The Real Purpose(s) Of A Compliance Program

by Michael Volkov
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purpose2You can label this posting as another in the series of profound grasps of the obvious.  Chief Compliance Officers rely on public relations skills – they have to convince their organizations to embrace a culture of ethics and compliance.

The key communications challenge is to move beyond compliance to protect against a government enforcement actions.  A message of fear of government enforcement is not a positive message and has limited impact.  People respond to positive messages (except in political campaigns which are predicated on cynicism).

Most officers and employees believe in their companies and want to be part of an ethical and profitable company.  Building on that concept, a CCO has to communicate a positive message that ethics and compliance is:

(1) a significant contributor to the company’s bottom-line profitability; and

(2) an important mechanism to prevent and detect a potential violation.

CCOs have to change the dialogue in an important way.  Too many CCOs used fear as a way to wake up their boards, senior managers and investors concerning the need for to focus on compliance improvements.  That message is now stale and may have been appropriate in an earlier context.ethics5

CCOs have to show bottom line contributions of their compliance programs.  It is critical in this area for CCOs to build as many alliances as they can with senior and middle business managers through the sharing of information and insights as to business practices, efficiencies and proactive planning.  CCOs who limit their message to fear will restrict their opportunities for growth and will only improve their condition when the company is experiencing government investigation threats.

Moreover, CCOs have to convince senior leaders and the board that the ethics and compliance program is important to preventing and detecting violations before they grow into significant problems.  The recent Weatherford settlement is an important reminder of how bad a compliance culture can become – Weatherford is a poster child for a culture of lawlessness and profits at any cost.

A compliance culture is an important protection of the company’s goodwill and integrity.  In the absence of a compliance culture, companies are at risk of falling into the trough of Weatherford-type conduct – a rampant lawlessness of bribery and circumvention of export controls and sanctions.

facilpayment2More CEOs are understanding the importance of ethics and compliance.  They are being educated.  As the economy improves next year and company financials become positive, more CEOs will allocate resources to improve and advance their ethics and compliance programs.  CCOs have to recognize that this will be a time to advance their agendas and consolidate their gains.  Compliance and ethics programs have to become more institutionalized in the fabric of every company and protected from cutbacks during eventual downturns.

CCOs have risen to the challenge before and I expect them to do so again.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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