FCPA: How to Introduce Change into Your FCPA Compliance Program (Without Blowing It Up)

Spring 6Thucydides or Herodotus; Herodotus or Thucydides. Which is your favorite? I admit to vacillating between the two. Thucydides wrote about the end of the Athenian dynasty from the Peloponnesian War and the debacle of the Sicilian Invasion. Herodotus wrote about the beginnings of the Golden Age of the Greek City State through the defeat of the Persian Invasion of Greece. Slogging through both is never easy but it is far and away worth the effort. One of the things that both of these ancient authors wrote about was massive change.

I recently read a book review of a couple of new volumes which looked at these authors and thought about the changes wrought when implementing or enhancing a Foreign Corrupt Practices Act (FCPA) compliance program. In making a large change, most compliance practitioners think of bringing it all to a company in one fell swoop. This is usually based on a Board of Directors or senior management directive to ‘get it done’. Sometimes this can simply be overwhelming to the compliance practitioner or information overload to the troops in the field, particularly those outside the US. However, a recent article in the MIT Sloan Management Review, entitled “How to Change an Organization Without Blowing It Up”, suggests that a different approach might be appropriate. In this article, author Karen Golden-Biddle writes that there is a middle ground between wholesale change and tentative pilot projects which could allow an organization to operate more effectively.

The author believes that “Too often, conventional approaches to organizational transformation resemble the Big Bang theory.” Further, that this “Big Bang transformation attempts often fail, fostering employee discontent and producing mediocre solutions with little lasting impact.” To overcome this she believes that “organizations can seed transformation by collectively uncovering “everyday disconnects” — the disparities between our expectations about how work is carried out and how it actually is. The discovery of such disconnects encourages people to think about how the work might be done differently.”

She suggests that there are three techniques for discovering these disconnects and turning them into a way to “seed transformation from the bottom up.” These three techniques are (1) Work Discovery; (2) Better Practices; and (3) Test Training. I will look at all three and discuss how a compliance practitioner can bring them to bear to help move a compliance program forward.

I. Work Discovery – Examine Firsthand the Work Where It Is Actually Conducted

The author states that “instead of assuming that you know if the work process will be successful as it is designed, you should examine it firsthand, “as it is actually conducted.”” This will allow a company to “turn the (inevitable) surprises you uncover into assets.” She advises that senior management needs to actually see how the organization works to understand not only the expectations that they have set but also to uncover disconnects in the process. She cautions that this is not the same as a pilot project but rather should be viewed as part of a larger exploration of how a system might become the best that it can be. Put another way, the initial “design and rollout was always connected with the larger possibility, even though the possibility was in the process of becoming defined.”

For the compliance practitioner, this examination ‘in the field’ allows you to find the  disconnect in the proposed compliance program or changes to facilitate the reconsideration of expectations in the program or understanding of how the program is designed to be conducted, but further allows you to  entertain new possibilities  of how to make the program work better. Compliance professionals can talk through the proposed changes to generate insights and possibilities for change and help company employees understand what the program changes will be and how the compliance program will work in their day-to-day operations.

II. Better Practices – Instead of Adopting the Best Practices of Others, Screen Your Work Through Those Best Practices in Order to Generate New Ideas

Often times, particularly in the compliance arena, companies will simply review and determine the best compliance practices and then adopt them into their organization. This approach was certainly not suggested by the recently released Department of Justice (DOJ) and Securities and Exchange Commission (SEC) FCPA Guidance, where it stated “When it comes to compliance there is no one-size-fits-all program.” This sentiment was echoed by Golden-Biddle when she recommended that a company should not simply adopt another organization’s best practices, but instead should screen the way work gets done in your company and use those other’s best practices in order to generate new ideas. “In other words, use best practices to generate even better practices.”

However other companies’ best practices can be more effectively used as a discovery technique, enabling people to go beyond replication and discover new methods for meaningful change. The author opines that by studying other companies’ best practices as a discovery technique this will allow employees to compare their expectations of how a new system or program will work as it is currently constituted with what might be offered by the best practice. Further, “this discovery tool imports the unfamiliar in the form of others’ best practices and pairs them with the familiar. Exploring this pairing enables people to move beyond their expectations and tease out new possibilities that are suggested by best practices elsewhere. Overlaying your current practices with someone else’s best practices in this way generates better practices — better than best because they are relevant in highly specific ways to your organization’s work.”

Ways that a compliance practitioner might do this is to ask the following questions. First, what would you do differently as a result of the new compliance practice and what might you wish to incorporate into the company’s compliance practices? Next, is there anything in the new compliance policy that was not included that you believe should have been or are there any issues in the new policy which you did not know how to address when using the new policy?

III. Test Training – Use Training to Experiment With Emergent Possibilities for the Way Work Will Be Done

This part may be the most intriguing and useful as the author advocates that you can use training to develop new possibilities so that “Instead of locking down standard operating procedures during training, experiment with other, potentially better possibilities for changing the way the work will get done.” Training typically comes at the end of a policy/program revamp or enhancement. However, the use of the phrase “test training” means something different than the usual corporate training. She says that it allows a company to uncover the “disconnects between people’s expectations for how proposed solutions might operate and the actual experience of the solution in experimental settings such as training or trials. This enables people to see and come to understand what they don’t know about the solution as well as to continue to shape it for implementation, often in significant ways.”

This type of testing would allow the compliance practitioner to obtain insights from those in the field on not only what does not work but also what might work better. Consider training on a third party management program. You would usually walk the designated training group through all of the steps your policy would entail. But those in the training test group might suggest new, other or different information that might be relevant to evaluate a third party in the context of compliance. But also such “test training” provides an opportunity to find out what is not being discovered through the third party investigation process and provide the opportunity to suggest a new solution.

Golden-Biddle ends her article with five points that she believes Discovery Techniques can bring to an organization. They are:

  1. Achieve the benefits of transformation without risking wholesale disruption of operations.
  2. Build a culture of continuous improvement that is embraced by leadership and employees throughout the organization.
  3. Avoid the often exorbitant costs of Big Bang transformation associated with wholesale replacement of employees.
  4. Leverage existing employee knowledge and experience for transformation.
  5. Cultivate collective, not just individual, capacity in surfacing disconnects and generating new insights and ideas that seed transformation.

To her list I would add one more but I might put it as Number 1 on the list. It is that you bring your employees into the process. By listening to them and incorporating their ideas on what works and what does work, they not only become invested in the final compliance product but they feel like you care about what they think. That may be the biggest reason to take up some of Golden-Biddle’s Discovery Techniques.

If you want to look at how change blew things up, pick up a copy of Herodotus or Thucydides and settle down for a long winter’s read.

Filed under: compliance programs,Best Practices,Department of Justice,FCPA Guidance,Big Data — tfoxlaw @ 1:01 am
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© Thomas R. Fox, 2013

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