10 Challenges Facing Ethics and Compliance Executives

As more organizations place a greater emphasis on ethics and compliance, the role of the chief ethics and compliance officer (CECO) continues to evolve. In most instances, the CECO is now a key member of the senior management team and is heavily involved in the decision-making processes that determine the organization’s short- and long-term direction.

However, the enhanced role also creates additional responsibilities for today’s CECOs, which makes the job more challenging than ever. In the is article, we’ll take a closer look at some of the biggest obstacles that ethics executives must navigate successfully to ensure their organization meets its specific ethics and compliance objectives, and identify some steps for overcoming them.

  1. Getting employees to commit to ethics and compliance: Many employees will not automatically “buy in” to an ethics and compliance program. A CECO must be able to sell ethics and compliance to employees and stakeholders. Ongoing training is typically the best method for engaging staff members and reinforcing the individual and organization benefits of creating and maintaining a strong ethical culture.
  2. Obtaining support from top management: Despite the increasing understanding of the importance of ethics and compliance, there are still some organizations where top management views the department as nothing more than an additional cost center. The CECO can attempt to reach these budget-conscious executives and board members via the use of numerical data. For example, providing specific reporting hotline statistics will indicate the level of potentially unethical activity that is occurring within the organization and illustrate the need to allocate additional attention and resources to the department.
  3. Combatting cultural indifference: In some organizations, looking the other way when ethical indiscretions occur has been the long-standing unofficial standard operating procedure. According to leading organizational ethics expert Dr. Albert C. Pierce, a CECO can attempt to turn around an indifferent ethical cultural by working to develop and instill these four abilities in employees: moral awareness, moral courage, moral effectiveness and moral reasoning.
  4. Staying current with changing regulations: From a compliance perspective, the CECO must keep abreast of changes in laws and regulations that impact the organization and the industry it serves. One option for organizations in heavily regulated industries is establishing a dedicated regulatory intelligence function that gathers pertinent information regarding changes in the law and communicates it to the CECO and the rest of the executive team.
  5. Managing and controlling the actions of third parties: Organizations can be held accountable, and in some cases, criminally and civilly liable for the actions of the vendors, agents, independent contractors and other third parties that represent them. CECOs must ensure that effective third-party risk management procedures are in place. This includes conducting proper due diligence on all third parties prior to enlisting their services, providing organization-specific ethics and compliance training when appropriate and instituting comprehensive oversight practices.
  6. Managing ethics and compliance in a global work environment: CECOs of organizations that operate in foreign countries face a unique set of ethics and compliance challenges. They must ensure that E&C programs are tailored to their global employees, taking into consideration the nuances of local laws in the nations where they are conducting business. Behaviors and practices that are deemed ethical in the home country could constitute serious ethical breaches in the host country. They should also provide training on the Foreign Corrupt Practices Act, the UK Bribery Act and any other pertinent anti-bribery laws.
  7. Managing ethics in the “five-generation” workplace: Many modern workplaces are comprised of workers spanning five generations, ranging from the “Silent Generation” (individuals born prior to 1946) to the “Nexters” (those born after 2000). CECOs face the challenge of seamlessly blending the various generational attitudes and beliefs to establish a harmonious organizational culture. They can accomplish by focusing on the strengths of each generation and finding ways to combine them. Fostering mentor-mentee relationships between older and younger workers can prove extremely beneficial in this endeavor.
  8. Meeting expectations for social responsibility: Younger workers and a growing segment of the population believe that, for an organization to be ethical, it must act in a socially responsible manner. CECOs should seek to reposition the E&C function so that it addresses employee and societal expectations in terms of social responsibility. Methods for accomplishing this can include working with the executive team to find ways to support philanthropic causes and community engagement, as well as encouraging employees to create and organize community outreach events.
  9. Increasing E&C involvement in cyber security: While cyber security is typically viewed as a technological issue, research indicates that nearly 70 percent of data breaches were caused by either malicious employee actions or non-malicious employee errors. Steps CECOs can take to improve cyber security include ensuring the topic is clearly addressed in the organization’s code of conduct, incorporating cyber security into E&C training and encouraging the use of reporting hotlines to convey information regarding potential security breaches.
  10. Making the most of limited resources: Smaller organizations often face the challenging of implementing an ethics and compliance program on a limited budget. For organizations that do not have the resources to create a dedicated ethics and compliance function, the owner bears the bulk of the responsibility for establishing a solid ethical foundation. Owners of small businesses do tend to have closer interaction with employees than CEOs of Fortune 500 companies, which provides an excellent opportunity to lead by example in terms of what constitutes ethical behavior.

Making a concerted effort to identify and overcome these challenges can increase the likelihood of creating an ethical cultural in any organization.

Related Posts

Enter your keyword