Hire the Best Naysayers

Hire the Best Naysayers

One of the hardest jobs in an entrepreneurial company is being the person who has to say no.

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Hire the Best Naysayers

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One of the hardest jobs in an entrepreneurial company is being the person who has to say no. The people in legal or other compliance roles have the unenviable role of putting on the brakes when everyone else in the company is going full speed ahead to meet the needs of their customers.

Compliance handled poorly can damage the business. One company I know acquired a leading competitor in an emerging market, and soon uncovered a problem within the new sales group: What had been common practice locally violated the acquirer’s standards. In came the firm’s lawyers, determined to review and sign off on every contract with every distribution partner. That created a bottleneck for all new contracts, which needed to be signed daily. The company lost many customers before the local CEO intervened. He asked the lawyers to outline clearly what was unacceptable about the previous contracts, met his sales team and said it was a fireable offense if any such contracts were used in the future. Better to rely on information and trust, he said, than on “ignorant compliance”.

Every company has to operate within legal and regulatory constraints and avoid actions that put its reputation at risk. If the compliance folks fail to do their job, the company’s brand could be destroyed, and people might go to jail.

Yet in a company in which every role and function is focused on either serving customers or supporting those who do, there are ways to ensure that the compliance staff views its role (and that it’s viewed by the rest of the organization) as one dedicated to that mission.

The first step is to recruit the right people the right way. Be precise when you define the job. Don’t look for “years of experience in a regulated industry,” for example, but rather “years spent supporting an entrepreneurial-minded commercial organization undergoing regulatory change.” If the people you hire in compliance roles are known for seeking solutions and making “yes” happen 90% of the time, the organization will accept having to stop in its tracks for the 10% of instances in which compliance must say no.

The best compliance practitioners frame compliance issues in commercial language. If you want to sell a salesman on compliance, show him how noncompliance will result in lost sales. Smart compliance officers seek out the most commercially successful people in the business—such as the sales director whom other salespeople respect—and work with them to craft their policy language. The resulting policy will be biased toward action, which is something that doesn’t happen when the compliance group sits in an echo chamber with other members of the legal team.

A savvy compliance officer also uses horror stories wisely, again by pointing out how noncompliance hurts the business. Inevitably, there will be times when the commercial side can cite its own horror stories about poorly implemented or overly burdensome compliance requirements. Smart compliance officers don’t burn up their limited equity defending the indefensible. Instead, they seize opportunities to work out a solution, demonstrating that they are responsive and willing to learn from the front line.

No one wants to create a policy or compliance requirement that actually hurts the business, but the best compliance officers go further by shielding the front line from compliance drudgery. For example, they confront problems like sexual harassment with a serious discussion, rather than relying on a mandatory online training exercise. They avoid giving the front line lots of compliance forms to fill out and boxes to tick. That way, they can steer attention toward effectively regulating the few issues that employees can really screw up.

James Allen is co-leader of the global strategy practice at Bain & Company and co-author of the upcoming book “The Founder’s Mentality.”


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