Compliance: Building Trust in an Oil & Gas Company

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Tom Fox, FCPA

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Earlier this week I explored LRN Corporation’s (LRN) 2016 Ethics and Compliance Program Effectiveness Report (Report). One of the key findings of the Report was that if there was greater employee trust, the values of ethics and compliance could be more effectively embedded within an organization or operationalized as mandated by the Department of Justice’s (DOJ’s) Evaluation of Corporate Compliance Programs (Evaluation). As the Report focused more on compliance program effectiveness I wanted to consider how senior management and corporate leadership can help build trust within an organization.

I recently read an article by Paul J. Zak in the Harvard Business Review (HBR), entitled “The Neuroscience of Trust – Management Behaviors That Foster Employee Engagement”. The article’s premise is that low employee engagement is a sign of lost employee values. While many companies try to increase engagement with “random perks hoping those will move the needle” they inevitably fail to do so because such perks do not establish a culture of trust. The author believes that there are eight key management behaviors which can foster a culture of trust. By doing so, the values of ethics and compliance can be moved throughout an organization.


  1. Recognize excellence. Public recognition both celebrates the person or group which sustained excellence and inspires others to engage in similar behavior. It also gives top performers a “forum for sharing best practices, so others can learn from them.” One technique would be to have employees nominate their fellow employees for those which engage in the most values based behavior. These peer nominated employees would then be invited to attend a companywide ceremony where their action would be publicly announced and celebrated. From this group, a winner could be chosen with a substantive prize. 


  1. Create a challenge. Bring together a group of non-compliance professionals and task them with a compliance challenge for your organization. The challenge must be difficult yet obtainable. Senior leadership should provide support when requested and have active engagement with the group. This project will work to “intensify people’s focus and strengthen social connections.” You will also have created an advocacy group going forward.


  1. Give employees discretion in how they do their work. Zak advises whenever possible to allow “employees to manage people and execute projects in their own way” as “being trusted to figure things out is a big motivator” for employees going forward. It directly communicates that management trusts its employees. Zak goes on to state that “Autonomy also promotes innovation, because different people apply different approaches. Oversight and risk management procedures can help minimize negative deviations” during this process. Most interestingly, younger and less experienced employees may well be your greatest innovators as “they are less constrained by what “usually” works.”


  1. Enable job crafting. While at initial blush, this may not seem applicable to engendering trust in a company to build ethical values, there are points to consider. This technique allows highly motivated employees to use that drive for greater productivity and efficiency. It also allows a peer dynamic and review by requiring “Clear expectations to be set when employees join a new group, and 360-evalutions are done when projects wrap up, so that individual contributions may be measured.” By using this technique to operationalize compliance, business can better imbue it down to the group or even employee level.


  1. Share information broadly. If there is one thing that destroys trust it is that management does not share information, except only on a “need-to-know basis”. Moreover, the author notes that this lack of information can extend to a company’s “goals, strategies and tactics.” If you are keeping employees in the dark of these matters, you will never have a fully engaged, let alone trusting, work force. Transparency is the key and here you should consider how well your organization uses social media to communicate both up and down the food chain within the company.


  1. Intentionally build relationships. The author believes “trust and sociality are deeply embedded in our nature.” This means creating relationships is big plus in a company. If senior managers work to connect with employees, it will not only earn their respect and trust but “will make them more productive.” The author advocates brown bag lunch get-togethers, after-hour work parties and even team building activities so employees will know their peers and their senior managers will not let them down.


  1. Facilitate whole person growth. If it is not obvious by now, if an organization is not concerned with your professional growth, there is probably little chance for it to engender its employees’ trust. One might assume that companies understand that it is in their corporate self-interest to keep their employee base growing professionally. For it is clear that such an employee base will provide the return back in spades to their employer. However, the author believes “if you’re not growing as a human being, your performance will suffer. High-trust companies adopt a growth mindset when developing talent.” A company which works with you to achieve your own personal goals is found to be one which engenders more employee trust.


  1. Show vulnerability. This might seem counter-intuitive but Zak believes, “Leaders in high-trust workplaces ask for help from colleagues instead of just telling them to do things.” He further notes, “Asking for help is a sign of a secure leader—one who engages everyone to reach goals.” He cited to Jim Whitehurst, Chief Executive Officer (CEO) of Red Hat, for the following, ““I found that being very open about the things I did not know actually had the opposite effect than I would have thought. It helped me build credibility.” Asking for help is effective because it taps into the natural human impulse to cooperate with others.”


What is the return for all this trust? To test how much return was generated, the author made three general inquiries. Initially, he obtained evidence from a dozen companies that have launched policy changes to raise trust. The second tested two separate groups of employees on the same criteria. It was giving the two groups of employees’ specific tasks, gauged their productivity and innovation in those tasks, and gathered very detailed data which showed that trust improves performance. And finally, he “collected data in February 2016 from a nationally representative sample of 1,095 working adults in the U.S. The findings from all three sources were similar”.

Zak’s findings were all positive for the effect of trust on businesses. That should really come as no surprise. In its 2016 HOW Report, LRN found “that an organization’s commitment to sustainable, human values, such as trust and respect, drives superior performance across its operations. Values-based organizations demonstrate better financial performance than their competitors, as well as greater innovation, stronger customer satisfaction and higher levels of employee engagement.”

The bottom line is that input driven, paper compliance programs, which emphasize policies and procedures, do not work to operationalize compliance. While written controls form the backbone of a compliance program, it is operationalized through the actions of its employees, who are largely not in the compliance function. Yet it those very employees who must do compliance to make it work in any organization. To fully operationalize compliance the employees must trust that senior management will adhere to a corporate value of doing business in compliance; that the employees will be rewarded for operationalizing compliance and not sanctioned based on performance metrics alone.

Moreover, to have the courage to speak up requires that it be valued in the company as well. One simply cannot have the situation which Uber faced when Susan Fowler went to HR complaining her immediate supervisor had propositioned her only to be told he was a ‘high producer’ and nothing could be done about the situation. How many other female Uber employees do you think will go to HR now over allegations of sexual harassment?

Finally, near the end of his piece, Zak quotes former Herman Miller CEO Max De Pree, for these words of wisdom, “The first responsibility of a leader is to define reality. The last is to say thank you. In between the two, the leader must become a servant.” Building trust and operationalizing compliance must come from the top and the top management must continually work to keep those values in place.

The bottom line is that trust is good for the bottom line. As reported in its White Paper, “Return on Trust: The “State of Trust” 2016”, Trust Across America found “During the three-year period from February 2013-February 2016 America’s most trustworthy public companies outperformed the S&P 500 according to the actual composite audited performance shown below and reprinted with permission of Facts Asset Management, LLC. This was not a “test” but rather “real” money under management, followed by an independent audit verifying the returns. Trust works as a business strategy.”

When you can wed good business values into an organization which beats the S&P average for profitability, you clearly have a recipe for success. Good leadership fosters trusts which makes companies run better and more towards economic success.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Oil & Gas IQ. This article was orginally posted at the FCPA Compliance Report and is reproduced with permission from the author.