Belatedly, we boldly go where no Canadian actor has ever
gone before, to celebrate yesterday's birthday of William Shatner, Captain Kirk
of the original Starship Enterprise. I thought about Captain Kirk and his
leadership of the Enterprise in the context of a panel at Ethisphere's 2012
Global Ethics Summit. In a moderated keynote session, entitled "View from the
Board", moderator Stephen Jordan lead the panel in an exploration of issues
relating the Board of Directors responsibility in a company's compliance
What is the relationship between leadership and culture?
Panelist Sheila Penrose, Chairman of the Board at Jones Lang LaSalle and Board
member of the McDonald's Corporation, said that she views the Board of
Directors as the "curator of a company's culture." As a Board member she wants
to know if there is a clear framework to determine and measure certain key
facets of a compliance program. These key facets include: (1) tone of the
company towards doing business in a compliant manner; (2) the effectiveness of
the company to understand new compliance issues as they arise; and (3) the
process and dynamics of the company's compliance program. Her view of a Chief
Compliance Officer (CCO) is that he or she should have "good professional
judgment" and be able to communicate to the Board about their judgment of
ethical behavior in the company.
Presentations to the Board
Regarding presentations to the Board of Directors,
Penrose said that she desired to have two general types. The first is training
the Board of Directors on emerging issues that the company might face from the
compliance context and to direct how the Board of Directors might think about these
issues, particularly in regard to how they would affect the risk profile of the
company. The second is a report of the trends emerging from internal reporting
on compliance issues. This could include hotline reports or surveys that the
compliance group performs to determine if there are any emerging or systemic
issues relating to compliance that should be addressed. From these metrics
Penrose said that she is always keen to know if there are any lessons to be
learned which can be applied to future situation or to stop certain behaviors.
The second panelist, Daniel Tishman, Board member of
AECOM Technology Corporation, said the initial issue to determine is the type
of Board. Is it the Board of a new or relatively new entity, populated with
friends of the Chief Executive Officer (CEO) and with persons who either work
in or have significant experience in the core business of the company?
Conversely, is it the Board of a more mature company? If it is the former,
Tishman believes a CCO will have to provide much more basic compliance
education to the Board.
As to the types of presentations he prefers, Tishman
focused his answer on the types of information that he expects if a serious
compliance issue has arisen, which may well be a violation of a substantive anti-corruption
law such as the Foreign Corrupt Practices Act (FCPA) or the UK Bribery Act. He
said there are four points that he would like to receive guidance on or
through. First, he demands prompt reporting to the Board. Second, all reporting
must have complete transparency to the Board. Third, he expects proactive
action by the CCO, rather than simply waiting for instructions. Lastly, Tishman
would expect to be told if any event is a one-off or a systemic problem,
coupled with a fair appraisal if the event is a true crisis or is it is more of
a "regular issue".
Both panelist discussed metrics as a key component of
Board reporting. Tishman said that he prefers to receive metrics which focus on
new or emerging areas for the company. So if the company is opening up with a
new product line or service, or is moving into a new geographic area, he wants
to see the compliance risks assessed and reported to the Board of Directors.
Penrose advocated metrics to measure three areas: (1)
measures of magnitude; (2) measures of direction; and (3) measure of
penetration. By measures of magnitude, she said that she desired information on
how well the company's compliance regime had been communicated throughout the
target audience of employees and third parties, or "exposure". The measures of
directions are designed to present information on trends that compliance is
seeing within the company, an example she gave was a review and summary of
hotline reporting. The final measure of penetration was designed to drill down
further than the measure of magnitude to provide metrics on how well the
compliance program had penetrated down into the employee base and third parties
with whom the company might be working with to obtain or retain business.
And what of Captain Kirk, his leadership and lessons
learned for the compliance profession? He did not have to deal with a Board of
Directors, in the form of Star Fleet Command, too often so that probably is not
a helpful analogy. However, Kirk did lead from the front and that is what a CCO
must do. Penrose said that she expects her CCO to "manage by walking around" to
go out into the field and get the message of compliance to the troops. If you
are the CCO, or compliance professional, you need to either be on the Away Team
or lead the Away Team and boldly go where no CCO has gone before.
To get yourself in a Star Trek frame of mind, cue the
iconic original television series opening theme here.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
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© Thomas R. Fox, 2012
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