Great Expectations: What your Board Expects from Ethics, Compliance and You

What does the Board expect from me personally, as an Ethics and Compliance professional?

Competence and courage.

Your Board members expect that you will stay on top of best practices, that you know what is really going on in your organization, and that you will implement steps to address risks, gaps and deficiencies. This is the same expectation they have of the CFO, general counsel, head of HR, etc. So no news there.

But they also expect a very high degree of courage from you. Wise Board members know you are in a challenging position. You want to keep your job, maybe even get ahead. And from time to time you may need to ask for resources that are not in the budget. Or to conduct an investigation of a high-level person. Or to recommend an officer be terminated. Or to point out a cultural or leadership attribute that is not what it needs to be for sustainable high performance.

Board members need to know you will do these things. Not fearlessly or foolishly, but thoughtfully and carefully. And they need to know that you will keep them informed, especially when matters are sensitive.

Sometimes after I have presented an assessment of a company’s ethics program or culture, Boards ask to meet with me in an executive session. Their questions are always about people. “Do our leaders get it? Do they walk the talk?” And “Is E&C respected? Does the E&C officer and team have what it takes to make the hard calls?”

What do you tell them?

Of course it depends on results of the assessment. But the real point here is that they should not need to hear this from me. Their exposure to you and the E&C function/program should give them the assurance they need.

Anything else Board members expect from me?

A third “C” that Board members should expect from you, but rarely do explicitly, is compassion. Ethics professionals need to exhibit competence, courage and compassion. Why compassion? Because the overwhelming weight of E&C efforts rest on compliance with policies and regulations. Yet some of the biggest costs to organizations come when actions are taken that impose a burden or risk for customers, employees or the public. Compassion is necessary to identify and understand these costs before they become compliance obligations.

So what do Board members expect from Ethics and Compliance?

Boards hope that E&C will keep them and the company out of trouble. There are many nuances to this expectation, which we will explore over the course of this series, but this is the fundamental driver. Keep the company and Board members out of legal and reputational trouble, and you will be judged a success.

This seems simplistic.

It is simplistic, but not simple, as anybody who has been in ethics and compliance for a while knows. It is not simple to implement an E&C program that reduces the likelihood that people will do the kinds of dumb, unethical or illegal things that get companies in trouble. Board members expect that you will do this with a high level of competence.

So you are talking about essentially implementing the guidance from the United States Sentencing Guidelines for Organizations?

Yes, and the advice from the U.S. DOJ/SEC Resource Guide to the FCPA, the UK Bribery Act and other country-specific legislation or guidance, depending on where you are domiciled or have significant operations. What this means is that informed Board members will expect E&C to:

• Understand the ethics and compliance risks faced by the company and implement efforts designed to reduce those risks.
• Create the right governance infrastructure to reduce ethics and compliance risks.
• Communicate and train employees (and directors!) to reduce the likelihood they violate the law or ethical standards.
• Integrate E&C into HR and other operational systems of the company in order to strengthen a culture of integrity.
• Monitor for risky behavior.
• Assess the adequacy of the Company’s efforts and culture to reduce E&C risks.
• And keep the Board appropriately informed about performance of each of these.

You emphasized the last point of a fairly standard, but simplified list.

Yes. If the Board does not know about the great work you do, it doesn’t count. It doesn’t provide them assurance. Yet you must resist the temptation to provide unnecessary details, like all the clauses of the Sentencing Guidelines. Subsequent articles in this series will describe how to live up to Board expectations in more detail.

If you have a question you would like answered, please email Steve@IntegrityII.com.