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Compliance Missed Opportunities: CCOs and HR

A chief compliance officer can get overwhelmed with responsibilities and initiatives. CCOs have a never-ending to-do list – once an initiative is finished, the CCO has to jump to another “priority.”

CCOs are responsible for operationalizing the company’s compliance program. The CCO’s success depends on the cooperation of related functions – procurement, legal, human resources, security, finance, internal audit, and information technology.

While there has been much written about the importance of operationalizing a compliance program, CCOs have to maximize the benefits of such coordination and communications. Human resources and compliance have numerous areas where the functions can and should cooperate with each other. If a CCO and the HR leader do not work together well, the company is bound to suffer harm to its compliance efforts.

One area CCOs tend to ignore is HR handling of employee complaints and possible misconduct. Typically, a CCO writes off, or even ignores, the details or data relating to employee complaints received on a company hotline. Approximately 80 percent of hotline calls relate to employee issues.

I am not advocating that CCOs dig into the specific employee complaints received on a hotline. Instead, CCOs should mine the data generally from HR reports. Such a review is important to identify potential trends and issues that may undermine corporate culture.

For example, if a specific office in a country is suffering a rash of complaints against its supervisor or another manager in the office, there is likely the need for some intervention to mitigate the ongoing misconduct. While some of the complaints may involve “petty” or relatively minor issues, the complaints may reflect a broader morale issue in the country office. If there is no response, the office’s culture may be harmed.  Again, this is not an opportunity for the CCO to inject himself or herself into HR issues in a specific office, but it is an important issue that requires coordination and communication between the CCO and the HR manager.

Employee complaints relating to discrimination, sexual harassment, inappropriate relations and unfair treatment all can reflect or create serious compliance risks. It is not rocket science to understand that employee morale and mistreatment can lead to a poor working culture where employees start to believe that “anything goes.”

Such a working environment inevitably becomes a hotbed for employee and manager misconduct. HR and the CCO have a responsibility to proactively identify these potential issues and address them, not only from an employment policy perspective but from the impact of such behaviors on the company’s culture.

To be sure, not all employee complaints reflect deterioration in culture. In fact, an employee who complains about another employee’s conduct may be doing so to protect the company’s culture. Such complaints, depending on the number and the degree, may reflect a positive ethical culture rather than deteriorating ethical culture.

A CCO should review employee complaint data for geographic, division and product/service categories so that significant trends can be identified. Employee data is an important source of culture information and CCOs need to make sure they work closely with HR to access and monitor the data.

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