Last week I was chatting with the chief compliance officer of a large manufacturer, yet another U.S. corporation that is growing briskly overseas and acquiring foreign business units to bolster those operations. We were talking about the challenges of running a compliance department, which is often small and highly dependent on other departments in a corporation to get its job done.
“I came up on the legal side, so I know how to deal with those people,” my compliance officer told me. “And I know that I need to listen to the auditors and the accounting department closely, because they know all the financial reporting details that I don't know.”
OK, no surprises so far. Lots of compliance officers were lawyers in a previous life, and most are smart enough to know that they don't know the intricacies of financial reporting. Then came his true nugget of insight.
“What really frustrates me,” he said, “is how to work with the HR department—because I absolutely need them to help me shape company culture, but boy, do they act like they don't need anybody and can dance to their own tune.”
He has a point, and I suspect many of you reading his words are nodding your heads in agreement. In this modern era of globalized corporations merging business units (read: people) all over the world, where startup businesses get acquired by larger corporations as a matter of course, the HR department is often one of the first—and one of the enduring—points of contact that people have with the corporation that employs them. Yet I hardly ever hear of compliance departments working with HR all that much; in fact, in my seven years writing for Compliance Week, this might be the first time I've ever mentioned that relationship either.
That's not to say compliance departments don't work with HR. On the contrary, compliance departments ostensibly interact with HR quite often. In the 2011 State of Compliance report Compliance Week published in conjunction with PwC, we asked compliance executives how often they “leveraged resources” from various departments. Sixty percent of respondents said they collaborate with the HR department “always or frequently,” which ranked only behind legal (84 percent), ethics, and internal audit (tied at 64 percent). So clearly the lines of communication with HR are open.
What matters, however, is how compliance and HR cooperate—and here, I fear, is where executives like my CCO friend get frustrated. All I have so far is anecdotal evidence, but that evidence suggests that compliance departments mostly tap HR departments to support internal investigations. Unto itself, that's fine. After all, most employee complaints that reach a compliance department's ears (through a whistleblower hotline, employee survey or other method) are mundane in nature: somebody hogging a prime parking spot, somebody arriving to work late all the time while others pick up the slack. Such complaints are routine fare for a corporate HR department. And on the rare chance that a complaint does evolve into something more serious, most HR departments also have the sense to sound the proper alarms immediately. (That's one benefit of working with people whose paid profession is to explain and implement policy.)
But what goes missing too often, I suspect, is HR's assistance in molding company culture. That can be particularly frustrating for companies acquiring new business units—and as much as the problem glares out with the example of newly acquired overseas employees, newly acquired employees right here in the United States can be just as challenging. These groups are used to one way of doing things, to sell one particular product or service; then the Big Acquiring Corporation arrives with a new way of doing things, and their one beloved product is simply one among many that the corporation makes. Employees get scared in those situations, and instinctively defend that which they know: a way of doing things, an attitude to have, a chain of command they respect.
You, the compliance officer, are left to change that mentality—“to get them to start thinking as a corporate family,” as my compliance officer friend phrased it. I don't profess to know how to get that done, but I'm sure it involves lots of training, lots of explaining, and lots of patience. The problem is more about people than policy, and people issues are where HR is supposed to excel.
Yet I get the sense that HR departments still act much in the spirit of what my CCO friend described: managing paperwork, following up on incomplete forms, scheduling training sessions, adjucating small disputes by separating employees rather than addressing any underlying tensions about corporate culture. Those underlying questions themselves… Well, those they leave someone else to answer.
Am I right? I freely admit I don't interact with large HR organizations all that often (hallelujah), so I'd be curious to hear from the CCOs and HR directors out there. What's it like at your company?