NOT LONG AGO, I stopped by the grocery store to pick up some sugary, assorted sweets.
The cashier took one look at my packages of cupcakes, frosting, multi-colored sprinkles, and
various candies. “Looks like you’re having a party,” she drily surmised, only to learn they were
for a college-level law school class I teach at Suffolk University called “Compliance Practice
Skills.” The delectable party treats were targeted for a more restrained use, namely, a class
exercise on drafting policies and procedures. More on this shortly...
When you think about compliance skills, what comes to mind? Are they
rules-based skills? Well, yes, as regulatory knowledge is certainly critical
for compliance officers to do their jobs. But a compliance officer must also
understand the building blocks of their discipline—especially the seven
factors that, according to the U.S. Sentencing Guidelines of the Department of Justice (DOJ), 1 must exist for a compliance and ethics program to
be considered effective—and which are foundational to any compliance
program.. But subject matter expertise and knowledge of the tenets of compliance are not the only necessary components. Skills that have historically
been viewed as “soft skills,” such as collaboration and communication, are
of vital importance to your program.
And increasingly, soft skills are being viewed as essential in building
a sound compliance culture—and in incorporating a compliance culture
throughout the entire organization.
Eat Dessert First
What many in the business world have traditionally—and somewhat
dismissively—labeled as soft skills are today taking on critical importance for those working in compliance roles. For example,
the concept of “culture” has historically been viewed in the soft
skill category, and the formation of “culture” would simply
sort itself out as an organization developed its compliance
program. Culture was sometimes relegated to the “nice to
have” or “it’ll work itself out” column.
Today, those charged with compliance responsibilities
try best to keep pace with the frenetic volume of regulatory changes, constantly helping build plans to adjust to
those changes, re-training staff on the new requirements,
updating testing programs, reporting on progress to
leadership, identifying and managing risk, preparing for
regulator inquiries and inspections…and that’s just Monday.
If you were to think of compliance as a formal meal,
the main course would include many task-based elements
(drafting policies and procedures, testing activities to identify
risks and confirm controls, monitoring regulatory changes,
etc.). These are usually fairly easy to identify, as there are long-standing, clearly defined practices for these compliance program
aspects. But how does one define, much less set in place, a clear
notion of culture within a firm? Is culture something we can’t really
define but, to paraphrase the famous Supreme Court ruling on a very
different matter, something that we just “know it when we see it?” 2
Compliance officers often have strong tendencies to get caught up in
keeping pace with the day-to-day requirements and doctrinal laws, that
what might be considered to be soft skills are often relegated somewhere
towards the back of the “things to do” pile.
But culture—and the soft skills that make it possible, has become a very
real “thing” in today’s business world, and regulators have increasingly
made it part of the regulatory lexicon. The Office of the Comptroller of the
Currency’s July 2016 Exam Handbook mentions “culture” 45 times, with
an entire chapter entitled “Establish an Appropriate Corporate Culture.”
In 2016, the Federal Reserve Bank (Fed) of New York hosted a conference
on culture and behavior. This event built upon two conferences that the
New York Fed held in October of 2014 and November of 2015 on culture
and behavior in the financial services industry. The conference focused
on expanding the definition of culture to include the perspectives of institutional investors and financial institution supervisors. The conference
included sessions on methods of culture assessment and the influence of
technology on culture. As one conferee stated “everyone from the mail
room to the board room needs to feel it in their bones—that the bosses
care about integrity.” 3
A fundamentally important aspect in assessing the health of your firm’s
compliance culture lies in evaluating your compliance team’s soft skills.
And if soft skills and culture are the desserts of your compliance program,
perhaps we should be focused on eating dessert first. After all, what good
is a compliance program that solely exists within the bounds of the compliance department? If a compliance officer cannot work with the lines of
business, cannot communicate effectively or train a team without inducing
a collective coma, then no matter how good the compliance initiatives look
on paper, efforts toward building an enterprise-wide compliance program
are doomed to fail.
Soft Skills as Elements of a Compliance Program:
Frosting Your Policies and Procedures
The DOJ’s U. S. Sentencing Guidelines require that a firm establish standards
and procedures to prevent and detect criminal conduct. Now, let’s get back to
why I brought cupcakes to a law school class. The supplies were for a lesson
illustrating the importance of drafting policies and procedures that reflect
the actual practices of the institution. The goal was not to teach the “how”
of drafting policies, but rather to demonstrate the “why” behind the policies
and, to the extent possible, clarify “who” the policies impacted.
The class was divided into two departments: Compliance and Operations.
The Operations department was instructed to frost and decorate the cup-
Skills that have historically been viewed
as “soft skills,” such as collaboration and
communication, are of vital importance
to your program.