Working With Middle Managers

The other week I had the good fortune to moderate a webinar on how compliance officers can work with middle management — those assistant vice presidents, department heads, regional managers, and other executives so crucial to the success of a corporate compliance program. I took lots of notes, and pass them along now since this is such an important thing for compliance officers to get right.

First, compliance officers should appreciate the unique role that middle managers play in a corporation. They are leaders of teams, but still beholden to objectives set by senior management. It’s important to understand because it dictates how you, the compliance officer, should engage with middle managers to get what you want: a strong culture of ethics and compliance. 

For example, when compliance officers engage with rank-and-file employees, you really are giving them training on compliance fundamentals: how to avoid an FCPA violation, how to protect customer data, how to complete onboarding for a new supplier, how to seek approvals for gift and entertainment spending. 

Middle managers should typically know all those fundamentals already (or it will be fairly easy to train them on those details, at least). Instead, your goal with middle managers should be more about helping them to cultivate ethics and compliance awareness on their teams. 

That is, once you’ve poured all the factual compliance information into the heads of low-level employees, how does the middle manager help that knowledge take root and then grow into a strong culture of ethics and compliance? It’s your job to help middle managers understand how to do that. 

So the challenge here really is more about coaching middle managers, and helping them to be better leaders. Those are tasks not well-suited to online training courses. You might need to spend more time working with them one-on-one (even in virtual calls if your travel budget is tight), or simply serving as a sounding board for middle managers who want to vent about the challenges they have. 

Middle Managers and Speaking Up

Moreover, all of the above advice is about helping middle managers to be better leaders. There’s still the other part of their role: being beholden to objectives set by senior management. That means middle managers are expected to deliver results — a point compliance officers must always respect, since your desire for a strong culture of compliance exists adjacent to those business deliverables. 

Another goal, then, is to forge a sense of trust between middle managers and you, so that they’ll feel comfortable bringing ethics and compliance concerns to your attention even when those issues might conflict with senior management’s objectives. (Like, what senior VP wants to hear that the team might fall short on revenue targets because of a compliance issue?) 

One speaker on the webinar stressed that your paramount goal should be to create an environment where middle managers “feel safe” to talk about the issues they see. That’s absolutely correct. The more you can foster trust between you and middle managers, the more they’ll feel safe — and the more they’ll be willing to cooperate with you, either by bringing concerns to your attention or helping you to investigate concerns that arrive over the hotline. 

That all sounds great in theory. In practice, however, middle managers can be a wary and cynical bunch. They’ve seen lots of new directives from senior management before, and watched those directives fall by the wayside after a short burst of enthusiasm. Why should they view exhortations to “do the right thing” from the compliance officer any differently? 

The webinar speakers had a few ideas on that point, too. One was to perform an “objection audit” with those wary and cynical managers you want to win over. That is, sit down with the middle manager and ask: What are the beefs you have with the company? Where did those beefs come from? How can they be resolved so that the middle manager is on board with your ethics and compliance goals? 

Then, just like any other audit, identify remediation measures to address the manager’s concerns and implement them. You might even find that numerous middle managers have the same objections, and you can correct the corporate culture with a small number of high-impact reforms. (By the way, credit to Ethico co-CEO Nick Gallo for coining the phrase “objection audit.”)  

On the other hand, there’s also the practical reality that if a middle manager always assumes the worst about his or her employer, perhaps that manager should seek other employment. Otherwise he or she will never be happy, and neither will the employees on that team. 

Compliance Incentives

I also asked webinar attendees about incentives for middle managers to embrace compliance — and honestly, we were all kinda stuck on that point. 

Negative reinforcement for bad behavior is easy. One can easily craft disciplinary policies that say, essentially, “If this bad behavior happens on your team, and you either knew about it or should have known about it, you will suffer this penalty.” The Justice Department even devotes a whole section of its guidance on corporate compliance programs to “consequence management,” which is just a fancy way of saying that negative reinforcement is important.

OK, but positive reinforcement is important too. That Justice Department guidance even says: 

Compensation structures that clearly and effectively impose financial penalties for misconduct can deter risky behavior and foster a culture of compliance. At the same time, providing positive incentives, such as promotions, rewards, and bonuses for improving and developing a compliance program or demonstrating ethical leadership, can drive compliance. 

I get the theory of those sentences, but I struggle to see what they look like in practice. If the goal is to say, “When your team behaves in this ethical way, you get this extra reward” — what does that formula look like? What metrics are you tracking? What incentives are you offering? 

Plus, shouldn’t ethical behavior generally be expected as part of the job, especially among managers? Why would you pay more for someone doing what’s expected of them? 

As I said, we had no easy answer for that positive reinforcement question. If you have ideas, please let me know at [email protected] and we can explore them in a future post. 

Meanwhile, hats off middle managers everywhere! Too often they have a thankless job, but compliance professionals can’t do yours without them.