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Ropes & Gray attorneys provide timely analysis on legal developments, court decisions and changes in legislation and regulations.
[00:00] Intros and icebreakers
Nitish Upadhyaya: Welcome back to the Culture & Compliance Chronicles, the podcast that gives you new perspectives on legal, compliance and regulatory challenges faced by organizations and individuals worldwide. The clue is in the title—culture is at the heart of everything. It’s the endlessly shifting patterns that govern our environment and behaviors. The magic is in amplifying certain patterns and dampening others. Let’s see if we can pique your curiosity, get you to challenge some of your perceptions and give you space to think differently about some of your own challenges. I’m Nitish Upadhyaya, and I’m joined by Amanda Raad and Richard Bistrong.
Amanda Raad: Hi—good to be back.
Richard Bistrong: Great to be back—thanks, Nitish.
Nitish Upadhyaya: After our amazing episode with Brennan Jacoby last month, where we talked about everything from trust and the philosophy behind how we think, how we interpret things and how we move forward with some of these concepts in the world of compliance, who do we have in store for our listeners today?
Amanda Raad: Our guest today is the amazing Katie Daniels, managing director and head of compliance at CPP Investments. Katie is an all-around terrific person. She is an innovative thinker, former securities regulator, (my words) current bridge-builder and solutions-oriented advisor. She’s also been a huge inspiration to me personally over the course of my career, and Katie was really a big part of the reason that I launched the firm’s data and behavioral sciences initiative, and ultimately, R&G Insights Lab. So, I could not be more excited to team up today on this podcast.
The first thing we like to do, Katie, to get everybody warmed up, is to do some quick icebreakers, and I can’t wait to see what you say to these rapid-fire questions to help the audience get to know you a little bit. First, can you give us three things we should know about you?
Katie Daniels: First, I want to say, thank you for inviting me. Our partnership over the years has been tremendous, so I was really excited to be able to have this conversation. The three things people need to know about me is, first, my wife and I are moms to two terrific young men, who are about to launch into the world as young adults, and we could not be more proud of them. The second is—and I know you know this, Amanda—I love a concert. That has been my passion for 30-plus years—the bigger the spectacle, the more I enjoy it. At the risk of dating myself, I was at the first of The Who’s last shows as my very first show as a too-young teenager. Most recently, I was at the Eras Tour, where I was possibly too old, but I enjoyed it quite a bit. The third fun fact is that I wake up ridiculously early—it freaks out my team somewhat, and it can terrify my family.
Amanda Raad: But it makes me really happy, because our time zones work really well when I’m in London and you’re in Canada. Now, what’s one thing that you are curious about?
Katie Daniels: People. People fascinate me endlessly. I love how they work. I love how they interact. I personally get a tremendous amount of energy from people. I am not a behind-the-desk person. COVID impacted that a lot, and so, the last couple of years as we’ve been back out has been fantastic.
Amanda Raad: Alright, one more: What is the last thing that surprised you?
Katie Daniels: Sadly, I don’t know that I can surprise easily. Another benefit of being as experienced as I am, I have seen a lot over the course of my career. The only thing that’s constant is that people will continue to find innovative ways to challenge, so you just need to continue to pay attention.
Amanda Raad: That’s a great thing that you just can’t be surprised, which actually might be reassuring to people. I love it. Let’s kick into this discussion a little bit more. Where does this journey begin for you?
[04:25] Katie’s career reflections
Katie Daniels: I started my career as a litigator. Even when I was in law school, I always wanted to be a litigator, and I was fortunate to work at a large firm here in Toronto and started life as basically a defense civil litigator. After that, I went to the Ontario Securities Commission, a securities regulator here in Ontario—which has a similar mandate to the FCA in the U.K. or the U.S. SEC—and prosecuted and led the Enforcement Branch for a number of years. Then, finally, I came here to CPP Investments. I think the common theme or how this all sums up my history is that I’m the anti-litigation litigator. I really do think that litigation is a destructive force, and until you find common ground, you’re never going to get resolution. Whether I was a defense attorney or prosecutor, both parts of my career really taught me to focus on what matters and just ratchet it up and try to find common ground. How does that tie into behavior? I said my number one curiosity was people. I really do think that the motivations for how people get into those bad spots, you need to unpack—and when you unpack those motivations, you’re going to get to resolution faster. So, it was behavior, thinking, and the failure really of traditional litigation as a defense or prosecutor that led me to think more closely about why people work the way they work, which led me to behavioral science.
Amanda Raad: I love that so much, and after all these years, I don’t think I ever heard you articulate your views about litigation, which I share completely. Very early in my career, while I had great litigation experiences, what pushed me into the more advisory work and white-collar work was wanting to be more solution-oriented. So, it’s just so interesting to hear you say that. Just one quick follow-up question on that: Does that same principle apply to traditional investigations? How do you carry that over in investigations to that solutions-oriented focus and behavioral science?
Katie Daniels: One of the things that I’ve noticed over the years, and it’s critical to the compliance world, is how scary litigation and investigation is to people. We’re all very experienced in it—it’s our day-to-day existence, and so, we’re familiar with what’s going to happen, the pace of litigation, which can be very slow, the pace of an investigation that can be very slow. But in the person who has made that one mistake, it’s often the first and only time they’re going to engage, whether in litigation or investigation. So, again, coming back to that behavior piece, you have to be very mindful of how you present and gain people’s trust in order to really understand what happened from their perspective and to get the full story. If you come in too fast, too overbearing, too distracted, they will not trust you. And if they don’t trust you, they won’t tell you what happened—and if they don’t tell you what happened, you can’t find a solution.
Amanda Raad: That’s actually something Richard and I have explored on many a podcast together. I think the element of trust to the different approaches can really allow someone to either tell their story or not tell their story, even if you have the biggest intention to say what’s actually happened. If you’re feeling afraid, I think it can be hard to do that.
[08:30] The human element of compliance and investigations
Nitish Upadhyaya: How do you take a more human approach then to something like an investigation’s procedure or framework, bringing some of the skills and disciplines, like behavioral science, into the world of compliance? What’s it been like, and what have you been up to?
Katie Daniels: I focus very strongly on presence. Again, I opened with the curiosity about people and being present. I genuinely believe that compliance can’t be delivered from a desk, delivered from an online training or delivered from a policy manual. So, I’ve always done a couple of things, even as a people manager as well—they’re very similar skills. You need to be present and with the team, and when I say “team,” I’m talking about the 2,500 or so employees of CPP Investments—they have to know you, and they have to know the real you. There is a very key reason I opened with my wife and two sons—we’ve been married for 22 years. When I first was in the business, I was being tested for security clearance at the Ontario Securities Commission, and back in the day, in 2004, being gay was something that the police actually tested on the basis that you could be subject to blackmail or some form of coercion. So, I’m out there and present my authentic self. I tell young people and I tell the people whom I’m working with, “You have to tell us what’s going on, what’s challenging to you, so you show up and be authentic.” That seems really far away from compliance, but I don’t think it is, because people know something’s wrong, and being in an environment where you’ve shared something that might be perceived as vulnerable will allow them to share that with you. If you get to people who are juggling a bunch of things, present so they can trust you, hopefully when that thing goes wrong, when that mistake happens, they’ll be able to reach out and you can solve it when it’s still small.
Nitish Upadhyaya: I love that articulation of vulnerability. I’ve also seen it come up in the work that we’ve done together. In training that we’ve designed, for example, I had to work on “How am I going to get Taylor Swift into a compliance refresher presentation?” And we had an amazing story, didn’t we, Katie, of a compliance officer who was offered tickets to a Taylor Swift concert and had to decline, and was telling the folks who were being trained exactly what happened, how difficult a choice it was to decline, how it didn’t fit the policy and how it didn’t fit the ethos. But that vulnerability of realizing that it isn’t always just compliance saying, “No”—there’s a human being behind it, there are gray areas and tough decisions. I love how that comes through in so much of the work that we do.
Richard Bistrong: Katie, that is such a great point, and there’s so much research that points to, if we’re having an issue and we need support, we’re not going to reach out to someone that we don’t know the first time, right? So, the more we show vulnerability, the more we’re relatable and maybe focus on influencing and inspiring people—not always implementing—is how we can make people comfortable to pick up that phone knowing that there’s a voice on the other side that wants to help and is not going to judge their questions.
Moving forward a little bit, there was an interview with author Benjamin van Rooij of The Behavioral Code, and he was sharing how in our compliance world, so much of our program, implementation and initiatives is based on regulatory expectations. The DOJ has just issued new guidelines—Evaluation of Corporate Compliance Programs—everyone’s dissecting it, reverse engineering it, “Here’s what we need to do.” And he presented a little bit of a counterintuitive opinion, in that that’s the exact wrong way to put together your program because you’re just looking at regulatory expectations, not behavioral realities. I was wondering what your thoughts are on that?
Katie Daniels: Even though we’re not directly obviously regulated by the U.S. Department of Justice, we do make reference to it in the assessment of our compliance program. So, I wouldn’t put it entirely aside, but it depends how you’re going to answer the question. If the first question is, “Is your compliance program well-designed?” There’s a lot of different ways you could answer that question. I answer that question from a behavior perspective: “Are our policies easy to understand? Can people learn what they’re expected to do in a time-sensitive manner?” Time is everybody in our organization’s biggest and most precious resource, so what I need to deliver needs to land quickly and in a sticky way. The question, “Is the program well-designed?” I actually mean this somewhat disparagingly, “clipboard compliance”—you could have a program that had 55 things that I was running around looking at, but I don’t think that that would be well-designed. I think a program that’s well-designed is one that people understand, that they understand the throughput from what the compliance obligation is to our mandate, to their own personal risk, and that it lands and remains with them.
[14:20] Effective programs and practices
Richard Bistrong: Whether it’s incentives or face-to-face training, are there any top of the list—throwing away that clipboard—that you’ve seen these small initiatives have a much larger impact on the workforce from a behavioral perspective? If you had to write where you’ve seen the greatest effectiveness of an initiative, what might those be?
Katie Daniels: Making sure the policies that people need to make reference to are easy to understand—and that means often delivering what the message is in multiple ways. We have offices around the globe in London, Hong Kong, Mumbai, San Francisco, New York, São Paulo, and Sydney, but there are multiple languages. Everybody needs to speak English, but I would probably hasten to guess that the majority of our employees have a different first language. So, a policy that is 30 pages long is going to be of limited use. Several years ago, with the help of Ropes, we took our code of conduct and really distilled it into a number of key principles. We then redesigned it a couple of years ago using a graphic designer, so some of the key elements are pulled out. Somebody flipping through it or who is not excited to read a long code of conduct can still get the essence.
Everything about compliance to me is layers of protection. That first layer, the code, is it digestible by the population? Secondly, going to talk to people, understanding what parts they miss. Nitish has really helped us with some technology to get people having a conversation with us on what it is that they need more information about. I don’t think they need to be lectured that integrity is our first principle, but the nuances of our personal training policy or conflicts of interest—if they want to have a part-time job, an outside interest or an academic interest—those can be complicated. Same thing going back to if something goes wrong, this is often the first and only time somebody’s going to interact with that point, and so, we need to be there live and answering the questions. The third layer, which is often cited first by the U.S. DOJ and other regulators is “the tone from the top.” I have a very strong partner in our CEO, our general counsel, and the message of integrity and the importance of our code backstops for all of this. So, it’s multilayered—you can’t rely on any single element.
[17:20] Culture and program design
Amanda Raad: On this podcast, we’ve talked about culture quite a lot over the course of all of our guests that we’ve had here—and I know I’ve already mentioned it a little bit today in our discussion—but for you, where does culture fit into this whole discussion and to the control framework design?
Katie Daniels: Culture, it sounds trite, but culture is obviously the bedrock. One of the most influential books that I’ve ever read was Gillian Tett’s Fool’s Gold, which comes out of the global financial crisis, credit default swaps (CDS) and just the collapse of various investment banks. She is the editor of the FT, but when I dug into it, she also has a PhD in anthropology, so her original passion is the study of people in groups. That book is the tale of something that started out as a risk mitigant and a very conservative element where the culture soured, and when the incentives distorted its use ended in obviously something that nearly brought down the global financial system. It has stuck with me, that you need to be paying attention to your organization and attention to the subgroups in your organization to make sure all those pieces of culture align.
When I was a securities regulator, we had two teams—some focused on criminal securities regulation, but I was in the group that was focused on the “legitimate market” and came up through the Enron years. Canada had its own financial misstatement issues—the same thing where the desire to meet shareholders’ expectations for quarterly results, the desire for performance and that constant need to push out results, can really work the culture of a team. When I was investigating—and these are very tricky cases—there was very rarely a criminal moment, if you will, where somebody was, “Hah, I have a scheme.” It’s the corrosion of a culture and those tiny little steps over multiple years where results were manipulated or really pressed—where they pressed on the advisors, the accountants and the gatekeepers that were supposed to be there to always push the envelope. And that’s a culture piece—it’s very hard to prosecute, because there is no “aha” moment, but it’s very corrosive.
Amanda Raad: Appreciating the role that culture plays, how do you use that in program design and in just the everyday world? How do you keep a pulse on it? How do you make sure you don’t lose sight of it? Do you have tips for people on that?
Katie Daniels: We obviously partner across the entire organization, and I think that compliance professionals need to make sure they’re tied into the business, that they understand where the business is going, what the business requirements are, but also, not just risk and audit, who are obviously your number one partners, but your HR team, your human resources and talent team. We spend some time at this organization doing upward feedback surveys and making sure that questions about how people are feeling and how people feel comfortable in raising hard issues is really a critical point. But, again, I know I said it earlier about the layers, there’s no single partner or no single data point—you just need to keep an eye on it. We have a very strong governance function, and you can see over the 24 years since Enron, multiple sets of eyes with different incentives in those groups. Making sure those are in place in your organization is going to help—so, making sure your valuation team is effectively challenging the investing groups, is effectively challenging the finance that’s reporting results, and having no single source of information being present.
Amanda Raad: Having all of these different layers and pieces of the puzzle takes time and energy and obviously commitment from the organization, especially because you have so many different stakeholders that you’re working with all the time. How do you go about securing buy-in from your organization? I know that’s something we hear from compliance professionals regularly, that they have big ideas, big goals—they want to use culture, they want to use behavioral science, they want to use all these initiatives, but they can’t figure out how to make that actually happen within their organization. Do you have suggestions on that?
Katie Daniels: I think you should write a list of all of your ideas, and then critically think about which ones are going to land in your organizations and which ones you can do most efficiently in terms of money or time. Budgets are always a critical component, but there are lots of things you can do that don’t cost money or don’t cost a lot of money, which includes making sure your check-ins are short and sweet, making sure that your examples come from the business, so you’re out there developing them yourself. I am not a fan of off-the-shelf compliance programs that are expensive and won’t resonate with people. So, being there, listening to what people have on their mind is going to build the most effective program. It’s also going to help you next business planning cycle when you are asking for time and money for these exercises, that the people who hold the purse strings to both actually have seen what’s happened in the year prior know that you are delivering at scale and fit for purpose. You should be building that trust in the organization.
Amanda Raad: I have watched you over the years; it feels like you go from strength to strength in trying new and innovative ways and different ways of exploring these. Are there any kind of favorite examples that you would be willing to share of this approach that we’ve been talking about—keeping a focus on culture, using data, using behavioral science principles—where you feel like it’s actually made an impact that you feel proud of?
Katie Daniels: We created a video with a firm called Labyrinth, and it is less than 10 minutes. They use the language of our enterprise; they use scenarios that have been in our enterprise, and they’re coupled with a jingle that is sticky and that reminds people what to think about. We send it out about every 18 months or so, because I’m always very worried about white noise coming from compliance, so people get it in different packages at different times. The other key example is we were experiencing a series of “misunderstandings”—people just needed to better appreciate the nuances of a particular policy that we had. When we worked through—with the Lab’s help—why were people getting it wrong, we focused on how to train them very specifically, and sometimes, you need to be very slow, deliberate and step by step. We actually saw a decrease in the number of events that had been of concern. The stickiness of something that’s cute, unusual and reflects our organization with when it’s a higher-risk activity, making sure people really understand both paired together—so, no single event.
[25:45] Learning from mistakes
Nitish Upadhyaya: What about things that haven’t gone so well? I assume you’ve tried it over and over again in certain scenarios or looking at challenges. Are there stories of things that haven’t worked or didn’t work initially and then you had to adapt to make changes?
Katie Daniels: We do things in multiple ways. I’m a huge fan of the in-person training, but we also deliver training in attestations online. When those systems don’t work smoothly—they’ve got a good faith expectation that they’re going to do this compliance training—and they’re faced with five minutes of a system failure, that can be incredibly frustrating. If they come into a room and the room’s actually not ready and they’ve got to mill in the hallway, or anything that’s going to create friction on the compliance process, try to really take it out so people are just experiencing the message as opposed to being frustrated.
Nitish Upadhyaya: I think that attention to detail is so important, because at every single stage—and we’ve talked about this before—you’re an advocate. You are advocating for a position, a way of working, a way of behaving, certain attitudes that you want these participants to embody, and so, from five, 10, 15 minutes before, if not many days before, you are on show. Katie, you and I share a love of the theatre as well, and we are always on show, whether it’s the communications prior to a training exercise or how we follow up and help people understand that we’ve heard them and that they have been listened to in terms of their concerns and challenges that they articulated, to the actual thing. The show has to be pristine, perfect and create that level of confidence in legal, compliance and risk that, “We have your back—we can do this.” And it’s a collaborative effort along the way. So, I love that you mentioned those points of detail.
Katie Daniels: I’m going to go back to a question where you asked what hadn’t gone well. One thing that I need to always be mindful of, because I’m a very extroverted person, is how people experience me. As open-minded and thoughtful as I think I may be, I am also head of compliance for a large organization with 30-plus years of experience and a big personality. So, where things have not gone as smoothly as I’d hoped is often with people who are experiencing Katie for the first time and are in a stressed situation—it’s a point of constant reminder. Again, I said it earlier: the fact this is our business and often people who are experiencing these stressful moments—it’s the first and only time it’s going to happen to them—is I need to make sure and check myself on occasion that I’m really in listening mode.
Amanda Raad: I just love the vulnerability of that. To go back to vulnerability—I think, sometimes, that’s the missing piece, right? I know that we’re always on show—we were just talking about the importance of being appreciative of that fact, too—but the reality is, we have to do our best, we have to be super aware, but sometimes, it’s just not going to land or we’re not going to get it right. Being able to identify those places and think about why maybe it didn’t land the way we wanted it to and being willing to try something else, it takes a lot of courage actually. I think, sometimes, the reason people rely so much on every word that any regulator ever says is because it’s like the easy path out. “Okay, a regulator said this, so we’re going to go do this.” There’s no innovation or creativity around it. It doesn’t take a lot of courage. You’re literally following a path of trying to do what somebody’s told you to do. Whereas, doing some of the more innovative work that we’ve talked about and taking some of these approaches takes a little bit of vulnerability, a little bit of courage and trying things differently sometimes. It’s so important—I’m so glad you flagged it.
Katie Daniels: We talked at our team meeting recently about the twin elements that are necessary for people to actually trust us. It’s a bit of a charisma curve—you need to appear competent. When people come to you—and that’s not just me, it’s the whole compliance team—they need to believe that you understand their business and that you know what you’re doing so that you’re competent. But they also need you to be warm, understanding and seeing them in a moment of vulnerability. Again, if you whip out your clipboard metaphorically and start quizzing them, you may appear competent, but you are lacking in warmth. So, we are trying as a team to twin those up and check ourselves.
[30:45] The importance of the ‘middle’
Richard Bistrong: Katie, I’m curious to know your thoughts on the role of middle-level management in culture. I was reading an article in the MIT Sloan journal about how typically the model is, middle-level management has a responsibility to cascade tone at the top to the front lines of operations, and the article was like, “Back up. Middle-level management has a responsibility to operationalize and enhance tone at the top to where it actually makes sense to different parts of the organization and have different challenges and needs.” So, where do you see middle-level management in terms of culture in an organization, other than being a step in cascading messages down?
Katie Daniels: It’s an interesting question, Richard. From our CEO to the most recent hire, everybody’s expected to live with our guiding principles of integrity, partnership and high performance, so we have a common language, which is really helpful. It really doesn’t matter where you sit in the organization. Middle management, it’s such a fascinating cohort because it’s not simply the compliance objectives—compliance objectives are probably 5% of what’s on their mind—but the delivery of the organization’s objectives is really on their shoulders. The people management is on their shoulders—making sure everything happens. They’re not necessarily in the strategic room that the senior management or executive management team is, but every part of the organization, the output, is guided by middle management. I honestly believe they are both incredibly stressed with that tension and that obligation and an element that you have to make sure you’re partnering with. They’re often in the organization for a relatively long period of time, and so, making sure that they’re not jaded, that they have the tools that they need, and that they understand that you are making sure they have the time and space to let their people do what needs to happen. So, you need to nurture them somewhat—water them.
[33:10] Takeaways and conclusion
Nitish Upadhyaya: What a great lesson to finish up on. I’m so amazed at all the amazing tips that you’ve passed out to the listeners. It’s the practical implementation, I think, of all of these mixed methods and bringing them into reality that is so tough, and you make look incredibly easy. So, thank you for sharing those stories. Amanda, do you have a key takeaway from our conversation with Katie?
Amanda Raad: Every time I talk to Katie, I have 50 key takeaways, but I think today, it’s on vulnerability. I am very focused on trying to understand other people’s situations, but I don’t think I’ve been focused enough on my role that I can play and how I may be being perceived in a particular situation, and so, turning that lens on myself is going to happen.
Nitish Upadhyaya: What about you, Richard?
Richard Bistrong: I would echo the message of vulnerability. I think that speaking as former commercial Richard and current compliant Richard, we really open ourselves up for deeper conversations with the workforce, because I think they will respond in kind, that you have showed the personal side of yourself. I think when we talk about psychological safety and speak up culture, that ingredient is so critical to having people feel comfortable, because you’re showing yourself to be a good listener, which is much more than saying, “I have an open-door policy,” or “You can speak up.” You’re doing it yourself. I think the other part I won’t forget is clipboard compliance isn’t well-designed compliance, so I don’t know that I’ll look at a clipboard the same way again. Thank you for calling that out.
Nitish Upadhyaya: One final question for you, Katie. As I’ve said before, we share a love of theatre and musicals. What’s next on your list to see?
Katie Daniels: I was very sad to miss The Picture of Dorian Gray with Sarah Snook in the West End last winter, which I understand is coming to Broadway this fall. So, that will be number one on my list to scoot down to New York to see. Very excited to see that.
Nitish Upadhyaya: If you’re in New York, I think Operation Mincemeat, which I have just seen here in London, is also transferring. I would highly, highly recommend.
Katie Daniels: I’ll keep an eye out.
Nitish Upadhyaya: Thank you so much for a really stimulating discussion. So many practical tips I suspect our listeners will be beavering away and adding some more to their roster and their tool kit. Before we leave you, where can listeners find out more about you and your work?
Katie Daniels: I keep a generally pretty low profile, actually, and that’s the way we like it. If anybody’s actually interested and wants to reach out to me directly, it’s pretty easy to find me. Always happy to have conversations about what people are seeing, problems they’re trying to solve, because it helps me in my job.
Amanda Raad: A happy Thanksgiving to everyone who celebrates. It is absolutely my favorite holiday. It’s such a nice time to pause, reflect and just say what you are thankful for and grateful for, which I think is really important. On that note, I’m super grateful for this podcast and for this time together with you, Nitish, with you, Richard, with all the amazing guests that we have, and with all of you listeners. I really feel like the work that we do together here makes a difference, and I’m grateful for that. So, happy Thanksgiving.
Richard Bistrong: Amanda, I can only echo those sentiments, wishing you a wonderful holiday. It is a time for gratitude and thanks, and to our guests, to our listeners, these have been such inspiring moments and have really broadened my thinking about, “What are the opportunities out there?” It’s the people that are so willing to share their experiences, perspectives and to be a part of this open community of like-minded thinkers and people who want to learn. What an honor and with such gratitude to be part of this podcast and to join you and Nitish, and all our listeners and participants. So, thank you.
Nitish Upadhyaya: And thank you all for tuning in to the latest episode in our Culture & Compliance Chronicles series. For more information about our series and any of the ideas discussed today, take a look at the links in our show notes. You can also subscribe to the series wherever you regularly listen to podcasts, including on Apple and Spotify. Amanda, Richard and I will be back very soon for our next chapter. If you have topics you’d like us to cover or novel perspectives you want everyone else to hear about, get in touch. Thanks again for listening. Have a wonderful day and stay curious.