Leadership Support Provides Compliance Credibility
We often hear the compliance refrain on the importance of tone-at-the-top – meaning when the board, the CEO and senior executives demonstrate by communications and by conduct their commitment to a culture of ethics and compliance.
This single idea carries with it enormous importance to the success or failure of a compliance program. A positive tone-at-the-top permeates every aspect of a compliance program and specifically emboldens the chief compliance officer and his/her authority in the organization.
A CCO has to devote time to ensuring that the board, CEO and senior executives consistently support the CCO’s efforts. To accomplish this, the CCO has to communicate often with the board and senior officials, report on ethics and compliance program developments, and reinforce the importance of their participation to the ultimate success of the company’s ethics and compliance program.
Building on this asset, the CCO has to strategically deploy this support when necessary to accomplish various tasks. Consider this example – a CCO is deploying a new third-party due diligence automated platform. To be successful, the business has to become familiar and comfortable with the new automated tool. Before initiating this new due diligence tool, the CCO needs the support and approval from the CEO and senior management. Without such support, the CCO’s likelihood to succeed will diminish.
In meeting with managers and employees responsible for implementing the automated due diligence system, the CCO now has an important card to play when there is resistance to change. The CCO can specifically cite the fact that the CEO has committed to implementing the automated due diligence tool and expects it to be done. Suddenly, the dynamics in the meeting will change – the possible resistance will quickly melt under the CEO’s support for the CCO’s initiative. The managers and employees will fall in line and support the new initiative.
My example is not meant to highlight a threat or fear in persuading managers and employees to back a new operational and compliance initiative. To the contrary, a CEO’s support for compliance is important for the CCO to cite when needed to move the compliance ball.
This simple example is just one of many ways in which a CEO and senior executive support for ethics and compliance advances a company’s ethical culture. A CFO who understands the importance of compliance will ensure that financial controls are operating appropriately, will reinforce compliance with these controls, and most importantly will act to ensure the accuracy of Sarbanes-Oxley certifications.
Every senior executive acts with the same degree of importance and impact over the functions that he or she supervises. When senior executives support the company’s ethics and compliance program a CCO can coordinate with their support to leverage the CCO’s influence and authority. It is a critical lifeline for a CCO.
Those CCOs who do not have the support of their CEOs and senior executives will face a tough assignment in designing and implementing an effective ethics and compliance program. In the absence of such support, a CCO has only one alternative (other than leaving the company) – create a compliance committee, build a consensus of support and seek to build support by communicating to senior management, the CEO and the board the importance of compliance projects and initiatives. It is a difficult task and will slow down the CCOs progress in building an effective ethics and compliance program.
For those CCOs who have the support of their boards, CEOs and senior executives, they should count their blessings, coordinate with such supporters and leverage their support to accomplish their compliance mission.