Get Your Board On Board
Sometimes my references to Seinfeld episodes or Curb Your Enthusiasm vignettes do not work or can charitably be characterized as a little off. Nonetheless, I press on.
In Season 4 of Curb Your Enthusiasm, Mel Brooks explained to Larry what a famous Greek actor explained to Mel Brooks about talent – “Or you got it. Or you ain’t.” (Watch here)
The same applies to your board of director’s. They either “got it,” or they “ain’t.” In other words, there is no real question of degree on this issue – your board either understands the importance of ethics and compliance programs and makes the commitment needed to implement a successful program, or your board does not understand the importance of ethics and compliance. There is no in between on this question – your board is either on board or not on board.
Not to be too dramatic, but a CCO without the support of a board is in dangerous waters. I would not condemn the program to certain failure but without some high level support from the CEO or COO, a company’s compliance program will face numerous obstacles. A CCO has to act and cannot put his or her head in the sand and continue to devote time and energy to a program that will suffer resource and authority deficiencies, almost by definition.
With all this introductory background, the issue then boils down to one important question – what, if anything, can a Chief Compliance Officer do to change the situation? Or how can the CCO get the board on board?
There is no one answer to the issue, but I have a number of ideas on what to do.
Before giving up or continuing with a compliance program restricted from ultimate success, the CCO has to make efforts to reverse the situation.
Look for an Alliance
A CCO needs to find a natural ally on the Audit/Compliance Committee. If the board of directors does not understand compliance, a CCO needs to educate the board through a natural ally, a board member who understands the importance of compliance, either from experiences at another company or his/her experience in a senior executive position. It only takes one director to change the dynamic in a boardroom. If necessary, the CCO should seek to meet with the targeted board member, or even meet informally for coffee or a meal. The CCO needs to break down the barrier and get the single board member to support the CCO’s efforts.
A CCO should seek/demand the opportunity to “train” the board. If necessary, the CCO should cite the increasing importance of board training and request between 45 minutes to one hour. This is important so that the CCO can make hiss or her case. I have placed quotes around “training” to make a point – it is not so much a training session but an opportunity to explain to the board its unique legal responsibility for conducting oversight and monitoring of a company’s compliance program, and to educate the board on how to do so. I have rarely seen a board that knows how to supervise and monitor an ethics and compliance program, and no one should ever assume that a corporate board knows how to oversee a compliance program.
Enlist the Compliance Committee’s Support
One of the important benefits of creating and operating a senior ethics and compliance committee as part of corporate governance is the ability to enlist the committee to bring issues to the attention of the board. When the compliance committee speaks, it brings gravitas to the communication and the importance of the issue being raised. The delicate dance here is to bring the issue to the board’s attention in a positive way – to couch it in terms of best practices for board oversight of a compliance program. A CCO should orchestrate this strategy and enlist the support of the committee to bring this issue to the board’s attention.