In the last week of February 2020, I spent a day at a legal & compliance leaders conference organised by Lexology LIVE. Over the years, I have come to enjoy the multi-faceted nature of the discussions that come to pass at such sessions. You could be talking ethical mindfulness with one compliance leader one minute, and then you are talking about forensic technology and the importance of ensuring chain of command with the lawyer you meet next. But, what I enjoy the most with these discussions – is the unambiguity and candour.
General counsels and compliance leaders are the first call of C-suite executives when trouble brews or when the proverbial hits the fan. Being in such a vantage position means that they often cut to the matter at hand very rapidly. That makes these discussions – and discourses at such events – immensely informative and relevant.
There were five panel sessions through the day – discussing regulations, sanctions, data strategy, crisis management and compliance. I spotted five themes that transcended these sessions and fed into each other.
- Companies must strive to do better for all their stakeholders – because the view is always better from a moral high ground. Voluntary adoption of social codes, governance standards, progressive employment practices and environmental offsets not only defines internal culture but also external valuations of companies.
Business has become a much more influential political, social, and geopolitical actor at the expense of governments in recent years – it has acquired new responsibilities and become an appropriate focus of social demands.
In August 2019 the Business Roundtable, an association of chief executive officers of leading US companies, redefined the purpose of a corporation… to include employees, customers, communities and partners in addition to shareholders to their list of stakeholders. Since 1997, The Business Roundtable had supported the principles of shareholder primacy – that corporations exist principally to serve shareholders. No more.
- The purpose of business, the business of purpose: In tandem with the growth of activism there has been a redefining of corporate purpose beyond the rather weary concept of corporate social responsibility.
All stakeholders now evaluate companies based on how they make money (as much as how much money they make).
Your purpose should drive your business – adopting a principles-based approach will ensure that you always do the right thing.
Purpose is defined right at the top – by the Board and the C-suite. The tone at the top defines, the voice in the middle validates and the hum at the watercooler sustains the culture within any organisation.
- Having a risk-based approach depends on the kind of business you are in, and the specific kind of risks your supply chain presents. Companies have to invest in sensitising all their stakeholders (employees, customers, communities, partners & shareholders) on their key opportunities and risks. Within organisations, it is important to promote a culture of situational awareness and empowerment – so that incidents and risk factors can be identified early, managed promptly and shared for learnings.
Companies need to invest in greater due-diligence towards understanding their partners, their supply chain, their customers – and even their customer’s customers. This requires an enterprise-wide sensitivity to risk factors that could impact and impede business continuity – whether it is an international investment company evaluating ultimate beneficial owners or local pharma company defining regulatory exposure due to policy changes.
- Encouraging a culture of crisis thinking within the organisation is imperative. No matter how broad you cast your enterprise risk planning net, an organisation will only be as secure as its least risk-aware stakeholder.
All crisis management is a fight between “habit” and “plan” – when employees know what they need to do even the biggest incidents get managed; but when employees do what they want the smallest issues escalate
No company can ever eliminate risk – if you do, you are not looking at all the opportunities ahead of your business. Understanding of risks leads to preparedness and ability to quantify / qualify it – so that a measured decision can be made about the opportunity
- Establishing the primacy of accountability depends on how a company demonstrates intent – how consistently are rules held up and how reasonable / proportional are the actions taken. People do things they are rewarded for – so integrity has to be ingrained into the performance management system. Integrity is an acquired value – it can be sown, nurtured, flowered and ingrained into organisational DNA through consistent application across the firm. Because protecting the money a company has made is not just the job of legal & compliance folks, just as making money for the company is not just the sales team’s mandate.
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