Takeaways from the 2015 Compliance Week Conference

I spent three fascinating days last month with some of the best and brightest from the corporate compliance world at the Compliance Week 2015 Conference in Washington, D.C.

The conference highlighted speakers from companies such as Coca-Cola, Kimberly-Clark, Tyson Foods, Boeing, Kaiser Permanente, the Department of Justice, Department of Commerce, Kroger, US Steel, Kraft, GE Capital, Fox Networks, International Paper and Thomson Reuters, among others. I have a point in dropping these names, and it is the word “culture.” I heard speakers from these companies emphasize the importance of corporate culture in almost every session I attended.

Donnie Smith, president and CEO of Tyson Foods, spoke from a leadership perspective about the importance of creating a culture of transparency. Leaders, he said, must create an environment where doing the right thing is expected of everyone and everyone has the opportunity to voice an opinion – even if it is different from the majority. It must be okay to disagree during management meetings at any level, up to and including the board of directors.

Mr. Smith cited an example from his 35 years at Tyson. He said he was once in a management meeting where everyone was expected to express their opinions. One member of the team disagreed with the direction the plans were taking and everyone else knew it. During the meeting, however, the team member said nothing, but began denigrating the plans immediately after the meeting had concluded. It’s common enough behavior, and can destroy the effectiveness of a plan before it has even been launched.

Team members, however, worked in a culture that encouraged open disagreement. They confronted their colleague and asked him either to take the opportunity to share his thoughts during management meetings or keep his opinions to himself. The culture valued openness and empowered team members to address concerns directly.

Smith said they created the culture, in part, to empower participants in much graver situations to act.

Those reporting compliance problems, for example, have a cultural responsibility in their company to reveal misdeeds long before they spiral out of control.

I have worked on a few engagements related to fraud settlements and have found them to be examples of companies actually wasting their resources. When found in the wrong, companies are often required to pay both restitution and punitive damages – far greater than any savings they may have sought to gain in the first place. Their reputations have been damaged, and they have risked losing the trust – and business – of both current and potential customers.

Had these companies operated with the transparency Mr. Smith recommends, they might have discovered the schemes early enough to handle them in-house. Smith’s point was to create a culture where the tone in the middle is the same as the tone at the top – everyone has to live it. Leaders, starting with the CEO, must model the culture in all of their interactions. In doing so, the company provides a safe place for team members to report problems in the company without fear of consequences.

We think culture is so important at HORNE that we’ve developed a concept called Wise Firm that is our vision for the kind of firm we want to be. Our culture has to support every strategy we want to pursue. No strategy, no matter how great, will work if it is at odds with the culture. So culture has to be number one. If you haven’t already, subscribe to the “Culture Matters” blog for more tips and information about creating a positive corporate culture.

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