Menu

governance

experience

How to Be a Voice of Experience

, , , , , ,

You got to where you are today due to your experience. You were hired because of your experience.  How then, will you make that experience count as you provide guidance to key contributors and decision-makers in your organization?

As I’ve addressed in previous posts, developing a network of “Friends of Compliance” who engage in mutually beneficial exchanges of information will help you stay relevant, needed, diligent and more effective overall.

Draw on What You Know and Seek to Know More

Your experience and skill set will be an invaluable asset to your organization; however, like many professional service careers, you will need to keep up with regulatory expectations and norms, industry best-practices and more. Your experience will only be valued if it continues to grow and be added upon.

To protect your “brand” and add value to your organization, you will build on this experience through fostering relationships and connections both internally and an externally. A compliance officer needs to understand industry trends and use that intelligence to develop smart, strategic ways to address challenges.

You can successfully accomplish this by:

  • Being actively involved with your industry – participating in conferences, discussions, groups, etc to keep abreast of developments, expectations and best-practices.
  • Establishing value-add relationship with Legal and risk peers, to seek support and collaboration.
  • Making your involvement with fellow business leaders a priority as you build a network of “Friends of Compliance” (FOCs) throughout the organization help encourage interest, identify red flags and provide candid feedback about your ideas and work.

Make it your mission to help those around you understand the importance of compliance at the executive level and throughout the organization.  Go beyond your compliance experience to understand the drivers of business interests, behavioral incentives, and the importance of relationships. As a compliance officer, you need to know the rules, but that knowledge and its value will increase when you apply this technical knowledge to the inner-workings, motivations, and priorities of the organization you work for. To keep increasing your knowledge, visit Bethhaddock.com

Silos

Prevent The Danger of Silos with Mock Audits

, , , , , , ,

It’s an easy trap to fall into – becoming immersed in your department’s priorities can be like being engulfed by wheat, corn, etc. in an actual silo.  The result is an inability to see and recognize the other resources harvested at the same “farm.”  When resources collaborate though – they mitigate systemic risks. This is the time of year compliance officers should consider inventorying systemic risks and planning for the year ahead. One approach is to conduct a mock audit to test controls, help breakdown unhelpful silos and adopt best practices, particularly on the higher risk topics.

The Opportunities

Management often does not realize how compliance can contribute to sustainable business growth.  Consider what can happen when compliance isn’t integrated effectively.  If a compliance officer works in an organization where Compliance is not included in strategic initiatives until the last minute when there is not enough time to study the impact of the issues, inefficiencies grow as compliance or independent consultants audit and find control gaps after a new product is designed or new system is launched.  For example, time and money may be wasted marketing new products if a compliance officer is brought in too late to address issues. The product is already baked, so Compliance fixes are more likely to be bolted on instead of baked in. Product developers may not focus on avoiding conflicts of interest, self-dealing, and unfair expense allocations.  Recently, Deutsche Bank offices were searched as part of a money-laundering investigation, in the latest example of an allegedly siloed compliance culture because suspicious activity reports were not allegedly not handled as required.

The dangers of siloed compliance can be avoided with collaborative risk assessments and independent audits of the business including high-risk products and new technology. This approach will arm compliance officers, so they can help grow and sustain the business at the start of 2019. It will also serve as protection against any regulatory investigations into the adequacy of the compliance program.

Changing the Perception and Building Influence

To avoid the inefficiencies and disruptions of silos, the key is for compliance to become an influential participant in the business and develop metrics to illustrate its value-add.  Read my previous post on how to increase influence and play a more integrated role across the company.  Also, learn more about developing your skills and building Sustainable Governance within your organization by visiting www.bethhaddock.com

Networking

Networking: How and Why You Should Engage “Friends” (FOC)

, , , , ,

Trying to do anything of significance unaided is difficult, let alone provide protection, productivity, and impact to an organization. It’s why the most successful compliance officers and departments rely on their relationships in and out of the companies they work for.

Networking is a critical skill – one that will be as crucial to your success as a compliance officer as it potentially was to navigate your career thus far. As compliance professionals, it’s our job to be the “eyes and ears” of the company, prepared to offer preventative guidance and effective solutions when necessary. To do this successfully requires having a comprehensive view and understanding of the industry, business, and relevant stakeholders. That can’t be done alone.

Seek to establish a network of “Friends of Compliance” (FOCs) within your company that will provide diverse perspectives, identify issues – helping you build smart controls, and create effective alliances. Remember, a solo compliance officer will have a tough time making an organizational impact.

Building Your Network

Research shows there is a common behavioral pattern, called a social exchange, that compliance officers can leverage to help build their FOC network. Social exchange theory essentially states that through a series of interactions, employees build a state of reciprocal interdependence, which leads to mutually beneficial trust relationships.

Building this network will not only increase engagement in your compliance program – which will help achieve sustainable governance – these FOC will be able to highlight blind spots, operational challenges, and obstacles that lead to ineffective policies and controls. As you create programs and processes to provide protection, productivity and impact, your FOC will often become a source of information about business perspectives, strategy, and priorities. The result?  This network becomes a secret weapon, boosting diplomacy skills before important presentations or requests for resources. Time spent building an FOC network helps not only the organization, but your reputation as well.

Look at your compliance team as individuals strategically sprinkled throughout your organization, as well as key individuals outside of it. Leverage their different perspectives, skills, priorities, etc., to shape your approach to sustainable governance. Read more in my book: Triple Bottom-Line Compliance

Attorney Compliance

Year-end Planning and Examining the Attorney-Compliance Relationship

, , , , ,

As I discussed in a previous post, the relationship a compliance officer has with the company will be different than the one an attorney has with the same company. Attorney communications are private and protected and focused on protecting the company as the client. A compliance officer’s communications and self-critical analysis of the company and its controls do not receive that same protection or single focus. This is a distinction that is important to understand as enterprise risks are managed and year-end testing is completed.

If collaboration is leveraged, enterprise risks can be efficiently managed. On the other hand, if the business treats attorneys and compliance officers as they treat doctors shopping for a second opinion, business development could be delayed as answers are reconciled.  For example, if an attorney is asked about how to expand into a new jurisdiction or whether one can loan money to a client to enable the client to participate in a new opportunity, an attorney may analyze the legal permissions and agreements needed to help the business proceed. A compliance officer may attempt to also help the business proceed but, for expansion into a new jurisdiction, the compliance officer may also consider the timing because the company will need the infrastructure to monitor adherence with local laws and anti-bribery, anti-money laundering (“AML”) and sanctions requirements. When helping the business consider the appropriateness of a loan to a client, the compliance officer will consider whether proceeding with the loan is fair to other clients who may also want the opportunity but weren’t offered a loan or whether the loan raises other conflicts or regulatory issues such as affiliated transactions and disclosures.

As you complete year-end planning, consider how to leverage the collaboration between these teams when completing risks assessments and budgeting for compliance, legal and risks costs in the coming year.

There are several ways compliance and legal can work together for the benefit of the organization to make a long-term impact including treating attorneys as “Friends of Compliance” (FOCs) and understanding that they cannot represent compliance officers if interests diverge.  Learn about these specific situations and solutions for compliance officers by reading Chapter Six of my book, Triple Bottom-Line Compliance here.

business

How to Avoid Easy Compliance Mistakes in Business

, , , , , , ,

Mistakes happen in every discipline and industry of business – we are after all, human. However, the thought of mistakes is not a reality we, as compliance officers, want to experience.

As individuals, we have a certain amount of control in preventing mistakes. With critical self-analysis, we can find a problem before someone else does. As compliance officers, finding an issue before a customer, regulator, or the public becomes aware of it is the key to providing not only protection but also value for the organization.

However, because we are human, it is difficult to take on the task of protecting the entire company as an individual (or Compliance team).  Which is why the avoidance of many compliance-related mistakes can be solved with one major focus: building solid relationships throughout the company.

A compliance officer must be a diplomat, understanding many different stakeholders, and must be someone who doesn’t just find problems but fixes them and proactively avoids them. To do this requires an understanding of who we’re working with.  Earlier in my career, a brilliant businessperson with extraordinary people skills taught me to know my client and adjust accordingly. She taught me an important starting point for understanding clients is to expect differing views of Compliance and its ability to incentivize good business judgment. With a smile and a curious mind, she helped the Compliance team build rapport and reminded us that a compliance officer who doesn’t understand varying behaviors and simply announces edicts will have a tough time making a sustainable impact on anyone’s business judgment.

When we accept that understanding behavioral drivers and incentivizing behavior is more effective than dictating rules and expecting adherence simply because we say so, there will be a culture of compliance. When the culture encourages engagement with Compliance, where self-reporting to Compliance is valued and rewarded as a form of leadership, issues can be addressed more easily and resolved earlier.

This approach takes time.  It’s a long-term approach, changing the way people work together by aligning interests and relying on incentives to win wider engagement that helps avoid problems. This kind of sustainable compliance develops its own momentum – allowing compliance officers to almost step back and only calibrate improvements as needed.

The more awareness and involvement you instill within your organization, the less likely your company will find itself making compliance-related mistakes.  Learn more about strategies to effectively incorporate compliance within your organization by visiting, www.bethhaddock.com

compliance

Compliance Question: What Would You Do with a Rogue Tweeter?

, , , , , , , ,

Imagine if you were the compliance officer for Tesla. What would you do?

In light of Elon Musk’s (the CEO of Tesla) recent string of tweets – – the tech genius’ uncontrolled social media posts have highlighted the importance of social media governance and how difficult it is to eliminate the risk that emanates from executives’ individual conduct.

The question becomes, can you really control a founder, CEO or a favored executive of a company? The short answer, no, but you can influence and have safeguards in place to protect your organization and its stakeholders including clients, investors, and board. Those who have founded and built successful companies likely feel entitled to speak their mind about the company they have created.

What would be your first order of business if you were the new compliance officer at Tesla implementing social media and other governance controls?

First, do what is necessary to understand what the company has in place currently, what it doesn’t, and why.  Understand why certain protocols are missing or if they are in place, why have they been ignored.  You will earn the trust of the business and others by assessing the current state before making changes. Then start to build trust by explaining and implementing controls that facilitate marketing and promotion by the company’s leaders and proactively protect the company for liability and any reputational crisis.

Most often, public companies like Tesla have controls guiding executives and PR agents who speak on their behalf. The SEC alleged there was not enough of both.  Following Musk’s “$420 per share tweet,” SEC Chairmen Jay Clayton stated, “Tesla had no disclosure controls or procedures in place to determine whether Musk’s tweets contained information required to be disclosed in Tesla’s SEC filings.  Nor did it have sufficient processes in place to that Musk’s tweets were accurate or complete.”

This situation is a good reminder to consider whether your company has the following best practices in place when it comes to public statements about the company:

  • Limit who may publicly speak or represent the company in the media, so the company can control the message,
  • Require pre-approval of content to ensure any message is fair and balanced and accurate, and
  • Create “rules of the road” for social media posts, public appearances etc. — such as communicate what is true, already verified and fair and balance. Do not communicate feelings, beliefs or hopes – unless pre-approved to confirm there is no bias, conflict or misrepresentation.

Now, instead of imaging “what if I were at Tesla,” take the time to consider the “what if” in your current organization and do everything you can to influence leaders, implement protocols, and prevent a similar reality from happening to your company.  Learn more about best compliance practices by visiting www.warburtonadvisers.com