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When Tone at the Top Is Missing

toneWe all tend to gloss over a critical requirement for an effective ethics and compliance program – tone-at-the-top. I hate to be dogmatic about the issue but, as Mel Brooks said in the Curb Your Enthusiasm (Season 4, Episode 1), “You either got it or you ain’t.”

The same is true for the board, CEO and senior executive commitment to ethics and compliance.

Every Chief Compliance Office knows whether they have the proper tone-at-the-top. If they have it, they can set lofty goals; if they don’t, they have a lot of work to do to get the board, the CEO and senior executives on board.

I am raising this issue because of a recent survey that was reported in the last edition of the SCCE magazine. Fifty-five (55) percent of all respondents stated that the C-Suite was not engaged in promoting a tone-at-the-top or culture of ethics and compliance.

This is a recipe for disaster. If the board, CEO and C-Suite see their role only as filming a video message and checking-the-box on stating their commitment to compliance, the company is missing the most effective ingredient to establishing a culture of compliance – the company’s leadership.tone2

To be sure, CCOs face a challenging environment when they lack senior company support and commitment.

CCOs face two alternatives – they can marshal internal forces to persuade senior management to join the compliance effort, or they can toil in the world that they control, developing policies, procedures and controls to promote compliance.

To persuade the CEO and senior executives to increase their commitment to ethics and compliance, a CCO has to build a consistent message and deliver it from as many angles as possible. The most important voice in this effort is the company’s internal compliance committee.

If the internal compliance committee is established with key internal stakeholders, the committee should be the messenger, not just the CCO, of the need for engagement by the board, the CEO and senior executives. CCOs don’t like to challenge the board, the CEO or senior executives on their own – that is why a committee message can be the perfect vehicle for pushing the C-Suite to engage on compliance.

It is hard to divert the C-Suite’s attention to compliance when they are obsessed and comfortable with key business decisions, strategy, accounting and financials. But that is the importance of persuading the C-Suite using their language – ethics and compliance does not just keep a company out of trouble; ethics and compliance increases the company’s profitability and sustainability.

CCOs have to make this issue a high priority. In the absence of a real and significant senior level commitment to compliance, CCOs are flailing and often frustrated. We all want the approval and engagement of our supervisors, and CCOs have the same need. When the board, CEO and senior executives engage on compliance, there is tone3nothing more fulfilling to the ethics and compliance mission.

CCOs who do not have this key support factor often convince themselves the program is okay, or that they can accomplish a lot without key executive support. In the end, they are deluding themselves.

In the end, CCOs have to establish their demands for engagement from the board, CEO and senior executives from the beginning. A good starting point is to train the board, the CEO and senior executives early and often. Look for ways to educate this key constituency and repeat your message to this key constituency as much as possible until you convince them to engage. It may be the difference between success and failure.

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