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What does managing beyond compliance look like?

Corporate managers…and especially, corporate lawyers….often ask why would a company manage beyond compliance with legal requirements? The best way to understand why is to look at real-life situations and corporate decisions.

In an October 2nd address to the International Institue for Conflict Prevention and Resolution’s Corporate Leadership Award Dinner in New York, John Ruggie offered up some examples that clarify why beyond compliance strategies make good business sense. These examples demonstrate how managing beyond compliance can help to bridge disputes between corporations and communities:

Remarks by SRSG John Ruggie – Alternative dispute resolution (ADR)…”is a promising approach for dealing expeditiously and effectively with conflict, not only in the workplace and B2B sphere. I’ll turn in a moment to how it might play out in my world of business and human rights by helping to resolve disputes there, especially between companies and communities…Here is [an] example. A large commodity mining company in Africa, a subsidiary of a transnational firm, reports to its parent that all is well because it has won six of the seven lawsuits brought against it by local communities…But executives at the parent company are deeply puzzled, because with each lawsuit won the local dispute seems to escalate, not decline, while the parent company’s international reputation is taking ever bigger hits…The lesson to be drawn from these cases is this: a serious misalignment exists in each instance between legal requirements and prevailing social expectations… 

Sometimes, it isn’t easy for a company lawyer to accept beyond compliance with the laws as a business strategy. But, I’m a lawyer and a former corporate lawyer and executive. Based on in-the-corporate-trenches experience, I have to appeal to corporate decision-makers and strategists: Don’t just ask, what does the law say about our accountabilities…ask as well, what do stakeholders legitimately expect? Corporations aren’t going to kow-tow to stakeholder expectations all the time, but it may make good business sense to anticipate their expectations and reactions. Changes in laws often happen AFTER shifts in prevailing social expectations and norms.  It’s worth your while to stay ahead of those curves…if you want your company to be “top quartile”, “leading”, “cutting edge” or sometimes, just competitive.

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  • Working with some clients I noticed there is a tendency to over-regulate. It is rediculous what kind of policies are labeled “SOX requirement” in a usual IT departeen.

    My observaion is, that this is not a planned strategy to over-comply, but it is caused by fear, uncertain requirements and by a natural tendence of middle management to over regulate.

    Writing a policy and balancing between “nice to have” and “doable” is not so easy. In real world this reslts in all kind of work arounds and missinterpretation in order to keep up every day business. This is certainly not the best possible result of a policy.


    • I agree Bernd! The tendency to over-regulate…and stop thinking strategically…is great, particularly in the wake of SOX. With the financial markets crumbling, I hope that we don’t slip deeper into this reactive, non-strategic way of making business decisions.

      Maybe an easy thing for people to do is to ask this question, occasionally, or even at the end of every weekly team meeting: have we added another reporting requirement, another compliance step, in our work? If so, what is “compliance” really, and what is belts and suspenders? Then, you can think about how you are using corporate G&A and human resources…to reactively over-comply with rules, or to proactively manage stakeholder expectations and comply with laws and rules in a logical way?

      Simply ask yourself…why am I doing this work? If there isn’t a logical answer (or the answer seems mired in fear), get the question on the table with a wider group and see if there are options.

  • Going beyond compliance makes a good company!

    I am from a mining company.
    Things to comply with were plenty. They were regulatory and statutory. Voluntary compliance was unknown during 70s.

    But still on the issue of displaced persons and local environment, the steps taken were purely based on the personal foresight of the CEO and may be on known example of good

    practice at that time. It was such measures that helped the company to have a long life, until the legal stand became very strong, armed with new laws. Without ‘beyond

    compliance’ as a strategy in the beginning of the project itself, the end would have come much early.

    This company was established in southern India with consultancy from Canadian-Metchem Inc.This association probably would have helped to know global practice.

    During 1990 when the company was doing well in all respects, based on a query from a customer whether the company had a quality management system as per the

    international standard for quality assurance, a QMS was established though no where in any commercial contract it was a requirement or otherwise agreed upon.Apart from

    third party certification , the QMS enabled the company to look at all connected issues too, gradually.

    Without taking a flashy stance, the next issue on which the attention of management was drawn was, environment.Doing anything additional to statutory and regulatory

    requirement was seen as a burden. There was again no legal requirement to implement an MS for Environment Management.But still the company went ahead.

    Down the line a few years later the regulatory authorities themselves started recommending such measures.
    The management felt they are ahead of time and this boosted their confidence to manage issues considered difficult.It was realized that when voluntary codes are adopted by the

    company the ground realities improve and work for regulatory bodies also reduce. And the company was at ease.

    It was aalso realized that what looks as expense by one hand is a source of income in different form and quantum to the other hand.
    Going beyond compliance has a strategic advantage, not known to many.

    Proceeding in the same line it was found possible to address ethical conduct in the company with ECS 2000 standard as the framework and the book ‘Management Ethics-

    Integrity at Work’  by  Joseph A.Petrick and John F.Quinn as a great guide. It could not proceed for someother reason, but that it is possible became evident from the path


    It keeps the company cool!

    It is said that the ‘Resolution Rainbow’  has three sections.
    In the first section in ascending order is risk management,escalation,pre-action protocols,mediation,and negotiated conciliation.
    In the second section, the middle portion, there is expert determination, adjudication, and arbitration.
    In the third section, the other end, there are litigation and crisis management.
    Going beyond compliance generally keeps the company in the risk management phase and prevention mode. And the company remains cool.

    It is easy if we factor-in Time and involve genuinely committed people.

    I wonder whether in every step we should look for money! or in aggregate.I wonder very much.

    With regards.

    Sam Anbazhagan

    • Sam…what a wonderful experience to share. Way cool! As a Canadian, it also makes me smile to know that Canadians can do good operating abroad! We hear more negative stories than positive. The sustainability that is achieved through beyond compliance thinking is remarkable when you hear your story, over a lengthy time line. Have you ever written up this story and shared it with other business in India? It is unusual to have such a long term perspective on investment, especially in our world that focuses on quarterly results for public companies. Is your company private or public? Is this history known within the company itself? Does the managment team understand the reasons for sustained success?

      Many thanks Sam for sharing this experience.

      • Had there been a corporate historian he/she  would haveaccomplished it!

        In the normal courseit is not viewed in this perspective.The initial approach gradually turned into more’practical’.

        Since ultimately the mining operation got stopped, it didnot become a case of example.
        It is a public sector company and still striving.
        The company used to eulogise the foresight of CEOs and used to stop there.It was not turned into a case study incorporating the principles that made it a possibility.

        Generally management team attributes success to the operational performance and stops there.
        In future,if companies can build their corporate history  incorporating objectively how they used their strengths, how they overcame weaknesses,how opportunities were figured outor missed and how threats were managed or how it consumed part of the company, it would become a repository of knowledge and wisdom for reference by those coming up next.
        May be a tall order!

        Thanks for your attention. In fact there is more to say. i will try to other forums subsequently to converse on them.

        With regards

        Sam Anbazhagan

        • Sam…what you envision is exciting: the essential story of a company (not just the essential story of the CEO of the company). I manage a humanitarian organization called Bridges Social Development ( and one of the key strategies we use when engaging with leaders in any community, is to ask the leaders to think about and share (via YouTube, story, however!) their essential story – who they are and what difference do i seek to make in my community? The essential stories include their challenges and trials, and how they overcame the difficulties. Then, we ask leaders to look at their communiteis and to map their communities’ priorities…then see how their essential story (as an individual) integrates with the community’s reality map.
          The same can happen for companies. What is a company’s essential story? What makes it unique? And, how does the company’s essential story integrate with the community priorities?
          This doesn’t need to be written down. you can share the story verbally, in corporate gatherings, on websites. you see the value in the sharing.
          You are already doing this work Sam. Congratulations.

          Carry on…
          Warm regards,
          Donna Kennedy-Glans