Shortchanging the Compliance Function
A company that does not back up its words with deeds is doomed to suffer compliance and cultural breakdowns. When a company commits to building a culture of trust and integrity, the company has to keep its word. This is not a hard principle to follow.
Yet, we hear all too often about company’s leaders who commit to compliance in words and promises of commitment to implementing an effective ethics and compliance program, but fail to deliver on these promises. Many CCOs describe disappointment in failing to get the support they need for the company’s compliance program.
A compliance program depends on the lifeblood of energy, deeds, communication, and follow up. To carry out its mission, the terms of the Sentencing Guidelines are critical – independence, authority and resources. It is painful to watch when the promises of robust compliance program are slowly dashed through a failure to back up the commitment to compliance. You can see it in the CCO’s eyes, and hear it in the CCO’s voice – the sting of disappointment.
A CEO and his/her leadership team can rationalize why they do not need to do more to support compliance. They see evidence of a new compliance program – the company adopts new policies, the CCO reports regularly on the compliance program, and CCO puts together the skeleton for a new and effective compliance program.
The CEO and senior leaders then short change the program by failing to ensure that the company’s compliance program is operationalized – meaning that the program is integrated in every aspect of the company’s functions, and that the program is generating critical information needed to continuously improve the program. Senior leaders have to regularly recommit to the compliance program by stepping out in front of the company staff, reiterating their support and encouraging participation, and maintaining ethical conduct in the business operations.
A short changed compliance program is the equivalent of strangulation, a slow death by denying critical resources and support. In response, CCOs carefully communicate their needs and they avoid Chicken Little scenarios of impending doom. Maybe CCOs should adopt a more aggressive approach and use their capital to secure greater support from the company’s board and senior leaders?
A company has to commit to educating the board and senior leaders on how to implement, monitor and evaluate its compliance program. They have to learn how compliance programs operate, and what makes a compliance program effective. When companies do not have this basic educational foundation, the company’s compliance program will suffer, and may even be doomed to fail.
Tone-at-the-top is much more than just paying lip service – it is premised on commitment, communication and conduct – the three Cs of compliance. Senior leadership has to understand the vital role they play beyond mere video statements of support – a company’s culture is a mix of so many actors and influences – some more important than others. When a compliance program fails to detect and prevent wrongdoing, you can rest assured that a failure to support and fund the program was one of several reason that the program failed.