Building a Culture of Compliance: Reframing Compliance
Main Contributor: Meghan Sundquist, Compliance Associate
Defining Reframing
Last month, we dove into one of the building blocks of compliance culture and education. In this blog post, we will explore the second idea on the list, reframing compliance.
The idea of reframing has a few different connotations, some positive and some negative. Let’s review Merriam Webster for our purposes today.
According to the Merriam Webster definition, to reframe means to “frame something again and often in a different way.” This could mean literally, like putting a new frame on a doorway, or it could mean metaphorically, putting a new perspective on an idea or situation. We’ll use the latter connotation for our discussion.
Developing a Fresh Perspective
The beautiful thing about working with diverse compliance beliefs is that it can fill a room with curiosity and creativity. Often, this can create conflict, and people are seen to be at odds. We believe that leadership should focus on using the diversity of opinions to unite and bring people together.
Creating and growing require the ability to think outside the box, and every business needs those kinds of people. The job of the CCO, then, is to take those out-of-the-box ideas and see how they can ensure those ideas are compliant with the rules and regulations designed to keep investors safe. These conversations can be challenging at best, tense, and hostile at worst. Here are a few ideas to consider as you take steps towards working with your creative business builders, not against them.
Build trust. In our last article on education, we discussed the importance of professional relationship building. It can help set the tone for training as well as strategic meetings. A foundation of trust goes a long way.
Know your employees. Part of relationship building means knowing the people you work with and their experiences. A professor once told me that “context is king.” When we understand people’s experiences, we are able to obtain insight into how they move through the world. Are you working with people who have had negative compliance experiences? You may be reshaping more than just your own compliance culture.
Respond with maybe instead of no. At least right off the bat. This doesn’t mean that eventually you may have to say no to an idea, but it leaves the door open and allows you and your colleagues to brainstorm the motivations and goals behind an idea and whether it can be done compliantly. While it takes more time, these conversations can help facilitate trust and teamwork rather than division. Further, providing context and reasoning when you do say no can help your team understand and support the decision.
Create an “us against the problem” mentality. It’s all too easy to get stuck in “me versus you” or “us versus them” ways of thinking. Work to foster a culture of working as a team against the problem, not against each other. If there is a clash between an idea and a compliance rule, make it clear that you want to help find a solution that checks all the boxes, if possible. Have a conversation sitting next to someone rather than across from them. Give them positive feedback in addition to any compliance concerns.
Use facts and evidence in discussion. Incorporate cases from SEC investigations or publications into training and conversations. Talk about real numbers, real rulings, real fines. Discuss implications of the idea and how it could impact the overall business. Ask for data from the employees to support their ideas. Do a cost/benefit analysis. Is there a significant risk to the firm? How does it compare with the revenue generating idea? Be sure to look at long-term implications as well as short term.
Conclusion
As we think about business building and incorporating a new perspective on compliance in that process, I like to think of a boat analogy a former colleague presented to me. Explorers used ships to sail and explore new lands and were often excited about what lay beyond the horizon. For many merchants, this was their livelihood, how they made money and made a name for themselves. Choosing to ignore compliance concerns is like boring holes in the boat. You may get where you want to go, but it will be harder, more time-consuming, and the risk of ruining cargo or sinking the ship is much higher. While staying compliant may mean staying in the port longer, delaying that expedition, or choosing a new one altogether, it can also result in a more productive, more sustainable, more successful trip in the long run. Providing a new perspective on compliance for your firm can be helpful in ensuring long-term success and profitability.
