Compliance Culture

Practical insights for compliance and ethics professionals and commentary on the intersection of compliance and culture.

Tony’s Chocolonely and a Roadmap for CSR principles

The chocolate business has long been plagued with associations with slavery and child labor. In the countries where manufacturers buy their cocoa beans, trading companies and farmers traditionally have engaged in exploitative and unfair business practices both between each other and in employing the work of slaves, many of them children. Chocolatiers have even claimed that producing chocolate without the use of slave labor at some point in the supply chain, however remote, is impossible to prove or accomplish. Instead, the industry has focused on shifting risk or responsibility for the use of slave labor or abusive trade partnerships by moving these decisions and relationships to third parties and offering ignorance or lack of control as a defense.

Tony’s Chocolonely, a Dutch confectionary company, offers an intriguing alternative to and challenge within this market. The eponymous Tony is actually Teun van de Keuken, a Dutch investigative reporter. In 2002, van de Keuken was working on a project about chocolate manufacturers. He determined that none of the manufacturers he studied that had signed the 2001 Harkin-Engel (aka Cocoa) Protocol, an international agreement intended to end child and forced labor in chocolate production, were in full compliance with the protocol’s requirements. Therefore, all the chocolate for sale by those candy companies (including Hershey’s, M&M Mars, Nestle, and Guittard) was, in van de Keuken’s view, an illegally-manufactured product.

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TravelBird and setting the standard for corporate cultural values

One of the undeniable effects of the trends of globalization and increased demand for customization and specialization that have occurred in both the retail and service industries is that competition is keener than ever. In today’s crowded marketplace, organizations must get creative to set themselves apart and appeal to consumers. From a compliance perspective, of course, the most practical and sustainable way for an organization to do this is to be loud and proud about its integrity and values-based approach to business.

TravelBird, an Amsterdam-based travel agency which operates in 11 European markets, has embraced a disruptive business model and is determined about changing the way customers plan and book their vacations into a holistic experience. Founded in 2010, TravelBird refers to itself as a “scale-up,” a start-up with a strategy of cultivated and plotted growth. Its customer service ambitions are matched by its desire to create a vibrant employee experience and to have a corporate profile which is inspiring and consistent with the image it wishes to project publicly.

Towards accomplishing this goal, TravelBird has recently announced its “cultural values,” a novel spin on the corporate mission statement or business principles. These values as stated by the company are strikingly balanced and represent a thoughtful evaluation of the organizational and employee traits which embody the best alignment with a successful, sustainable business philosophy:

  • Adventurous but Responsible – Take measured business risks, even as leaps of faith, and go boldly into new product and service areas as the customer experience may demand the organization to do so. However, do this with respect for foundations such as legal and regulatory frameworks and the ethical and moral considerations that may be implied. This is the ultimate principle of sustainability that emerging enterprises, especially companies with a basis in technology, forget to make room for in their organizations. An organization which approaches its growth with this orientation is culturally better prepared to offensively weather future storms than one that defensively considers problems for the first time as they occurring.
  • Passionate but Practical – Creative and sales may drive the bottom-line survival, but compliance and other control functions inform the staying power. Design strategic choices and decision-making at the company so that it is consistent with an ambitious business profile and speaks to the passions and excitements of the employees and customers, but don’t forget to do things right from the start.
  • Candid but Compassionate – Honesty is the best policy, but it doesn’t have to be brutal or at the expense of a mature relationship-based way of doing business. Commercial relationships can be very remote and it’s easy to forget there are people on both sides of every interaction. It is important to treat each other with integrity but to also have a high standard for performance and behavior.

Customers and employees alike are highly motivated by companies that model admirable cultural conduct. Blending corporate ambition and conscience, strategy and cultural responsibility, is a powerful approach to growing and cultivating a business. Companies looking to develop directed corporate cultures should aspire to lead with this kind of message and engage in these values authentically and continually.

For TravelBird’s announcement on their cultural values: check out their LinkedIn.

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Guiding principles for a compliance advisory practice

Guiding principles formalized in mission statements or charters have long been seen as essential to positioning businesses and individuals in them for success. Virtually every major organization has such a mission statement at the center of its business principles, which is used to succinctly define its internal strategy as well as it to represent the image it wishes to present to its stakeholders and the public. Famously, the business or personal mission statement is prominently featured in Habit 2 of Stephen R. Covey’s 7 Habits of Highly Effective people. This reasoning indicates that acting with a defined purpose and memorializing it by creating a formal mission statement for this credo gives power and motivation to decision-making. This concept can be powerfully applied to a compliance officer working within an advisory practice, a function which is greatly supported by having a basis in well-articulated guiding principles and values.

  • Express and adhere to a bright-lined scope within the advisory model. Defining and sticking to a scope is essential for success. The compliance officer’s role must be well-defined and meet shared objectives determined by business needs and risk awareness analysis. The compliance officer who fails to plan scope adequately, fails to plan in the grand scheme of efficient and strategic self-positioning.   An advisory model is not a finite scope of work, such as in the Legal function where an issue-limited “go or no-go” opinion is often expected. Nor is it an operational approach, such as in Human Resources, where queries on and exceptions to practices and procedures are handled case-by-case. Instead, the compliance advisory anticipates both solicited and unsolicited advices and focuses on building a practice with business management where both modes are equally appreciated and expected.
  • Promote a risk management profile consistent with the clearly-defined role of compliance. A successful compliance advisor must represent and broadcast a profile consistent with his or her position in an integrated system of compliance risk management. Ownership of risk must be thoughtfully distributed and articulated. In the popular three lines of defense model, for example, the business is responsible for management control in the first line. Independent assurance is owned by audit in the third line. Compliance sits in the second line responsible for risk and control oversight functions. Strict adherence to this model or any other defense structure is necessary to promote the establishment, implementation, and evaluation of effective controls.
  • Pro-actively align with colleagues in other functions to strengthen integrated efforts. Strategy for compliance advisors often focuses on gaining buy-in from business management.   Foundational to this, however, is successful cooperation with other functions that also face the business from on oversight perspective. Compliance advisors should value cooperation and coordinated efforts with close peers before communicating to others. This starts with fellow compliance colleagues but extends immediately to frequent partners such as Risk, Legal, Finance, and Human Resources. All of these functions succeed in their work because of reliable credibility within the organization. High cohesion among the partner functions is crucial to model collaboration and prevent the business from shopping across functions to find favorable outcomes.
  • Incorporate the spirit of customer excellence/continuous improvement practices. A compliance advisor should embrace a service-oriented and relationship-focused way of working. In a clear and evolving view of what is needed to support the compliance function and from whom, imbuing the role with a commitment to ongoing improvement of advice provided, with the cooperation and expertise that entails, will help to maintain relevance and flexibility. Feed-forward input from business partners and a focus on efficiency and evolution helps to make sure that compliance initiatives have the support they need to be implemented and compliance investments can be viewed as integral to business strategy.
  • Demonstrate added value to business partners. Successfully persuading management that compliance adherence can support commercial sustainability under the right circumstances, rather than undermine it, more than justifies the costs of implementing and maintaining effective compliance controls. In giving advices, compiling reporting, providing and analysing management information, and updating on the intersections of business objectives and regulatory developments, compliance advisors can earn trust by demonstrating integrity as a core practice. Once this becomes a genuine shared goal, compliance can not only add value to the business, but indeed be seen as an active participant in these interests.

The ideal compliance advisory profile is one of an individual who is trusted, professional, and collaborative.  This profile, in combination with strong guiding principles setting ground rules about scope, role, and sustainability via high standards and added value, is the basis for the compliance advisor’s way of working, promoting a progressive and professional profile that is visible to the business served and functional partners.

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