Can Corporate Compliance Be a Strategic Asset?

If organizations approach corporate compliance proactively, they can make it a strategic advantage rather than simply a preventative measure. In this episode of Mastering Innovation on Sirius XM Channel 111, Business Radio Powered by The Wharton School, guest Bob Conlin, President and CEO of NAVEX Global, discussed how to bring efficiencies to corporate compliance for companies to protect their customers and reputation.

One of the big challenges for corporations is keeping up with the sheer volume of compliance regulations that come out. With that in mind, Conlin stressed how the process cannot be approached as a means of checking off boxes, but instead should be a way to create a company-wide culture of ethics. He pointed to various examples to show how corporate compliance, if embraced as a culture and reputation, can deliver a significant return on investment and actually prevent further costs in the future.

An excerpt of the interview is transcribed below. Listen to more episodes here.

Transcript

Bob Conlin (President & CEO, NAVEX Global)

Nicolaj Siggelkow: An interesting finding from your data: you found that organizations that documented reports from [non-web-based] methods (like walk-ins, manager submissions, letters, and direct emails) captured 58% more reports than organizations that collected reports only through web and hotline channels. This sounds like not everyone is a web native yet. Is that the conclusion?

Bob Conlin: That’s right. It’s a really, really important point if you think about it. Say you’re a mid-level manager and somebody walks into your office saying, “I think the sales rep is bribing this guy or maybe taking a kickback.” If a manager doesn’t know what to do with that, if there’s no vehicle for him or her to report that, then those are issues that never rise to the top. The Chief Compliance Officer, the general counsel, the CEO, and even the board, they need to know about that. What if that bribery then hits the market? Think about the Walmart bribery scandal that happened years ago. They lost millions of dollars in valuation in just a matter of days. I can guarantee you that they wish they had known about that ahead of time.

“Many sophisticated companies are now recognizing that just having a whistleblower hotline isn’t enough.” – Bob Conlin

That’s what that report is alluding to. Many sophisticated companies are now recognizing that just having a whistleblower hotline isn’t enough. They have to have what many companies refer to as open-door report forms. They train all of their managers. When somebody comes in to report something, go onto your laptop or your computer, bring up this app, fill in the information, hit send, and our investigators will follow it up in our system.

Siggelkow: Interesting. There’s this tendency where you say, “We’ll rely on all digital, and everyone will just go to a page and do it.” That’s an interesting reminder, particularly when it comes to these issues, that technological solutions is not always the best solution.

Conlin: That’s right. What we train our people on, especially the people responsible for taking these calls in our contact centers, is: there’s almost 100% certainty that before somebody is so frustrated or so obsessive that they call a hotline, they have already talked to somebody else, and they felt like they were not being heard. That concern was not being validated, so then they call a hotline. In fact, I have to give a lot of credit to our contact center operators. When you listen to these calls, sometimes, people are screaming because they’re so mad, and sometimes, they’re crying. They’re so frustrated. It’s a very challenging thing. Had there been a vehicle for their initial report to be have been filed, investigated, and followed up upon, it may have never risen to that level.

Siggelkow: Yes. What are some other interesting insights that you’ve derived from having access to all of this data? We’ve talked so far about the number of issues that actually get reported and that turned out to be problematic, and this idea about not all digital is the best solution. What are some other interesting insights?

“You can’t just send reports to HR and hope they get taken care of.” – Bob Conlin

Conlin: Well, particularly this year, Nicolaj, one of the biggest insights that we’ve seen is the dramatic increase in reports related to sexual harassment. It’s really alarming to think about the scope. I mean, almost every day for the last six or eight months, you heard about yet another… Last year, it was Charlie Rose, it was Matt Lauer, it was Weinstein, and it was Uber. This is just alarming to think of the egregious and morally repugnant workplace behavior going on. The #MeToo movement and the Time’s Up movement, they have helped empower and embolden people to speak up and have their voice be heard.

There’s also just more general awareness that that behavior is just not okay. We’ve seen a dramatic increase in that. We have an initiative that we call “You Can’t Delegate Ethics.” The issue there is, you can’t just send that to HR and hope it gets taken care of. There has to be a board level, executive level topic that’s addressed and taken incredibly seriously. Again, think about the reputational and financial damage to these organizations that have had this happen. If you look at the return on investment of putting some time and effort into building a true culture of compliance and strong ethics and to have a zero-tolerance policy in place, it’s goodness across the board.

Siggelkow: Yes. Now, I also found it interesting that your thinking is beyond the borders of the firm. You’re saying you’d probably also want to be a little bit concerned with who you’re connecting with throughout your entire supply chain. Can you tell us a little bit about that?

Conlin: That’s right. This is really interesting, especially as it relates to the Foreign Corrupt Practices Act, the FCPA, and the largest fines out there – look at ZTE Corporation, $900 million. Rolls Royce paid $800 million. TMA Pharmaceutical was $529 million or something like that. These fines are all related to behaviors, not of their employees, but of their suppliers, agents, and folks like that. It does almost no good to have built a culture of compliance in your own organization to then work with organizations that don’t share the same culture. It’s important to make sure you extend that.

“It does almost no good to have built a culture of compliance in your own organization to then work with organizations that don’t share the same culture.” – Bob Conlin

Another key thing that organizations need to do is, they need to have a risk approach to accepting who they’re going to do business with, and then, a way to monitor those businesses over time, such that if something happens – say, if something pops up in the newspaper in South Korea about a bribery scandal involving your South Korean distributor – you know that that happened. You want a software system that picks that up, alerts you to it, and then, you determine whether what happened rises to the level that you need to part ways with that partner or that agent.

About Our Guest

As President and CEO of NAVEX Global, Bob Conlin leads the executive team and serves as a member of the board of directors. He leverages more than 25 years of senior management experience in operations, sales, marketing, product management and business development to champion NAVEX Global’s vision, strategy and execution. Conlin began his tenure at NAVEX Global as President and Chief Operating Officer. Under his leadership, NAVEX Global has grown organically and through multiple acquisitions to become one of the largest and most recognized and respected brands in the governance, risk and compliance (GRC) arena.

Before joining NAVEX Global, Conlin served as senior vice president of marketing and business development at Accero, a global provider of human capital management solutions. Prior to Accero, he served as the chief marketing officer at Boston-based Centive, where he led the successful transformation of the company from a traditional software provider to a pure-play SaaS provider and created a new product category—On-Demand Sales Performance Management. Previously, Conlin held senior sales and marketing management positions at Infinium Software, a publicly traded ERP software vendor, Cort Directions and Myriad/OrCom Systems.

Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.

Somina Lee is a Production Assistant for the Mack Institute’s radio show, Mastering Innovation. She is a junior in the Huntsman Program, concentrating in Finance and Marketing & Operations Management at the Wharton School and majoring in International Studies in the College of Arts & Sciences.

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