Should compliance officers be optimists?

First, a  short but intriguing piece from the back pages (in 2007) of the ABA Journal:

Lawyers are often the exception to the rule. It’s no different, researchers are finding, in studies of optimists. A study by Duke University researchers found that, on the whole, optimistic people do better in life, the Wall Street Journal reports (sub. req.). They work more hours, save more money, pay credit card bills more promptly, are less likely to smoke, and are more likely to remarry after divorce. (Those who were overly optimistic, however, didn’t make such good judgments.) Martin Seligman of the University of Pennsylvania, who studies positive psychology, says most optimists do better in life than merited by their talents alone. But with lawyers, the opposite is true. Seligman’s survey of law students at the University of Virginia found that pessimists got better grades, were more likely to make law review and got better job offers. “In law,” he told the newspaper, “pessimism is considered prudence.”

Of course, being a lawyer and being a compliance officer are not the same thing. But given the substantial overlap between the two – at least as a general matter – this research should be of some interest to those in the latter line of work.

Next, a somewhat related piece from the back pages (in 2015) of the COI Blog  on finding the right degree of ethical confidence in a given organization:

“M]uch of the field of “behavioral ethics” is addressed to proving that “we are not as ethical as we think.” …The view of human nature underlying this key insight predates the behavioral ethics field. Perhaps most famously, Judge Learned Hand said in 1944: “The spirit of liberty is the spirit which is not too sure that it is right.” I believe that this is a good way to view the spirit of compliance and ethics too. At least as applied to C&E, this is not to say that we should be relativistic about what is right. Rather, we should be skeptical about our ability to do what is right when pressures or temptations pull us in the wrong direction. Those likely to be confronted by risks of misconduct (e.g., corruption or competition law violations) should strive to be ethically alert – which is not always consistent with being highly confident. Indeed, while the focus on corporate culture is a generally a very positive development in the C&E field, it carries the danger that having a strong culture could be seen as obviating the need for the regular “blocking and tackling” that C&E programs are based on. This is particularly true of glorification of – and over-reliance in some companies on – the “tone at the top.” On the other hand, one should also be skeptical about the value of pessimism. Given how relatively new the C&E field is – and the tendency for many to view it as a fad which has overstayed its welcome – a truly pessimistic view can effectively scuttle a compliance program. That is, some degree of optimism is absolutely necessary for the effective operation of a C&E program – whether it is a salesperson choosing to forgo a questionable business opportunity or a mid-level manager deciding whether to call the hotline. Optimism is also necessary for boards of directors and senior managers in determining whether to invest the substantial time and other company resources needed to develop and maintain an effective C&E program, particularly given that the empirical case for such programs is still a work in progress. For every company, the right C&E confidence quotient will be different. But all should to some degree be both skeptical and optimistic.

What should be added to this topic in 2018?

I think the case for optimism has grown – particularly in the past year. By this I mean not that things are looking better than in the recent past but that the need for an optimistic cast of mind may be at an all-time high.

This is due (in my view) to events in the political, rather than business, realm – and particularly the assault by the Trump administration on notions of honor, truthfulness, responsibility, prudence, generosity, humility and other foundational elements of any ethical system. My hope – and belief – is that being optimistic about these characteristics in one’s job can help protect them in the public sphere. This is clearly an optimistic case for optimism – but I do believe it has merit, at least as an intuitive matter.

Yesterday, hundreds of thousands of individuals gathered around the world in support of common sense gun control. Just as – as an old saying goes – there are no atheists in a foxhole, so it seems likely to me that there were very few pessimists in these crowds, at least not based on what I heard and saw at the rally I attended.

Of course, there will always be a substantial place for pessimism when it comes to law, C&E and politics. But now may be a time to accentuate the positive.

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