I had a conversation a few weeks ago with one of my favorite general counsel (GC), who has a more business-oriented view of compliance & ethics (C&E) than most people I talk to in the legal or C&E industries. She understands that it’s necessary to have a solid C&E program in place because you can’t demonstrate that an employee has gone rogue (as so many companies claim when something goes wrong) unless you can also demonstrate that the company took every opportunity it could to educate the employee and make him aware of its standards of business conduct.
She also recognizes, though, that while most CEOs would say that C&E is important, those same CEOs view C&E as a cost center that may or may not give a positive ROI. This GC views C&E as necessary hygiene but approaches it from the perspective that she wants to do just enough to be able to show that an employee has gone rogue and not much more.
When she said the word “hygiene,” I had the flash that C&E for a company is like oral hygiene for people. Stay with me here. Most people I know pay for dental insurance, get their teeth cleaned once a year (even though insurance will cover cleanings twice a year), and brush their teeth twice a day most of the time. They dread going to the dentist for any reason, including routine cleanings, and they think that these three things are enough to keep their mouths healthy.
For companies, dental insurance is the Code of Business Conduct, cleanings are the equivalent of yearly or biyearly Code training with the occasional mention from the CEO about the general importance of C&E, and brushing means designating a Chief Compliance & Ethics Officer (CCEO). My experience has been that most senior executives believe that this should be more than enough to keep the company out of trouble both proactively and in the event that the feds come looking for them.
This may be true. I’ve visited companies where, as startups, their cultures started based in integrity, and the cultures have grown as the companies have grown. In these cases, I could be persuaded that the natural tendencies and unspoken expectations around doing business the right way will be enough to protect the company in the future. At the very least, employees know to alert someone to problems so they can be mitigated.
But I’m a C&E nerd. It’s not the easiest industry to be in – people joke about ethics in troubling ways when you tell them what you do for a living. You can see the flashes of memories of potential misdeeds ripple across their faces when they check out for a moment. The industry has turned me into less of an optimist than I used to be, and it worries me that I’m don’t feel surprise anymore when a major act of misconduct hits the front page.
I’m also fervent believer in oral hygiene. I love going to the dentist. I go religiously every six months to have my teeth cleaned. I brush my teeth at least twice a day. What sets me apart from the general population, though, is that I floss every day, on occasion twice a day. I can talk about the benefits of flossing for a good ten minutes, which is about nine minutes and forty-five seconds longer that anyone really wants to hear about flossing. Dental insurance, cleanings, and daily brushing make up the bare minimum of what you need to do, in the absence of amazing oral hygiene genetics, to keep your teeth from rotting out of your head. Even then, there’s a limit to what the bare minimum can prevent from happening in your mouth.
Flossing is where the real work happens. People don’t do it for a variety of reasons. It’s gross, or it hurts. The primary reason I hear is that it’s a pain in the patootie. It’s too much trouble. People might recognize that there’s a positive ROI, but the R is a long way off and underestimated while the I is too big.
In the C&E context, flossing is the daily investment the company makes to thread C&E through its strategy, transactions, and water cooler conversations. And just like with flossing, companies may recognize that there’s a positive ROI, but the R is a long way off and underestimated while the I is too big.
We in C&E must get better at repositioning and recalculating the R to justify the I that we need to keep the teeth in our companies from rotting out. And just like with almost everything that we have to do in C&E, it’s so much easier to say and write than it is to do. Let me know if you’d like to talk about actual or figurative flossing, and maybe we can figure this out together.