Questions to Ask About an In-House Compliance and Ethics Job Offer

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Questions to Ask About an In-House Compliance and Ethics Job Offer

scce-cep-2014-09-MurphyBy Joe Murphy – Originally appeared in ethikos Nov./Dec. 2004, Vol. 17, No. 3

Who would have thought, in 1991 when the Sentencing Guidelines first went into effect, what would happen in the field of ethics and compliance (or that it would even be considered a field). Since that watershed event, companies in all lines of business have instituted compliance and ethics programs. Every company listed on the New York Stock Exchange (NYSE) and NASDAQ now has to have a code of conduct. Every listed company in the U.S. has to have a whistle-blower system. Hundreds of healthcare companies settling fraud charges with the government have had to establish compliance programs. The Ethics Officer Association (EOA) has more than 1,100 members; the Health Care Compliance Association has 3,200. University compliance people have formed their own compliance group.

A global trend

This same trend can be seen around the world. The Australian Compliance Institute has more than 1,000 members. Companies listed on the Johannesburg Stock Exchange are expected to have compliance programs. Competition law enforcement authorities in numerous jurisdictions say they expect companies to cooperate and to have compliance programs. European companies must have privacy compliance personnel.

When companies first started addressing this area they would often just hand the baton to the general counsel and consider the job done. But as more experience was gained, management and board members realized this was not enough.

Companies began establishing compliance and ethics departments. Human resources, the legal department, internal audit, and other staff organizations had to have members with compliance and ethics expertise. They also realized that a compliance program confined to headquarters would not be enough to prevent and detect problems throughout the rest of the business. This led to business unit and field compliance and ethics positions. Some companies instituted ombuds offices as well, to surface problems that might otherwise go undiscovered.

At the same time, attention has focused on a growing list of risk areas. In addition to such previously acknowledged risks as antitrust and overseas bribes, there were added new and difficult areas like privacy and earnings management. In the privacy area it was leadership from the European Union (EU) that resulted in more and more companies appointing privacy officers. Each major risk area—environmental,

FCPA, employment, etc.—has increased the staffing needs in the compliance and ethics field.

As strong as these trends were before 2001, they picked up speed dramatically with the breaking of the Enron story and the other scandals that surfaced. These, in turn, were followed by regulatory initiatives that placed a premium on compliance efforts, and added further to the need for experts in the compliance and ethics field. The scandals and their aftershocks were not limited to the US. Parmalat and other tarnished corporate names around the world raised the compliance and ethics profile even further.

An emerging industry

Today there is an entire industry of compliance and ethics providers and practitioners. There will come a day in the not-too-distant future when college graduates will be considering a career in this fast-growing compliance and ethics field.

Those in existing management positions who are tired of their current jobs and are looking for a new assignment that can give them the satisfaction of doing work that makes a difference, may decide to enter this new world. We are seeing the development of an entire field of work and employment—a career in the business of integrity.

Working in-house with a job in the integrity field can certainly be an exciting change. It can allow a person to pursue a more values-oriented career path. Managers can, in effect, do well by doing good. But before jumping into a compliance and ethics position, the candidate needs to know what he or she is about to do.

There are, in fact, perils in taking a compliance and ethics job in-house. This is a line of work that involves deliberately looking for trouble. The compliance and ethics position is one that needs a great deal of clout, or authority, to get the job done. The person also needs to have protection provided by the company in case things suddenly get hot. If in truth the compliance position is really just a sham, designed to look good on paper but not to rock the boat, the person considering the position needs to know that so that he or she can quickly look elsewhere.

So for those who are considering entering this field by taking an in-house position, or for the current compliance professional who sees greener pastures at another company, there are definitely things you need to know before making the jump. Here are the key questions to ask before accepting that position:

1. What are the pay and benefits? There is more to this question than the usual, however. You want to be sure these are comparable to others in the company at comparable positions.

2. To whom will you report? If you are the compliance officer, are you a real officer or is this a sham title, with you reporting to an assistant vice president or a deputy general counsel? Is your boss a true believer in the compliance mission?

3. What is the title? In many companies where title conveys status, a weak title can undercut your effectiveness.

4. Is there a board resolution setting up the program and electing the compliance officer? You want to know how committed the company really is. Without a resolution how do you know the board is on record with its commitment?

5. Does the compliance officer participate in all executive meetings, including the CEO’s staff meetings? Is this officer really a senior officer?

6. Is there a position description? Compare it to published model descriptions. Make sure it conforms to what you are being promised.

7. What is the scope of the compliance program? Does it cover all legal, ethical and reputational risks, or are there important carve-outs, like Equal Employment Opportunity (EEO), privacy, product safety, Environmental, Health & Safety (EH&S), and now, corporate governance? Each carve-out reduces your authority and creates room for turf conflicts.

8. Does compliance have direct, unfiltered access to the CEO and the board’s audit committee? This is a clear sign of the level of commitment. Every level of filtering directly and significantly reduces the compliance person’s authority and ability to do the job.

9. Do compliance people have real independence and authority? Do they have full access to all people, places and paper (including computer records)?

10. What is the relationship to the legal department? Will you be subordinate to or controlled by a strong general counsel, or will the lawyers be your helpers and allies?

11. Are there any past or pending compliance debacles, like an ongoing government investigation, or a voluntary disclosure by the company?

12. What has been the past turnover in the position? Can you talk to others who have held this position? To your future subordinates?

13. What resources will you have? Will you have budget and authority to retain outside experts? Access to inside resources and experts, e.g., a lawyer assigned especially to help you?

14. What protections does the company provide for you? A strong employment contract? A golden parachute? Required approval by the board before you can be discharged or demoted? Mandatory reporting to the board on such critical issues as management ignoring your advice? Insurance/indemnification?

15. Will the company support networking and participation in the compliance profession? Is the company a member of a compliance/ethics professional organization, such as EOA, HCCA (for healthcare) or ACI (in Australia), or an industry practice group? Will they let you speak publicly and write on the subject of compliance?

Will you turn down any job that cannot give you a strong answer to each question? That may simply not be a viable option for many. But the answers to each of these questions will help prepare you for what you will face. If you are in a strong negotiating position you may be able to set the right groundwork to increase your chances of success before signing on. If not, at least you will know in advance what your risks are.

Finally, if you are new to the field, remember there is strength in numbers. One of the hallmarks of the compliance and ethics field is openness. Compliance and ethics people regularly network with one another, exchanging ideas and experiences. So whatever your position and whoever your employer, remember: Network. Start immediately and take every opportunity you can find. Join the compliance and ethics professional organizations that apply to you. Read ethikos regularly. Call your counterparts at other companies. In the challenging world of compliance and ethics, you may find that a good heart-to-heart discussion with someone who has been there and knows what compliance is all about may be the one thing that pulls you through those tough moments.

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