Stretching Compliance Resources

stretchingChief Compliance Officers are creative people.  What appears insurmountable to us mere mortals and attorneys, is just another daily challenge for a CCO.  It is a wonder that the compliance profession continues to grow in membership and importance in the business world.  After years of neglect, CCOs have become everyone’s best friend in the corporate governance world.  CEOs, COOs, CFOs and all of the acronymed-senior staff now embrace the CCO, inviting them to meetings, asking for their help, and rooting for the CCOs to succeed.  It is a far cry from yesteryear.

CCOs experience a myriad of challenges.  Just being best friends with senior management does not translate into the most valuable commodity in the corporate world – resources.  With the hyper-focus on quarterly earnings targets, senior managers dole out resources like gold coins with astronomical value.  Drip by drip, or one by one, CCOs are awarded additional staff, and sometimes are told to lean on other divisions to get part-time assistance from personnel on other offices.

Talk about being short-sighted.  Talk about a recipe for disaster.  It is all too often that I see or hear about global companies with operations in 80-plus countries around the world which have a dedicated staff of less than ten individuals responsible for ensuring compliance with US domestic and foreign laws.  That is an impossible task – no doubt.

In this situation, a CCO can design and implement the most sophisticated, state-of-the-art set of compliance policies and procedures but it is and will be a losing battle.  The CCO does what he or she can do, putting out fires along the way, but the program is limited and dysfunctional.complaince solutions

What should the CCO do?  Again, it is too easy to just say leave and find a new job.  Most other jobs will have similar challenges.  CCOs have to go back to their creative drawing board and come up with solutions.  It is not going to be easy, nor can the CCO rely on his or her persuasive talents to turn the ship around and change corporate attitudes.  It may be that only a government enforcement action can create the right climate for a CCO to bring about real change.

A CCO has to look for solutions outside the box.  It requires some persuasion and some creativity.  The CCO needs to indoctrinate the business managers to participate in the ethics and compliance program and to contribute some resources to the effort.  The CCO has to identify those business managers who are predisposed to supporting compliance and who recognize the benefits of having a compliance function on the ground in certain countries or regions.  The benefits to the compliance program are two-fold – the CCO gains access to additional resources and the CCO builds a supportive constituency in favor of the ethics and compliance program.

The CCO’s pitch has to focus on the bottom-line benefits to the business manager.  A locally-based compliance officer can reduce the burden and time spent on compliance functions, create an environment in which the compliance officer can become part of the business planning and implementation team, increase communications among compliance and business staff, improve financial performance and morale in the local office.  These are all strong selling points and arguments to persuade a business manager to dedicate part-time or even a full-time compliance representative from local personnel.

transaction2Such a solution raises challenges in other ways since it may be difficult to ensure the local officer’s allegiance to the CCO and a centralized compliance program.  But it may be worth the risk.  CCOs need adequate resources and they are used to taking risks.  This solution may be just another risk in the day-to-day portfolio which a CCO faces each day.

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1 Response

  1. Outstanding article calling out the real challenges for compliance officers and why most fail. Brute force doesn’t get the job done effectively. A highly collaborative process with the business is a foundational must for success, and you only get that kind of willing participation if there’s something in it for the business managers. Strategically, a good compliance officer recognizes this is their number one key to success. Well done, Michael! Best description of this problem I’ve ever seen.