Can BPM Keep You From Getting Fired?

Okay, I have to admit it:  “My name is Clay and I am a political junkie.” They say the first step to recovery is admitting that you have a problem. I am also a policy geek and I love watching C-SPAN.By now, I’m sure you’re wondering “What the heck does this have to do with I&KM pros?”

I believe last Wednesday’s House Hearing on Madoff and the SEC should be required viewing for all I&KM Pros – particularly for those of you that want to understand how BPM can keep you from getting fired.

If you caught the hearing in its entirety on C-SPAN (I had a front-row seat on my couch, thanks to being taken down by a nasty flu-like virus last Wednesday – this will become relevant a little later), you saw the whistleblower, Harry Markopoulos, rip into the SEC, FINRA, and other industry regulators. Mr. Markopoulos raised numerous red flags to the SEC about Madoff’s Ponzi scheme over an eight year period.

Pulling no punches, Mr. Markopolos called the SEC "incompetent" and FINRA "crooks" to their faces – senior representatives from both organizations were in the audience listening to the hearing and waiting for their opportunity to respond.  Following Mr. Markopoulos’s testimony, I thought "Hey, its time to get some popcorn, the fight’s on!" Then I recalled why I was home in the first place – sick, right? 

After a little break, the House brought out the SEC heads for their grilling.  I was particularly taken by the grilling given to the heads of SEC Compliance and SEC Enforcement.  My naïve assumption was that these people would have reasonable answers about why Madoff’s $50B Ponzi scheme fell through the cracks.  Boy, was I wrong!  They had not a single coherent answer.  In fact their collective answer was (I am summarizing here for them): "I don’t understand my own process."

Rep. Gary Ackerman completely went off on all of the SEC heads testifying at the hearing.  Based on Ackerman’s response, I hope all of the SEC heads started job hunting immediately following the hearing.  There is no doubt left in my mind that they will all be fired summarily (looks like I moved too slow on getting this blog post out).

After watching the hearing, I thought to myself "These people could have avoided being fired if they had simply implemented a good BPM solution."  Here are my Top 3 suggestions on how BPM could have kept them from getting fired (or at least kept them from appearing incompetent on C-SPAN):

Job Saver #1, Transparency – During the hearing, the SEC was grilled numerous times regarding specifics on how their compliance and enforcement processes worked.  For example, several congressmen asked "How many red flags does it take before action is taken?"  None of the SEC heads could answer this question.  Implemented properly, BPM provides the transparency needed to answer these types of questions.  Or at least it allows you to say, "We did not consider red flags as part of the process, and here is why…"  The other benefit of BPM is that the SEC's visual process for enforcement and compliance could have been published on the web for all to see.  Then, the SEC heads could have answered, "…as outlined in our current process, published on the Web…"  This would have helped them demonstrate the greatest degree of transparency.  I believe there is an opportunity here for process-wiki vendors (e.g., Lombardi Blueprint, Itensil, etc.)...

Job Saver #2, Business Rules – Many of the congressmen also asked about escalation rules for investigations in addition to several other "rules" related failures that allowed Madoff’s scheme to go undetected.  My immediate thought was that most of the rules discussed could easily have been captured by a rules engine to automatically escalate and route processes accordingly.  One of the congressmen asked "Do you give additional weight to tips coming from highly credible sources, like Mr. Markopoulos?"  The SEC responded, "Yes, we do.  However, we have to look at the history of the source."  The SEC's response left me thinking this is not a "rules" governed process – in other words "you are credible, if we think you are credible."  No, there should be documented and institutionalized rules that govern whether a source is credible.

Job Saver #3, Workload Management – Finally, one of the congressmen asked "How many fraud tips do you get in a given year?"  The SEC response:  "We get over 100,000 and there is no way we can chase down each and every one…"  I thought this was the most telling response.  In other words, the SEC was saying "We could not catch Bernie Madoff because we had too many fraud tips coming in..."  Using BPM, they could have automatically identified tips that had a high chance of fraud and routed these tips to be vetted by staff members with the appropriate expertise.

I&KM pros should take note!  If you have internal processes that are compliance-related (or otherwise), BPM is ideally suited to provide the transparency needed to make you look good in front of Congress, ahem, I mean key stakeholders,  that have hard charging questions when things go haywire.

After the House Hearing on Madoff and the SEC wrapped up, I finally decided I was sick enough to take myself to the doctor.  However, instead of going to my family practitioner, I decided to check out the “Minute Clinic”, CVS’s in-store quick clinic.  My experience there was the exact opposite of the fiasco I had just seen on C-SPAN.  I left the doctor thinking "The SEC could learn a thing or two from the Minute Clinic about how good processes work…"

In my next blog I will share more about my positive process experience at the "Minute Clinic"…


re: Can BPM Keep You From Getting Fired?

if this is not a case for BPM i do not know what is, but then again you still need people to follow-up on tips and from the sound of it, the SEC knew but they just did not follow-up.As for the minute clinic, i am a big fan and have been there a couple of time, they have it down, doctors could take a lesson especially for routine stuff.Good post overall and a good read/cp

re: Can BPM Keep You From Getting Fired?

I'm sorry but your understanding of the subject is limited at best. I am a citizen of the United States and I am not proud to say our elected leaders have no understanding on the mechanics of modern trading. The system would never have caught the issue, and no change will make it so. I do not mean to belittle or insult but everyone is playing catch-up in financial knowledge. I see the article is on preventing your termination with useful tips, but I disagree the SEC is to blame for Bernie Madoff investment advisory fraud.

re: Can BPM Keep You From Getting Fired?

Great post. The information was there - it was just both lost in the [inefficient] process and that's exactly what BPM would have helped alleviate.Arete, I don't think the take-home message was the SEC is to be blamed for Bernie Madoff's investment advisory fraud. It's that the SEC could have presented themselves stronger and more credible with good BPM implementation (and possibly not get themselves in this situation to begin with).This isn't about modern trading nor is it about a ponzi scheme. It's about good business process automation and identifying bottlenecks and dealing with accordingly. :)

re: Can BPM Keep You From Getting Fired?

Thanks for the feedback Arete and Andy. Arete, Andy is correct. I didn't mean to imply that BPM would have caught the Madoff scam; BPM would have improved some of the transparency and internal procedure issues that were highlighted during the hearing. In order to gain the full perspective, I think you have to watch Harry Markopolis's (the whistleblower's) testimony. He really tore holes into the SEC's process (or should I say lack thereof) around enforcement and compliance. As a process person, I was blown away with the fact that they couldn't answer even the most basic process questions. I believe we will see a lot more of these types of hearings if solid and transparent processes are not put in place for doling out and tracking the stimulus money. Many government agencies will receive gobs of money that are multiple times larger than their usual allotment and they will have to spend it in record time.

re: Can BPM Keep You From Getting Fired?

Let's start with first post..what information was there? the processes of how the SEC operates?? Over 90% of cases come from whistle blowers, the rest come from insanely complicated computers programs that scour orders and executions ONLY on markets sec regulates. "I" am implying that the SEC would never have caught the fraud. BPM or any other program would never help organize the millions of line of code that show potential problems to explain it to house committee. The guy Harry Markopolis is a "johnny come lately" trying to sell books or his future services as an investigator. If a prosecutor showed you the ways he nails criminals, it should not have to explain that process to the world. I have worked with the SEC before working at a broker dealer, and I do agree with a lot Harry Markopolis commented on.

re: Can BPM Keep You From Getting Fired?

Also, SEC stated for not answering questions with specifics was the ongoing investigation. Rep. Gary Ackerman from my home state was one of few members of committee who even knew what Madoff had even conjured up, but he is also very wrong because the SEC would never oversee an unregistered investment advisory firm!! It was a hack of the system, give me details of rules and I will create a system that rules will never cover. I watched the full day of both hearings live, yes the whole thing, at least four hours each and you will notice committee was questioning workers from the SEC that do not handle the questions of procedure. After 4 hours of questioning to find out they were talking to the wrong person.

re: Can BPM Keep You From Getting Fired?

Clay, thanks for this post. Admittedly, I am a C-SPAN junkie myself, and this video was extremely interesting to watch (just from a sheer entertainment value). But I also agree that some of the key fundamentals to BPM apply here. As I continue to talk to business executives about their concerns and frustrations with how they operate business on a day-to-day basis (especially in today's market), visibility and transparency are the two words that keep coming up again and again. By leveraging a quality BPMS, the critical processes a business executes become lucid, in terms of the business data in these processes and the time, effort, and cost to fundamentally execute these processes.