10 Traits of a Good Chief Compliance Officer: Lessons from Polar Exploration

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Suzanne_Folsom_editedSuzanne Rich Folsom, General Counsel, Chief Compliance Officer & SVP – Government Affairs, at U.S. Steel & Anastasia Kelly, Partner at DLA Piper, review what explorer Sir Ernest Shackleton’s journey teaches us about CCOs.

After Roald Amundsen claimed the South Pole for Norway in 1911, the British polar explorer Sir Ernest Shackleton mounted an expedition to claim the remaining prize—crossing the continent of Antarctica. He christened his ship the Endurance after his family motto “Fortitudine vincimus. By endurance we conquer.”

It is said he ran this advertisement: “Men wanted for hazardous journey. Low wages, bitter cold, long hours of complete darkness. Safe return doubtful. Honour and recognition in event of success.” Over 5,000 people applied to be a part of his 26-man crew, and there was even a stowaway.

The journey went almost as advertised. Just 100 miles from its landing spot on Antarctica, the Endurance was beset in pack ice.4 For almost 10 months, the ship drifted in the pack ice before being crushed. Forced to abandon ship, the men lived on ice floes—dragging three lifeboats by sledges until they reached open water. They sailed for seven sleep- less nights, landing on a small sliver of inhospitable land called Elephant Island. From there, Shackleton and five men set out for South Georgia Island, some 800 miles away. Remarkably, they made it, but landed on an uninhabited part of the island. Shackleton and two of his men crossed the island by foot and got help, eventually rescuing all 27 crewmembers.

One of the crew said, “I can’t remember the matter being discussed or argued in any way. We were in a mess, and the boss was the man who could get us out.” Today, Shackleton’s leadership is the subject of several books. It is a worthwhile exercise to consider the lessons from his story. While there is now a “highway” to get to the South Pole, there remain other rugged terrains to cross. Metaphorically speaking, these include the complex legal and regulatory landscapes that public and even private companies need to traverse today. Who is their Shackleton?

The past 10 years have seen a proliferation of chief compliance officers (CCOs), persons tasked with overseeing and managing compliance, and sometimes regulatory, issues within an organization. Because it is a relatively new position, at least in the executive suite, it is worth considering the characteristics of a good CCO, which are as follows:

  1. Integrity. Integrity is the quality of being of sound moral principle. This is necessary of everyone in an organization but especially the executives who manage the business and tell others what to do—by their words and deeds. Perhaps the need for integrity in a CCO is best understood by considering the opposite of integrity: hypocrisy. It would be troubling, for example, to have a CCO who did not comply with rules and regulations or internal company policies. Shackleton demonstrated his integrity at the very outset of his expedition. When Britain entered the Great War on Aug. 4, 1914, Shackleton consulted with his crew and then offered his ship and crew to the government saying, “There were enough trained and experienced men among us to man a destroyer.” A one-word response came by telegraph: “Proceed.” Shackleton was willing to sacrifice everything for a greater good.
  2. Courage. CCOs must have the courage to alert senior management and the board when red flags arise. This is a critical characteristic, since many professionals could be intimidated or worried about losing their jobs. In the case of Shackleton, his courage to make difficult decisions was evident from a prior polar expedition in which he was within one hundred miles of claiming the South Pole for Britain, but turned back to save his crew’s lives. Later, the British explorer Robert Scott made the opposite decision and he and his men died after reaching the South Pole. “Shackleton’s decision to turn back was more than a singular act of courage; it bespoke of the dogged optimism that was the cornerstone of his character. Life would always offer more chances.”
  3. Presence. A CCO must be able to stand before the board, clearly articulate compliance risks and provide solutions. To do this, a CCO must have a direct reporting line to a Board Committee, either as a stand-alone or in addition to a senior management reporting line. Most CCOs do not have this access, but they need it. Shackleton had that presence since, in addition to gathering a crew, he raised the money to fund his expedition gaining the backing of the British government, the Royal Geographic Society and a number of individuals and schools.
  4. Strong analytical Ability and Understanding of Laws and Regulations. A law background is critical due to the changing regulatory landscape around the world, which is increasing not decreasing. The more complex the regulatory environment, the greater the need for an attorney at the compliance helm. That said, this is not an absolute requirement, because there are some outstanding CCOs who are not lawyers. These CCOs all have strong analytical ability and understand laws and regulations. Shackleton himself learned to sail not by going to school but by serving an apprenticeship “before the mast.”A CCO must be able to navigate a global regulatory map.
  5. Attention to Detail and a Global Vision. CCOs must be attentive to detail, but not become so mired in the details that they “cannot see the forest for the trees,” as the expression goes. Shackleton’s captain attributed Shackleton’s success as a leader “to the fact that he was not the sort of man who could do only big and spectacular things. When occasion demanded, he would attend personally to the smallest details, and he had unending patience and persistence, which he would apply to all matters concerning the well-fare of his men.”
  6. Leadership. A CCO must hire good compliance officers, set the right compliance tone for the organization and lead by example. When his crew crammed aboard their lifeboats and sailed for Elephant Island, Shackleton was a visible leader. “Practically ever since we had first started Sir Ernest had been standing erect day and night on the stern counter,” one crewmember wrote.
  7. Business Acumen. A CCO must possess the business acumen and ability to work with the executive team to ensure the company is legally compliant and a successful business. Shackleton employed enterprising ideas such as selling the news and photographic rights to his expedition.
  8. Teamwork. A CCO must be willing to work with everyone in an organization because compliance is not a one-person job. At every critical point in Shackleton’s survival story, he made himself part of the rescue team.
  9. Proactivity. A CCO needs to anticipate situations, particularly potential breaches of laws, regulations and internal rules. Unfortunately, a breach is often judged with the benefit of hindsight, so successful compliance is achieved by anticipating breaches and preventing reputational damage. Captain Worsley recorded Shackleton telling him in midwinter: “She’s pretty near her end…the ship can’t live in this, Skipper. It may be a few months, and it may be only a question of weeks, or even days…but what the ice gets, the ice keeps.”
  10. Reactivity. A CCO needs to be a good crisis manager when there is a compliance problem. Alexander Macklin, the ship’s doctor wrote, “He did not rage at all…he told us simply and calmly that we must winter in the Pack, explained its dangers and possibilities; never lost his optimism, and prepared for Winter.”

The ship’s name, Endurance, captures the essence of what Shackleton and his men discovered on their voyage. Although Shackleton’s voyage was a failure— they never even reached Antarctica—his story has inspired many because of his heroic leadership.

Shackleton wrote that his crew, despite “dark days and … continuous danger, kept up their spirits and carried out their work.” Despite the daunting legal and regulatory landscape today, chief compliance officers must do the same.

Originally Published in the December 2013 Issue of InsideCounsel Magazine.

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