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Moving from Oil & Gas to Retail

Walmart was my first introduction to the retail business. Before moving from Houston, Texas, to Bentonville, Arkansas, I spent the prior 20 years working for other large corporations in different industries around the globe (e.g., the largest civil construction firm, an oilfield services giant, and the largest privately held company). With over 2.2 million employees, Walmart made the others look small by comparison.

My first task at Walmart was to enhance my understanding of the retail business. I learned early in my career that a key ingredient to designing a successful ethics and compliance program is developing a deep understanding of the business and company culture. I had experienced Walmart as a customer and followed the company's tremendous success and growth, but I needed to understand what makes the world's largest multi-channel business tick. For any new chief ethics and compliance officer (CECO), this background knowledge becomes part of the roadmap for integrating the program. If you do not understand the business, you cannot help the company embed the program in a way that allows ethics and compliance to become part of the way the business works.

By using this approach, the ethics and compliance program remains focused on satisfying all the regulatory requirements, while working for and with the business, identifying ways to add value and speed and doing the right thing and protecting our shareholders. This article outlines a few lessons I picked up in my 20 years working in compliance.

Regulatory Framework

In parallel with understanding the business, a new CECO must understand the regulatory framework specific to the industry. At Walmart, our program covers 14 subject matters and operates in 27 different countries outside the United States, so understanding this framework is critical to program design.

In general, the basic framework for an ethics and compliance program includes: (1) an appropriate organizational structure and leadership; (2) a process to understand risk and resource allocation; (3) standards and controls for various compliance areas; (4) training and awareness of the program, and communication of the program to external and internal stakeholders; and (5) a process for reporting, escalating, and responding to compliance issues. These key ingredients are found in the U.S. Sentencing Guidelines, the OECD Framework, the UK Bribery Act Guidance, and just about any other regulatory guidance you can find. For instance, if you look at the U.S. Sentencing Guidelines, Chapter Eight outlines seven general criteria that are necessary components of an effective compliance program.

Adding Value and Speed

Good programs, however, do not stop simply at meeting regulatory guidance. To truly become part of the business, ethics and compliance programs must be sustainable, efficient, risk-based, and effective. The easiest way for me to fail at Walmart would have been to take what worked at other companies and apply it to Walmart without considering Walmart's culture and business. And the model of what is effective may grow over time.

There are many examples of evolving the ethics and compliance program to adapt to changing conditions. Technology has made re-invention and evolution critical. Our personal lives are also replete with such examples. A few months ago, I locked myself out of a cabinet at my house. It was a slow Sunday afternoon and I had put some important papers inside the cabinet. My seven-year-old son was quick to suggest finding a solution on YouTube with instructions on how to open the cabinet. Within seconds, I was surprised to find an instructive YouTube video on my phone on how to pick the lock with paperclips. The instructor was an 11-year-old boy. After several attempts at trying to follow his instructions, I gave up and went to find a different solution and left my son alone with my phone, the lock, and the paperclips. Within five minutes, he shouted to me excitedly that he had opened the lock. I was amazed, but then thought that I shouldn't be. The video presenter understood his audience and how to communicate to my son. And my son understood the technology and the instructions. The 11-year-old boy was relevant to my seven-year-old and that made me think how important it is to ensure we are relevant to the employees in our companies. We have to undertake the same sort of deep understanding of our message and our audience and accept that what may be effective today may not work tomorrow.

The first thing I did when I arrived at Walmart was a key ingredient for any new successful relationship—I listened and watched. I tried to understand what made Walmart the world's number one company with 2.2 million employees and over 260 million customers per week online and in stores. What are the key risk areas for the company? How did the business manage those areas? You often hear that there is no one-size-fits-all program. It is a cliché, but it's true. Ethics and compliance programs must be bespoke to the company. When a business person looks at the compliance strategy, he or she should instantly recognize it because it has a deep connection to the business strategy.

If you can understand the business and regulatory requirements, program design becomes easier because the program is shaped around the business. The program becomes not only a tool to comply with legal requirements and protect stakeholders (including our 260 million customers each week), but also a way to make the business work better. After five years, the business now looks to my ethics and compliance team to fill leadership roles, with the business recently recruiting one of our market CECOs to fill a key business position. That is another mark of a successful program.

Other Lessons Learned

My first 20 years in various industries shaped the compliance lawyer I am today. In one of my early jobs, one of the leaders I worked for told me that I needed to figure out a way to “pay for my salary every year.” It was one of those “aha” moments that made me realize that I needed to figure out a way to make my budget and my program one with the business. Doing my job well was not enough; I needed to be able to bring value to the company, not just by keeping the company out of trouble but also by adding value through ethics and compliance. It was something that I was not taught in business school, but it is part of my DNA as a business executive today.

I have also learned that having the right talent in your organization remains critical to whether any program succeeds (whether or not it is aligned to the business). A strong team is more important than a big one. I have learned that hiring is one of the most important things that a company does and the importance of surrounding yourself with people who are inspired and smarter than you are. I have found that my successes have always come through collaboration with my team—both the world-class talent I work with and report to at Walmart as well as at the other companies I have been privileged to work for. I have been extremely fortunate to work with some incredible leaders at Walmart that believe in ethics and compliance and the tremendous value it can add to an organization.

With these lessons, I go to work every day thinking about not just how to make the program better—I challenge myself with how to make the company better. I have found that if you start with that question, the program works better and is effective, efficient, and sustainable.

Daniel Trujillo is the Senior Vice President and Chief Ethics & Compliance Officer for Walmart International. Before joining Walmart, he served as Deputy General Counsel and Director of Compliance at Schlumberger Ltd., and also previously worked at Cargill and Impregilo S.p.A.