The Human Factor: Joint Venture Partner Compliance (Part III of III)
It is time for another in my series of profound grasps of the obvious – compliance comes down to people. A company violates its code or the law because of human actions or inaction. Usually it is a conscious decision to act or not to act; sometimes, a violation is unintentional.
There is what I call the human factor to compliance. I know this sounds trite but bear with me as I try to make my point.
A talented compliance officer is one who understands people – not in the way that Freud, Jung or B.F. Skinner may have understood people, but in the way that a leader understands motivations and incentives, what drives people to act the way they do in an organization. I never thought that organizational management or other business school classes were able to capture this concept very well; instead, I always have believed – and still do believe – that interpersonal skills are intuitive, people who read people well, listen to people and respond to people are often excellent compliance officers. Conversely, people who need structure and can only work through structure, rules and policies are unlikely to be successful compliance officers.
How does this apply to joint ventures? A global company has to take into account the people who make up its joint venture partner. These people, in turn, act together or can be influences together, as part of the joint venture’s culture. This is what I mean by the human factor.
A global company cannot ignore the human factor of its joint venture partner. It has to assess the culture, and more importantly, the key personnel who are part of the joint venture partner – the leaders, the go-to-people who get the job done, and the overall environment in which they operate.
A joint venture requires the integration of disparate company cultures. It can be successful, and is usually one of the significant reason for the joint venture itself. After all, both parties have to assess each other and decide that the joint venture is a good fit, meaning that each side will benefit.
The human element or cultures cannot clash or the joint venture will not work. A compliance officer has to make the same type of assessment – what type of culture does the joint venture partner maintain? How will our cultures mesh? What are the strengths and weaknesses of each culture?
A compliance officer has to realize that this is an important aspect of a joint venture. Too much time is spent on looking at the joint venture partner’s compliance toolbox (e.g. policies, procedures, and controls), and not enough time is spent on identifying compliance strengths and weaknesses.
As an initial step, a compliance officer has to develop a plan to integrate the joint venture cultures. The factors identified in Part 1 of this series – purpose, control and operations – should be used to frame the cultures and how the joint venture can maximize the positive benefits of each culture, and align them with the proper functions.
The merging of cultures does not have to be complicated. It can be a very positive learning experience as you identify strengths and weaknesses, develop new ways to assess and enhance a joint venture’s culture, and bring together the best elements of each partner’s culture.