Compliance Titles and Responsibilities
Let me start with yet another profound grasp of the obvious — leadership requires many important interpersonal and intellectual capabilities. I do not intend to list the important ones right now but leadership requires an understanding of influence and the use of symbolic actions that may resonate through an organization and its constituents.
Effective leaders understand know that symbolic acts drive organizational behaviors. Symbolic actions impact other leaders and employees within an organization. It is a critical component to leadership in any company.
An organization is a micro-confluence of forces: actions, responsibilities, inter-dependent functions and communication. in this context, what may appear to be small things, may in fact translate into a larger issue with significant impact.
All of this is a long way of saying something quite obvious for compliance professionals — titles matter. An officer’s title sends a message within an organization — a title connotes responsibility, authority, and ultimately influence and impact.
Within the context of the micro-organization’s social order, an officer’s title will carry influence or lack thereof. Remember, the Justice Department’s Compliance Guidance has emphasized three critical concepts for chief compliance officers: independence, authority and resources.
To this end, a CCO’s title has to be considered carefully. I have consistently advocated that CCOs should carry the title of Chief Ethics and Compliance Officer. Of course, this would complicate my simplistic use of the abbreviation “CCO” to “CECO,” but aside from my stumbling typing skills (which is evident to readers of this blog), my point is that CCOs should carry the Ethics responsibility with their titles to emphasize their responsibility for a company’s culture. After all, as I repeatedly state, a company’s most important internal control is its culture.
My position, however, is flexible enough to recognize that some larger global companies have separate the ethics and compliance function to create separate positions — a Chief Ethics Officer and a Chief Compliance Officer. That is fine if the size of the organization justifies two separate positions and units within the ethics and compliance set of responsibilities.
Beyond this issue, however, I continue to observe problematic title assignments. The most senior compliance officer cannot be relegated to a title of “Director of Ethics and Compliance” or “Director of Compliance.” Sometimes companies downgrade the senior compliance officer title as a means to pay a lower salary. Talk about pennywise and pound foolish.
By relegating the senior compliance officer to the title of a “mere” director, the organization is clearly sending a message — first, compliance is not so important to the organization; second, compliance is not important enough to be a member of the C-Suite.
I pity the poor compliance officer who will be treading organizational water for most of his/her tenure at the company. For some, that is a livable situation. For most compliance officers. they know deep in their hearts that they will end up looking for a new job where the compliance function operates with appropriate compensation, authority and influence.
It is high time for companies to give compliance officers their due. If the Justice Department’s guidance means anything, CCOs should carry with them a title commensurate with the importance of the ethics and compliance function, should be fairly compensated as a member of the senior executive team, and should have the authority and independence to execute their responsibilities.