Leadership’s Role in Compliance and Safety Culture with Tom Fox - Ep. 183

So Tom and I are going to be talking today about the role of compliance and the power of podcasting. Tom, welcome to The Chemical Show.

I leveraged that position as a general counsel's position at another oilfield service company who in 2007 had the largest bribery and corruption fine in the history of the world over, uh, there's a US law called the Foreign Corrupt Practices Act, which prevents US companies from engaging in bribery and corruption outside the United States. I was part of the new management team brought in to, uh, clean it up and put in a new compliance program.

So that was really my first experience with compliance. I did that for a couple of years, the company got sold, my job went away. I decided, what I really wanted to do with my life was race bicycles. So I went off on this great adventure to race bicycles and I was over 50. I could ride in the senior division. I had great fun, got in great condition until, uh, one training ride, I got taken out by a Hummer.

And it really tied into my prior life as a trial lawyer in the following manner. What I saw in compliance was what I saw in safety in the 90s. That journey of safety being something everybody kind of knew about to number one priority of every company, everywhere, um, that became, uh, the same story for compliance. This was 2010. The only time I left the house was good physical therapy. So I couldn't meet people.

I couldn't have a drink, couldn't have lunch, couldn't go to a conference, couldn't go to a meeting. Um, and so I started exploring social media, which at that point in my life, I knew nothing about.

And so I went to each one of them and said, Hey, let's form this consortium and we will be the one stop shop for all information in the compliance format. And we won't take away from what you're already doing. Um, and I could get no interest.

So I did in 2020 till they shut the country down on March 15th. And, uh, what happened was starting May 15th, I literally got a call from every product provider in the compliance space with, which had the same question, which was how long to get access to your network, because even by then I had the largest social media presence in compliance and prior to COVID almost all marketing was done at trade shows, conferences, breakfast roundtables, Or that sort of event.

And of course that wasn't available and all that money was just sitting there waiting to be spent. So they spent it on my little network. And because of the work I'd done in 2019, the answer to everyone's question was the same 24 hours. Cause it literally was just a plug and play. Because of everything I'd done. So my little world blew up and I have since that time tried to consolidate the explosive growth I had in 2020. And like I went to 200, 000 downloads a month in one month.

And then, um, so I've just tried to grow that network now and make it more professional and see if it can be an ongoing viable business.

All right, so let's talk a little bit about compliance. Um, And it sounds like you've done some pretty impressive things through your career, but what's critical about compliance today?

And we're going to make safety the number one priority of our company. And guess what? If you want to do business with us. You have to make safety the number one priority. So all of these companies that did business with Exxon, uh, had to, uh, put safety as number one. Now, most of those, many of those, I should say, had gone through these chemical plant explosions. Chevron, um, used to be Amico, but it's now BP, uh, and one other one. But, they had, you know, huge losses.

And so they changed their safety culture. So what I saw from that was when leadership makes a decision to change something, they can. And I, uh, when I went in the corporate world, I went with Halliburton, obviously an oilfield service company and Halliburton had that same ethos. Safety is number one in our company. Now it doesn't matter to me whether it was altruistic. It doesn't matter to me if it was a business decision. The result was safety was number one.

And, you know, even lawyers opened every meeting with a safety moment and that really drives home safety. Now you're still going to have incidents. You're still going to have accidents because people are involved. There was a huge shift in the nineties. That shift didn't start with leadership just saying we're going to change. They put in safety programs, they put in training programs, they gave up employees, the ability to raise their hand and speak up. Um, they did a monitoring of safety.

Data to make sure that an ongoing basis safety was being still taken care of. So a lot of, almost all of the things you have to do in compliance. Things we had to do in the nineties and first five years of this decade around safety. And so I really looked to safety and frankly, compliance is still not as sophisticated as safety is in training.

Um, and I don't know why we can't get there, but we can, for me, I had that model in mind and I saw it play out in front of me in the first decade of this year, this decade, uh, this century compliance was written by lawyers and for lawyers. You were these massive codes of conduct and massive policies and procedures,

Well, now the evolution is data and data analytics. And what can you move? There are three parts to every compliance program, prevent, detect, and remediate. We've gotten pretty good at detection, but we are still moving towards prevention. And that's what data analytics promises, which is to prevent something from happening, whether it's a safety incident or whether it's a compliance violation before it happens. So

And I, uh, see in these contracts and increased awareness of compliance because the plant owners are requiring contractors to sign on to very robust compliance programs. Part of it is around. You know, gifts, travel, and entertainment for plant employees. Part of it is around conflicts of interest. Part of it is around paying bribes to third parties. Part of it is around making sure everyone has their documents that is hired and works for a company.

Part of it is around, of course, drugs and alcohol use. Um, And that's, you know, for safety reasons, obviously, but, um, so I see all of these requirements that the top chemical plants have for themselves being pushed down in these contractual provisions. So, literally, a 50M dollar company that does 1 thing very well, they have to sign on to and have compliance programs in place for the Chevrons of the world, or you name the chemical plant.

And they're fairly, uh, established parameters around compliance, around risk management, and the legal terms. Now there's some room for negotiation, certainly. Um, and I guess the easiest would be are you going to cap your overall liability? If so, what's that cap going to be? Is it going to be the amount of insurance required? Is it going to be something above that? Is it going to be 15 million? Is it going to be 20 million? Uh, because that's a big deal.

Because you have unlimited liability, potentially you could lose your company. But, um, so everybody kind of understands what the parameters are. And, um, you can have a tough negotiation and still be fair. And my job is to, I don't tell clients what to do. I say, here's your risk. You have unlimited liability. If you want to swallow very hard and accept that that's your call cause you're the business owner.

Businesses outside the U. S., they understand that it is a true business differentiator and a business plus for them to do business in compliance with U. S. law, to have had training, and to be able to demonstrate that they can meet The U. S. company's requirements under U. S. law and, uh, just makes them more marketable as a subcontractor or a business partner,

And he, his company had gone through an enforcement action, and as a result of that, as part of his remediation, He put together the most sophisticated data analytics program for compliance in the U. S. And the DOJ hired him, and he brought that institutional knowledge to the Department of Justice. So number one, the DOJ could tell you had a really adequate data analytics program, but equally importantly, they could tell when you didn't.

And so last week, we had a huge release of information from the DOJ on their expectations around compliance and data was once again, a very big part of it. But here was the twist. We've always known you had to have a data analytics program, but the DOJ focused on data access. Which is different. And they said the compliance function has to have access across all data silos within your company. And that means all. And if you don't, you're going to get negatively graded.

And if you say, well, I didn't have the resources. Well, shame on you. You're going to get negatively graded and that they have elevated. the compliance function to having access to the data and then using the data. It's no, it used to be sort of a gold standard, then it moved to best practices. Now it's just table stakes. So that has been one evolution. Literally, we saw that capstone last week.

When it comes to AI, obviously we're still sort of in the infancy of that, but in the compliance realm, what the DOJ has said is it's about your data quality. Uh, what's going in to your AI or using chat GPT, which is everyone's data, or do you have a dedicated. Uh, AI or generative AI rather for your company with your company's data. How do you determine data quality and data security?

The issue I have with chat GPT and not really, I don't know if issue is the right word, but I ask a compliance question, I get an answer. I know if it's right or wrong because I know the answer. The problem is if you don't know the answer and you ask a question, you don't know if you've been given the right answer. And so the, the best example, uh, is I think everyone's heard of the lawyers who filed some briefs done by CHAT GPT and it turned out it cited cases which didn't exist.

And everyone went, ah, stupid lawyers. And yes, they were. But the greater point is, You have to double check the information you're given and it was that lawyer's responsibility to go site check those cases to see if one they existed to they said what chat GPT said they did for precedent purposes. So, I have asked chat GPT some pretty, uh, detailed questions about, uh, risk and risk management and I've got some pretty good answers back, but I. I'm confident I know the answers.

If you're a newbie and you put it in, you don't know the answer. So that's the biggest problem right now.

In fact, one example as well that came up recently, business colleague was telling me that, um, she had gone on in it searched on The Chemical Summit, which is the conference that that I host that I started last year. This is year 2 and she's like, well, it's interesting. It came up with AI answer.

It attributed the conference to a completely different company as the founder of the company, I don't know what's working behind the scenes, to your point, if you don't have at least a glimmer of what the right answer is, you could be really led astray.

I knew that wasn't right. So I said, who is he married to? And it gave me the daughter of the co defendant. And I knew that wasn't right, because it wasn't listed as Linda Carter. So the third query I said, please describe the relationship between Linda Carter and this other woman, whoever it was. And it came back, we are sorry, we made a mistake. Robert Altman was married to Linda Carter, not so and so. So one, number one, chat GPT apologized at two, it recognized it made a mistake.

But if I had known that, and it was absolutely positive about that, when I typed it in, I would have put the wrong information in whatever resource I was creating

So my guess is people are a bit concerned rightfully so that one of the risks around AI, the risks around some of our digital solutions is there's a lot of imperfect information out there. And so sorting through that imperfect information, um, is pretty challenging.

And as a lawyer, if, uh, there's another example, I think it was Air Canada. They had a, a bot that, um, customers could use on customer service questions. And the bot told some customer, do something this way and you'll get a refund. And it turned out it wasn't true. And so he sued Air Canada and Air Canada said, well, it wasn't us, it was the bot. No, one thing I learned a long time ago, if you, if it went out under your name, you're responsible.

Now you may have an indemnity right from somebody, but you know, if you're in a chemical plant and there's an accident, they're going to come to you. So the same basic legal principles apply around AI. Once it goes out under your name, it's yours.

And when Exxon said, we're going to change and they did that came straight from the top and that That principle still holds true today.

You are missing the boat if you don't have a podcast. Over 85 million people listen to multiple podcasts per week. And over 160 million people have listened to a podcast. Those numbers are just incredible. If you're not using a podcast format to publicize yourself and your company, you're missing a incredible resource. Number one. Number two is from a podcast.

You can generate social media marketing content and create video grams, audio grams, tweets, LinkedIn posts, Facebook posts, Instagram posts. If you want to go all the way, you can do a Tik TOK post. Um, but, uh, it's, it's. As powerful a marketing tool as you can have, it's not going to replace what you're doing, but it's going to supplement it. People trust. because of the audio format more than they trust the printed word or even visual or video.

Uh, but if I go back to those five reasons to start a podcast, number one, thought leadership, you want to show you're a thought leader. Well, um, here's the great thing about a thought leadership podcast. You get to learn from every person you talk to. And I see around corners further and faster than anyone compliance. It's not because I'm the smartest person is because I'm talking to the smartest people and I'm putting all those dots together because I'm talking to everyone.

And so it gives me the ability to improve my Speaking skills, my book, writing skills, my thought leadership skills. Cause I'm interviewing people to, um, relationship building. If you want to do business with a company and I'll just use myself. I mean, Melomans and my name is Tom Fox. I'm a solo lawyer. I've experienced in contracts. I'd like to talk to you about doing contract work for you. They may or may not respond by email them and say, My name is Tom Fox. I have this podcast network.

I want to interview you for a podcast and I want you to talk about you. You will get 100 percent response 100 percent of the time and it will be 100 percent yes. Everybody wants to talk about themselves. Uh, three relationship building, excuse me, um, content creation. When we were getting ready for the pod, you asked me how I managed to write all these books. Well, it's because the podcast is a part of my content creation, a process.

It can be, um, a podcast leads to a blog post, leads to a white paper, leads to a chapter of a book. can be, uh, I wrote, uh, modestly, I would say the definitive compliance handbook. And I wrote it. And to edit and proofread, I can't just read. I have to read out loud. And it dawned on me that if I'm reading this out loud, that's a podcast if I record it.

So for a year, every day, I did a podcast based upon a couple of pages I wrote for a book and I literally had a red pen with me and every time I saw a mistake, I circled it. I didn't edit while I was recording. I just circled it for later reference. And so that worked for me. Uh, you can kind of use the flip side of that. Say you want to, uh, my latest book I published this summer. Uh, I, um, did a 10 part podcast series.

On 10 separate things you have to do if you find yourself in an enforcement action. And I use those 10 podcasts to form the basis of 10 separate chapters for my book. So, uh, it's a wide variety of, of ways there. Conversion is how do you convert somebody from a top of the funnel, listener, engager, going behind your gated website, whatever it may be to a customer. So that's a different track as well. I got one in there somewhere. Um, but I'll think

I mean, I think, uh, Podcasting has a huge influence on business, and I certainly see it with the folks I interview, with the conversations I have, with the relationships I've built, um, across the industry and, you know, one of the things that always amazes me when I, um, when I talk to people, number one, just how personal it is, not just about me, but about the leader and the number of times I've had, um, People tell me, oh, yeah, I listened to one of your podcast episodes when I was going to

interview with that company or with that leader, and I understand a lot more, um, because you understand a lot more now, I would tell you in the world of compliance, uh, if this falls into a compliance category. Um, there's a lot of leaders that are still concerned about being on a podcast, certainly in the chemical industry, because, um, corporate communications doesn't want to invest relations is afraid of it.

But, you know, as as you and I talked about before we got started, this is a friendly conversation. You know, there are no state secrets. It is not investigative journalism. Uh, if you're looking for that look elsewhere.

I mean, when I was in Halliburton, I think I knew one of 10 people on the ELT and that's because he was the general counsel and I was in the legal department, but it actually drove positive corporate culture. Because they felt like they had a relationship with those people and that they could sit down literally. And if not talk to them, they could listen to them talk on a podcast. So, uh, it can be a great boon for your corporate culture. If your leaders talk about themselves,