Operationalizing Compliance – Natural Partners and Breaking Down Walls (Part I of IV)

by Michael Volkov

An effective compliance program is built on internal coordination and relationships. Applying the Justice Department’s terminology, an effective compliance program is one that is operationalized. At first glance, you may think this is something new. It is not.

The Justice Department’s adoption of the term “operationalized” is meant to distinguish between a compliance program that exists on paper versus a compliance program that is implemented and operating.

This is no a simple accomplishment or one that can be achieved in a short period of time. Instead, a Chief Compliance Officer has to recognize from the start (or early on) that a compliance program that operates by itself or among the compliance staff is destined to fail.

An effective compliance program depends on business accepting responsibility for compliance as an important element of their job. As a compliance manager for China told me, “If I do not take responsibility for compliance in China, no one will.” It is one thing to say that, but it is another to carry out your duties with compliance in mind.

When the business side of the company understands its compliance obligations, that is an important first step in the process of transforming your compliance program from a paper program to an effective program. But that is not the end of the story nor all that is required.

An effective compliance program also requires careful coordination with related functions needed to leverage compliance resources and activities to promote an ethical culture and mitigate risk.

A CCO knows who his/her natural partners are in this area. They include the company’s internal legal department, human resources, internal audit, financial operations, human resources and information technology. If a company has a robust security department, a CCO has to expand its band of brothers and sisters to include security.

Like world diplomacy, a CCO has to use his/her interpersonal skills to convince related functions to join together to implement important compliance policies and procedures.

Just like any significant diplomatic mission, the first step in this process is to create an appropriate structure or set of procedures to govern the creation of an internal compliance committee. This is perhaps the most important compliance structure that is needed – a committee committed to operationalizing a company’s compliance program through collaboration and coordination with each important function.

The compliance committee should be established with a charter, and the CCO should be the chairperson of the committee. Each important function should be represented on the committee to ensure that issues can be addressed and communications across the organization are enhanced.

With the committee in place, and with each function represented, the CCO has to build a unified front to break down the compliance silos and hopefully prevent any operational walls from developing between or among the related functions.

A CCO has to get the buy in from each of the representatives. This can be difficult when the representative from a function views itself as the one sand only representative to handle responsibilities in its domain. To convince them, a CCO has to explain that coordination with the compliance function will leverage the function’s resources and ability to operate efficiently.

For example, if you consider the important issue of training of new employees. The HR department often carries out this function but in some cases I have seen compliance officers assisting in training of new employees. Depending on HR resources, a compliance department may be able to help HR by conducting new employee training or parts of the program.

Conversely, when a CCO has to conduct an internal investigation where there may be related HR issues with potential code of legal violations, the investigative team may include a compliance representative and an HR staff member. In this case, the CCO is able to leverage investigative resources by collaborating with an HR staff member. Given the experience of HR staff in conducting employment-related investigations,. HR staff members are natural partners with compliance staff when conducting internal investigations.

In this four-part series, I intend to examine some specific issues that arise when a CCO seeks to operationalize a company’s compliance program. A CCO must be willing to embrace diplomacy, collaboration, and compromise to achieve the compliance nirvana – an effective ethics and compliance program.

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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Michael Volkov

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