Risk, responsibility and one true north
As the Pacific Northwest’s biggest companies redefine doing business on the global stage, UW Law students are learning firsthand what it takes to be an industry leader — and why corporate values matter as much as the letter of the law.
This past year, a first-of-its-kind UW Law class brought leaders from the region’s resident industry titans — including Amazon, Microsoft and PACCAR — to share insights into their companies’ strategies in the field of international corporate compliance.
As it turns out, there is no one-size-fits-all solution.
“Compliance is a relatively new discipline in law, and it’s becoming more and more important,” said Scott Schumacher, University of Washington Professor of Law and Associate Dean for Academic Administration. “It really is a growing field and something that wasn’t even around 10 years ago.”
So, how does one neatly define it?
“That’s the million-dollar question,” Schumacher said.
In a pared down view, the compliance field comprises three basic concentric rings: ensuring a business is compliant with the law; ensuring every action a company takes complies with the overall corporate policy; and ensuring a company is doing the right thing for the greater good of — and in the eyes of — the world.
“The internal compliance program can’t just be a list of regulations… It’s about what’s morally correct on the part of the company, and you have to make decisions around that.”Serena Hamann
Today, consumers are more likely to support a company that demonstrates positive global impact, sustainability and social responsibility. More than 73% of millennials and 72% of Gen Z consumers say they are willing to pay extra for products and services from companies dedicated to social and environmental change, according to a recent Nielsen study.
“Compliance is not just about the law,” said Serena Hamann 3L. “It’s also about how a company’s policy says something about treating employees equally, about non-discrimination more broadly, environmental stewardship…
“I do think there is a global requirement that corporations are supposed to do what’s moral, which makes you ask: What is the monetary value of the reputation of a company?”
Managing global growth
In law schools across the country, a number of programs focus on compliance on the domestic front. It’s when one goes abroad, where regulations and societal norms vary wildly, that issues become even more complicated.
The UW Law class is the only in the country that focuses on international compliance specifically. UW Law leaders joined with the Foster School of Business to put together the program, and due in part to Seattle’s position as a central hub for multinational businesses, the roster of guest speakers is a veritable who’s who of high-level compliance officers.
Noelle Berryman, director of global legal services, and Ben Clark, senior vice president and general counsel and corporate secretary, at Expeditors; Bryon Christensen, associate general counsel in tax, Jeannine Lemker, assistant general counsel for the Office of Legal Compliance, and Kumar Vijayaraghavan, director of compliance programs, at Microsoft; Ben Cohen, chief counsel for government operations at Boeing; Douglas Grandstaff, vice president and general counsel at PACCAR; Zabrina Jenkins, vice president assistant general counsel of global litigation and employment and interim CECO at Starbucks; Kathy Sheehan, vice president and associate general counsel for compliance and customer trust at Amazon; and Aravind Swaminathan, partner and strategic cybersecurity advisor at Orrick.
Jeannine Lemker is assistant general counsel for the Office of Legal Compliance at Microsoft. As a leader in a company that operates in 150 countries with more than 135,000 employees worldwide, she said it is an immense challenge to build a corporate culture that permeates all levels and geographic locations.
“What becomes very important in implementing compliance policies globally is risk: What is your one true north for managing that?” Lemker said. “Before you create a single process, you have to understand and calibrate processes that manage that risk at a global and national level.
“It becomes trickier when you talk about culture because we are so big, and so what we are compelled to do is to create a Microsoft culture that resonates around the world.”
A company’s international operations can be the biggest challenge when developing a bulletproof compliance program, Schumacher said.
For example, when it comes to companies like Boeing or Apple, which buy parts from thousands of different companies around the world, they must ensure the products they purchase do not contain conflict minerals, and that the materials are coming from the right kind of mines, and that the third-party company’s own vendors and their vendors’ vendors treat their workers fairly, and if…
It can be a head-spinning exercise to wrap one’s mind around different cultures, laws, regulations and moral requirements needed in order to do business globally — and even more so to develop a program that exceeds expectations and basic requirements. The latter is what separates successful multinational companies from the rest of the pack.
In her class session, Lemker reinforced the reality that consumers’ expectations of corporations have changed so dramatically in the past decade that a brand’s ethical character is either a tremendous asset or a significant detriment for companies depending in large part on how successful their compliance programs are.
In order to do that, Microsoft has leveraged a number of different technologies and tactics — AI, global cultural trainings, adult learning programs, research — to continue to refine its processes.
That, she said, is the heart of the field.
“There has been a whole different shift in how companies are thinking about the world,” Lemker said. “If you think 30-40 years ago and take GM for example: GM wanted to make cars to delight their customers and meet all the regulations and standards the government expected it to; now, consumers are looking to GM not only to meet the standards but to have a voice in what it means to protect our earth.”
Lemker said while the mantle of social responsibly used to be carried exclusively by nonprofits and government agencies, now there is much more of an push for people to look to and expect companies to play leading roles in that space.
“There has been a whole different shift in how companies are thinking about the world.”Jeannine Lemker
She estimates that back in the 1970s and ‘80s, some 80% of a company’s brand was based on tangible assets and 20% on intangible assets, i.e., social responsibility. Today, the exact opposite is true.
That strikes a chord with many students at UW Law, including Hamann. Before going to law school, Hamann worked with organizations focused on human rights issues but switched gears in order to effect progress from the inside out. “I want to focus on advising companies instead of just telling them when they’ve done something wrong,” she said.
In taking part in this class, Hamann and her fellow students got a glimpse of the frontlines through the eyes of those who are setting the pace for companies around the world.
“The internal compliance program can’t just be a list of regulations, and you can’t just learn all of the laws,” Hamann said. “It’s about what’s morally correct on the part of the company, and you have to make decisions around that. To this end, hearing from so many high-level leaders about how they actually make those decisions was incredibly valuable.”