Match Made in Heaven: Compliance and Human Resources
The corporate compliance function is only as successful as its partnerships with key internal constituencies. Depending on the company and the personnel involved, compliance has to establish and maintain effective working partnerships with key functions, such as human resources, legal, finance, and security.
All of the relationships are mutually beneficial. Each component works better when it is able to partner and work seamlessly with another related function. In some sense, a company consists of interdependent functions – one cannot operate without the other.
Human resources is a natural partner for compliance. They share common goals and can leverage each other in terms of resources.
I had the honor of presenting a webinar last week with Farzad Barkhordari, President of Workplace Answers (which acquired Click 4 Compliance), on the importance of a strategic partnership between human resources and compliance.
A recording of the webinar is available here.
As we noted during the presentation, human resources and compliance share a common goal of instilling and promoting a culture of ethics. Human resources promotes employee satisfaction as a means to ensure productivity and compliant behavior. Compliance shares the same goal of ensuring compliance with the company’s code of conduct and legal and regulatory restrictions.
The bottom line for each is an ethical company that has low levels of misconduct and strong morale that maximizes financial performance. Compliance and human resources promote and enforce policies and procedures in the workplace, conduct training programs, and handle incidents of alleged misconduct. They each are responsible for monitoring and promoting a culture of ethics in the company that reflects the company’s mission and values.
One important area of overlap is the training function. Human resources is responsible for onboarding new employees (and should include new senior executives and directors), conducting orientation, introducing the company’s code of conduct and securing an initial certification of compliance with the code of conduct. Human resources has a number of training responsibilities relating to employee conduct including sexual harassment training, conflicts of interest, discrimination, security and other day-to-day areas of job responsibility.
Compliance has its own topics for training centering on substantive areas such as anti-corruption, cyber security, antitrust, anti-money laundering, export controls and sanctions.
Human resources and compliance should coordinate their programs and use each other to reinforce specific topics of importance or issues of mutual interest. When they work together as training partners, they can leverage available resources, rely on common training content suppliers, and schedule training programs to minimize inconvenience to employees.
Two other areas of mutual interest include corporate culture and internal investigations.
Human resources conduct the bulk of internal investigations relating to employment issues. On occasion, these investigations can expand into substantive areas that may require compliance involvement, such as conflict of interest investigations or retaliation against whistleblowers. Compliance has to work closely with human resources to promote organizational justice, a hotline system, prompt investigations, and reinforcement of a culture dedicated to responding to employee concerns. As part of this responsibility, middle managers have to be trained and equipped to handle employee complaints.
Finally, compliance and human resources nee to attend to corporate culture by monitoring employee behaviors and attitudes. More is needed than a routine corporate-wide annual survey. A proactive approach to monitoring corporate culture includes focus groups, interviews and targeted surveys to high—risk areas and operations.
Compliance and human resources each collect important information concerning corporate culture – complaints, employee misconduct, and employee morale. Compliance and human resources can help each other by sharing such information, analyzing it together and developing action plans.
Considering all the areas of mutual interest, compliance and human resources share much in common and need to ensure that they communicate, cooperate and develop their common interests in compliance and employee morale.
I always enjoy your articles MV. Thank you. I do think there is a definite primary role for HR & Compliance. I would say that exploring termination histories, especially terminations d/t performance, would be a key indicator for compliance and also highlight other issues. If one explores the current Wells Fargo fraud we see many whistle blowers terminated for performance reasons. This is a common corruption of HR. In fact, corruption & cover-up really cannot be carried out without complicit actions by HR who can essentially be used to rob whistle blowers of their careers & livelihoods to hide executive fraud and corruption. HR is a key area for compliance, but also need to be audited in the process to ensure they themselves comply and do not work as the assassin arm of a corrupt regime.