Former FTC Commissioner Overseeing Herbalife Compliance
As a Direct Selling Executive, how much importance do you place on compliance?
Don’t be quick to answer this question in defense, but instead ponder it. Do you desire to enforce more compliance on your field, but fear that such policing will anger your top performers? Maintaining this balance is a delicate one as you know, but beware of falling hostage to upset representatives. After all, the people in your field that are abiding by your terms and conditions have nothing to fear, and at the end of the day, any success you accomplish is always under the watchful eye of the FTC.
Take for example Herbalife. They recently hired a former FTC commissioner to oversee the conduct of their independent sales team. This is a smart move in my opinion, not just because of the public scrutiny that they experience by being publicly traded, but also it is a smart business practice.
Pamela Jones Harbour spends her time monitoring training and mentoring programs for Herbalife’s nearly 4 million distributors by employing “robust and consistent monitoring and enforcement procedures,” the company said in a news release.
The most recent Direct Selling Company that I helped launch (as the Interim VP of Operations) was called Ampegy. We started on Day 1 with a Director of Compliance and a Compliance Manager. This was the first time I had initiated a department dedicated to helping a field maintain a high level of compliance and the effort paid off greatly.
The Two Pillars of this department were as follows, along with a few things we learned about each one along the way:
1) Make It Easy For Representatives to Submit Their Compliance Approvals.
You depend on your field to promote and market your opportunity as well as your products & services, so you have to be highly responsive or they will just keep on keeping on without you.
- This required us to have streamlined procedures in place for quick responses, including clear and concise guidelines for all types of marketing mediums.
- For ongoing compliance of approved websites, we maintained a huge database and checked back on the websites every 60 to 90 days to ensure that they were not manipulated after their form was approved.
- One important lesson we learned was that representatives come up with great ideas, so this department worked with marketing to continually develop and promote new marketing tools and templates that became very popular.
2) Handle All Compliance Infractions With Compassion.
It is easy for a compliance department to adopt the ‘bad cop’ mentality. While there are bad apples that spoil the bunch, most representatives misrepresenting either the opportunity or the products & services are simply not aware of the guidelines and need help in correcting their actions.
- We developed a step-by-step procedure to contact the representative and ask them to remedy the situation within a certain timeframe, and we did so in a kind but firm manner.
- We worked with the representatives that were willing to correct their infractions to help them remain in good standing.
- If they did not comply quickly, we would first suspend them until the infraction was corrected, and while we did suspend commission payouts, we allowed them to accrue commission earnings during this suspension.
- While most representatives worked quickly to get reinstated, others had to be terminated. We did find that we received praise from their peers in the field that knew they were building their business in unethical ways.
So take heed from Herbalife, and carve some time out with your Executive team to evaluate your compliance strategies. Doing this will help you proactively avoid any regulatory issues that could cause irreparable damage to your business.