The Importance of Effective Ethics & Compliance Leadership

While the ethics and compliance department has become more important and influential in many organizations in recent years, clashes between staff members and the E & C function still occur on an all-too-frequent basis. In some organizations, ethics and compliance may be viewed as a more of a nuisance than an asset – except when a breach happens and management needs the department to come to the rescue. This lack of compatibility can often be attributed to the inability of E & C to demonstrate sufficiently strong leadership.

Consequently, the chief ethics and compliance officer and other key department personnel must make a concerted effort to become more integral and respected members of the organization by ingratiating themselves with personnel at all levels. This will help to foster a climate where a greater emphasis and value are placed on ethics and compliance, which can go a long way toward preventing ethical dilemmas from occurring in the first place.

How Ethics and Compliance Departments Can Take a Stronger Leadership Stance

According to global best practices insight company CEB, there are three main areas that ethics and compliance teams should focus on in order to exhibit stronger leadership and eliminate the rancor with other areas of the organization:

  • Discover and communicate effective ways to minimize and mitigate risk throughout the organization
  • Create an environment where employees feel safe to report inappropriate behavior
  • Determine ways in which ethics and compliance can help the organization achieve its business objectives in a timely, efficient manner

A CEB survey of 500 non-compliance staff members who have regular interaction with the compliance team in their respective organizations identified three key things that employees are looking for from the E & C function:

  • Setting an example: In addition to establishing the ethics and compliance rules for the organization, employees want to see E & C team members serve as role models by following the rules themselves.
  • Reporting without risk: Employees need assurance that they can use reporting hotlines and other mechanisms to make the E & C staff aware of inappropriate behavior without the risk of losing their jobs or facing other negative repercussions for doing so.
  • Knowing the rules: Employees need to see that E & C staff members have the comprehensive knowledge of ethics and compliance-related rules, laws and regulations required to provide reliable, competent guidance when an issue arises.

Engaging Organizational Leadership

It is also important for E & C personnel to make a concerted effort to engage the board of directions, CEO and top managers as a way to strengthen the bond. In essence, E & C must continuously train and educate management on what the compliance program entails. A key aspect of this ongoing education should include keeping management abreast of the changing risk factors that impact the organization.

Additionally, the CECO should demonstrate its value to the organization by keeping management apprised of the what the department is actually doing to “earn its keep.” This can include:

  • Providing metrics regarding hotline activity during a given time period and the results of any follow-up investigations
  • Sharing audit results
  • Supplying information about the type of ethics and training being conducted for new and existing staff members
  • Detailing the progress and results of current ethics and compliance initiatives and providing information about upcoming initiatives

As Dan Dunham, former chief compliance officer at Aptalis Pharma stated, “You have to partner with your business colleagues in everything you do, whether you’re building a policy or training course, conducting an audit, monitoring an event, or conducting an investigation and determining appropriate disciplinary measures.”

Integrating the Values

Another critical aspect of ethics and compliance leadership is ensuring that employees and management both have a clear understanding of the organization’s values and finding effective ways to integrate them into the culture. Too often, there is a disconnect between the organization’s stated values and what employees and stakeholders perceive them to be.

As an example, at a 2014 roundtable discussion hosted by Compliance Week magazine attended by ethics and compliance executives from notable organizations such as HSBC, Master Card and Fidelity, one CECO made the following statement:

“I asked my board what our company’s values were, and they gave me the three listed on our mission statement. Then I went and asked our employees what they thought the company’s values were—and, boy, their responses were not those three values.”

By taking the initiative and implementing steps to ensure that management and employees are on the same page in terms of values, which can be accomplished through education and training, the CECO can assert his or her leadership, while also helping to integrate values into the corporate culture.

In summary, while bridging the gap between the ethics and compliance function and the rest of the staff can pose a daunting challenge, strong leadership can ensure that E & C will play a vital role in the long-term success of the organization.

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