The Critical Relationship — Compliance and Business
Compliance officers and business managers need each other, whether they like it or not. The CCO has to enlist the business to own and take responsibility for compliance. Compliance cannot ensure compliance throughout an organization. If the business takes ownership of compliance, the organization has a chance to achieve an effective ethics and compliance program. If the business avoids such responsibility, the company might as well forget about it – CCOs will be chasing business each and every day at the company with no success in sight.
In the end, a CCO and the business have a responsibility to each other and key company stakeholders. A CCO has to build a relationship, and so does the business. This is not done through the power of persuasion. If the business does not know why compliance is important, the business is doomed to fail, probably in more areas than just compliance.
Business leaders know that compliance is more than just a compilation of trite compliance-focused expressions. Every business knows that compliance is a must have – they either have the will to make it happen or they are just okey-doking the CCO about their commitment to compliance. CCOs who face resistance or business failure to assist have to hold those business leaders accountable. CCOs are not working to just make friends – CCOs have to build lasting compliance partnerships, where each party finds mutual benefit from compliance.
CCOs who tentatively approach business leaders to take ownership of compliance are start5ing off on the wrong foot. A CCO that is “empowered and authorized” by the board and the CEO to execute has to act consistent with this mission. Tentative requests for cooperation and assistance are by definition doomed to fail because they provide a business leader a quick escape hatch. A CCO who confidently approaches business leaders to build a relationship projects the organization’s commitment to an ethics and compliance program.
If the business representative avoids the relationship or fails to come through, the CCO must communicate this fact to the business leader and if necessary to senior executives for accountability purposes. This is not a situation where the CCO is perceived as a “tattle-tale,” but has to report a failure to execute. An organization is only able to operate when information is reported as needed to ensure efficient operation, achievement of goals and accountability for individuals.
Business managers who view compliance through the narrow prism of “obstacles to business” or “cost centers” do not understand compliance. While CCOs can explain the need for effective ethics and compliance functions, a CCO should never have to justify his/her mission and why the business has to join the effort. It is no longer acceptable to avoid or ignore compliance. Those organizations and individuals that do so – will eventually suffer the consequences.
By that, I am not suggesting that government prosecutors and regulators always catch up to non-compliant companies – instead, I am suggesting that a company with an attitude of non-compliance will achieve, at best, a short-term gain with a long-term negative result. In other words, the inevitable repercussions of non-complaint business leaders and organizations is punishment in the marketplace, leading to consequences for all – loss of position, rise in misconduct and negative financial performance.
Business leaders have quickly learned that corporate culture, ethics and compliance and internal controls are vital functions for success. A company cannot avoid these issues given the demands by key stakeholders – federal, state and local governments, shareholders, consumers, communities and others.
Business leaders know that a company’s most valuable intangible asset is its reputation – any harm to a company’s reputation in today’s marketplace and society can be devastating and take years, if not decades to restore. Business leaders who ignore this new paradigm will suffer the inevitable rejection by company leadership, shareholders and consumers.