CCOs Need a Seat at the Table
Chief Compliance Officers are moving up the corporate ladder. They are being separated out of the legal function and empowered to exercise greater authority in the company. Research already has shown that this structure makes a company’s ethics and compliance program more effective.
The next challenge facing CCOs is to ensure that they have a seat at the Business Table – not just a chair and an ability to sit in on a meeting, but the ability to participate in the business in a real and meaningful way.
CCOs have to develop an important message on this topic. They have to explain why it is important that they become a meaningful partner for business strategy. The message should address: collaboration, communication and sustainability.
Senior management needs to collaborate with the CCO to ensure that they coordinate the business strategy for growth and the important ethics and compliance functions needed to support such growth. A CCO can help to identify the ethics and compliance risks the company will face as it implements its business strategy for growth (and possibly diversification).
As part of this same process, the CCO can identify areas where ethics and compliance programs will be needed to ensure that such growth occurs with proper ethics and compliance support. CCOs can help to mitigate any significant risks to the organization by early planning and proactive strategies rather than last-minute attempts to respond to risks.
More importantly, CCOs can ensure that any strategic goals and initiatives comport with ethics and compliance requirements, value principles, industry standards and other requirements. In other words, CCOs can bring an important objective perspective to alternative business strategies.
Assuming that senior management and CCO are on the same page, they can communicate a consistent message, emphasizing similar points.
For example, a company that intends to grow through aggressive acquisitions can send a consistent message of responsible growth with proper due diligence review and timely integration of new businesses and employees. Also, senior management can emphasize important business principles for growth while reinforcing the message that the company will ensure efficient and effective operations.
Most importantly, an alliance between senior management and CCOs on strategy and initiatives will ensure sustainable results, both from the business perspective and from an ethics and compliance perspective. Senior management and CCOs reinforce each other and promote healthy growth that ultimately enhances the sustainability of the company’s operations.
All of this seems very obvious to everyone but many companies do not take the time to build this strategic alliance. CCOs are good for business and business is good for the CCO. In today’s environment, a disconnect between the ethics and compliance function and the business planning function inevitably leads to increased risks and inefficient business and compliance planning.
Business plans have to be reworked because of a failure to take into account ethics and compliance considerations. Similarly, ethics and compliance planning has to be revised to account for new business plans and initiatives that require a reallocation of compliance resources. In the extreme, poor planning can result in ethics and compliance program costs incurred as part of a crisis or other unexpected developments.
All of this can be avoided if CCOs are brought in to the business planning process and given a real seat at the table. The bottom line is that the ethcis and compliance program has to be aligned with the organization’s overall business strategy. That can only occur when the CCO has a seat at the business table. It seems obvious but CCOs have to make sure it happens.