Compliance officers need clout to positively influence companies
One reason I became a lawyer was because I was just not a ‘numbers guy’. I did not want to do mathematics for a living. But there is an exception. Throughout my compliance and ethics career I’ve come back to ‘numbers’ of steps, tools and ideas on how to do things. This started in 1989 when I wrote an article for the Association of Corporate Counsel’s newsletter on 15 steps for building a state-of-the-art compliance program. I’ve since raised the number to 501, explained in my book 501 Ideas for Your Compliance and Ethics Program.
So why offer a list of 10 steps for empowering compliance and ethics officers (CECOs)? Why focus on empowerment? Because you have to insure that compliance and ethics programs do what they are supposed to do: prevent and detect misconduct in companies and other organizations. As the US Sentencing Guidelines make clear, actual compliance is the job of all managers, not just the CECO. But there is also truth in the saying: ‘If everyone is supposed to feed the dog, the dog starves.’ In other words, if everyone is responsible, no one is responsible. The CECO is the champion who manages the program and makes sure it moves forward and covers the various risks and elements for it to be effective. Just as a company needs a chief financial officer even though every manager is responsible for the company’s financial health, so too companies need someone in charge to initiate a compliance program.
Top dog
But if all that is needed is a cheerleader, why not just have a CECO as a middle manager in HR or a mid-level lawyer in the legal department? There are a number of compelling reasons why the CECO really needs to be a ‘chief’ officer at executive level and report directly to the board of directors. First, the CECO must represent the program to the other senior managers; they are the ones who make the most important decisions in the company and thus they’re the most important from a compliance and ethics perspective. Moreover, the record of who is most likely to get a company in trouble is sobering: It is the top officers, including the CEO, CFO and general counsel who show up most in such things as the reports of the President’s Corporate Fraud Task Force, and whose misdeeds have the greatest impact on a company’s reputation. A lower-level compliance manager would not have the seniority to intervene, and in fact, would not even know what was going on in the executive suite. It is also essential when dealing with the government to have a CECO whose position in the hierarchy and responsibility make the company’s strong commitment clear.
Of course, the CECO needs to be a strong leader of high integrity, but what else is needed for the CECO to be able to carry this weight? A white paper issued by Ethics Resource Center, the Society of Corporate Compliance and Ethics (SCCE) and other compliance and ethics organizations, ‘Leading corporate integrity: Defining the role of the chief ethics and compliance officer’, lays out all of the basics. The broad points can be reduced to this acronym: ICEP (pronounced ‘I keep’ as in ‘I keep my job as CECO’), standing for independence, connectedness, empowerment and professionalism. What are these elements?
Independence is the ability of the CECO to do the job based on professional judgment, without interference, and to insure that the company acts legally and ethically, even when others may prefer another course.
Connectedness is a very important qualification of independence. Consider that the ultimate in independence is irrelevant. A CECO could be 100 percent independent, meaning he or she has no involvement in anything important and no idea what is happening in the company. Connectedness means the CECO attends key meetings, talks with people throughout the company and is part of what is happening.
Empowerment is in getting the job done. The CECO does not have to beg for people to listen; this officer has the clout to make things happen, or to make them not happen as the case may be. A CECO is not simply an adviser, but has actual authority.
The fourth general element is professionalism: The detachment to view what the company is doing from a perspective outside of the company itself, and strong professional ethical standards that insure the CECO will act in a way that serves the public, the company, and the compliance and ethics profession.
How do you make sure your CECO meets these standards? This is the part of the compliance and ethics program where commitment – or its absence – is most visible in a company. But if yours is a company that aspires to best practices in your compliance and ethics program, take the 10 step path to CECO empowerment.
