Collaboration And The Compliance Function

by Thomas Fox
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7K0A0947Today is the anniversary of two very different musical legacies. On this day 31 years ago the iconic song “Valley Girls” by Moon Unit Zappa broke into the Top 40. Twenty years later Kelly Clarkson won the first American Idol competition. Moon Unit was the daughter of rock and roll satire icon, Frank Zappa. Clarkson was a 20 year old waitress at the time she won the contest. These two somewhat disparate events demonstrate to me the usefulness of collaboration to show how music has evolved.

One of the difficulties that many compliance professionals, who come out of a corporate legal department, have is understanding how important it is to not only to get out in the field with company employees but also how to incorporate ideas from other company disciplines into an overall compliance regime. Most typically, corporate lawyers come from a world where the rules are fairly well known and are often black and white. However, in the world of compliance there is a fair amount of guidance but fewer black and white rules as there are in the legal world. So in the legal part of the company, the benefit of legal department consultation with the business unit is often not seen as a cost worth bearing, especially if international travel is required.

However, in many ways, the compliance function can be seen as a collaboration; that is a collaboration between a legal based function with a business group doing sales and marketing in many different regions and geographic areas across the globe. I recently read in the New York Times (NYT) Corner Office article, entitled “Be Yourself, Even if You’re A Little Goofy”, where reporter Adam Bryant interviewed Glenn Kelman, the Chief Executive Officer (CEO) of Redfin. One of the things that intrigued me in the article was about the company Redfin itself, which is a collaboration between real estate agents and software developers, about two disparate business functions as I can imagine. Indeed Kelman was quoted in the article that “The main project I have at Redfin is to unite two separate cultures — real estate agents and software engineers. One of the ways we do it is by having people do “A Day in the Life” talks during our all-hands meetings, and they talk for 10 minutes about a typical day. Then you hear other people saying things like, “I had no idea how hard it is to be a real estate agent.””

This theme of collaboration seemed key to me in another article I recently read in the September issue of Wired Magazine by Robert McMillian, entitled “The GitHub Way – How the Collaboration Platform Aims to Help Everyone Do Any Project”. In this article, McMillian discussed how this relatively new software platform, GitHub, can be used to work on or develop a wide variety of software, projects or topics. While GitHub was designed to be used by open source software programmers as a collaborative workflow process it turns out that the iterative process can be used for a wide variety of projects which require collaboration. GitHub co-founder and CEO Tom Preston-Werner was quoted in the article for the following, “The open, collaborative workflow we have created for software development is so appealing that it’s gaining traction for nonsoftware projects that require significant collaboration.” Some of the non-software projects discussed in the article included legal contract drafting and even development of wedding invitations.

What the GitHub platform allows is for anyone working on a project to review the current state of the project, make corrections or changes, have those changes documented and dated, then be available for anyone else working on the project to use in the next iteration of the workflow. McMillian writes that “The site’s big innovation is the pull request. It’s what you do after forking [correcting or changing] something, an electronic note saying, “Hey, I was checking out your project and I found a way to make it better. Look here and you can see what I have changed; press this button and the changes will become part of your project.” The pull request makes it easy for anybody to fix a bug in a software program or a mis-spelling in a document.”

These concepts of collaboration are particularly relevant to the compliance function. One of the greatest challenges in implementing or enhancing a compliance program is how it will work in the real world of your company. That is why collaboration is so important. If you can sit down and work through your policies and procedures with your employee base, through a shared workflow or collaborative project, it will allow you to implement a new or enhanced program with less difficulty. If you cannot utilize such collaboration beforehand, then implementation will require not only a steady hand but most probably a full time compliance professional dedicated to that function alone. Answering the day-to-day queries from sale unit employees on how to implement a new or updated compliance regime can be a full time exercise.

I think that is one of the reasons some of the more recent Deferred Prosecution Agreements (DPAs) have spoken to companies who have a sufficient number of personnel dedicated to the day-to-day running of a compliance function and why the FCPA Guidance said that one of the inquires would be “In assessing whether a company has reasonable internal controls, DOJ and SEC typically consider whether the company devoted adequate staffing and resources to the compliance program given the size, structure, and risk profile of the business.”

In a recent blog post by Mike Volkov, entitled “Corporate Excuses to Avoid Compliance and Ethics Programs”, he discussed the failure of companies to see the cost benefits of effective Foreign Corrupt Practices Act (FCPA) compliance programs. I would take this idea a step further and posit that without sufficient collaboration between the compliance function and the business units, there could be an equal disconnect. Whether you use an approach like Glenn Kelmen and get people to explain their job roles and functions to each other or you can avail yourself of such collaborative software tools like GitHub; the compliance practitioner needs to make sure that collaboration is in his or her toolbox.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Fox, Compliance Evangelist | Attorney Advertising

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