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Shop Talk: Strengthening the Tone From the Middle

Jaclyn Jaeger | August 12, 2014

Any good compliance officer knows the valuable role middle management plays in shaping a strong culture of ethics and compliance. How to work with them to achieve that objective, however, is a different story.


The following panelists participated in the July 23 CW & SAI Global roundtable on strengthening tone from the middle. Click on participants' names to see their full bios.

bovard-carole-updatedCarole Bovard
VP of Compliance,
The Options Clearing Corp.


digirolamo-kris-updatedKris DiGirolamo
Compliance & Privacy Director,
Allstate Insurance


ford-ann-updatedAnn Ford
Chief Compliance & Integrity Officer,
MedLine Industries


going-mike-updatedMichael Going
General Counsel,
CNH Industrial


keys-kristopher-updatedKristopher Keys
Deputy General Counsel, Compliance & Ethics,
Exelon Corp.

liston-kirsten-updatedKirsten Liston
Associate Vice President, Learning Content Strategy,
SAI Global

pryal-michael-updatedMichael Pryal
VP of Internal Audit,
Federal Signal Corp.


rizzo-bindoo-updatedBindoo Rizzo
Senior Corporate Counsel,


roberts-colleen-updatedColleen Roberts
VP, Assoc. General Counsel & CCO,
Fresenius Kabi USA


vakharia-tejal-updatedTejal Vakharia
Chief Compliance Counsel,


williams-garrett-updatedGarrett Williams
Assistant VP of Enterprise Compliance & Ethics,
State Farm

Traditionally, mid-level managers haven’t played an integral role in fostering a culture of ethics and compliance within their companies. Only in the last few years has that mindset begun to change, explained Kirsten Liston, associate vice president of learning content strategy at SAI Global, during an executive forum co-hosted with Compliance Week last month in Chicago. “We hear more compliance officers saying, ‘the business owns the risk,’” she says.

During the discussion, a dozen compliance, ethics, and internal audit executives spoke of the problems they encounter, as well as the solutions they employ to engage mid-level managers in becoming advocates for the ethics and compliance program.

Many of the executives agreed that the most immediate difficulty, as one attendee put it, is “just getting air time, just getting the message through, among the many others sent daily.”  

Mid-level managers “get pulled in so many different directions,” said Michael Pryal, vice president of internal audit for Federal Signal, a global safety and security solutions provider. “It’s an ongoing challenge to maintain their focus around compliance matters.”

Getting buy-in from mid-level managers can be even tougher for multinational companies with operations in hundreds of countries throughout the world, each with their own cultural nuances, language, and laws and regulations.

Agricultural and construction equipment company CNH Industrial, for example, has more than 70,000 employees and is doing business in 190 countries. “The cultural problem is that many people outside North America tend to view compliance as a U.S. issue,” said Michael Going, senior vice president of CNH. “Often, they don’t feel that they have the time, money, or energy to get behind it.”

“That’s the cultural dilemma—to help them understand this is not just a U.S.-focused issue,” Going added. “Compliance is a global issue—it’s everyone’s responsibility.”

According to Liston, it takes time to change the way middle managers think about compliance. It doesn’t just happen overnight. “Communicating and changing culture is a slower process than most people would like, or think, when they first sit down to do it,” Liston said. “Boiling it down to a simple message really helps.”

One way that healthcare IT solutions company Allscripts achieved that, for example, is by building the compliance program “bottom up, instead of top down,” Tejal Vakharia, chief compliance counsel of Allscripts, said. “That is, we didn't start with writing the policies first.”

Instead, the company reasoned that it could change the culture of the company faster, and with a more lasting effect, by coming up with eight core principles and pushing them out to all employees. “That’s how I think we were relatively effective in getting change quickly,” Vakharia said.

“Compliance is change management,” Vakharia stressed. “It’s about whether the front line person understands issues and their context to make the right choices the moment they have to make a decision.”

Walking the Walk

Executives also stressed the crucial role senior management plays when it comes to partnering with mid-level managers to foster a strong culture of ethics and compliance. According to Going, while training is important, it’s critical that employees have a strong feeling of “organizational justice.” That effectively means having “a sincere tone at the top,” he said.

How employees perceive a company’s culture of compliance has a lot to do with whether the actions of senior management align with the tone that they’re setting, Vakharia said. It’s the old cliché: Actions speak louder than words. And if the actions of senior management don’t fit with the message they are sending, the words are meaningless. “Middle management is pretty good about knowing whether senior management is just saying something, as opposed to whether they actually mean it,” she added.

Keys-GroupKristopher Keys, vice president and deputy general counsel, compliance and ethics, at electric and gas utility Exelon Corp., stressed that, “an organization’s culture is defined by its tolerance for misbehavior by its highest performing employees.” If a company’s star sales representative engages in flagrant misconduct yet remains on the payroll, he noted, that sends a message throughout the company.

Mid-level managers are always under extreme pressure to meet their sales numbers. In that respect, senior management has an influential role to play by setting the example that they can still be competitive in a compliant and ethical way, and still make their numbers, said Colleen Roberts, associate general counsel and chief compliance officer for healthcare company Fresenius Kabi USA.

“It’s easier to change culture and change people’s minds when there is a positive benefit—when it isn’t just about avoiding bad consequences,” Liston said.

The Wheels of Training

Another innovative way that companies are engaging senior management in the business, from a compliance perspective, is through training. Some companies are finding it effective to let middle management take the lead on training. “From a training perspective, we do not focus from the top, down,” said Carole Bovard, vice president of compliance for The Options Clearing Corporation, a clearing house that specializes in equity derivatives clearing.  “Instead, we conduct interactive sessions where senior management participate in the dialogue around the practical application of compliance and ethics in the same training session as all other employees,” she said.

Collectively, the group noted a change in the way compliance training is delivered to employees and the materials they use, with more emphasis on effectiveness and less of a check-the-box attitude.  “We’re going through a revolution in what counts as compliance training,” Liston said. Historically, she noted, companies approached compliance training as having to train on as much information as possible, because it looked good to regulators.

Liston-Group“The government, however, is tired of seeing paper programs,” Liston said. Now, companies are moving away from a training model of covering everything to really thinking carefully and thoughtfully about how their employees retain information.

“You have to avoid compliance fatigue,” Liston said. “One way to go about achieving that is to keep the message fresh,” she said.

Companies are also getting more creative and trying different approaches to get the message out. One company, for example, brought in a former felon, who had been convicted of securities fraud, to speak to employees and management about his experience. After the session, employees could be heard in the halls talking about the conversation. “It really resonated with them,” the executive said.

According to the group, there is no singe approach to engaging mid-level managers to carry the water of compliance and ethics. Several factors come into play, including the maturity of the company’s compliance program and how regulated the industry is. But that shouldn’t stop companies from trying. “It doesn’t have to be a big formal program. Sometimes it’s just about building relationships,” Liston said. “It’s just about getting the ball rolling, and improvising from there.”