Challenges in Global Compliance Operations: Structure and Responsibilities (Part I of II)

Global companies face ever-increasing challenges when building and implementing global ethics and compliance programs.  From my vantage point, the set of challenges can be different depending on the industry.  Global regulated companies, such as pharmaceutical, medical device or financial institutions, face a different constellation of challenges than a global manufacturing company.

Notwithstanding the risk and compliance differences among the specific industries, there are a number of common challenges in any global ethics and compliance operation.

Structure: Global ethics and compliance organizations should mirror the company’s business operations.  In other words, if the company is divided among headquarters, regional and local business operations, the compliance structure should resemble the business operation.  This rule, however, is less applicable to manufacturing operations, unless the manufacturing company is heavily regulated.

In this three-tiered system, the responsibilities have to be divided among headquarters, regional and local offices.  These responsibilities will differ for each level.  Each component will be responsible for interfacing with the business at the headquarters (board and senior management), regional (board and business management), and local (business manager).

Headquarters: For efficiency reasons, some functions should be managed at the headquarters level, including ethics and compliance policy management, design and enforcement of compliance controls, risk and compliance program assessments, auditing, internal investigations and design of a training program.  Some issues may bubble up from the local compliance office to the regional office, and ultimately to the headquarters level.  Most issues, however, that arise from the local level will be resolved at either the local or regional level.

The headquarters office should bring together the compliance organization for an annual meeting to share best practices, plan for the upcoming year and reinforce the operation of the ethics and compliance program as a global, unified team.

Regional:  A strong regional team depends on an effective regional leader who, in turn, reports to headquarters senior compliance executives.  The regional leader, in turn, has to be supported by a relatively small team of effective ethics and compliance professionals.  The effectiveness of a compliance program, in reality, depends on the dual role of the regional leader and team, and their ability to maintain efficient relationships with headquarters and local compliance professionals.

A regional ethics and compliance team has to provide prompt support to local compliance officers.  When an issue arises that they need to address, regional compliance officers have to prioritize a prompt resolution of such issues to ensure that the business is well served.  A local compliance officer’s relationship with the business in a country depends on the transparency, honesty and support they provide to the business. In this regard, regional compliance officers are critical in supporting local compliance officer efforts.

Local:  The rubber meets the road when it comes to the performance and relationship of local compliance officers (assigned to a specific country).  The local compliance officer’s effectiveness is proportional to his/her proactive efforts to engage and support business staff.  This does not mean that they should agree to everything the business wants to do but local compliance officers have to engage the business, find win-win strategies to promote both the business and compliance, and facilitate the business’s overall compliance with relevant policies and procedures.

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