Tips for leading from within

I wrote up some nitty-gritty tactics for how to “Lead Good” for the website of the Association of Corporate Counsel (ACC) — the leading trade association for in-house lawyers. My article, “Top Ten Practical Ways to Enrich and Empower Your Compliance Program,” is the ACC’s featured “Top Ten” article of the month.

The sub-text for my recommended methods: Don’t just administer. Be pro-active. Be creative. Lead.

The Ethical Taint of Post-It Notes — and the Power of a Company Policy

News yesterday (5/27) from the pharmaceutical industry that may prove the insidious power of promotional materials, and how little it may take to taint what is supposed to be impartial, objective decision-making.  But what’s really interesting in this news, and less ambiguous, is evidence of the power of organizational policies to set ethical norms.

The news is of research about how promotional items, like pens and note pads, that bear the logo of a drug, affect the attitudes of medical students toward that drug.  You’ve probably seen these pens and pads, and the like, all over your doctor’s office. The ones in the study promoted the anti-cholesterol drug Lipitor. The study appears in the Archives of Internal Medicine.

Reportedly, the study found that the little trinkets worked!  According to the New York Times:

The researchers worked with 352 third- and fourth-year students at Penn, which bans most gifts, samples and meals from drug companies, and the University of Miami, which allows them.

Using a series of psychological tests, the researchers assessed whether the students had positive or negative associations with the cholesterol drug Lipitor and a competitor, Zocor, which is available generically for less money.

Most students from both schools viewed Lipitor more favorably, the researchers said.

But when the researchers sought to influence the students unconsciously by having them use promotional materials like Lipitor clipboards and notebooks, they found that the fourth-year students at Miami showed stronger positive feelings for the drug.

The Philadelphia Inquirer dug a little deeper on how the promo items made the Penn students wary of Lipitor.

The results weren’t due to an Ivy League bias, said study lead author and Penn doctor David Grande.

The environment is important, he said. Grande and his coauthors, including a University of Miami business professor, speculated that Penn’s restrictions on marketing seem to have primed students there to react negatively to even a small marketing message.

This study is especially interesting given changes that became effective in January 2009 to the leading pharmaceutical industry trade association’s code of practices, the PhRMA Code On Interactions With Healthcare Professionals.

(Some quick background: The PhRMA Code first took effect in 2002, amid concerns over “kick-backs” in the drug business, where drug companies allegedly rewarded doctors who wrote lots of prescriptions for their medicines by showering them with monetary favors. Clearly, you wouldn’t want the pharmas to outright bribe docs to write scrips: first, it would mean we are all underwriting those bribes as they become built in to the cost of drugs, especially because the government is such a big buyer; and second, you’d hope your doctor prescribed a particular medicine solely because it was the best thing for you. Extending this idea, various laws, regulations, government “guidances” and codes have made verboten favors from pharmaceutical (and medical device) companies to doctors — like lavish meals, golf junkets, and lucrative “consulting” contracts that do not involve any real work.)

As of January 2009, for companies that adhere to the voluntary PhRMA Code, even the formerly ubiquitous post-it notes and pens bearing a drug’s logo are now disallowed. PhRMA says the revised Code:

Prohibits distribution of non-educational items (such as pens, mugs and other “reminder” objects typically adorned with a company or product logo) to healthcare providers and their staff. The Code acknowledges that such items, even though of minimal value, “may foster misperceptions that company interactions with healthcare professionals are not based on informing them about medical and scientific issues.”

Pharma compliance leaders complained bitterly off the record about this level of restriction, but the research announced yesterday provides some vindication for this aspect of the new PhRMA Code.

On the other hand, it may simply show that advertising works.

So to me, the more interesting news in this research is the different reaction of students in the two schools studied (all the more interesting to me because I went to the law schools of both of these universities!).  At U of M, where the trinkets favorably disposed the med students to Lipitor, there was no school policy about students receiving promotional items from drug companies.  But at Penn, there is a policy banning promotional items — and it was at Penn that the give-aways wound up making med students feel less favorable towards Lipitor.

This is one of the neatest pieces of evidence I have seen to prove that an institution’s policies don’t just establish “the law of the land,” something that could be the basis for employee discipline. The policies do more: they establish an ethical norm, they help create the culture of the institution.

Behavioral Econ Part II: Managing like you like it (and like them)

More thoughts on my April 25 post on behavioral economics and behavior change. This gets to the nub of what I want this blog to be (mostly) about.

Randy Cohen‘s anecdote made me think of another that appears in my no-question favorite management book: “It’s Your Ship,” by D. Michael Abrashoff. The story is about the owner of an industrial repair shop who kept his tools in a tool-issue room to avoid theft and losses. He paid the custodian of the tool-issue room $35,000 a year (this was c. 1990), and his workers spent part of their day standing in line to check tools in and out. So the owner did away with the tool issue room. No more lines. And over the next year, he spent only $2,000 to replace tools.

As Abrashoff puts it, a “lack of trust was costing him money.”

Bingo. Beware of the processes that get in the way of compliance. Beware of bureaucracy that takes the name of compliance but really has nothing to do with your company staying on the right side of law and ethics, because that busy-work only makes your team resent your legitimate compliance efforts. And beware of processes that may be contrary to your tone at the top.

There are things you’ve got to button down in tight processes, like, say FCPA compliance. Then there are areas where clearly and repeatedly communicating a vision and mission — and not contradicting them with your actions – goes a long way.  (Balance. An obvious point, right?)

And let me take this moment to give a fan’s rave to Abrashoff’s book. It’s the story of his time as captain of a US Navy destroyer, and how he used simple, commonsense trust and communication — treating his sailors as he would expect to be treated– to lead it to excellence. I’ve lead companies or business teams for more than 20 years of my career, and I’ve read a lot of management books — this is the one that, as I read it, I kept nodding my head. “Yes, that’s right!”, I kept saying. (I got real annoying to my family about it.) And there’s no diluting his approach by saying that a commercial executive can’t enforce the order and discipline that a military leader can; as Abrashoff notes, he was the ultimate middle-manager — with ranks of superiors above him and an immense bureaucracy surrounding him.

This book also carries an interesting history, to me, anyway. It was published in 2002, but demand made it disappear from book store shelves overnight in the fall of 2007, when it was mentioned on Monday Night Football as the inspirational leadership guidance for Bengals QB and Captain Carson Palmer.

Behavioral Economics and behavior change in the company

I have long advocated that behavior change is the New Frontier of company ethics programs. I’ve described it to my clients as the heart of “Compliance 3.0” (if the heart of v1.0 was the employee handbook and v2.0 was the code of conduct). It’s a hard nut to crack, but not rock hard. Just needs some attention to detail.

Whether an C-suite exec embraces this idea, that her company’s programs can actually affect the behavior of team members, is not a bad indicator of whether her company’s dedication to ethics and compliance is cynical or sincere.

In this light, some nice thinking about behavior change — and that it is for real — from perennial compliance thought-leader Jeffrey M. Kaplan. He gives it in an interview with compliance professional and recruiter Maurice Gilbert, in Gilbert’s meaty new website, Corporate Compliance Insights. Kaplan’s point is that the ideas of behavioral economics, a fundamental tenet of the Obama Administration, can and should be applied to leading one’s company toward ethical behavior:

“[T] need for strong C&E [compliance and ethics] programs has often been questioned based on the assumption that ethical decisions are driven almost entirely by character, and this view hurts C&E program efforts because character is largely beyond the reach of such programs. What [behavioral economics] shows is that this view is incorrect, and that by impacting in a positive way the situations in which ethical decisions are made – which is what truly effective C&E programs do – ethical “results” can indeed be significantly improved.”

Something for Execs to keep in mind if they need rebuttal evidence against the cynics.

Kaplan refers to an experiment that took place on the campus of my old client, the Princeton Theological Seminary. It found that people were much more likely to act like true Good Samaritans to a person in distress… if they were not running late.

It reminded me of an example used by Randy Cohen, author of “The Ethicist” column for The New York Times. Cohen basically says he has faith that ethics can be fostered by processes thanks to a small change at Penn Station in New York City. Used to be that it was a free-for-all to catch a cab on 7th or 8th Avenue next to Penn Station and Madison Square Garden. People would push and cut in and make cab-catching hopeless for anyone standing down the arterial flow. Then they put in a cab line on the sidewalk along each Avenue, with a painted line (or now, sometimes, a wimpy barricade) to mark where to stand in line and — presto! — people willingly and orderly got in the line and waited their turn. The non-compliant received social ostracization from their peers. No line attendant necessary.

Says Cohen in one interview:

“Now people stand in line-because you gave them a structure that made it possible for everyone to behave equitably and civilly to one another. People still cheat, but most don’t. It’s extraordinarily inspiring. There’s no fear of getting caught by the police. People do the right thing because they want to do the right thing and because they see those around them behaving ethically.”