Effective compliance: Influencing the Board

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Barriers and obstacles put in place by the C-suite can make even the best thought out compliance programme difficult to deliver.

But for general counsel, working out how to influence the board, both in terms of gaining true buy-in and making senior directors aware of the consequences of not backing a compliance programme, is often one of the hardest challenges they face.

At the Legal Leaders General Counsel Forum conference in May, in which LexisNexis was the headline partner, attendees discussed their successes and failures in influencing the board, resulting in some valuable best practice tips on the approaches that are most likely to win favour.

Know your business

Aligning your advice to the identity of the company, its strategy and vision is key. Compliance policies need to mirror company values, threats and challenges; for example, if competition law and cartels present a threat, the board particularly need to be prepared for dawn raids.

Carrot or stick?

One of the perennial issues for GCs is whether they should be applying ‘carrot’ or ‘stick’ in delivering their message to senior executives. One GC observed: “The board get fed up of being told about fines and sanctions. Use your sales and communication skills to draw out the positives and incentivise them.”

Another added: “Don’t first go in with a problem – go armed with solutions and options.”

Consider the audience

In working out how you will deliver the message, it pays off to consider the personality of your audience. A further GC said: “It’s important to tailor your advice to who the board are and what their characters are like.”

This point was reflected within a World Café brainstorming session, perhaps the highlight of the conference, where one group said: “You must adapt your style of communication to the individual. Do your homework before speaking to them.”

Be prepared

Preparation more generally is key, and providing board members with relevant information to look at in advance of any discussion can help reduce the time it spends to communicate your message. One discussion group during the World Café sessions noted: “The board doesn’t like surprises!”

It’s also important to be self-critical when it comes to your approach to influencing the board. One former GC who boldly introduced 360 degree appraisals said: “I confess I was shocking. The feedback was that I was robotic and I really had to learn, although I was fortunate enough to have a coach. Think about being a fly on the wall. Could you do something differently?”

Presence on the board

It goes without saying that, if possible, it’s important for the GC to be on the board to influence executives directly during key decision making meetings. If this is not possible, one GC at Legal Leaders GC suggested: “You need to find an ally to act as trusted adviser so you can gauge the mood in the room if you’re not there yourself to influence the board in person.”

External adviser

Bringing in an external and objective adviser can mean the board is more likely to listen, given executives’ respect, rightly or wrongly, for the word of an ‘expert.’

The decision making process

However, behind all these considerations is the need to get the wider decision making framework right. Peter Neville Lewis, founder of principled consulting and one of a four-strong panel considering what ethical compliance means in practice, said: “At the core of getting things right is having the right decision making framework. Poor decision making will catch you out.

I often ask ‘what decision making framework do you have in place in your business? What is the answer? None. I have never had a completely satisfactory answer.”

Without a decision making framework is hard for a business to articulate how it makes decisions, agree who is responsible for certain decisions, and, perhaps most critically, hold them accountable for a wrong decision.

Iain Larkins, a director at Radius Law who was previously general counsel and chief compliance officer at Mercedes Benz, also on the panel, said: “Having been in-house and in private practice I would say that the decision making process is pretty poor. There is often no clarity as to how a decision was raised; no focus on how a decision was reached. Sometime later if it goes wrong everyone then says ‘I didn’t agree with it.’

Accountability

A far better solution is to minute who is in favour of the decision so that all are aware that they will be held accountable.

Claire Debney, former RB group legal affairs GC and chair of Legal Leaders GC said: “The next step after the CEO is to make individual directors accountable, which filters down to processes, polices and training. When things happen it’s important to publicise and discuss the actions taken.”

Business culture

It is also important to encourage the board to put the wider culture of the organisation under the microscope, including looking at how a bonus culture can impact on the organisation’s willingness to distinguish right from wrong and whether there should be a ‘claw back’ policy in the event of a compliance breach.

Neville Lewis said: “Compliance is closely linked to values and care. Do we care about outcomes for all the organisations you engage with – are you a careful or careless organisation? One thing at the core of getting things right is decision making. Poor decision making will catch you out.”

Debney added: “Never cry wolf - pick your battles. You touch every part of the business and your gut leads you in the right direction. Be patient, it’s a marathon not a sprint. Work with and capitalise on strengths in the business. Find your champions.”

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