Making Corporate Compliance the Fabric of the Organization

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It’s taken some time, but organizations are beginning to view their compliance function as no longer just a cost center, but instead as a value center that protects revenues and reputation and increases performance. Many of our clients are telling us, and news reports and findings confirm, that organizations are hiring ethics and compliance staff at a clip at least as fast as before the recession. Still, compliance leaders have to fight for the budget to build their teams, as much in terms of technology and process as in headcount.

These are topics near and dear to me and to The Network as we help organizations improve their ethics and compliance programs with integrated corporate compliance software, aimed at driving employee engagement. I have come across a number of articles recently that stand to prove my point that compliance is indeed starting to gain a seat at the table and find traction using compliance best practices.

Two articles in the The Wall Street Journal, “More Compliance Chiefs Get Direct Line to Boss,” and “The Hottest Job in America: Compliance Officer,” make some great points about how the threat of increased enforcement and the realization that compliance can make a proactive difference are placing compliance chiefs in a new and brighter light. CCOs and CECOs (or as the WSJ authors say, “chief in-house watchdogs”) are evolving their focus more on what one chief compliance officer calls “preventative law,” a proactive approach that works to educate and train managers and employees alike on risks they may not know exist.

We’ve written before about the stress that’s put on compliance chiefs – every day when they report to work, they are held accountable for the good-standing of their company. Many can’t take the stress and just leave. Many feel disconnected from the executives and directors of their organizations and are left to flounder on their own. Many feel that compliance at their organization is treated just as “veneer,” as one former risk manager put it. Without support, resources, a real degree of accountability and oversight, CCOs are not only stressed out – they are set up to fail.

However, that notion of accountability is especially important since companies are encouraged by legislators and regulators to give their CCOs a more direct line to the board of directors, with only a dotted line to chief executives. By doing so, BODs are giving more emphasis to their compliance initiatives. Integrated corporate compliance software, like The Network’s Integrated GRC Suite, gives CCOs the metrics they need to make a case before the board and to illustrate the need for better policies, better training, better ethics and compliance related communications, better risk assessments, and better reporting capabilities.

Thank heavens, “compliance” is meaning something more like “good business” rather than “business cop.” Companies are taking heed of regulators like the DOJ and SEC when they say that the enforcement whip is getting ready to come down. Organizations are beginning to see that well-implemented compliance initiatives, supported by enterprise-level corporate compliance software, sound policies, and extensive training and communications programs, have at least partially shielded many other ne’er-do-well organizations from full-on prosecution. Enforcement agencies, through actions such as deferred prosecution and non-prosecution agreements, have blessed good-faith efforts and focused instead on rogue employees.

In the end, companies are becoming enlightened to the fact that compliance is about prevention and protection, and there is great value to that. Finally, leaders are getting the message that compliance isn’t just a cost center. Taking proactive compliance measures and gaining a greater degree of defensibility is starting to pay off and being seen as an asset. Think about it: What could all of those companies, for instance, subject to 2013 FCPA settlement actions of almost three-quarters of a billion dollars, have done with that money?

Paul McGreal, a dean of the University of Dayton law school, said it really well in one of the WSJ articles: “There’s a recognition that to be effective compliance has to be knitted into the fabric of an organization.” Knitted, tightly woven, baked-in compliance. It’s a value, not a cost, that makes a real difference.