CCOs and Compromising Positions
The chief compliances officer is the guardian of a company’s most important intangible asset – its culture. Everyone at a company is responsible for a company’s culture; the board of directors, CEO, senior executives play an important leadership role and have to exercise responsibility for preserving and promoting a company’s culture.
CCOs, however, are responsible for a company’s ethics and compliance program. I have regularly advocated for CCOs to focus their work to include oversight, measurement and promotion of the company’s culture. Like any other aspect of an effective ethics compliance program, CCOs have to add or replace items on its dashboard that are relevant to its culture.
A recent Ethics Resource Initiative survey (Here) confirmed increasing pressure on employees to circumvent company rules and controls. No one is surprised by this trend. Pressure on managers and employees has been increasing for years. History is replete with instances where CEOs, senior managers, general counsels and others have engaged in misconduct, sometimes as leaders of illegal conduct and other times as willing participants.
There is pressure on corporate actors to generate profits. The slavish devotion to quarterly financial reporting creates inevitable pressure on senior leaders to cut corners, ignore business ethics and maintain a singular focus on financial reports. Such a narrow focus inevitably creates an environment in which misconduct is much more likely to occur, corporate scandals are likely to occur and government investigation and prosecutions are a significant risk.
In such an environment, CCOs are likely to face a real professional dilemma. CCOs will face pressure to compromise their own position as guardian of the company’s culture. It is in these critical times that CCOs have to speak up, calculate when and where to raise concerns, and how to navigate the corporate governance system to ensure that business ethics and culture are included in any decision-making process.
CCOs face a difficult choice – if they speak up, they may be marginalized; if they keep their mouth shut, they are sacrificing their responsibility to key stakeholders to protect and promote the company’s culture. Every CCO has faced this quandary – even in ethical companies, CCOs may face these issues. In the less ethical companies, CCOs may be heard only when senior management believes it is “convenient,” meaning there is no “cost” to the business.
Every CCO has to ask themselves two important questions:
- Is this an issue that requires me to speak up?
- If I do not, what are the implications for my role in this company?
Most, if not all, CCOs do not find this situation to be a hard question. Many CCOs have responded to these situations by speaking with their feet – and leave the company. It is unfortunate that CCOs are limited to this solution – it is not fair to the company, the CCO and ultimately company shareholders, the real party in interest.
CCOs often face these pressures and sometimes may give in to the pressure based on the reality that perfection in the corporate governance world is impossible to achieve. But if the CCO does not stand up, who will? Is it fair for a CCO to always speak as the conscience of the company?
We all hope that CCOs never are put in a compromising situation. CCOs have a significant burden to carry – they speak for a company’s culture and have to adhere to a company’s values and principles. If the CCO is compromised, you can rest assured that other C-Suite leaders have embraced circumvention of the company’s ethical culture.
In this case, CCOs may have no option other than to speak up, advocate his/her position, and continue to promote the company’s culture. If the CCO’s influence is diminished as a result of his/her advocacy, the CCO has to continue to act in accordance with ethical principles. A CCO has to continue to demonstrate the importance of integrity. A company that retaliates or compromises integrity may cause the CCO to leave the company. It is an unfortunate result but it reflects the reality of today’s corporate governance world.