By Roy Snell
roy.snell@corporatecompliance.org
For 20 years I have been told that compliance is a fad that will fade. And they were all wrong. I was told by someone in enforcement about 10 years ago that he was going to stop supporting something related to compliance and that if he did, compliance programs would decline. And he was wrong. This is bigger than any one person or administration. There have been about a dozen times over the last 20 years that someone involved in our profession said some current event was going to cause compliance programs to decline and they all had something in common. They were all wrong. In fact, not only has the number of compliance professionals grown every year for 20 years, compliance programs have now spread around the world.
Well, they are at it again. This time I believe they have gone too far and have become a risk area for compliance professionals. If your CEOs listens to them and reduces their compliance resources, your company’s risk of a compliance failure could increase. I thought I had seen it all in the last 20 years but I never thought that I would see compliance pundits become a risk area. This is dripping with irony. They are telling people the need for compliance is going to be diminished under the new administration because the number of regulations could decrease. I am tempted to bet anyone that there will be more pages of regulations at the end of 2017 than there were in the beginning. If we have fewer pages at the end of 2017 it may be the first time it ever happened. But frankly, the number of pages of regulations is irrelevant. Most regulations are not even enforced. It is the settlements that matter.
The compliance officer’s workload could be reduced significantly and they would still not have enough time to get their job done. Most of the laws that are going to be changed are going to reduce bureaucratic paper work, not compliance work. The FCPA may be simplified but bribery will still be illegal. The ACA laws may be changed but they don’t apply to most compliance officers. Building an ethical culture takes a great deal of the compliance officer’s time. None of that ethics work will change if Dodd-Frank, ACA, FCPA, etc. are simplified or eliminated. Compliance officers at multinationals who are dealing with dozens of country’s laws and different cultures will barely feel the impact of a few changes in US regulations.
Compliance is driven by settlements not by the number of pages of regulations. Compliance is driven by watching business leaders lose their job or go to jail over a compliance or ethics issue. No regulation is going to be eliminated and allow pedophiles to roam your campus, people to be killed by faulty air bags, banks to steal from their customers, spilling 200 million gallons of crude oil into the ocean, misleading shareholders with false financial statements, or writing software to defeat government testing. If the lying, cheating and stealing continue, settlements, job loss and jail time will continue. If that happens, not only will compliance programs continue, compliance programs will increase. Of course, there are also many CEOs that support compliance because it is the right thing to do and their efforts will not diminish no matter what the new administration does.
I called the smartest guy in compliance before I wrote this. Joe Murphy told me, “The only way that compliance professionals will find a material decrease in their workload is if we all wake up tomorrow morning and everyone does the right thing.” I hope that your leadership is not fooled by this latest round of, “The sky is falling.” If your CEO listens to them the compliance pundits will be a new risk area for compliance officers to deal with. However, they are a short term risk because like all the others who have predicted the end of the world for compliance programs in the last 20 years… they are wrong. It will be obvious to everyone in 12 months. My advice to anyone who is asked about the impact of the new administration on compliance programs by their leadership is to tell them to wait 12 months. And as always, your CEO should be careful who they listen to.
Donald Trump's Impact on Compliance ProgramsClick To Tweet
Though certainly nowhere in or near Joe Murphy’s standing as shared by Roy…personally I am fine with a wait and see position with respect to the new administration.
HOWEVER…
I expect that during President Elect Donald Trump’s Administration of 4 years…the ACA’s yet to be defined core elements (with the exception of nursing facilities) of the now required compliance and ethics program is the next tsunami I see that will hit the coastline of change within the compliance world in the healthcare sector. Especially given that this is a Condition of Enrollment (CoE) which is a game changer when one compares this with Conditions of Participation (CoP).
What I was trying to get at is that it is unlikely that US companies will have a material decrease in their compliance and ethics efforts as a result of the change in administration.
Wonderful article with great insights. Thank you Roy for being the voice of calm and reason in a time of uncertainty!
Thoughtful, articulate, passionate and yet entirely rational in its structured argumentation. Thank you for this eloquent manifesto for compliance.
Vladimir and Diana, I appreciate your comments more than you know. This is a very important issue to me. There is a lot of misinformation out there. I spent a week on it. I tossed out two other drafts because they were ruined by my inability to calm down, which is something these other commentators should consider doing. The risk of bad decisions being made by leadership as a result of these commentators advice is significant. This commentary and some of the recent settlements (like Wells Fargo) causes me to wonder, “Who is advising our leaders on these matters?” They are killing the reputation of corporate America with their bad decisions and refusal to look for, find and fix problems. It is also resulting in thousands of pages of new regulations.
Long way of saying, this is important to me so your comments are important to me. Thanks
As a former healthcare compliance leader who has moved into health system leadership, I am 100% with Roy’s comments. We will not relax compliance resources or compliance education, culture sustainment or controls vigilance because it is the right way to ensure appropriate stewardship of limited resources by doing our work the right, best way the first time, and ensuring we sustain a culture where anyone who is unsure can and will speak up to get it right before we act. The new Administration’s impact may reduce administrative reporting burdens; we shall wait and see about that. Our leadership is not looking at the change of Administrations as a labor reduction opportunity or a reason for a cultural shift. Thanks, Roy.
When I think about the divisiveness of this election, I remind leaders that there are few issues that bind the left and the right and are bipartisan issues in the halls of congress and the enforcement community. One issue they all agree on is rooting out fraud, waste and abuse in government spending (whether it be government contracts, healthcare, or corruption). Hence, there will always be a need for compliance and ethics programs. In fact the pressures of increasing budget deficits will only increase the focus on rooting out fraud, waste and abuse with planned tax cuts and increased infrastructure spending. So don’t worry, I don’t predict any decrease in enforcement and I expect the demand for effective compliance and ethics programs will increase not decrease over time.
Best article thus far about the state of our affairs! Lela Goldwyn
I like your attitude Lela, thanks.
Excellent article Roy! It is probably one of the most thoughtful and honest ones I have read. Thank you for the time and effort you put into your postings.
There’s one sentence that jumps off the page:
“Building an ethical culture takes a great deal of the compliance officer’s time.”
In an ethical culture, compliance becomes a given, which is exactly what Joe Murphy told the author. Obviously, compliance rules are necessary only to deter unethical people from acting unethically.
What’s really necessary is cultivating the awareness that working in an ethical culture benefits everybody all the time. If you can do that, you’ve got it made.
Great piece.
I think one of the key challenges for ABC remains unchanged – getting away from linking the value of ABC risk reduction to the enthusiasm of regulators or the volume of regulations, and getting towards successfully articulating its inherent value to any business.
In a world of increased uncertainty, effective ABC reduces net uncertainty by reducing the likelihood of sudden, disruptive corruption events.