Laurence W. Bates joined Panasonic Corporation in April 2018. His roles include Managing Executive Officer, General Counsel, Chief Risk Management Officer, Chief Compliance Officer, and the Board of Directors as Director of the Legal & Compliance Division.
On the third anniversary of his appointment as Director of L&C, Bates reviews his tenure, how the division has responded to challenges presented by the COVID-19 pandemic, and his expectations for L&C under the new holding company system.
The mission of the Legal & Compliance Division is to apply a high level of expertise to support sustainable business growth, contribute to the enhancement of corporate value, and be a guardian of corporate value.
I've seen tremendous progress over the last three years in people really recognizing the role of the Legal & Compliance Division and the value that we bring. It starts with the decision to create my position, which didn't exist before, and making the director of Legal & Compliance a member of the board. That signal resonates throughout the organization. We're still not there yet, but top management sends strong messages on this topic and it's increasingly apparent in everyone's DNA.
The first measure of "success" is fostering the mindset within our function that L&C has an equal voice, a seat at the table where decisions on important issues affecting the company are being made. Historically among Japanese companies, legal departments have had a relatively less strategic, less upfront, more backseat role. So the measure of success in all my jobs in the past 30 years has been to what extent I've been able to build an organization--and a mindset within the wider organization--that legal belongs at the table and that the other functions (the rest of management) recognize its value.
The second measure is to deal effectively with issues as they arise, learning from them and putting in place a virtuous cycle of prevention, detection and response to mitigate similar risks in the future.
This requires having the right culture across the whole company--a culture where people speak up about concerns and ask questions about the work that they're doing. So that's a third element for measuring success.
I think the first challenge is making sure there's a culture of accountability--a knowledge of where you can go to get answers and acknowledgement that you are responsible for asking those questions. Open and accountable culture is critical for a company as global as we are.
A second challenge is the intersecting, complex, sometimes conflicting laws and regulations worldwide. We need to have a sophisticated approach to identifying the risk and gearing ourselves up with the right infrastructure to manage it.
IT tools are part of our global infrastructure--from monitoring and tracking all of the nearly 20,000 third-party intermediaries that are in our system to using know your customer (KYC) tools to uncover and prevent money laundering and trade controls violations.
Policies that are truly global are another key infrastructure. We've kicked this off in the past three years with anti-bribery/anti-corruption, or ABAC.
And then, most important of all, there's people. Part of my organizational vision has been to build a world-class legal department with powerhouse expertise in certain areas--compliance, trade controls, M&A transactions--so that we have an organization where people who are experts in their field complement the business and organizational expertise that other members have developed over their long careers with Panasonic.
I'm really glad that we already had the communication structure and operating mechanisms in place for collaborating and communicating globally when the pandemic hit because it allowed us to more naturally work together as teams, to understand who's doing what and where, and to organize remote project teams on the various work streams in response to the pandemic.
I want to see that competency maintained and built up under the new holding company structure. Delegating authority should not mean that we become siloed.
I think a second thing is that we recognize the importance of IT tools as a way to track and measure what we are doing in the L&C function. We've made giant strides to become more efficient. The most recent example is this new e-signature tool that we started to roll out internally for contracts.
Furthermore, we've now embedded compliance questions in the annual employee opinion survey and this allows us to track changes in our compliance culture over time and between companies and regions, to measure the impact of our L&C activities and to benchmark against other corporations.
The driver for the holding company has been communicated as "the need to make the business segments sharper"--sharper in focus, more competitive in their fields--by better defining and, in some cases, narrowing down their fields of activity. And that's good, and that's what we see as the opportunity.
From a Legal & Compliance perspective, the much broader challenge is recognizing that we need to continue to build on corporate governance we have set in place in an appropriate way and, in particular, define the role of the holding company and Panasonic Operational Excellence, so that we can put in place a governance structure that protects the Panasonic brand at the group level even as we delegate decision-making authority to the businesses.
I'm glad to see L&C included with Finance and HR as the three pillars of that governance structure. But it's a huge responsibility. Put simply, L&C needs to define the baseline standards at the holding company level that everybody need to comply with; and then the business corporations, working with L&C, need to map their own specific risks and then define the processes for dealing with them.
Becoming a truly global company requires us to have a global-standard legal and compliance function. Looking back over the challenges of the past three years, I have seen a positive change at Panasonic.
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