Expectation

Regulations prohibit US and EU companies from exporting almost every type of product to Russia. So Russia cannot access some types of critical products and loses its military capacities and economic power.

Reality

Well… Let’s watch the story of Mr. Marchenko below.

What does this mean?

I know. Compliance isn’t sexy.

But when done well, it can make regulations effective.

And so, it reaches the desired results that our society wants.

That’s why you shouldn’t underestimate what you can do with:

• a clear procedure;

• an inspiring training;

• or just a straightforward decision.

Sounds obvious.

Yet very often, this is where things go wrong.

Crazy, isn’t it?

I told you so.

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Thousands of years of evolution have honed us into creatures that can instantaneously respond to perceived threats, from the metaphorical lion in the savannah to the real challenges in the workplace.

Knowledge feels safe until it’s not

Let me clarify: you don't need to know everything about a lion when you spot one in the wild.

What's its age? Its weight? Its dietary habits? No. You need to know that it's potentially dangerous, and you should start running. That, my friends, is the primal essence of our survival instincts and serves as the heart of the Lion/Run framework.

The Lion/Run framework is a different approach to training colleagues, particularly in the context of regulatory compliance. This isn't about transforming every employee into a compliance expert, just as we're not asking every person to become a zoologist who can differentiate between an African lion and an Asiatic lion. It's about understanding how to spot a potential risk in the context of their roles and knowing what action to take.

The danger, however, is that knowledge feels safe.

Knowing a lot feels safe until the moment reality hits you.

The complexity barrier

But, why is this important? Because complexity is a barrier. Overly detailed compliance training often leads to a cognitive overload, reducing the ability to identify and react to potential issues effectively. When we make it overly intricate and laden with jargon, we risk creating an environment where violations go unnoticed or unreported.

On the other hand, the Lion/Run framework simplifies the process, just as our ancestors did when they spotted a lion in the wild. It hinges on two fundamental ideas: recognizing the signs of risk and knowing the right action. The goal is not to churn out employees with encyclopedic knowledge of rules and regulations, but to have individuals who can effectively discern the potential "lion" in their work, understand when something feels off, and take appropriate action.

Now, this doesn't mean that specialized knowledge isn't essential. We still need compliance experts, just as we need zoologists. Their role is to dive deeper, understand the intricate workings of regulations, and provide guidance when complex situations arise. But expecting the same level of detailed knowledge from everyone is, in essence, setting them up for failure.

Consider the Lion/Run framework part of your company's broader risk management strategy. By reframing how we approach compliance training, we can create an environment where everyone feels empowered to act and "run" when they see the "lion." And just like our ancestors who survived and thrived despite the omnipresent threat of lions in their world, a company that can swiftly identify and respond to potential risks is more likely to succeed in the wild, unpredictable world of business.

The bigger-than-life lesson for compliance

At the end of the day, we need to remember that simplicity often outperforms complexity. Whether escaping from a lion or identifying a compliance risk, the quicker and clearer our response, the higher our chances of survival. Use the Lion/Run framework. Make things simpler, not complex. After all, as we’ve seen through the lens of history, it’s not the strongest species that survives, nor the most intelligent, but the one most responsive to change.

Bringing this bigger-than-life lesson to compliance means that you need to train people with flexibility in mind: providing them the skill to spot risks in reality and giving them the tools and reminders to take the right action.

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A peculiar headline caught his attention:

David's heart sank. Just a year ago, Mamava made a major sale of their top-of-the-line breast pumps to a new customer in Kazakhstan. The deal had been hailed as a massive breakthrough in an untapped market.

But now, it seemed, it was a ticking time bomb.

From lullabies to bomb sirens

David had an instinct that this baby boom was more than it seemed. He called in his top attorneys, with Rebecca Strauss as the leader, known for her sharp wit and unflinching honesty. They sat down with a simple question: Was the dream deal in Kazachstan too good to be true?

Rebecca, always one for details, quickly pointed out crucial information. Kazakhstan, it seemed, was being investigated for helping Russia circumvent sanctions. The breast pump boom wasn't due to an explosion of babies, but due to an explosion in the demand for drones. The tiny, highly sophisticated computer chips within Mamava’s pumps were being extracted and repurposed for Russian drones to be used in their war against Ukraine.

While Rebecca was describing the circumvention routes the Russians used to obtain Western technology, David came to a horrific realization:

The big purpose of his company is to nurture newborns and support young families. Would it be possible that their products are now used to end life? To support this war? To kill families?

David felt like he'd been punched in the gut. It wasn't a baby boom at all. It was a sanctions evasion scandal, and Mamava was unknowingly caught in the middle of it.

In the background, a television was playing the promo movie of Mamava. But the lullabies in the movie sounded more like bomb sirens in the head of David.

The Red Flags That Were Fireworks

David and Rebecca, together with her team of attorneys, dove into the details of the deal. The red flags weren't just flags, but fireworks that the sales team had chosen to ignore. They had been so caught up in the excitement of the big sale that they had missed critical signals: the hurry to close the deal, the insistence on a specific model, and the unusually large order.

David’s heart pounded like a drum in his chest. He realized that the joy of the breakthrough deal was, in fact, a breakthrough disaster. The pride of their product, their top-of-the-line breast pump, was being used not to nourish babies, but to fuel conflict.

Now it was time to inform the Board of Directors. Another storm ahead for David.

Panic in the Boardroom

David’s message for the Board was simple but heavy, like a tiny iron hammer: "Sanctions compliance violation discovered."

The boardroom fell silent. You could almost hear the sound of stock prices crashing in the distance.

"Are we talking a slap on the wrist, or do we need to start measuring our office for orange jumpsuits?" quipped one of the directors, using humor to hide the dread that had just landed in the pit of their stomachs.

The attorneys, accustomed to dealing with major crises, jumped into action. They were like firefighters trying to put out a blaze, only the blaze was a potential scandal, and the water was endless paperwork and legalese. The atmosphere in the boardroom became a mix of fear, denial, and finger-pointing.

"Who dropped the ball here?" barked the most senior director, pointing an accusatory finger at David.

Everyone was looking for a scapegoat but the only thing they found was a mirror. None of the directors ever insisted on investing in a compliance program or training the sales staff on red flags.

The Unlikely Hero: Meet Holly

As the attorneys dissected every detail of the violation, the fear only grew. It was like trying to fix a watch with a sledgehammer. Their approach was meticulous, and methodical, but perhaps missing the human touch.

Missing the sense of solution-finding, and only focused on fact-gathering and calculating chances of prosecution.

The executives were buried under a mountain of legal jargon, escalating risks, and worst-case scenarios. The attorneys were doing their job, of course, but their tunnel vision only exacerbated the panic.

A board meeting that started with a light mood and discussions of the summer holiday plans had now turned into an episode of a courtroom drama, only scarier because it was real.

But in the midst of the storm, Holly Smith, Mamava's diligent Compliance Officer, walked in. She was known for her practical approach, her empathy, and her problem-solving skills. She had a knack for turning around even the most dismal situations.

Holly didn’t look for someone to blame. She looked for a solution. She proposed a comprehensive plan to address the violation, reassuring shareholders, cooperating with authorities, and tightening Mamava’s compliance procedures to prevent future violations.

Holly navigated the company through the crisis with compassion, showing everyone that in times of adversity, the human touch can make a difference.

By crafting the solution, she gave hope.

From Scandal to New Beginnings

The ordeal was a wake-up call for Mamava. It exposed the cracks in their due diligence process and taught them a valuable lesson about the importance of vigilance and responsibility. It was a reminder that success should never come at the expense of integrity.

In the face of crisis, Mamava learned that it’s not just about the product you sell, but also about the values you uphold. And in the end, it was not the sanction evasion scandal that defined them, but their resilience and their commitment to doing what's right.

Mamava emerged from the scandal stronger and wiser. They revamped their compliance procedures, invested in robust due diligence, and provided extensive training to their teams. They ensured that every deal, no matter how lucrative, was thoroughly checked for any potential red flags.

CEO David Jenkins, once a figure of charisma and charm, had now also become a symbol of resilience and responsibility. He learned the hard way that a red flag ignored today can become a wildfire tomorrow. He promised to lead with vigilance, ensuring that Mamava’s products would only serve their true purpose - to nourish and empower mothers.

A Profound Lesson: Never Trade Integrity for Success

In retrospect, the breast pump boom was a sobering reminder of the unseen pitfalls on the path to success. It taught Mamava, and all who followed its journey, that ignoring red flags in the pursuit of success could lead to a crisis.

But it also highlighted the importance of resilience, responsibility, and the human touch in the face of adversity. It was a testament to the fact that success is not just about profits, but also about upholding values and doing what's right.

So, the next time a lucrative deal comes knocking at your door, remember Mamava’s tale. Look beyond the profits, watch out for the red flags, and never trade your integrity for success. After all, as the saying goes, "It's not the destination, it's the journey that matters."

This is a work of fiction. Names, characters, business, events and incidents are the products of the author's imagination. Any resemblance to actual persons, living or dead, or actual events is purely coincidental.

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At first glance, the man abides by a rule. But it did not serve him well. It serves as a reminder that the real world is complex, and the cut-and-dry nature of rules may not always align with the nuanced situations we encounter.

We often seek out straightforward guidelines to assist us in navigating the complexities of daily existence.

Black/white. Yes/no. Stop/go. Hold/Release

This is what people expect, clarity.

While clear rules can be helpful in many instances, there are occasions when adhering to them too strictly can have unforeseen repercussions.

Recently, I've been pondering this concept quite a bit when drafting a new procedure for sanctions compliance.

What do we do if we encounter a customer in country X? Should we block every supplier requesting this type of payment method?

In compliance, it is vital to be precise.

But at the same time, we need to give people the minimum awareness, context, and knowledge to make decisions independently. Or to tell them that asking questions before acting is recommended.

If it’s not desired that a rule answers, let people come up with the answer. For this to happen, they need to be trained well.

Compliance training should not repeat the black/white rules written in procedures.

Compliance training should prepare people to have the correct reflex.

And that’s what I like about crafting compliance trainings. You need to be creative.

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To explain the different triggers, we organize them along two axes:

1. Formal-informal axe: Formal triggers are documented or consistently messaged via structured communication channels. Informal ones aren't communicated in a structured way, and they aren't documented.

2. Internal-External axe: What is the 'source' of the trigger? Is it coming from an individual his/her heart or mind (internal)? Or is the source external from the individual?

And here we have visualized this with some examples:

Let's dive into the three categories and their characteristics.

Formal motivators

The most used and known motivational triggers are the formal ones. They are created by the government or the company and are formalized in a document:

1. Laws, regulations and decrees at the governmental level.

2. Enforcement cases initiated by controlling authorities, and judged by courts.

3. Codes and policies at the company level that describe the principles.

4. Procedures that specify these principles in practices.

5. And finally controls, which form the enforcement at the company level.

These are the traditional methods of compliance to motivate people.

They share one characteristic: it's based on the stick-and-carrot idea.

• People will take rational choices if they consider all consequences.

• And they can only take the right rational choice if we provide them with sufficient information.

Unfortunately, this is a broken method.

But why?

One crucial reason is that people see themselves as having - at least - a basic desire to maintain their integrity. If they are confronted with top-down documents and controls, they feel that the employer isn't trusting them.

Their potential reaction? They ignore the document, thinking it's not for them but for others.

Group motivators

An employee is, like most human beings, a social individual. We care about what the group thinks and we mirror the actions of the group.

It's simply a brain shortcut, a heuristic: we are mirroring the actions of others because our brain is wired to copy the behavior of others. Especially in situations where we don't know how to act.

Case in point: products on Amazon.com get +45% more views if it shows the badge "Best Seller". That's called social proof.

This is how social norms work. Social norms are collective beliefs about what kind of behaviors are expected (or appropriate) in a given situation.

Social norms will influence an individual's behavior if:

• that individual sees others follow that rule;

• the others expect that the individual will follow the rule.(5)

If you can help spread the word that colleagues are complying with the cybersecurity policy, like changing every month their password, then people will also do this more.

But here is the catch: these values do not necessarily match with the "formalized" company values as expressed in the code of ethics and policies. You cannot control these values immediately, unless with the right recruitment.

Group social norms can trigger prosocial behavior, which may not be in our self-interest, but also negative behavior like bribery. If it seems that bribing is common practice, the social barrier to bribe is low to non-existing.

In other words, social norms work both in positive as in negative sense.

Simply put: if people notice that the cybersecurity policies are totally ignored and everyone is very sloppy with the IT equipment, then they will adopt the same behavior.

Personal motivators

There is no stronger motivation for employees than an understanding that their work matters and is relevant to someone or something other than a financial statement.(4)

If you can identify what really matters to someone, you can create long-lasting behavior change.

For this, I recommend reading about the Self-Determination Theory, which I highlighted in a previous post.

DIY WORKSHOP

You can use this template to map all motivational triggers.

That is, what different messages are sent to an employee that contains a compliance message?

The more granular you go per user persona, the better the result, but this takes time of course. So you can start very general: the average employee.

Example (+ template):

• They have access to the code of conduct

• They follow at least one compliance training per year

• They read checklists and procedures while doing their job

• Etc.

After the mapping, you can see where to change the mix of the three types of motivators: formalized, group, and individual motivators.

MOTIVATION MATRIXby COMPLIANCE EXPLAINED

You may have issues when viewing the above Motivation Matrix on smartphone.

If you want to use the Motivation Matrix, go here: copy, edit and add your logo.

USE THE MOTIVATION MATRIX

Resources

1. https://jamesclear.com/motivation

2. https://airandspace.si.edu/stories/editorial/how-kites-fly

3. https://stevenpressfield.com/books/the-war-of-art/

4. https://hbr.org/2017/06/motivating-employees-is-not-about-carrots-or-sticks

5. https://www.habitweekly.com/pro-only/habit-weekly-pro-social-norms

• Do you struggle with finding the right compliance measures? Do you focus on screening? Automation? Training? Awareness?

• If you don't know where to start, take 15 minutes to map all frictions that prevent an employee to perform a target behavior.

• And then, as a compliance measure, you increase or remove the friction.

• To show you how, I've made a case study about economic sanctions. The target behavior is that Sales detects red flags as early as possible in the prospection phase.

Where to start?

If there is a new regulation to comply with, you sometimes wonder: where do I start?

Let's take the economic sanctions, like the ones against Russia. These are not new as such, but have expanded seriously since the war against Ukraine started at the beginning of 2022.

To comply, you need to take certain measures internally: you need to use new screening procedures, or review your product portfolio. You may need to train specific employee groups on this new thing. And what do you communicate to the rest of the company?

A lot of options.

But what do you do first? What's most important?

How do you prioritize?

To get an immediate grip, I'd recommend reviewing key business processes and mapping all frictions in that process.

💡

This Mini Guide is all about mapping frictions. But in case you wonder "Which business process are actually key?" then I got news for you: this will be a topic for a next Mini Guide 🥳!

After the friction mapping, you will feel confident about your next steps: about where and when you intervene, as compliance team.

What we will cover below:

1. What is friction?

2. Frictions in compliance

3. Case study: economic sanctions (+ completed template)

4. My advice

What is friction?

Friction is the time, money, or effort we need to spend doing something.

We want to avoid instinctively friction that we experience or expect. (Of course, it's not the only relevant element in our decision process!).

It makes sense to remove or add friction sometimes:

• Remove friction: Amazon removed all friction between the moment you think about buying a product and actually buying the product, with the 1-Click Checkout button.

• Add friction: A parking lot is gated (= friction added) because it's part of the payment process (get a ticket to know the time of entrance) and to control the number of cars (get a ticket to count the number of cars inside).

So friction can be an unnecessary evil, but it can also be a useful tool.

The key is to know how to use that tool.

Let's see how friction is relevant to our compliance practice.

Frictions in compliance

From a compliance perspective, friction prevents employees - or makes it hard on them - to perform a specific task or behavior.

So, you have two kinds of opportunities to decrease compliance risk:

• You make it easy for employees to do something: remove friction.

• You make it difficult for employees to do something: add friction.

To find these opportunities, we must first map all friction in a business process.

And that's what this Mini Guide is all about!

Friction mapping: how?

1. 🎯 Find a target behavior

2. ⚡️ Find the starting point

3. ➤ Describe all steps from starting point to the target behavior

4. 🚧 Describe all frictions employees may have in each step (structural 🚧 and cognitive 🧠 frictions)

5. 👍 Figure out how changing these frictions will lead to the target behavior.

To explain this, I have made a case study.

Case study: economic sanctions

Companies don't want to mess with economic sanctions.

• You don't want to do business with a company that is listed on a sanctions regulation.

• You don't want to do business with a company who does business with a company who does business with a company who does business with a company that is listed, too (this is called an indirect violation of the sanctions regulations).

The business process we choose = prospection by Sales.

The compliance goal = to detect red flags (signals that indicate a sanctions risk) as early in the process as possible. But without unnecessarily blocking or slowing down the business process.

So without further ado, here is the Friction Mapping Case Study: Compliance With Economic Sanctions.

(If you can't view the template above like on a smartphone, use this link.)

You will notice how compliance measures are complementary and serve different goals.

My advice

The title of this Mini Guide starts indeed intentionally with "15min of work".

What I mean is: Don't overthink it.

• ✍️ Jot down your first thoughts in this template for max. 15min.

• 📆 Revisit the template a few days later and take another 15min.

• 🙅‍♀💁‍♀️🙆‍♀️ Discuss it with a few colleagues from different departments.

• 🧪 Experiment and amend depending on results.

• 🔁 Repeat for other business processes.

Good luck!

Resources

• https://www.human-risk.com/post/friction-part-i-why-risk-compliance-officers-should-be-familiar-with-friction

• https://thedecisionlab.com/reference-guide/psychology/sludge

• https://www.habitweekly.com/pro-only/behavioral-mapping

Frustration, specifically.

Because compliance training can be frustrating.

Just like a bottle of ketchup.

To get in the right "frustration" mood, I suggest you do a small exercise:

Close your eyes and repeat after me:

"I am a sales manager. I need to close five more deals before the end of this month. I want to win the prize of Best Performing Sales Manager 2022, so I need those deals. Okay, I can do this, no time to lose. I am going to do a lot cold calls, I am going to call all prospects, I am going to close those deals. I got only 4 weeks left, no 3 weeks because of Christmas, but I can do this. Just go all in these 3 weeks. Time is money, but I can make this work. NOW."

Then imagine you are opening your mailbox, hoping to see some prospects reaching out to you, hoping to see some customers and deals. Or even meetings. You want to take action.

But you look closer and you see...

AN EMAIL FROM THE COMPLIANCE TEAM

The Compliance team invites you for a full day of compliance training next week.

NEXT WEEK. FULL DAY.

You still remember the last year's training on very obscure things like money laundering and corruption... all things I don't do. And they don't have a clue of what I'm actually doing as Sales Manager.

Waste of time!

+++ End of mood-setting exercise +++

If you hijack someone's time for a day or longer, don't be surprised people get frustrated about compliance. Especially if you don't deliver on their expectations.

This feeling perfectly described my emotions when dealing with a glass bottle of ketchup:

Getting the ketchup out of the bottle is a frustrating experience. You push and wait and push and wait. Nothing happens. And then suddenly, SPLASH, you are eating ketchup with a burger and fries on the side.

And for many people, compliance training is also frustrating.

Similar emotion, similar solutions? Let's find out!

Solving a frustrating experience - Part 1

There are two solutions to fix a frustrating experience:

1. Let people accept it.

2. Change the way it is.

You think: let's do option 2 immediately and I agree.

But that's not how reality works. People like the easy way first, which is trying to explain to people that what they are experiencing (frustration) is their problem, so they need to solve it (by accepting it).

That's EXACTLY what Heinz Ketchup tried for many years.

Heinz tried to let people accept that there is nothing wrong with their product. Instead, they shouldn't be frustrated about it but happy! "Good things come for those who wait!"

You can try to explain to that sales manager that is frustrated because of your compliance training that "Compliance is important because (insert cost of non-compliance) so we need to train" or "Compliance can ruin our reputation so we need to train".

"Good things come for those who are being trained"... Something like that?

Yeah. But the problem stays the same: your training is frustrating.

Frustrated about compliance training? Your problem. Accept it.

So, just like Heinz, you can try to explain it even better: not just your problem, you just didn't get it in the first place.

We explaaaaaain it agaaaaaaain:  

In this advertisement, Heinz tries to educate people on how to use the glass bottle (still with the design flaw).

The basic assumption: people got it wrong, so we explain it better. (or: you're stupid).

Seriously this is what they are doing: ignoring their flaws and blaming the user.

It's kinda what Legal Design is trying to achieve: "Oh you didn't read our Compliance policy? Poor boy or girl! Let us make it easier for you, so you'll finally read it."

Don't shoot, Legal Design friends! Recent research shows that changing compliance training from a policy text to an infographic doesn't lead to better compliance results.

I don't want to pick a fight with either Heinz or the Legal Design space. But they don't achieve the right results: the perfect amount of ketchup. Or the right compliance behavior.

☂️

Sure, some people may benefit. In some restaurants, they prefer the glass bottle of ketchup for aesthetics. And some people prefer a policy that reads better. But the result stays the same: the ketchup still flows slowly. And more importantly: reading a policy isn't the same as actually performing the right action.

Solving a frustrating experience - Part 2

The problem is that the design of classic forms of compliance training is wrong. Just like the design of a glass bottle of ketchup is wrong.

Classic compliance training is framed around the law and the risks.

It goes like this:

This is the law about X.

It's important because of X.

The main risk is that we do X.

If you spot that risk, contact asap X.

That's good if you are training a young legal or compliance professional, who needs to know the law and understand the risks. But with compliance training, your main goal is to train non-compliance colleagues on important but very specific topics.

That's a different audience.

So you need a different design.

The solution is audience-driven

If you would listen to your target audience, you are not just tweaking your existing solution, but you might radically change it.

Heinz did that with their new design: a squeezable bottle, upside-down so it uses gravity to make it flow-ready.

You should also change the design of your compliance training.

Make compliance training audience-driven.

The main focus of your training should cover one goal, one topic. It should look more like this:

How to spot suspicious orders?

This training will look less fancy:

• We delete the part about export laws/sanctions laws/AML laws/etc.

• We may talk slightly about "why it's important",

• We don't ask them to spot risks, that is not their job.

• We ask them to spot signs of risk.

Creating a short but audience-driven training is hard, though!

It requires that you segment your audience into specific groups and you have a deep understanding of their job responsibilities.

👀

Want to read more on Audience-Driven Compliance? Check my article here.

Once you have done your homework (that is, understanding who your audience is per topic), you can start building on your training program.

It also helps you distinguish between what is a must-have and what is a nice-to-have.

Let's look at two examples of two audience-driven solutions, that used another design than classic compliance training.

An example? Gamification.

Much has been said about gamification.

And I hate to admit it, but I have been a long-time critic of gamification. Yet, today I provide a compliance game myself too!

Why this change?

It's not why you think it is: it's not because of engagement.

Of course, you need to get people interested in your training and keep them interested. Gamification helps a bit with that, but you only need a bare minimum.

The real reason I became a fan of some types of games: is the power to start an interesting conversation among all participants (the audience).

So people start thinking on a deeper level and look at the content from a different angle. That is, from a practical angle.

And by taking actions in the game that simulate real-world actions, they apply lessons to build awareness. Not general awareness ("we need to comply with the law X") but specific awareness ("if I receive this type of information from the customer, it is a red flag that I may need to report").

Sure, you can go through a slide deck explaining the red flags of a suspicious order. And sure, you can provide them with a nice checklist of these red flags.

But nothing beats real practice: training by conversation.

Enter: Conversational Games

Having a conversation with other people in a specific context gives you a much deeper view of the topic. And sometimes you need to simulate that specific context.

Hence, games. Games that trigger conversation. Not just engagement.

Other options?

Gamification is not the holy grail.  

Let's say you want to stress the why of screening orders on suspicious facts (instead of training on the "how"). "Why do we need to investigate orders coming from a trusted customer?"

Well, if this customer is based in Russia, it makes sense from a compliance perspective but that's not a satisfying answer for the business, your audience.  

It's a business dilemma with an ethical angle.

Enter: Ethics City Tours

Say what????

You can guide your team through a historic city.

Why?

History is full of stories that can ignite conversations and inspire people.

Example: A tour through Brussels, Belgium, will learn that it was a city of merchants 5 centuries ago. The Grand Place is a great example of the wealth created by the merchants. It has many Baroque "Guildhalls", which are associations of craft guilds that dominated the economic life of Brussels, in the late medieval and early modern periods.

Oh, nice!

The wealth of these merchants was created by exporting their products to neighboring cities, counts, principalities, and kingdoms. Which in turn spurred the economy in these places. Win-win (or non-zero sum)

💡

A non-zero-sum: That's the history of humankind (or the so-called logic of human destiny as explained by Robert Wright in his book NonZero).

But as we know very well, periods of wealth are, more often than not, followed by periods of war.

In 1695 Brussels was bombarded by the French troops of Louis XIV. Nevertheless, the French were business partners for many Brussels' merchants.

When you tell this story to your team, ask them what they would do. What would they do if they were a medieval merchant that got wealthy because of trading with France?

Would you keep doing business with them?

Even if you provide "economic resources" to your new enemy?

And what if your city, Brussels, would enact a prohibition to do trade with France?

How do you balance the interests of your city against your own commercial interests?

These are just a few questions, framed in a bigger, historical story.

It should trigger the right conversation when you want to explain "why" trade regulations (like embargoes, sanctions and export laws, etc.) are put in place.

So your audience gets a better understanding of "why" they need to screen orders on suspicious facts.

Conclusion: what's the lesson of this Mini-Guide?

Focus on the interest and perspective of your audience.

And make your product (either ketchup or compliance training) audience-driven, so you get a perspective focused on the outcome instead of the tool.

By focusing on the objective outcome (and the behavior that leads to that outcome like conversations), you will get more creative.  

An audience-driven approach will enable you to put the same compliance training each time in a new jacket.

• You can train via a board game. To trigger conversations about the "how".

• Or you can train during a city tour. To trigger conversations about the "why".

Both are examples of how you can change the design of your training.

Just like Heinz did, after listening to their audience.

No more frustration.

But the right outcomes.

✌️

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At new year's eve, we celebrate that the world succeeded in making a complete orbit around the sun. For 4.54 billion times in a row. Quite a streak.

But do we need to follow the same orbit metric in our job?

We compare our professional activities, business trends, and performance in one complete orbit with the next complete orbit. It's what Morgan Housel calls the "Tyranny of the Calendar."

This doesn't always make sense.

Yet these questions might sound familiar to you:

What went right in 2022? What went wrong? Which projects were finalized this year, and which projects were started? Did you stay within the 2022 budget, and what funding do you need in 2023? What laws have changed that impacted the business this year, and what is the regulatory outlook for next year?

2022 compared with 2023. Or the 4.54 billionth successful orbit compared with the 4.54 billionth +1 successful orbit.

So again, does it make sense?

Maybe.

But is it risky?

I think so.

Because only focusing on the yearly metric, we risk overlooking the most critical metric:

The Unpredictable Event.

Preparing for a The Unpredictable Event, like a gloomy law violation or an unexpected opportunity, is the actual goal.

• If your team is prepared for The Unpredictable Event, then terrible yearly metrics don't matter much: you did your job.

• But if your team wasn't prepared, well, then brilliant yearly metrics were blinding you.

Yearly metrics, or any periodic metrics, do matter, but approach it with reason:  

• Change the metric: Break down the little steps to prepare for The Unpredictable Event, and measure with a yearly cadence whether you are better prepared each year.

• Enlarge the window: Make the period to measure more extensive than one year. Why not compare the first 1000 days of the team with the next 1000 days? It's as arbitrary as an entire year, but the window is bigger.

So, are you waiting for Earth's next orbit?

Or for The Unpredictable Event?  

But we will see that this is not what you want.

So buckle up, we will cover:

1. What is motivation?

2. How to make motivation easier?

What is motivation?

Motivation is your willingness to act.(1)

It's when the pain of action is lower than the pain of doing nothing.(2)

🏋️‍♀️

IF (pain of doing it > pain of not doing it) THEN = Motivation

Motivation is a power that can change the way it is.

If you want to change a process, like checking invoices or screening customers, you need to focus on motivation. That is, the person executing this process needs to feel that the inconvenience of taking action is higher than the pain of doing nothing.

But motivation doesn't happen by itself. You know how hard it is to motivate others. Especially for compliance.

So how to do it?

How to motivate people to comply?

Let's start with a short theory. The most commonly used theory about motivation is the Self-Determination Theory of Deci and Ryan.

It says that people are motivated if their psychological needs for competence, autonomy and relatedness are fulfilled:

• Competence: I can (learn how to) do it.

• Autonomy: I can make decisions on my own.

• Relatedness: I am part of a group I care about.

A theory is just a theory. The question is: how can we apply this in the compliance practice?

Competence

Motivation requires momentum. You need to overcome friction.

So we need to make things easier for employees. And we should make them feel like they are learning how to do to things.

Now take a compliance task. You should design it the right way: lightweight and the right size, to make the first action very easy. But the action doesn't happen by itself, the employee needs to be pushed to take that action, like with an awareness campaign or a nudge from the software he/she's using.

Instead of asking how we can motivate others, we should ask how we can create the conditions within people motivate themselves. (Edward Deci)

We should create a context that makes doing compliance tasks easier. And let the employee make progress by offering the right resources.

💡

How can you take barriers away?

Go ask these questions your employees:

• What makes it hard to do X?

• What would make it easier to do X?

• What is the context when you need to do X?

• What information do you need to do X?

• What training do you need to do X?

• What is your interest in doing X?

• What will the results be if you would do X?

Autonomy

Giving employees autonomy sounds contradictory in the build into a compliance program. Simply because sometimes a compliance program doesn't leave much choice.

But if possible, try to pay attention to this:

• Let employees reflect on what matters to them. So you can link it what the compliance task.

• Provide a limited and clear choice architecture. Like a flow with 2 or 3 open-ended questions.

• Let them dig into resources so they can find the answers themselves.

• Provide your team's contact details so they know the compliance team is always backing them.

Relatedness

Let people feel that they are not operating alone. Social connection is a big part of the human being.

• Human support: who can help a hand? Who can offer moral support?

• What are the ethical principles behind the compliance task?

• How do their actions help colleagues?

But be careful, this is not always possible. Like if it concerns sensitive information then it's better not to let people connect on that topic or task.

There are alternatives too! Psychologist Kip Williams studied that even computers like chatbots, with pre-programmed messages, can give us a feeling of relatedness.

So instead of a dry flowchart, think of building a chatbot.

Recap

Next time we'll dive into the Motivation Matrix to find out which tools you have as compliance team to increase employees' motivation.

Resources

1. https://jamesclear.com/motivation

2. https://stevenpressfield.com/books/the-war-of-art/

3. https://www.habitweekly.com/pro-only/habit-weekly-pro-engaged-by-amy-bucher-part-2

Yes? Well, that makes two of us.

Because if you're in compliance, you know there is a HUGE DIFFERENCE.

So let's break things down:

1. Why are people confusing legal with compliance?

2. How do you best explain the difference to colleagues and friends?

Let's explain!

Why are people confusing legal with compliance?

There are historic reasons, label reasons, and recruiting reasons

Historic reasons

Let's go back in time to when compliance got departmentalized. I mean when it started to become a professional role, and a new corporate thing.

At the beginning of the 90s, having a system of how to comply started to matter.

Governments realized that if you don't have a systemized approach, you will sooner or later violate the law. Not because you want to, but simply because a company is just a bunch of humans together. That is, not a very flawless bunch.

So the US Department of Justice issued its Federal Sentencing Guidelines for Organizations.

In a nutshell, these Guidelines:

• describe how to implement a such system, a so-called compliance program.

• give in return softened punishment if a company, that violated a law, could prove it implemented such a system.

It was a Copernican revolution. Not just avoiding law violations was important. Also how you do that became a thing.

And that's why in the 90s compliance started to diverge from legal.

But who could manage this new compliance thing?

Right, lawyers.

This made sense. Because the incentive came from the Department of Justice, and the incentive as such was to soften a legal punishment after a law violation.

It explains why so many lawyers work in compliance teams and why people could confuse legal work with compliance work.  

💡

There was also another reason for the increased attention to compliance. Several court cases in the US articulated the liability of the members of the Board of Directors for failing to monitor the compliance level. Whether or not this could be enforced, or even is valid in other countries, it did plant a seed in the brain of many directors: "better invest in compliance". A good read on this is Todd Haugh's paper Caremark's Behavioral Legacy - see the link in the footnotes.

Labeling reasons

Now compliance became a thing, a new system, it needed labels to tell people what they are actually doing.

There are two options to label the compliance work:

• Outside-in: starting from the regulation

• Inside-out: starting from the action

Let me explain.

Outside-in means that you take a regulation that could harm your company and then see how it could harm your company.

🤔

Example for naming the thing by the regulation: Anti-Bribery regulation >>> Anti-Bribery compliance

Inside-out means that you take an action that an employee or a team is doing and then see which risks or regulations could be relevant.

🤔

Example for naming the thing by the action: Exporting a product >>> Export compliance

The most used way of labeling a compliance topic is by just naming the relevant regulation:

• Anti-Corruption (or Bribery or FCPA) compliance

• Anti-Money-Laundering compliance

• Anti-Trust compliance

• HIPAA compliance

• GDPR compliance

• Sanctions compliance

It's the easiest way to label, too!

Because you don't have to do a deep-dive into what your colleagues are actually doing. You just take the next new regulation and name the thing.

It explains why compliance may look very lawyerly.

Hence, the confusion with legal.

Recruiting reasons

So who is going to do the job?

When companies need to recruit, they prefer you have a Law degree. They don't exclude other backgrounds of course. But being a lawyer, is still an advantage.

I challenge you.

Go on Linkedin and try to find a compliance job vacancy and count how many vacancies hint at something like this:

• "A relevant degree, preferably in business or law, is required"

• "Knowledge of other essential laws and regulations"

• "At least 10 years directly related experience in a legal or compliance role"

• "A law degree is a plus"

Being a lawyer isn't anymore a hard-core requirement for a compliance role. Which makes totally sense of course. But you can still see that people assume lawyers are fit for the job.

😅

I am a recovering lawyer and I doubt that you should be a lawyer to take a compliance role. In fact, I had to unlawyer myself first to really get good at the compliance job.

Recap

The main reasons why people confuse legal with compliance:

• People think it's done by lawyers (historically correct).

• It's labeled with regulations and laws (sounds lawyerly).

• If you are a lawyer, you're in the running for a compliance job (thank you HR).

How to explain the difference between legal and compliance?

It's still difficult to explain the difference to others.

You may create more confusion if you start with "following legal rules" - after all, isn't a legal expert good at legal rules?

👉

Before going forward, check this analogy as explained by Ricardo Pellafone of the Broadcat: compliance is like fire prevention and legal is like fire insurance. He really nailed it!

Here is the basic difference:

The compliance team operates in the real life. The legal team works with the legal reality.

This may read like a dog biting his own tail, but bear with me.

It's like a video game. Take my all-time favorite game MARIO BROS. 🍄

It's a fantasy world with avatars (like Mario and Luigi), with a imaginary setting (like the green pipe and the game rules) and a scenario (the mushroom makes you grow, the Goomba can hurt you).

It's pretty much like the legal reality:

• avatars are the legal fictions like corporations, associations, limited partnerships, franchise, joint venture, etc.

• a setting like contracts and rules set out by laws and case law.

• a scenario like a merger, a contract termination, bankruptcy, etc.

👉

Like Yuval Harari would say, humans have the power of imagination. A corporation isn't different than a Goomba: an invention created by the human brain and accepted by a large group of other humans.

For compliance, there isn't fantasy world, only the real world. This means that a compliance professional looks different to the world:

• there are no avatars or fictions, only real humans working in a corporation.

• the setting is created by employees' emotions, their motivation, but also the tools they use and the communication lines they have with each other. The setting has in other words unlimited features.

• the scenario is created by the actions and intentions of the employees and others who work in and with the corporation.

Examples

This analogy to a video game has its relevance.

Many people confuse the legal fantasy world with the raw compliance reality.

For example when you let your customers sign contractual clauses like:

• the products will not end up with blacklisted entities (to cover a sanctions regulation).

• the products will not be used for a specific use (to avoid certain tax exempt oil products are used for taxable purposes).

So it looks like you are covered, but that's only for the legal reality.

In real life, you still risk selling indirectly to blacklisted entities or that your products will be used for illegal purposes.

You cannot avoid real-life consequences with paper (aka imaginary) solutions.

You have to know which world you're in: real life or fantasy?

Some other interesting observations:

• Legal looks at what’s on paper and whether it was followed to the letter of the law; compliance looks at why things were done and what they should have been doing instead of just following a rule blindly.

• The main goal of legal is to minimize liability; the main goal of compliance is to protect the interests of the business and its employees.

• Legal work is about individual cases, whereas compliance is more about systems.

Conclusion

It's obvious to see why people confuse legal with compliance. But in practice there is a HUGE DIFFERENCE.

But if you are at a cocktail party, don't start with "legal minimizes liability in case things go wrong, compliance avoids that things go wrong in the first place."

That's too boring and still leaves people clueless.

Instead, say:

Legal is like playing a video game, Compliance operates in real life.

Then you will sound like a badass Goomba.

Resources

• The emergence of compliance. The Practice. (2017, April 24). Retrieved September 28, 2022, from https://thepractice.law.harvard.edu/article/the-emergence-of-compliance/

• Haugh, Todd, Caremark's Behavioral Legacy (November 1, 2007). 90 Temple Law Review 611 (2018), Kelley School of Business Research Paper No. 18-51, Available at SSRN: https://ssrn.com/abstract=3186879

• Pellafone, R. (n.d.). Broadcat named a behavioral compliance best practice! Broadcat Blog. Retrieved September 28, 2022, from https://blog.thebroadcat.com/broadcat-named-a-behavioral-compliance-best-practice

But he didn't violate the law thanks to his trusted General Counsel, Jordan Breslow.

It's a great story that underlines the importance of all compliance professionals.

At the same time, I believe every compliance professional can fall victim to confirmation bias:

"If X approved this transaction and X is very credible, this must be OK!

We shouldn't train only our colleagues to stay critical when screening transactions, we should also train ourselves to stay critical all the time.

We're all human after all.

Why is Black Friday so attractive to many people? Why do people hunt shops and webshops to find the best deals? Why do they ignore the fact that they might not need all these products?

It's because of the "loss aversion" effect.

💡

Loss aversion is the tendency of people to avoid losses. The fear of loss is twice as powerful as the desire to make gains.

Short-term deals, like on Black Friday, tap into this emotion. We get a deep feeling to protect ourselves from the loss of this potential dream sale.

We don't want to lose an opportunity to buy something at a lower price.

That's why we hunt deals.

So what's the Compliance lesson?

In companies, every department needs to seek (mostly) the approval of Compliance to get the final GO for a project:

• Sales want to close a deal with a prospect.

• Marketing wants to launch a social media campaign.

• Product wants to place a new segment on the market.

They all see the opportunity for this new customer, social media campaign or new product segment already. It will make them successful.

But after the hard work they've done (research, business case, multiple meetings, etc.) they suddenly get a No-message from Compliance...

Then loss aversion also kicks in.

Every restriction imposed by Compliance, every delay triggered by Compliance, will be felt like a loss.

And of course, if Compliance says "No" to the project, it feels like a huge loss. (Even though nothing happened business-wise. There was no customer yet, there is still nothing published on social media and no new product has been manufactured.)

The "No" is however not the problem.

That is, Compliance may have no other option than to stop the project or asks for clarification.

You often hear the advice that Compliance (and Legal) should turn a "No" into a "Yes, but". But this will not change a thing: your colleagues are still aware of the loss (which will come after the "Yes, but...").

The result is the same for the project and colleagues will still feel the loss aversion.

The word "No" is not the problem. 

It's the timing.💡

Timing matters way more than we think.

If we can proactively inform our colleagues about possible restrictions or obstacles ahead, then our colleagues will not feel that their project is already a done deal.

Define "green lanes":

• If their project stays within the green lane, they should not fear a "no" later.

• But if from the start the project deviates from the default, they are already warned from the start.

Don't give "loss aversion" a chance to get a grip on your colleagues' emotions.

Remember this

• There is no such thing as the Department of No.

• There is only the Department of Bad Timing.

(now get those last Black Friday deals before it's too late!!!)