Plato famously observed that “haters gonna hate, hate, hate, hate, hate” but, as we know, “Compliance” seldom arouses such a passionate response.
If you work in financial services, you understand that bored indifference, feigned interest, and eye-rolling are common reactions to most “Compliance” conversations. The brutal reality is that for most people, even for those whom we serve and support, Compliance is simply “meh” – uninspiring, undesired and unexceptional.
I appreciate that’s a bitter pill for many Compliance Professionals to swallow, but we can only change that reality if we first acknowledge the reasons why compliance elicits this reaction.
1. Compliance is boring
A common element of most Licensee’s Professional Development Days is the brief slot allocated to the Compliance Manager’s presentation on legislative and regulatory reform, audit results, complaints and the looming threats posed by the Regulators, aggrieved clients and plaintiff lawyers. Despite the Compliance Manager’s best attempts to engage their audience they’re seldom successful.
This is concerning because, despite what you’ve read, Compliance is inherently interesting. It’s multi-disciplinary, challenging, complex, constantly evolving and dynamic. So why is such an interesting, promising and business critical function met with indifference and inattention? In my opinion, the core problem is that many Compliance Managers have become so mired in formalism that they’ve lost their sense of wonder and reduced something dynamic and complex to a static list of observations written for primary-schoolers. Any surprise they’ve lost their ability to engage and enthuse others? Any surprise the audience is neither engaged nor enthused?
The solution is for Compliance Managers to first (re)frame “compliance” not as a series of burdens and impositions, but as an enabler of a better business. We need to educate our clients that compliance is not about restrictions and limitations but about optimisation. In practical terms, this means we should focus less on what can’t be done and focus better on how things can, and should, be done. By focusing on optimising the performance and sustainability of the businesses we advise, we’ll shift perceptions as surely as we increase profitability. Incidentally, this reframing and redefinition process should also help us to confirm “Compliance” as a strategic management discipline (and one that grapples with fundamental issues – motivation, incentives, behaviour, intent, acts and consequences).
“Do not accept the roles that society foists on you. Re-create yourself by forging a new identity, one that commands attention and never bores the audience”. Robert Greene
Remember, we’re grappling with the same elemental drivers so masterfully explored by Shakespeare, Balzac and E L James. So, when we present, we shouldn’t reduce our fascinating insights to bland, inert and dispassionate statements. Embrace colour, context and comparison. Compliance presentations don’t have to be predictable and boring. In fact, the remedy for this problem is simple; tell stories rather than reciting facts. Avoid offering regulatory fantasies, but recognise that even non-fiction can be thrilling, engaging and memorable if it’s well told.
Let’s be clear. I’m not suggesting that we lie and I’m not blind to the importance of either repetition or the need to communicate critical information with clarity. Repetition may be fundamental to effective learning, but it’s more effective if it’s complemented by variations in tone and delivery method. Being nagged in a monotone doesn’t engender either enthusiasm or engagement. I’m not invalidating a core part of our role, I am only suggesting that we recognise that introducing context, characters and consequences to our presentations is a far better way to engage (and teach) than by delivering a monotonous verbal dissertation on regulatory minutiae.
Ezra Klein, Editor-in-Chief of political commentary site, Vox, grapples with the same issues for their political analysis. He acknowledges the “dryness” of general political commentary and accepts the lack of popular engagement, but instead of offering self-serving rationalisations, he openly admits that any failure to engage or enthuse his audience is the fault of the author, not the reader. His observation applies equally well to compliance and it’s one that every Compliance Manager should adopt as their personal mantra
“If you can’t make something important interesting, that’s your fault”
Admittedly, it’s not always easy to make regulation/legislation interesting, but neither is it impossible to do so. Start by recognising that compliance presentations are not lectures but performances. Plan, practice and study how to perform better. Recognise that it’s your insight, experience and enthusiasm that drives engagement. Use anecdotes, images and humour to make your message stick. Start with Why and build a story around it. Never lose focus on the fact that, unless you’re engaging, no one’s engaged.
2. Compliance is just “common sense”
It’s difficult to position Compliance as dynamic, strategic and engaging when people consider that it’s “obvious”, “simple” or “common sense”. It’s even more difficult when we also consider it to be obvious, simple or common sense.
At some point in every Compliance Manager’s career she looks at what she’s done and asks herself why she gets paid what she’s paid for (repeatedly) giving such obvious and simple advice.
Financial services regulation in Australia is complex, inter-dependent and frequently changing. Managing compliance responsibilities well requires dedication, deep thinking and a synergistic mind. Unfortunately, in their mastery of these topics, and their desire to effectively communicate in a simple fashion, some Compliance Managers fall into the trap of assuming that everyone else has their knowledge, skill and understanding. They don’t. The additional complication is that audience often assume that because you’ve communicated simple points, that these “complex compliance issues” are actually simple issues. They’re not.
It’s ironic that our success in simplifying matters has caused our problems. I’m not suggesting that we insert case citations and statutory references into each and every communication (see point one) but I think we need to get better at acknowledging the complexity with which we deal.
For heaven’s sake, don’t make the mistake of thinking that increasing complexity is the secret to increasing your relevance and influence. Any short term benefit you’ll receive will be overwhelmed by the damage you’ll inflict on your own reputation.
Compliance Managers also need to invest in their education and continuing development to ensure they maintain their expertise (consider, for example, the range of exceptional options available through the GRC Institute). They also need to recognise that they’re part of an emerging and skilled profession.
3. Compliance people think everything’s a problem
A corollary of the first two points is another explanation of “meh-ness”. Perhaps, in our desire to be engaging and essential, we’ve created a perception that Compliance is the corporate “Chicken Little”, always anticipating disaster and always worried that the sky is falling. Comply or Die.
Repetition, in this respect, has desensitised our audience to our messages or the nuances of our communications.
This is how the Compliance function in a large institution can be sidelined and dismissed as “the Business Prevention Unit”.
“Business and regulators fight constantly over compliance, and some of the bloodiest trenches in this war are inside companies, where salespeople see themselves as elephant hunters and tag compliance employees as “internal control freaks” or the “sales prevention team.”Anthony Effinger
When there’s neither variation of tone or message, audiences become less alert and less alarmed over time. Given enough time, if the sky hasn’t fallen on them, then your statements and views are summarily dismissed as irrelevant and melodramatic. It’s hard to maintain the interest of a desensitised and disinterested audience.
If you’ve seen a lot of compliance presentations you’ll have recognised that weak presenters often rely on “fear of consequences” to drive engagement. Even when they resist this impulse, they assume that “hygiene” talks are memorable and successfully change audience behaviour. They aren’t and they don’t.
Clearly, I’m an advocate of provocation and satire, but even I acknowledge the need to vary my approach for the audience, the topic and the media. As a Compliance professional you need to do the same. Better yet, complement your clear presentation with unexpected insights and unanticipated perspectives.
Perhaps the first step in changing our approach is to first change our mindset. We should acknowledge, out loud and to our clients, that not every compliance failure has the same impact and not every issue has the same consequence. We should follow this up by rejecting our traditional focus on formal compliance in favour of substantive compliance. We should emphasise conduct and culture over checklists. Imagine how quickly these changes will lead to compliance being recognised as a balanced, commercial and constructive service. Viva la risk-based compliance!
4. Compliance lives in the past
Most people see compliance as a commodity because it’s ubiquitous, formulaic and prescribed. There’s been little innovation in this space because, despite our reluctance to admit it, most Compliance Professionals see it the same way. While there are occasional attempts to innovate, most licensees and Compliance Professionals approach these issues in the same manner as their competitors and with the same unwavering focus on formal mechanisms, “accepted” measures and lag indicators.
It’s ironic that despite our industry’s willingness to accept that “past performance is not a reliable indicator of future performance”, our compliance arrangements seem to be premised on the inalienable truth that past conduct is the best indicator of future conduct.
Conservatism is comfortable but it’s also self-defeating and ultimately destructive. There are compelling and effective alternatives. Adopting a flexible, risk based CGRM framework and a balanced, commercial and constructive philosophy is not a simple thing to do, but it can be done. Just remember that, when you’re adopting a more innovative approach than your checklist-wielding peers, you need to look forward as much as you look backwards. Ensure that lead indicators (for example training, CPD and business metrics) are given equal weight to lag indicators.
“Understanding the reality that compliance is both dynamic and driven by efficiency empowers firms to evolve past mere conformance and into wealth-maximizing innovation.” Associate Professor Robert Bird
This shift in perceptions will require more than a few discrete nudges. But looking forward, embracing innovation and being willing to break with tradition will also assist you to transition your Compliance department from a retrospective and bureaucratic function to a strategic management function.
5. Compliance is painful and unnecessary
An author, whose name I cannot currently recall, observed that Commonwealth citizens only agitate for a republic when the monarchy is doing its job well, invisibly and without any drama. When George III was gnawing on carpets and talking to trees, he observed, no one had any time or inclination to flirt with republicanism.
This may not be an historically accurate observation but in my experience, Compliance Managers are only seen to be irrelevant and unnecessary when things are going well. As any review of Australian regulatory actions shows, once the fan is hit (or when it’s obvious it will be) the Compliance Manager inherits (often retrospectively) the power, status and authority expected for someone that has, or had, a “significant role” in the business. This observation could be dismissed as cynicism if it weren’t so well evidenced.
Compliance may be challenging, costly and painful but it’s also essential.
“Compliance is like a colonoscopy: People may need it, but they don’t want it, they don’t like it and they certainly don’t want to talk about it. (And they absolutely don’t want any more than is necessary).”
Although compliance is the method by which a better business is achieved it’s too often positioned as an obligation rather than a benefit. As Compliance Professionals we need to accept some responsibility for this popular misconception.
We also need to shed the comfortable tradition that defines us as, and consigns us to being, a bureaucratic and often reactionary function. Please appreciate that you have specialised knowledge, hard-earned wisdom and profound understanding of the business and industry in which you operate. Accept this truth and acknowledge the significant value you offer.
Engage with the business on a strategic level and work assiduously to add value. Recognise that your role is not to prevent business being done, but to optimise the business’ capacity to run a sustainable, productive and consistently profitable business.
Redefining a function is not easy. Managers abhor complexity, but the Compliance function has an incomparable ability to understand, advise and lead. It is our obligation to drive this redefinition because, unless and until we do, Compliance will continue to be seen to be unexceptional and uninspiring.
Don’t be disheartened. Compliance is a dynamic area with significant potential to add real value to the businesses we advise.
Personally, I think Compliance is more “wow” than “meh” but we may need to do more if we want to change perceptions or realise our potential.
If you’d like to respond to these observations or if you need help implementing any of these changes, please reach out (email@example.com). Compliance may be dismissed, trivialised or denigrated but don’t for one moment fail to recognise that Compliance Managers provide an incalculable commercial benefit to the businesses in which they effectively operate.
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