When Organizations Lack Real Commitment to E&C
Every Chief Compliance Officer wants to be on the same page as the C-Suite and board of directors when it comes to a commitment to ethics and compliance. Without experience working inside the organization, however, it is difficult to tell the difference between a company that truly values the E&C program and one that simply talks the talk. So, what’s a CCO to do when he discovers all those promises were empty?
“Honesty is the best policy – when there is money in it.” – Mark Twain
Compliance professionals encounter a diverse range of corporate personalities in their work. To be sure, compliance officers have to rely on their abilities to analyze, lead, persuade, understand and motivate different functions in a company to contribute to the company’s ethics and compliance function. In doing so, compliance officers have to develop important psychological skills (e.g., reading and understanding what colleagues really mean when speaking to each other).
I do not mean to suggest that professionals are dishonest with each other in the business world. But the line between acceptable and unacceptable is drawn differently in a variety of organizations.
For example, in a company with a weak ethical culture that is operating along the edge of legality in order to increase quarterly financial results, a compliance professional has to be careful not to “alarm” colleagues as to his/her ethics and compliance intentions. In other words, a compliance officer has to avoid being perceived as someone who could “rock the boat.” In this situation, the company’s culture is ruled by business and financial needs; ethics and compliance will play only a secondary role in the overall operation of the company.
A more common scenario occurs when a compliance professional works in a company where the CEO has created a “happy talk” culture, where everyone speaks positively to each other, where risks are glossed over and where the company believes that it will always be financially successful. The company does not directly acknowledge nor address significant issues, but blithely creates an environment where one person or a small number of individuals without full consideration and analysis of alternatives may handle issues. Others at the company adhere to “happy talk,” encouraging each other and providing positive statements that reinforce each other and the overall culture (to the extent there is a real one), but ignoring real and substantive challenges facing the company.
The CEO and the senior management team have a responsibility to identify potential issues, analyze them and address them – or empower others to do the same. When a CEO operates as a figurehead and not as a leader, a company’s overall performance is at risk. I have observed these situations on a number of occasions. For compliance officers, such an environment is challenging.
A compliance officer working in a “happy talk” environment may be initially duped into believing the CEO and senior managers’ statements of commitment to ethics and compliance. In fact, such “happy talk” may encourage a CCO to act, plan and implement significant compliance initiatives.
Unfortunately, the CCO relying on “happy talk” statements will quickly find out that such statements are empty promises when he seeks to implement changes and/or seek resources (people and money) to build an effective ethics and compliance program.
All too often, a CCO is encouraged by a CEO and senior managers to move forward on compliance requirements, to present alternative proposals and to develop support within the organization only to ultimately fail to secure approval and necessary resources to implement the proposal. Inevitably, the CCO seeks explanations from each of the so-called “allies” and they each point a finger at each other, directing the CCO to talk to the other executive to clarify and seek affirmation of support. Round and round the CCO goes until he or she finally realizes that the CEO and the senior executives have spun him.
This is not a far-fetched scenario. I have observed this precise occurrence on a number of occasions. Once the CCO realizes what is occurring, he starts to polish his/her CV and look for an escape route to another company compliance position.
It is sad, but true – the corporate governance world is filled with examples of companies that do not follow honesty as the best policy. If only such a maxim were more common.
