Of horses and regulators

Isn’t it interesting how some of the best life lessons we can ever learn come from animals? Ok, I’m a bit fanatical about animals and my bond with horses in particular is one of the great sustaining truths in my life but the analogies between training a horse and dealing with a regulator are really quite interesting, if you give it some thought.

Lesson Number One: A horse is a big, powerful animal that can kill you if you don’t figure out how to talk to it and work with it. Regulators are big powerful animals that can shut down your business if you don’t figure out how to talk to them and work with them.

Horses are prey animals and largely motivated by fear. Hard to believe an animal that big and strong looks to you for guidance and leadership but it does. If you can earn a horse’s trust, by learning its body language, understanding what it is saying when it moves its ear or throws its head back, you can manage it better and predict, most of the time, what it is going to do next and thereby avoid disaster. Even in unpredictable situations, such as when you are riding in a forest and a deer jumps out and startles your horse, if the horse has an established relationship of trust with you, it will not panic. It will wait to see what you, its leader and trusted guide, do.

Regulators are protectors of the public and motivated by a desire to fulfill that mandate in a visible way. So they have a sort of “fear” for the public, to protect them from the unscrupulous or incompetent participants in the market. If you can earn a regulator’s trust, by learning what motivates them and work with it to provide what it needs to gain the appropriate measure of comfort and cooperate in the development of an ongoing relationship of trust, you will be better able to manage troublesome compliance situations and avoid disaster. And, if you can establish a trusting relationship and healthy dialogue, deer jumping out of the woods in the future will not be such a problem because the regulator will have come to trust that you handle things thoroughly, responsibly and with integrity.

Lesson Number Two: There is no point trying to fight a horse into submission. It weighs 5 times more than you and will win every time. There is no point in taking an adversarial position with regulators out of the gate. They hold the power to license you and that’s as powerful as it gets.

This is not to say that you shouldn’t take a stand when the time is right. There are times when regulators, as well-motivated as they are, will overstep the bounds of propriety in trying to fulfill their mandate. As with horses who will predictably and with regularity, push the envelope in their relationship with you and try to “get their way”, you need to remain calm, consistent and firm in your position. For example, a horse that moves when you are trying to mount him is a dangerous thing because in that moment between the ground and sitting firmly in the saddle with reins in hand, you don’t have control. You can’t cure a horse of this tendency by beating him or yelling at him. You cure him by understanding what he really doesn’t like (too much work and being isolated from the herd) and you make him work at the precise moment when he misbehaves and you isolate him. In 99% of cases, it takes one or two tries and that horse will not move again.

Similarly, regulators will sometimes step outside the bounds of their jurisdiction or will sometimes make unreasonable demands on your resources by requiring you to fix things you don’t think need fixing or to devote time and money to areas that in your view, pose little risk. If you expend time, money and energy in trying to fight them head on, it will cost you that much more and take that much longer for you to get your business back on track, which is the whole point, right? It is almost always (and there are exceptions over which we simply have no control) best to equip yourself with knowledge of regulatory requirements, industry standards and best practices and come to the discussion table with a well-developed plan on how you are going to remedy the situation. No doubt there have been times when self-reporting and self-remediation have gone unrecognized and the boom is lowered just as hard. But there is nothing to be lost and everything to be gained by expending the effort in understanding the problem thoroughly, arming yourself with knowledge and demonstrating responsible conduct in fixing the problem. That will often give the regulators the comfort they need to know you are not a risk to the public and allow them to focus their public protection powers elsewhere.

Lesson Number Three: Be kind to your horse. It isn’t all about manipulation. It’s about a healthy relationship. Be kind to regulatory staff. Even if you feel their position is unreasonable, if you maintain a conciliatory and kind tone, recognizing that they are just human beings trying to do a job, you will foster a healthier relationship.

In these difficult times we are all struggling to make a go of things and to meet the ever-increasing demands of compliance. Wouldn’t it be more pleasant, less stressful and more fulfilling to all of us if we could just shoot for the same ends and get along in the process?