How Much Power Do Import/Export Compliance Departments Really Have?

Dear Import/Export Compliance Manager,

I sometimes feel like my Import/Export Compliance Department is like a police department but lacking the authority to arrest anybody.  How much power does a typical Import/Export Compliance Department really have?

Slammed in San Diego

Dear Slammed,

Power is a rather interesting concept that the Import/Export Compliance Manager believes most of us don’t think about enough.  To us, the fact that the U.S. Bureau of Industry and Security, U.S. Customs and Border Protection and other agencies have the ability to penalize our companies through monetary fines and impose limitations on the ability to export and/or import should be enough to make everyone in our companies do everything we say.  Yet, that’s not how things actually work. 

So let’s start with the definition of ‘power’.  In the younger Import/Export Compliance Manager’s political science classes, power was defined as the ability to make someone do something they might not otherwise do.  Power may be derived from legitimacy conferred to the government with the consent of the governed or it may stem from a strong enforcement mechanism of the state.  Think of the difference between the democratically-elected governments and dictatorships.  Both have legitimacy but through different means.

Do import/export compliance departments have legitimacy?  Employees may see your department as being knowledgeable and thus competent; however, competency doesn’t necessarily correlate to legitimacy.  The question is whether you have the ability to force recalcitrant engineers and shipping personnel to comply with company rules.  If you have the power to penalize these employees such as through negative reviews, reduced or blocked pay raises or termination of employment, then yes, you have power.  But, let’s face it, you on your own cannot do those things and thus you don’t have legitimacy.

OK, so how do you get power?  The solution is to get the cooperation of those who do: the employees’ managers.  You walking into the Human Resources Department and explaining to the HR Specialists that they must screen all new hires against the different restricted parties lists does nothing on its own; it is the thought that, if the employees don’t comply, they will receive negative reviews, won’t get a pay raise and might be fired by their manager that will make them do so.  In essence, the person’s manager, all the way up to the Chief Executive Officer (CEO), are your police department.  They wield the power and have the legitimacy, not you.

So your Import/Export Compliance Department, like every Import/Export Compliance Department the Import/Export Compliance Manager has ever interacted with, does not have its own enforcement authority.  Therefore, as far as the company’s power structure is concerned, the Import/Export Compliance Department does not have any power.  Seriously, you don’t.  The CEO herself can take your strong verbal presentation detailing blatant violations that have been committed and your red-alert message that the previous practices must cease and desist TODAY...and totally ignore you. 

When you think about it, every single compliance-related department in your company is in the same boat.  Quality can go on all day about how the company isn’t meeting ISO requirements; they usually have no power to implement change.  Environmental, Health and Safety can raise the alarm about poor safety practices on the Manufacturing floor; they can still be told to go take a hike.  Even Legal, vaunted Legal, which usually has the ear of the CEO and the Board of Directors, is purely an advisory organization.  Its job, as well as all other compliance-related departments, is to provide advice as to how to comply with applicable laws and regulations and protect the company.  It is up to management, from the Board of Directors and CEO on down, to decide whether they will act upon that advice or not.

To answer your question, you really have no power outside of your own direct reports.  Regardless of how great your export compliance manual is, your automated systems are and the fact that you are on a first-name basis with high-level BIS officials, you can easily be told to go jump in the lake.  How to overcome it?  Get the enforcers on your side, starting with the CEO, as well as attempt to use soft power (see the previous question on Fear vs. Love).  Good luck!