“I have to believe my compliance work is relevant to this tragedy. I have to believe the mission of compliance can help. If you stay in this transformative work in progress called Compliance 2.0, you have a sense of mission that makes it worth it. Compliance officers can address that moral gap of ‘lawful but awful’ conduct. They are empowered under Compliance 2.0 to debate with management and the Board the hard questions, starting with: ‘It’s legally permitted but is it who we are?‘”
In the aftermath of the Orlando tragedy, I hope to start a deeper discussion of that last question, “It’s legally permitted but is it who we are?”
How are COs going to argue for not doing “awful” things? While COs are focused on preventing criminal wrongdoing and prosecution, we can’t rely only on laws like the FCPA to know what companies should not do. The evolving Compliance 2.0 profession and its institutional supporters have an obligation to prepare the next generation of COs to face the challenges of “awful.” It’s our contribution to preventing the next Orlando and to improving ethical conduct.
Over time a company develops an identity, a unique corporate culture of “who we are.” It has core values to which it returns in times of conflicted decision-making. It decides, We can’t do that. We must do something else to remain who we are.
Here is an image from the Orlando tragedy:
Apple’s CEO Cook, in tears, leads his company in paying tribute to the Orlando victims: “We celebrate our diversity. We know it makes us stronger and it moves everyone forward.”
The CEO is expressing Apple’s core values about diversity and non-discrimination, which are documented at length in Apple’s codes and standards of ethical, professional business conduct.
This image stuns me: the first openly gay CEO of a major corporation speaking out to uphold a legacy of core values opposing LGBT discrimination that led to hate and violence in Orlando. I grew up in a 1950s, Southern town with segregated schools and threats of hate-based violence. Times and values change.
All responsible companies have codes and standards of ethical, professional conduct. Boards adopt them pursuant to laws and their powers of governance. Through these codes and standards responsible companies create a legacy of core values they struggle to uphold.
In a stunning display of corporate engagement, over two hundred corporations and organizations, spoke out recently against laws denying LGBT Americans normal protections from discrimination in the workplace. IBM relies on a legacy of core values (explained here). Its letter of support said, “Our perspective is grounded on IBM’s 104 year history and our deep legacy of diversity and inclusion — a legacy to which we remain strongly committed today.”
CEOs speaking out on important public issues and Board advocacy are neither new nor radical and the trend is only growing stronger. It’s a welcome, important influence in American and global society. In Compliance 2.0 programs designed by founder Donna Boehme and recently adopted by the DOJ’s Hui Chen, COs are newly positioned to change the future of business ethics.
Here is another scenario that considers how to apply the legacy of core values inside the company: The CO and in-house counsel are included in the strategy session of senior marketing executives to set the annual sales targets for front-line sales officers in countries known for bribery.
The CO notices the company’s sales targets are close to local company sales but are much greater than those of other competing multi-nationals. Are the sales targets excessive, amounting to pressure, a temptation or implied permission for front-line sales officers to pay bribes like the locals reportedly do?
It’s not illegal to set a sales target. In-house counsel states there’s no evidence of intentional misconduct or willful blindness.
But, is it “awful” to put the front-line sales force in this position? They have families too. (Richard Bistrong, a former VP front-lines sales officer and FCPA Blog editor, poignantly describes the pressures and considerable risks here and here.) Is top management sending a mixed message about its commitments to anti-corruption and profitability?
The CO re-reads the company codes and standards, noticing all the references to treating employees fairly, building a culture of trust and incorporating employee well being in every aspect of the business.
Thinking about the company’s “legacy of core values,” the CO starts the debate over how the Board-approved codes and standards of ethical, professional conduct should apply. All divisions join in. The sales quota issue makes its way up to the Board, similar to a legal case on appeal to the highest court. Whatever the Board decides (many outcomes are conceivable), the checks-and-balances of Compliance 2.0 are working.
Moreover, the CCO and COs, having done their jobs, create another precedent defining the company’s legacy of core values. They will use it to grow and implement it in the future. They have “operationalized” core values through action.
Like the Orlando and LGBT issues, COs should be involved as critical public issues arise. Ten years ago it was inconceivable that hundreds of organizations would speak up for LGBT workplace equality out of loyalty to core values. Conceivably, over the next ten years, companies will take positions on helping millions of people stuck in jobs that don’t pay enough to live on. These are “pay check to pay check” families, just one mishap away from financial collapse. To scale the problem, in Florida, the third largest U.S. state, some 45% of families are paycheck-to-paycheck households. (For a picture of their predicament there’s an HBO documentary.)
Remarkably, solutions exist: A nonpartisan working group of politically Left and Right top experts, led by a mediator, shocked themselves by finding a consensus plan for “restoring the American Dream” (video report here). Companies will decide if ignoring these solutions is “awful” though lawful.
Future COs will face many challenges objecting to “awful” conduct that violates a company’s legacy of core values. They are in Compliance 2.0 because they are inspired and have compliance mission strength. But to succeed they will need help rethinking the compliance vision and building up new expertise to carry it forward. That’s work for the whole community.
Michael Scher is a senior editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He’ll be a speaker at the FCPA Blog NYC Conference 2016.