who bring attention to breaches of compliance, “town criers” if you will, are rarely received well or valued, whistleblowers even less so.
This proves challenging to compliance professionals working to deliver on intentions and expectations.
Communication can be assumed to be clear yet there might be a reason it misses the mark with some leaders and organizations.
“The challenge is to learn to speak the language of those you are trying to convince,” says Calvin London, Ph.D. and Founder and Principal consultant at The Compliance Concierge.
As to what stands in the way of this convincing happening, London knows.
“Modern day compliance folks have to show people three things in order to gain their confidence and their respect,” he says. “Note, I didn’t say that you have to be liked, although that is a bonus.”
Let people know that you are human and you understand change is difficult, that it will take extra time to complete a form, but also let them know that is for everyone’s benefit.
Never ask anyone to do anything that you would not do yourself.
“Easily said, but leading by example will speak volumes to employees and after all isn’t this what leadership is all about — setting a pathway for others to follow,” London says.
Accept you will have to do some marketing.
This might catch leaders and compliance professionals off guard because why would marketing be necessary? London says any aversion to the duty should be quickly dismissed because of the necessary reality and the power of its persuasion when done correctly.
“Yes, I know it can be a dirty word for compliance people, but let’s face it very few people are going to adopt more work for themselves, change what they are doing without knowing ‘what’s in it for them’, or agree to more monitoring without feeling that ‘big brother is watching.’ You need to give people a reason,” he says.
London sees similarities in his three-pronged prescription.
“The common element to all of the above, and the elevator pitch for initiating change has to be ‘Hey I am just like you with a job to do that will benefit everyone,’” he says.
Prevention is more desirable, inexpensive and beneficial than reactive compliance yet how that can be accomplished is an ongoing debate.
“Great question that to me screams out ‘tone from the top,’” London says. “We use this term a lot in compliance but in many cases I do not think there is a good understanding of what this means at its most basic core. To me, ‘tone from the top’ says I know what my company does, I know the environment and its requirements that we have to meet to be successful, and I am prepared to do what it takes to get there.”
Translated, London says that clarity of responsibility emerges as a core value and commitment and that leaders that construct a can-do, will-do narrative in their minds to drive needed strategy, communication and implementation can drive compliance competence and excellence.
He says the narratives that organizational leaders is one impetus to create success and that starts with an understanding of what is necessary and what can happen with a disinterested approach.
“ ‘I know what is expected from companies such as ours in terms of ethics and integrity, I know that I should have appropriate systems in place for the size of my company that minimizes the risks to an acceptable level, and I have seen what has happened to other companies that have failed to do this,’” he says.
Having this type of mindset also means that the right questions and responses are occurring within leadership thinking and conversations.
“Putting aside this holistic view, how can it be an acceptable practice to ‘wait and see if I get caught’ before I spend the necessary resources on minimizing my stakeholder and financial risks in the first place,” he says.
London strongly believes that the higher bar may very well have to come from the most dominant voices if quality compliance is going to be conducted on the front end as the wisdom of prevention.
“At the end of the day the drive for proactive compliance has to be created by the stakeholders of a company and in particular the shareholders who demand this approach from the CEO and executive team by challenging them to effectively execute ‘tone from the top,’” he asserts.
Compliance, being multifaceted, presents examination, including the area of monitoring and its quality, absence or convenient discouragement of, or dismantling of it.
Problem solving these possibilities and occurrences can be complex.
“My rationale is as follows,” London says. “If you have leadership that discourages monitoring or actively dismantles monitoring whenever budgets get tight for example, this sends a clear message ‘we do not have a good understanding of our business and there may be things that we do not want to see because then we might have to fix them.”
That short-sighted thinking and practice does happen, regardless of the risks being assumed. This blind spot and motivated reasoning are dangerous.
“I did some work for a company some time ago that actually refused to do any form of monitoring because that might identify problems,” London says.
That desire to bury one’s head in the sand might be psychologically protective and temporarily protect a leader’s well-being and peace yet the unknown, if problems exist, doesn’t stop being explosive in nature.
“It is far better to at least have some form of monitoring in place even if it is not a commercial system with bells and whistles, if that is all you can afford and you have acknowledged the risks associated,” he advises.
London says there are significant protective benefits of pursuing this approach that can act as a catalyst for improved risk management.
“The SEC and DOJ or any other regulatory body recognizes that some attempt to monitor and control rather than to have nothing, or even worse have a record that shows you have deliberately tried to avoid any form of monitoring, is a much more responsible approach,” he says.
Even with the multiple (figurative) carrots this presents, people are still people and will move away from responsibility, ethics, compliance and better governance.
London has been discouraged by the narrative that people and organizations “want to do the right thing.” His experiences in compliance have taught him differently than that assumption.
Leaders and organizations wanting to be more skilled at risk management have to find a way to become more intrinsically motivated to “do the right thing,” and consistently so, in a way that is simpler for them.
“People seem to have limitations when it comes to ‘doing the right thing.’” London says. “Most of the time they will accommodate what feels comfortable but then struggle with a change that asks them for a little bit more.”
There are helpful responses that can lead to improved decision analysis and decision making.
“The first is to create a safe environment. Research has shown that when people feel safe they are more likely to be motivated to do the right thing. Makes sense really,” London says. “If we feel confident about doing the most basic things in life, we are more involved and more motivated. So it would follow that if we can make a work environment safe by providing reassurances that doing the right thing is the expectation not the wish, we have a better chance of success.”
Psychological safety is regularly overlooked or not well understood in organizations as they hope to more effectively lead, especially with governance and compliance. London says that without a commitment to understanding the need and benefits of it, without the practices that build it, organizations will elevate risk of crisis.
“A few years ago in a previous life I was given the challenge to introduce a ‘speak up’ campaign and very quickly found that this was going to go nowhere unless there were firm commitments in writing and verbalized by responsible managers, that there would be no retribution for raising issues,” he says.
Studies have shown that employees want and are receptive to additional education and skill building and London believes that offering it is risk management intelligence.
“The second part is to empower people with knowledge. I have written several articles on the topic of compliance training versus education for the Society of Corporate Compliance and Ethics (SCCE). This in itself is an important aspect to grasp: people become empowered by becoming educated, not necessarily by becoming trained,” he says.
London explains why he recommends education as a difference maker in compliance.
“When you are trained you develop skills but do not acquire the understanding that fuels motivation,” he has learned. “The sooner we learn that there is more value in giving people short examples and ‘true tales’ associated with compliance principles to broaden their experience rather than sit them down to read policy from start to finish, the better off I think we will be.”
In the end, there is hope for greater understanding of what stands in the way of more ideal yet practical, high-level compliance. London’s experience and expertise has revealed to him a path through the risk and uncertainty.
Improved communication, modeling what behavior you want, setting the expectation and tone from the top and implementing internal marketing promoting compliance mindset and behavior are recommendations London sees as catalysts for success.
He also stresses that stakeholders and shareholders need to boldly commit to and act on the long view and express their specifically defined expectations, boundaries and limits for compliance; and organizations must lead with sustained ethics, commit to creating high-level psychological safety and focus on education.
Michael Toebe is a specialist for reputation, professional relationships communications and wiser crisis management, serving organizations and individuals. He writes the Red Diamonds Newsletter (on Medium), is the host of the Red Diamonds Podcast and writes advisory articles for online magazines.
