In the June issue of the Harvard Business Review is
an article by Alan Grant entitled, "How
Customers Can Rally Your Troops". In this article Grant argues that
"End users can energize your workforce better than your managers can." His
basic thesis is that employees are highly motivated and more effective when
they are shown that their job performance has a positive impact on others.
This article had me wondering if such a concept could be
translated into a company's overall compliance and ethics program. The answer I
came up with is a resounding yes, it can. The first question I had to think
through was who are the end users of a compliance program? From a sales
perspective the typical end user would be a customer, whether commercial or
consumer. So I began to think about the customers of a company and how its
compliance program might affect them. Most compliance practitioners do not
normally think of their sales customers as people or entities who would be end
users of a company's compliance program.
However, the more I thought about it the more I realized
that any company compliance program must take customers into consideration
during an evaluation process. Most companies are aware of the mantra "Know Your
Customer (KYC)" and put this phrase into action. My colleague Howard Sklar
calls it "compliance convergence" but however you term it a company must
be aware of whom it is doing business with in the areas of export control and
anti-money laundering. Sufficient checks must be run on customers to satisfy
Restrictive Party Screening in the export control area. In the anti-money
laundering the various Department of Commerce and Department of Treasury lists
should be screened before any transactions occur.
Nonetheless, it is clear that a wide variety of third
parties could be the user of a company's compliance program, either through a
Code of Conduct, Compliance Policy or Compliance Procedure. This could be third
parties in the sales channel such as sales representatives, agents, resellers
or distributors. It could be business partners such as Joint Ventures partners
or Teaming Partners, as well as services providers such as freight
forwarders, visa expeditors or customs clearance providers. This listing is not
exclusive there could be others.
In his article Grant identifies methods to use the
required screening to improve and enhance a company's overall compliance
program by taking companies which are subjected to such screenings and using
them as examples to your own company as motivational tools. He terms it
"outsourcing inspiration" and that a company can bring in outsiders to speak
about a company's overall compliance effort and how such an effort positively
impacted their company. He argued that there are three mechanisms of outsourced
inspiration, they are (1) Impact - Company employees themselves can see how
their compliance program positively benefited other organizations; (2)
Appreciate - Compliance practitioners can see how other third parties
appreciate their actions and move forward the overall compliance effort;
and (3) Company compliance practitioners develop a deeper understand of the
issues third parties face when complying with overall compliance programs,
procedures and obligations.
Grant also posits that strong leaders are very good at
outsourcing inspiration, in a complimentary role to a leader's vision. A
strong leader will use such outsourced inspiration to provide examples of his
or her vision. Grant listed several specific techniques by which this can be
accomplished. I have taken them and adapted them for a compliance and ethics
The final example comes from personal experience so I
hope that you will find it as powerful as I did. One of the first times I was
required to contact a customer to ask some questions about the customer's
compliance program was with Tyco, which had gone through their own compliance
and ethics journey. I informed the transactional counsel I was working with
that I needed to interview a person with knowledge about Tyco's compliance and
ethics program. He transferred me to someone in Tyco's compliance department.
That compliance officer proceeded to tell me, over one hour, the compliance
problems that Tyco had sustained and the steps that they had taken to remedy
the structural problems involved through a revamped Code of Conduct and
completely rewritten compliance program. He fully answered any and all
questions that I put to him. I came away from this conversation thinking that
this company was committed to compliance and more importantly for Tyco; it was
a company that I wanted to do business with. That is outsourcing inspiration
that you cannot pay a trainer to teach.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues
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© Thomas R. Fox, 2011
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