The definition of compliance in any company is specific to its particular needs and level of regulation. But at Sears Holdings Corp., the best word to describe the work is massive.
With more than 260,000 employees and 30,000 suppliers worldwide, the operating company behind the retailing giants Sears, Kmart and Lands’ End enforces compliance on a global scale. The company sources its best-known brands — including Craftsman, DieHard and Kenmore — domestically and abroad, making compliance necessary on everything from labor rules to factory safety. Employees need to be trained uniformly to sell a washing machine or to fix one.
Sears Holdings’ legal business unit in suburban Hoffman Estates, Ill., makes sure everybody is following the same rules. During 2012, it made great strides through digital conversion.
"It’s one of the reasons I took the job," said Dane Drobny, the company’s senior vice president, general counsel and corporate secretary.
When he joined Sears Holdings in 2010 from Chicago-based Winston & Strawn, the company had already consolidated the employment and training practices of Sears and Kmart, which merged in 2004. Drobny and his team encountered a human-based system that was being run responsibly but perhaps at less than optimal efficiency.
Back then, store associate training, to name one example, was a "part paper and part email function" that had human resources representatives and store managers going back and forth to make sure employees got the proper training on the proper schedule, Drobny said. "H.R. representatives had to create a manual list of associates who hadn’t received training [in specific functions] and they had to communicate that at the store level."
Well, enough of that.
Sears Holdings’ legal department worked to design and launch last year the company’s new "Learning Management System," which features real-time associate training on store-owned handheld devices. The system is designed to keep training and certifications on track and on time — employees have an incentive to pick up that tablet because their results are tied to their performance rating and compensation.
Technology underpins what Sears legal considers its biggest compliance successes of the past year. Besides the above system, Drobny’s legal department also launched:
• Digital reviews for managers at the company’s more than 2,600 stores to make sure they keep on top of pressing compliance priorities.
• Enhancements to the compliance database that tracks the 3,300 factories and vendors the company works with in the United States and around the globe.
• Live training for 2,000 vendor and factory representatives in Bangladesh, Canada, China, Indonesia, Vietnam and the United States in social and labor compliance, product quality and product safety. Every participant registers online.
• Audit coordination with other retailers that use the same factories as Sears Holdings.
• Expansion of the legal department’s digital portal linking 2,000 stores and field operations to attorneys and paralegals who can answer real-time legal questions and review documents. Additional types of communications and reporting capabilities were added to the system.
Drobny declined to share the exact number of attorneys who work on compliance matters — he said only that "dozens" of attorneys or staff members may be attached to those topics at any point.
He credits two lieutenants with managing the overall compliance workload: Maria Di Lorenzo, vice president, deputy general counsel and chief global compliance officer; and Jeff Eich, vice president, deputy general counsel and chief compliance officer. "The real heroes are Maria and Jeff and their team," he said.
Drobny believes compliance procedures drive business in general and specifically at Sears Holdings. He refers to the company’s increasing focus on its "Shop Your Way" loyalty and social digital program that’s now involved in more than 60 percent of the company’s transactions and sales.
The company has bet big on this loyalty and data platform.
"We’re becoming more of a membership company that engages [customers] while they shop online or on mobile, and compliance is a key component of providing this experience," Drobny said. "We need our employees properly trained, and we need products that are manufactured to high standards, and [legal] is a key component of making that happen." — Lisa Holton
|Sears Holdings Corp., a public retailing company|
|Headquarters:||Hoffman Estates, Ill.|
|Number of lawyers in the Chicago area:||46|
|Number of lawyers in the U.S.:||49|
|Number of lawyers worldwide:||49|
|General counsel:||Dane Drobny|
|KEYS TO SUCCESS
"Emphasize that you need to have a successful and lasting business to have a compliance ­function, but you can’t have a ­successful and lasting business that does not value compliance."
"Make compliance simple to understand and easy to execute for associates."
"Leverage technology to automate compliance training and processes where and when you can, so that not knowing or not remembering doesn’t result in non-compliance."
"Finally, have a proactive program that focuses heavily on user-friendly education on the front end rather than a program than just centers on detection and remediation after compliance failures have occurred.
— Dane Drobny, Jeff Eich and Maria Di Lorenzo