You may hate them and resent them and vote for anyone who promises to get rid of them. But for now, there's no avoiding them.
Laws and regulations affect every business. Sometimes it feels like a maze to work through these various rules and prohibitions. You can't be expected to know the exact provisions of every rule. But you are expected to create a culture of compliance and accountability in your company. Indeed, you have no choice. And that starts with you.
I teach a leadership and corporate accountability class at Harvard. This week, we invited to class Preet Bharara, U.S. Attorney for the Southern District of New York. He is well known for pursuing various high profile drug enforcement, organized crime, insider trading cases and other abuses.
In class, we discussed advice for emerging leaders in terms of ethical standards and compliance. We also reviewed several well known cases involving insider trading. While insider trading is likely not going to be an issue with privately held small growth companies, Bharara's lecture was a reminder about the responsibility of a leader to model behavior.
One of the key points Bharara made is that ignorance of the law is no defense. It doesn't matter if the violator of an insider trading law (or any regulation) is a "good person" who just fell afoul of a complicated law. Good people can get into trouble just as easily as "bad" people.
What does this have to do with leadership? When it comes to complying with the laws and rules you have to worry about, the onus is on you to know the law. It's why you need a general counsel or a trusted outside lawyer. More important, it's also why you need to make it clear as a leader that you won't condone bending the rules or going "right up to the line" in ethical situations. It pays to talk regularly to your staff about ethical and legal issues as well as emphasize that operating on a high level of integrity matters to you.
What if an employee is uncertain about what to do in a specific situation? Here are the steps they should follow. (Follow them yourself, too, if you're ever in doubt):
1. Slow down.
2. Seek advice and elevate the issue, and
3. Don't get bullied into making a quick decision that you might later regret.
Naturally, you spend most of your time figuring out how to play offense and build your business. At the same time, you need to speak regularly about how to follow the law and handle difficult ethical situations. You are a role model for high ideals in your company. Like it or not, you are responsible for knowing the rules, supervising your employees and setting the tone for acceptable and unacceptable behaviors.
Think about the example you set. Talk about it with your people. It will help you build a stronger company and protect you from a poor decision which could damage your business and even ruin your life.