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The Compliance Conundrum — Spending Money to Save Money

Chief compliance officers have to be honest with themselves. While I am optimistic about the growing importance of the compliance function, I remain concerned that CEOs and senior management are slowly strangling ethics and compliance programs through delays and denials of needed human and support resources to implement an effective ethics and compliance program.

So, my question to CCOs is an important one – are you being denied basic and necessary resources to carry out your ethics and compliance obligations at the company? Please answer honestly – I suspect your answer to this posting is more honest than when asked by officials in your company.

CCOs have to bite the bullet and become a squeaky wheel. If you keep your mouth shut and do not raise the issue, but mumble and complain to underlings and colleagues, you are not doing your job. It is time to stand up and do your job – especially on such an important issue.

Let’s talk about how to communicate your needs. If necessary you can play the ROI or return on investment game, but you can use the required buzzwords but integrate important concepts as explained herein.

First, and most importantly, do not get stuck in the nickel and dime trap. A CCO who operates without confidence will fall back on the nickel and dime request – only ask for the bare minimum for what you need for the next year. Instead, take a broad brush approach – present a two-year or three-year plan with no holds barred, meaning ask for what you need to operate a robust ethics and compliance program.

Second, the CCO must weave in relevant “research” and well-established facts that an ethical company makes more money over a sustained period of time than companies that do not invest in their ethics and compliance programs. Spending money on ethics and compliance is a small investment when considered against the positive benefits of reduced employee misconduct, increased employee productivity, and more profits.

Third, a CCO has to remind senior executives and the board that federal sentencing guidelines and government guidance requires that a CCO has “adequate” resources to implement an effective ethics and compliance program. If necessary, the CCO has to present an honest assessment of performance – has the company implemented the required elements of an effective compliance program?

Furthermore, the CCO has to explain that the company will not achieve “effective” status unless and until the CCO is provided more resources to implement the ethics and compliance program.

CCOs have to develop a persuasion style to inform senior management and the board about the status of the company’s compliance program and the resources needed to fulfill applicable requirements.

In many cases a company has to spend money to make money. And a perfect example is the need to automate a company’s due diligence program applicable to third party agents, distributors, consultants and lobbyists, as well as vendors, and suppliers. A company that automates its due diligence system quickly realizes benefits and efficiencies. CCOs uniformly report that third-party automation platforms enable the CCO and compliance staff to devote more time to other compliance issues. A CCO has to explain this to senior management and the board and must do so with confidence and resolve.

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