In the first part of this post I claimed that without mutual trust between business and compliance in an organisation, compliance is a useless if not a destructive function. This conclusion was mostly made on the basis of 3 powerful concepts of trust, which were outlined in the book “Speed of Trust: The One Thing that Changes Everything” by Stephen M.R. Covey. If you did not read the first part of the post, where Concept 1 - Low-trust taxes and high-trust dividends was discussed, I recommend going through it quickly first.
In this second part of the post I am to continue with this paramount topic of trust. I think it is particularly cruсial for ever-developing compliance profession. As promised, we will start with Concept 2 - Dimensions of trust. Subsequently we will accomplish Concept 3 - Trust matrix in the final part of this post. These concepts will supposedly help to understand how to build and retain smart trust and how to avoid blind trust.
Concept 2 - Dimensions of trust
In the abovementioned book Stephen M.R. Covey defines five dimensions of trust: (I) Self, (II) Relationship, (III) Organizational, (IV) Market, and (V) Societal. At each level building trust is important. Let us have a look at the particulars.
This individual level of trust is called credibility. It combines answers to two simple questions: “Do I trust myself?” and “Am I someone who others can trust?” To build credibility there are four cores. Two of them are character cores: (1) integrity and (2) intent. Another two are competency cores: (3) capabilities and (4) results. Integrity is an honesty combined with congruency, humility and courage. Intent is our motive behind each of our behaviors. Capabilities are the talents, skills, knowledge, capacities, abilities, attitude and style that enable us to perform with excellence. Results are not the actions but the deliverables, the outcome which contains value.
I hope you would agree that for compliance function these traits mean a lot. Here are some examples to support this claim.
Integrity means it is indeed important to act in a good faith for a compliance officer to be the role model for others.
It would be hard to build compliance without having clear intent in mind – sustainable development of the company through compliant decisions.
Capabilities are required to persuade and impact your stakeholders in order to e.g. gain necessary resources and costs for an effective compliance function.
Results are the quality of compliance program, trainings, oversight, which is converted in compliance behavior and absence of incidents.
It all starts from inside of you. If the person is not credible, it is hard to imagine his/her efficient performance in a compliance role.
Building trust at relationship level is all about consistent behavior. Quote: “People judge us on behavior not intent. People can’t see our heart but they can see our behavior.” According to Stephen M.R. Covey, building trust at this level requires practicing the following 13 behaviours of trust: (1) Talk Straight, (2) Demonstrate Respect, (3) Create Transparency, (4) Right Wrongs, (5) Show Loyalty, (6) Deliver Results, (7) Get Better, (8) Confront Reality, (9) Clarify Expectations, (10) Practice Accountability, (11) Listen First, (12) Keep Commitments, (13) Extend Trust.
Let us see how this all is applicable to compliance role.
Talking straight in front of the Board of Directors, CEO or Audit committee may be difficult, but is necessary.
Demonstrate respect is something required to gain respect back in an organisaton. Our actions should show we care. They should be sincere.
Creating transparency in an organization is pivotal. This is the type of a culture compliance officers stand for. Transparency has been shown to be an effective tool against corruption.
Righting wrongs means making a remediation plans, taking corrective actions.
Showing loyalty is the key for compliance profession. This is the way not to report externally but to do your best to correct wrong practices, even if it is very difficult.
Delivering resuts is about getting things done. This is not only about creating and regularly revising a compliance program but also ensuring its proper enforcing and continuously maintaining effective controls.
Getting better is nothing else then “continuous improvement” from 10 hallmarks of compliance described in the FCPA resource guide 2012.
Confront reality is not closing eyes to the truth, even if it is tough. Being honest about the difficulties and addressing them head-on makes people trust us.
Clarifying expectations is about effectively employing project management and change management techniques when incorporating new processes.
Practicing accountability includes taking responsibility for bad results. Compliance officers actually have to enforce their compliance programs and be accountable for it. This means even considering quitting when strongly disagreeing with the management practice.
Listening first is to give a compliance advice only when you know the business well. “Seven Habits of Highly Effective People” by Stephen M.R. Covey names “first seek to understand then seek to be understood” as a key leadership trait.
Keeping commitments is very important for trust. If an employee hears about non-retaliation policy and reports of a wrongdoing using a hotline, compliance officer must ensure at any cost that such individual is actually not retaliated.
Extending trust is actually inspiring people to do the right thing and at the same time to be willing to give a trust credit to those yet earning it.
This level of trust was discussed in detail in the previous post as part of the Concept 1 - Low-trust taxes and high-trust dividends. It conveys that the higher the trust is in an organization, the lesser the operational time is and the lesser the costs imply.
This is again all for now. Stay tuned for the final part of this post where Market and Societal levels of trust will be discussed. Also I will explain Concept 3 - Trust matrix and its application for the compliance profession.
Pavlo is a regional Legal and Compliance Head with a global pharmaceutical company. He leads Legal and Compliance function in CIS & Romania as a part of Emerging Markets business region.
He got his LL.M. degree in International Business Law from Tilburg University, the Netherlands. He also graduated from Ukrainian university with a Master degree in Commercial Law.