The Volkov Law Group

Sometimes compliance issues are simple.  Most times they are nuanced.  This is a simple issue but it carries with it a significant message.  So here goes – where is the CCO’s office?

To clarify rather than complicate, let’s take ourselves out of the remote workplace.  In the physical office, where is the CCO’s office located?

I am a big fan of the movie Office Space and my favorite character, Milton, who is slowly but surely moved in the office building and eventually ends up in the basement.  A very funny charcter and set of events.

Let’s start with the obvious – is the CCO’s office located in the C-Suite, meaning from an organizational standpoint and a culture perspective – does the company value the ethics and compliance function? The location of the CCOs office outside of the C-Suite and the failure to include the CCO in the senior leadership team underscores the lack of importance placed on compliance.

This sounds simplistic but symbols in an organization can be very important.  A CCO who sits next to a CEO, or a CCO who sits on a different floor than the C-Suite is a powerful symbol of just how much importance the organization places on the compliance function.

If an organization is committed to compliance and makes sure that compliance is integrated into the company’s business, a CCO will sit in the C-Suite and the CCO will have a seat at the senior executive leadership table.

If conducting a risk and compliance program assessment, it is easy to pick up on that issue.  Is it a conclusive issue – no, but it sure is a good indicator of the company’s commitment to ethics and compliance. 

After answering the first and basic question, the structure of a compliance function is another indication of the role of ethics and compliance.  For example, to the extent that a compliance function sits in a legal department, shares resources with legal staff and is dependent on a company’s legal budget, often reflects the priority placed on compliance. 

If this sounds familiar, I will wager that compliance is struggling for a foothold in the organization and implementing basic compliance program elements, with an emphasis on training.  In these cases, the organization has sent a clear message – compliance is not so important, but the business is our priority with little regard for compliance. 

It is hard to watch these compliance operations because it is an unending struggle.  In the absence of a major calamity – financial fraud requiring a major internal investigation or a government investigation – a low-grade compliance program is likely to sputter along with small “accomplishments” in the overall limited framework.  After a while, ther is not that much difference between the company’s CCO and Milton in Office Space.

But there are many shades of grey between the two extremes – a full-fledged commitment to compliance in the C-Suite in contrast to the muffled compliance program operating on the edges of the company’s legal department.

It is in this grey area where many CCOs operate and where a multitude of challenges occur.  The compliance struggle is just that – a struggle.  It requires education, collaboration with natural partners, and the marketing internally of a business case for ethics and compliance.  In pushing this message, fear is not a motivator – indeed, a positive message of ethical conduct, financial sustainability and corporate mission, is the most important tactic a CCO can adopt. 

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