In the October issue of the Havard Business Journal, in
an article entitled "How 'Mystery Shopping' Helped Spark a Turnaround",
Office Depot's President Kevin Miller wrote about his experiences as a 'mystery
shopper'. He began this tour to determine if the high customer satisfaction
scores the Office Depot was achieving were correct. To do so Miller toured 70
Office Depot stores in over 15 states as a 'mystery shopper'. It turned out
that customers did have high satisfaction over the products and services that
they were asked to rate, however, this high satisfaction did not drive sales.
It turned out that Office Depot was measuring the wrong things. Miller then
began to assess what customers needed and turned that information into sales.
The recent Watts Water Technologies settlement with the
Securities and Exchange Commission (SEC) regarding internal controls violation
of the Foreign Corrupt Practices Act (FCPA) of a subsidiary in China was a
reaction to the background facts. One of the things that struck me was how the
allegations of FCPA violations initially came to the attention of the General
Counsel during the course of FCPA training for senior members of the Chinese
subsidiary. Watts' "corporate counsel became aware of potential FCPA violations
at [the Chinese subsidiary] through conversations with...sales personnel who were
participating in the training." This point reinforced to me one of the most important
things that a compliance practitioner can do, which is get out into the field.
I have often heard my colleague Mary Shaddock Jones,
former Assistant General Counsel and Director of Compliance for Global
Industries (GI), speak about her experiences in traveling across the world to
train the third party business representatives of GI. She often talks about the
personal relationships she was able to build with both the people and companies
because she took the time, effort and money to come to their area of the world
and put on training. But she also speaks of the questions, observations and
ideas that these parties would give to her. It also allowed her to have an 'ear
on the ground' as a front line member of GI's compliance department.
The same holds true for employees who receive compliance
training. When I was in the Halliburton Legal Department, one of my assignments
was to travel overseas to put on contract training. At every training session,
which was announced well in advance, employees would bring to me questions,
comments or concerns that they had been saving up and did not ask over the
phone or via email, for whatever reason. Such queries might be asked over
lunch, dinner, or some other more relaxed social setting before or after the
formal training. This taught, and continues to drive home to, me that lawyers
and compliance department members need to get out of the office and out into
While web-based compliance training certainly has its
function in a multi-national corporation with thousands of employees, it cannot
and does not take the place of live, in-person training. The Legal Department
of Watts Water Technologies learned the value of this lesson first hand. If
certain of the employees who received the compliance training had not spoken to
the Legal representative of their concerns, the company might not have started
down the path which led to a civil penalty only for FCPA violations.
Near the end of his article, the President of Office
Depot stated, "I still try to visit stores as frequently as possible. It's
really the only way to know how your business is doing." The same is true for
the Compliance Department. You can take all the metrics you like, but you have
to get out into the field to understand what is truly going on in your company.
You need not traverse the world in 80 days but you do need to get out and meet
folks. An additional point might be [with apologies to Tip O'Neill] "All
compliance is (mostly) local."
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
faced by multi-national US companies, insurance coverage issues and protection
of trade secrets.
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© Thomas R. Fox, 2011
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