Benedict Arnold and How To Be a Game Changer In Compliance

This article was republished with permission from Tom Fox’s FCPA Compliance and Ethics Blog.

Last week marked the anniversary of the birth of one of the most notorious Americans of all time: Benedict Arnold. His name is synonymous with the word traitor in the United States and in many ways more derogatory. Simply calling someone a “Benedict Arnold” is insult enough and no more context is needed. Although a loyal American and a skilled leader in the Continental Army, his money troubles and jealousy over lack of promotion caused Arnold to change sides in the Revolution and offer to surrender the American fortress at West Point, where he was the commanding officer, to the British. Had his attempt been successful, it might have been a game changer for our Revolution. But his attempt failed and Arnold’s name now lives in utter disgrace.

I thought about Benedict Arnold and how his name lives in infamy in American history after reading an article in the January-February issue of the Harvard Business Review (HBR), entitled “Building a Game-Changing Talent Strategy,” by Douglas A. Ready, Linda A. Hill and Robert J. Thomas. The authors’ thesis is that effective people policies “drive business strategy, address concerns across the entire organization and add value.” I found that to be a good prescription for a compliance program, so, using the article as a starting point, I will discuss a game-changing compliance strategy you can use in your company. The authors have provided 11 statements you can use as a starting point to evaluate the state of your company’s compliance.

1. My company places compliance at the heart of its business model.
2. My company has a high-performance culture in the area of compliance.
3. Leaders in my company follow well-understood guiding principles.
4. Our compliance policies help drive our business strategy.
5. Our compliance practices are highly effective.
6. Our leaders are completely committed to excellence in compliance.
7. Our leaders are deeply engaged in and accountable for spotting, tracking, coaching and developing the next generation of leaders.
8. Our compliance practices are strategically oriented, but they also put a premium on operational efficiency.
9. Our compliance practices engender a strong sense of collective purpose and pride, yet work very well for my career as an individual.
10. Our compliance practices strike the right balance between global scale and local responsiveness.
11. My company has a long-standing commitment to compliance development, but we are very open to changing our policies when circumstances dictate.

Recognizing that it all starts with the commitment from senior management, the authors posit that having a top program does not involve trade-offs, such as “we do compliance or we do business.” They stated, “inherent tensions that must be carefully managed and reconciled: A strategic orientation must be balanced by ruthless operational efficiency; a sense of collectiveness must be balanced by the need for individuals to build their careers; a global perspective must be balanced by local relevance; enduring commitments must leave room for regeneration and renewal. Mastering all four of these tensions together will help your organization achieve and maintain high” compliance performance.

In the areas of strategic and operational decision making, the authors suggest six responsibilities which a company must master.

• Talent planning and recruitment. In this capacity, a company should use the compliance function to help its recruitment process. Companies need to recognize that they must “tailor their appeal to a new breed of college and business school graduates who have social responsibility as one of their highest priorities.”
• Ensuring a high-performance culture. Here a company should not only celebrate its compliance successes throughout the organization, but also make sure that those employees who show leadership in the compliance arena are rewarded financially and through promotions.
• Prioritizing leadership behaviors that matter. A core part of your company’s mission should be to protect and promote the culture and values of compliance by ensuring that leaders are assessed not only on their technical performance, but also on how well they live by and teach the guiding principles as set out in your code of conduct or other foundational documents.
• Developing employees. A robust process for employee and managerial training is essential. The authors suggest that a company should value “stretch assignments and bosses who pay attention to developing direct reports as cornerstones” of your company’s compliance culture.
• Talent reviews and succession planning. It is mandatory that you incorporate a compliance component into your annual reviews, hiring assessments and succession planning.
• Networking and collaboration. You should use your internal company social media, online chats and other collaboration tools both to foster dialogues on compliance and to network on areas of concern across the globe.

Top local compliance talent also needs to be developed and nourished throughout this process. The authors believe it is important to have “talent policies and practices [which] are globally scaled and locally relevant.” This can also be useful for companies to “know where their best people are, what capabilities they possess and how they can help with the challenges the company is facing.”

A final key point is to stay nimble. The authors state that “in the top-performing companies, a sense of legacy and continuity matters.” Moreover, talented individuals are drawn to organizations that continually refresh their systems and processes as well as their strategic initiatives in order to delight customers and outwit competitors. One of the ways to accomplish this is to build your compliance strategy, one that “both endures and regenerates.” You can do this by constantly scanning for innovations in compliance practices while ensuring that your company’s guiding principles are well understood and practiced. You can employ such techniques as an annual engagement survey that addresses, among other things, the quality and effectiveness of your company’s compliance practices.

The authors end their piece with the following: “Game-changing companies build three winning capabilities simultaneously: They are purpose-driven, performance-oriented and principles-led. We believe that their secret weapon is superior talent strategies characterized by deep commitment from the top executive team, broad-based engagement and line accountability, with a ‘leaders developing leaders’ culture.” Your compliance strategies should completely align with your company’s enterprise and business strategies; they should be transparent and authentic and guided by skilled professionals throughout your organization.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business advice, legal advice or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The author gives his permission to link, post, distribute or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.