All for One and One for All – The Three Musketeers, Alexandre Dumas

The famous swashbuckling adventure of The Three Musketeers should inspire chief compliance officers to pursue an important concept – the need for teamwork and collaboration is imperative for all compliance programs.  We all know the pernicious effect that operational silos can create for CCOs and their need to collaborate with operational partners in the company. 

If you give a CCO truth serum and ask which internal function obstructs compliance efforts to implement an effective compliance program.  In our experience at the firm, we have learned of CCO frustrations created by Legal, Human Resources, Finance, Procurement, Security, Internal Audit, and others.  Now, this is not an exhaustive list.

Over ten years ago, we frequently heard how Legal Departments often frustrated compliance from accomplishing its mission.  These turf battles were legendary.  Recently, the disputes between legal and compliance have been replaced by recognition that both operations can reinforce successes – win-win results if they commit to working together.  The importance of compliance independence from legal has been long-settled and it is rare to observe difficulties between these two critical functions.

At the top of my list, however, are two important functions that regularly resist cooperation with compliance.  In their respective opinions, HR and Finance create operational silos built on the need to confine their HR and finance expertise and avoid sharing of data with compliance and coordinating on joint projects. 

Silos are a direct threat to a company’s compliance program.  By building obstacles to collaboration, silo leaders frustrate information sharing, joint responsibilities, ownership of issues and mutual efforts to advance shared objectives. 

In response to silo situations, CCOs may avoid projects that require cooperation with the siloed-function. By doing so, the CCO effectively prevents the company from implementing an effective ethics and compliance program.  CCOs need to develop a two step process – first, build political support for the compliance function by demonstrating successes with other non-siloed functions; second, seek senior management support to approach the siloed operation and establish specific needs for cooperation and coordination.

In the face of specific coordination requests, bolstered by the support of senior management, CCOs should press the situation.  If they are able to complete certain tasks, the CCO should continue to build a coordinated effort.  If the CCO continues to face resistance from the siloed function, the CCO should document his/her efforts, and the uncooperative responses.  Once a record is established, CCOs have to report the situation to senior management, and if needed, to the board.  While some may fear being labeled as a tattletale, professional cooperation and resistance is imperative to the company and its stakeholders.  A siloed function has to be called out and held accountable for a failure to cooperate.

The existence of silos in a corporate landscape is more common than CCOs may acknowledge.  My two primary culprits – HR and Finance – resist cooperation by claiming that they hold a special expertise that cannot be matched by compliance.  While there is no question that HR and Finance are responsible for important functions and internal controls, a silo undermines important coordination responsibilities needed to leverage limited resources to maximize compliance, finance and HR performance. 

The Justice Department’s latest compliance guidance has underscored the need for operationalization of all relevant functions, with specific emphasis on the coordination of HR and compliance functions.  The same goes for compliance and finance functions.  Each function has important overlaps in responsibilities – companies that ignore these overlaps and permit silos to continue will ultimately suffer severe misconduct, deteriorating corporate culture and possible government investigation.