With the recurring breakdown of corporate governance “checks and balances” and the decline in the public’s trust of traditional modes of corporate governance, heightened scrutiny of corporations has become the new normal in corporate America.
A panel of legal experts gathered at the 14th annual SuperConference on May 13 to discuss how general counsel and chief compliance officers (CCOs) can mitigate bad behavior in the C-suite and what traits are necessary to effectively do so.
“The difference in the kind of person goes back to the strategic; it’s somebody who has a really broad-based orientation and is a holistic risk manager and calibrator,” said Julie Preng, managing director, legal at Korn/Ferry.
Glenn Ware, principal of PricewaterhouseCoopers, said that general counsel today must drive compliance in the C-suite.
“You must have excellent [compliance] competency in the C-suite, it is not a side job,” he told the audience. “It’s not just a core requirement, it’s a core expectation the government expects corporate executives to know a lot about compliance and these same executives have to have proof of compliance training.”
Suzanne Folsom, general counsel and senior vice president, governmental affairs at U.S. Steel said that transnational awareness is also paramount for today’s GC.
“In Fortune 500 companies you have to have an awareness of what’s happening around the world; we are so interconnected now…you need to have an awareness of how it’s going to impact your company,” Folsom said.
Judgment, integrity and having the courage of your convictions are also important attributes in a general counsel.
“Judgment is key and that ties into leadership. I don’t think necessarily that judgment is learned, I think to some degree it’s innate but it can be enhanced and improved by your experiences,” Folsom said. “In the past you could grow up in one company…but the challenges companies face today…in order to handle the different crises that companies encounter, you have to have broader experience than one role in one industry to best serve your colleagues, your CEO, the board and the shareholders.”
Folsom, who served as deputy general counsel and chief compliance officer of AIG during the financial crisis, and most recently was CCO of private security firm Academi, said that when you are dealing with a corporate crisis or scandal, having the courage of your convictions—even when not popular—will carry you both professionally and personally.
“If you are going to be dealing with a crisis you have to have thick skin and stand steadfast. It becomes very hard as the GC or the CCO in a time of crisis,” she said. “You’re going to do the right thing even if that means you don’t have a job at the end of the day. If you’re not willing to sit at the table and realize you have a role to play and that role means being a voice and raising your hand, then perhaps it is not the right role for you.”
The panelists also shared tips for interviewing for the general counsel role and discussed red flags to look for when you interview for the job.
“If you talk to the executive recruiters and you hear that that role is sidelined, my advice is to walk away,” Folsom advises.
However, there is also a chance that this dynamic won’t be revealed during the interview process and you find after you start the job that the role of the GC does not have a seat at the table.
“Let’s say you hear all the right things and then you get sidelined…. That’s where the courage of your conviction comes in,” Folsom said. “You have to make sure you get a seat at a table and if you aren’t you go to the person blocking you, or your CEO or the board and tell them you aren’t being heard.”
Part of getting a seat at the decision-making table also means making sure you have the right skill set to advise the CEO.
“I have seen this where something is exploding…this is an area where I see this a lot, where a crisis is going to a public company and there is going to be some media scrutiny of the company and the CEO does not want to control the narrative and the media writes the story that is just devastating for the company. You realize in retrospect that you could have controlled the narrative,” Ware said. “It is an exceptionally rare thing to have this all planned out. Because in business [compliance] is a discretionary expense, you have to spend time and you have to get money. Now compliance is a 21st century competency…. there are a lot of companies that get caught off guard over and over again because of poor planning.”
Being a GC today also means being prepared to handle how a crisis may impact them personally.
“I feel very confident in the decisions I’ve made in my jobs. I’ve thought long and hard in my jobs when we’ve been in crisis,” Folsom said. “Sometimes when you are going after corruption…they come after you on the Internet, they come after you personally and they come after your family. Unfortunately in the world we live in today, people can do that and with the Internet there is no recourse. You just have to realize that is a risk that comes with the job today. Stay true to who you are, have the courage of your convictions.”