The second day in our 3-part series focuses on day-to-day challenges facing compliance professionals.
How can senior management encourage employees to come forward with compliance concerns?
Employees must see that others have come forward without retaliation, whether in the open or anonymously. Examples can be persuasive. Self-interest can also be a motivator, as by showing that a compliance problem that is ignored may ultimately come back to hurt the employee (e.g., a rampant theft problem, the perpetrator known to many by unreported, that ultimately results in the closure of a plant and the loss of jobs).—Theodore L. Banks, Partner, Scharf Banks Marmor LLC www.scharfbanks.com
By talking about previous incidents and by praising those that came forward in the past. Like with all things in life, you will only be able to remove the stigma from being a whistleblower, by talking about it and if the senior management then also acknowledge and praise such whistleblowers it will soon become clear that it is the right thing to do.—Paul Zietsman, Trade Compliance Lead Specialist, Sadara Chemical Company Connect with Paul on LinkedIn
They can encourage employee reporting by living up to non-retribution policies, re-enforcing that the leadership want to know if something is askew, and taking action when reports come in. Making the company aware of the changes that happen due to reports also reinforces that opinions count, and lead to change for the better. —William (Bill) Kruse, Vice President- Law & Counsel/Regulatory Compliance Officer, Gallup Connect with Bill on LinkedIn
Tell them about other concerns that have been raised and how they were addressed. Staff want to see that something will be done if they are to stick their heads above the parapet.—Sally March, JD, CCEP, CCEP-I, Director, Drummond March & Co. Connect with Sally on LinkedIn
By not telling them that they have a duty to do so would be a good starting point! Let’s face it most calls to reporting lines are not compliance issues, they are HR issues – somewhere between 70 and 75% is the benchmark. This should be telling organisations something and they should be listening to what those numbers are saying. it’s not about compliance it’s about the way that people are feeling and unless leaders are able to approach this issues with some empathy and care, then they won’t encourage anyone to come forward.—Jane Mitchell, FRSA–Director, JL&M; Chair, eCP Connect with Jane on LinkedIn, Follow Jane on Twitter
How can the CEO help a compliance and ethics program?
Participate!! – lead by example! Successful commanders in the military take their physical fitness test first, go qualify on a weapon at the range first, take mandatory annual training first, take his or her flu shot first – and then tell their troops that it is important. CEOs should sign certification of compliance with the Code of Conduct first, take corporate training first, be the first to address misconduct or non-compliance and publicly state that it will be addressed.—Amy Hutchens, JD, CCEP, President and Founder at CLEAResources, LLC www.clearesources.com
By visibly supporting and constantly reinforcing that the organisation is committed to values-based leadership and purpose.—Jane Mitchell, FRSA–Director, JL&M; Chair, eCP Connect with Jane on LinkedIn, Follow Jane on Twitter
Demonstrate leadership by example and talk about tough decisions and how they were made. If a tough decision was not visible to the entire staff, they need to know about it.—Sally March, JD, CCEP, CCEP-I, Director, Drummond March & Co. Connect with Sally on LinkedIn
A. Appoint a senior compliance and ethics officer that has both the soft skills and the tactical knowledge to be able to succeed.
B. Empower the senior compliance and ethics officer with an appropriate budget and reporting responsibility to the Audit Committee of the Board of Directors.
C. Include the senior compliance and ethics officer in meetings of the executive team and ensure that his/her input is solicited and heeded.
D. Encourage investigative processes that are necessary to create a foundation for the program; and support the discipline recommended by an empowered compliance and ethics committee.
E. Be a role model for the compliance and ethics program by taking the training first and modeling the correct behavior (I.e., turning down gifts or trips offered by third parties).—David Birk, JD, Black Belt Compliance, LLC www.blackbelt-compliance.com
The CEO must set the example for the program to have any chance of success. Her or she must visibly support the program by communicating directly with all employees and by making sure that everyone in management gets the message that no business goal justifies a compliance breach.—Theodore L. Banks, Partner, Scharf Banks Marmor LLC www.scharfbanks.com
They can, and they can also hurt. They need to reinforce the mission and purpose of doing business ethically as often as possible; truly leading by example.—William (Bill) Kruse, Vice President- Law & Counsel/Regulatory Compliance Officer, Gallup Connect with Bill on LinkedIn
A CEO should, like the President of a country fulfill his role as Commander in Chief when the country is at war, also serve as the Commander in Chief for its company’s Compliance Program. Like the President being informed by his Generals on a regular basis, the CEO should also have a close relationship with his CCEO. He should know where his company stands on Compliance, should be involved on important Compliance decisions and should have faith in his CCEO. Like the President of a country, he should also be seen in public, passionately supporting the cause of Compliance without any hesitation. The CEO should be clear in everything he does or say that compliance is one of the highest priorities for the company as its very existence could depend on it.—Paul Zietsman, Trade Compliance Lead Specialist, Sadara Chemical Company Connect with Paul on LinkedIn
They need to understand the importance of compliance for business success, and that business ethics is not something “mushy” that real business people don’t need to worry about. They also need to understand the specific requirements of the Federal Sentencing Guidelines, federal law, state law, and how they may become personally liable for compliance breaches.—Theodore L. Banks, Partner, Scharf Banks Marmor LLC www.scharfbanks.com
Tone from the Top, or Tone from the Middle?
Can’t have a successful program without both.—Theodore L. Banks, Partner, Scharf Banks Marmor LLC www.scharfbanks.com
It is important to realize that there is downward forces and upward forces in an organization. The tone from the top is usually the strongest force and therefore forms the cornerstone of any successful compliance program. But when this force is not strong enough to boost your compliance program, you can always resort to the middle and leverage the force of their pressure to move the top to support the compliance program.—Paul Zietsman, Trade Compliance Lead Specialist, Sadara Chemical Company Connect with Paul on LinkedIn
I’m a huge proponent of “Tone in the Middle”. Getting to the middle managers and front line managers is critically important for achieving a compliant and ethical culture. Most employees report to first line and middle managers so what they say and do is likely to be more important to them than what they see and hear from the senior level folks. Middle managers will also become senior managers at some point, and as a result will be easier to inspire going forward.—Al Gagne, CCEP, Former Director Ethics & Compliance, Textron Systems Corporation (retired) Connect with Al on LinkedIn
I know “Tone from the Middle” is in right now, but it’s really just a cute way of saying that ALL managers, from the CEO to the newest manager who oversees the clerical pool are all responsible for setting the right example. Leave it tone at the top.—William (Bill) Kruse, Vice President- Law & Counsel/Regulatory Compliance Officer, Gallup Connect with Bill on LinkedIn
What is the greatest misperception about compliance?
That it is a program that the Legal Department owns or runs. Many lawyers have the skills needed to be successful compliance officers, but many do not. Compliance is not “the lawyer said we can’t do that.”—Amy Hutchens, JD, CCEP, President & Founder, CLEAResources, LLC www.clearesources.com
That compliance officers have some sort of protected status. In contrast, there seems to be a relatively high mortality rate.—Theodore L. Banks, Partner, Scharf Banks Marmor LLC www.scharfbanks.com
That it does not extend to values/principles. Compliance without the appropriate discretionary, caring and reasonable behaviour will not keep you out of the trouble.—Jane Mitchell, FRSA–Director, JL&M; Chair, eCP Connect with Jane on LinkedIn, Follow Jane on Twitter
That Compliance ensures compliance with laws and regulations and therefore has the accountability for compliance. The truth is however that compliance belongs to the business and the business therefore has accountability for compliance. The Compliance function is merely a facilitator of compliance and in certain instances an assurance provider to the board.—Paul Zietsman, Trade Compliance Lead Specialist, Sadara Chemical Company Connect with Paul on LinkedIn
The greatest misperception about compliance, in my view, is that the corporate compliance department “owns” and is responsible for compliance. Corporate compliance is the responsibility of each and every department and individual working for an organization. The true role of a corporate compliance function is to serve as a mentor and coach for the rest of the organization – to guide, educate, encourage and support the organization in working towards a culture where each individual takes personal ownership of compliance and incorporates compliance into their daily work.—Gwendolyn L. Hassan, Managing Attorney-Compliance & Regulatory, CNH Industrial America LLC Connect with Gwen on LinkedIn
I believe the greatest misconception about compliance is that some people view compliance as “optional”. Compliance is non-negotiable and any behavior to the contrary should never be tolerated.—Al Gagne, CCEP, Former Director Ethics & Compliance, Textron Systems Corporation (retired) Connect with Al on LinkedIn
That compliance officers like to say “no”. Another misperception is that more rules and audits lead to compliance. More rules can lead to more creative evasion unless employees are engaged and want to do the right thing.—Sally March, JD, CCEP, CCEP-I, Director, Drummond March & Co. Connect with Sally on LinkedIn
The biggest misconception is that the compliance department exists to say “no” all the time. The Compliance Department should be a partner in the business, helping it to grow in legal and ethical ways. A well-run compliance department is one in which the business knows it has any ally who will help the company to be profitable, with the added protection that there won’t be trouble later.—Kristy Grant-Hart, Chief Compliance Officer, United International Pictures Connect with Kristy on LinkedIn
The greatest misconception is that we are all just “Dream Killers”. We don’t want to make sales or growth hard. We just want to help the company achieve profit in a reasonable and safe manner that won’t lead to costly back-end litigation or worse.—William (Bill) Kruse, Vice President- Law & Counsel/Regulatory Compliance Officer, Gallup Connect with Bill on LinkedIn
Compliance officers routinely hear comments from the executive suite and elsewhere that compliance programs create added costs rather than business value. This attitude can result in difficult choices between “paying” for compliance or “investing” in customer-facing initiatives. In fact, if compliance programs are properly supported by executive commitment and are designed appropriately for the enterprise, the addition of these programs can return far more than their cost to the corporate culture, professionalism and reputation.—David Birk, JD, Black Belt Compliance, LLC www.blackbelt-compliance.com
Interested in learning more? Each expert that contributed to this week’s posts is also speaking at our Annual Compliance & Ethics Institute, Sept. 14-17 in Chicago, Illinois. For more information, visit www.complianceethicsinstitute.org