Getting executives and middle managers to “buy in” to the goals of compliance can be an uphill battle at many companies, especially at those where compliance is viewed as an obstacle to getting things done.
Some line managers may harbor misconceptions about the role of compliance. They view most compliance initiatives as a nuisance, at best, and some see them as undermining the organization's competitiveness. Others may assume that compliance is simply waiting for a slight mis-step, at which point they'll swoop in for a “gotcha” moment.
To be sure, compliance officers may achieve some level of cooperation by pushing their way into the business units and hammering home the need for strict regulatory compliance. Such an approach, however, is unlikely to foster a deeper understanding of the value behind compliance and ethics and will cause managers who do the bare minimum to satisfy their compliance obligations. Compliance will remain an unpopular ancillary function, rather than a critical component of the organization.
Building an effective compliance program requires winning “the hearts, hands, and minds of the individuals within an organization,” says Richard Girgenti, the U.S. leader of forensic services at KPMG. While policies and procedures are critical, a truly successful compliance program is embedded in the culture, he adds. In addition, most compliance professionals find their work more enjoyable when they're seen as a valued part of the organizational culture, rather than a necessary evil.
Winning hearts and minds starts with the board and senior management. While it's equally important to win support from rank-and-file employees, that's harder to pull off if the top brass isn't already on board. “If you can't convince the board and senior executives, you're swimming upstream in trying to convince employees,” says Jim Slavin, vice president of advisory services at SAI Global.
Building support among top management usually requires showing how compliance can be more than an expense or a mechanism to avoid the costs of ethics or compliance violations, although avoiding such violations is a critical component. Compliance needs to show that a strong program can add value to an organization.
Anthony Dell, global chief compliance and ethics officer at investment adviser Ares Management, uses car brakes as an analogy. If cars didn't have breaks, they'd have to go more slowly, just to have any chance of avoiding crashes. It's the same with compliance programs. “The stronger the safety controls, the more risks you can take,” Dell says.
Similarly, when others insist that compliance is a cost center and not really part of operations, Dell will ask whether they view the brakes on a car as not really being part of the car. Compliance can help the business succeed by keeping it in line as it grows, he adds.
Compliance officers also can emphasize their department's value in attracting both customers and employees, Slavin says. When employees don't trust management, it can create a negative environment that builds on itself, with word leaking out to prospective employees, and even potential customers or business partners. “The majority of people want to win business the right way and want to work in an environment in which they're comfortable,” Slavin says.
Building Understanding and Trust
Along with gaining the support of executive management and board members, compliance needs to win over business unit leaders in order to embed compliance within the business functions. “It has to become part of the strategy and operations of the organization, just like any other process,” Girgenti says, although compliance can provide direction and guidelines.
Building these relationships, like any others, requires time and effort. Rather than simply sending e-mails—“issuing edicts from on high,” Dell says—compliance officers need to engage in conversations with their peers in other areas. “It's taking the time to have conversations and build understanding.”
“The stronger the safety controls, the more risks you can take.”
—Anthony Dell,
Global Chief Compliance & Ethics Officer,
Ares Management
Gaining an understanding of the business units also helps to develop a relationship with their leaders, Dell notes. He regularly asks his colleagues in the operating areas to conduct short talks with compliance employees about their role in the organization. Along with fostering a deeper relationship, these talks can help compliance provide more targeted and intelligent guidance to the organization.
Similarly, by providing employees in other areas with information about its role, compliance can show that it's not some faceless entity, says Kevin Sisemore, director of internal audit at the University of Colorado.
Gaining the support of business managers can be especially difficult when employees are scattered across multiple locations, making it hard for compliance professionals to personally visit all the groups.
Ethics Ambassadors
To counteract this problem, some companies develop “ethics ambassadors” who are located in various locations, Slavin says. These are employees of the business units, who maintain their regular jobs, while taking on the responsibility of advocating and communicating compliance aims. Their added efforts are considered during reviews and at promotion time, he notes.
The ambassadors can become the face of the compliance department to far-flung employees who may be leery of calling headquarters or even using the hotline to report a concern. “It lets people hear compliance spoken about by an actual manager,” rather than someone from headquarters who doesn't understand their daily lives, Slavin says.
The practice also provides compliance with a better handle on the culture and attitude at each location rather than what an employee can obtain from headquarters. In turn, that allows compliance to address minor issues before they escalate.
When it comes to training employees in compliance and ethics, a growing number of organizations are moving away from an exclusive reliance on online training, Slavin says. Executives are recognizing that “there's great value to having a manager train on certain issues,” he says. When managers demonstrate their support and conviction during training, employees get a clear message that compliance is important. That also builds support.
Communication, especially when employees report a concern, also helps in sustaining relationships with employees. If those reporting a concern never hear how it was handled, many will assume that it wasn't. That can undermine any support they initially had for compliance. While it may not be possible to name names or list the disciplinary actions meted out, a compliance representative can let whistleblowers know an investigation was undertaken and whether disciplinary action was found to be necessary, Girgenti says.
It's also important to keep in mind that employees pay attention to “how organizational justice is meted out,” Girgenti says. If it's clear that compliance infractions by high earners are treated less severely than those by rank-and-file employees, it becomes tough to sustain support for compliance initiatives.
When it becomes necessary for a compliance or audit team to investigate an allegation, several steps can help employees in the area under question support the investigation. As a starting point, it's important to remember that just by showing up, the investigators are going to cause anxiety, Sisemore says. Employees don't know what exactly is going on, or what the results might be.
While investigators may not be able to completely counteract this, they'll want to keep in mind the effect they can have and emphasize that their role is solely to uncover the facts in an unbiased manner; that no agenda is driving the investigation, Sisemore says.
When Support Is Lacking
Even if compliance professionals do all they can to build support for their department and its role within an organization, some executives or managers might resist. The emotional response can be difficult, Dell notes. “You start to feel marginalized, belittled.”
ORGANIZATIONAL ATTRIBUTES
According to a study by IBM, to draw out the best in their workforces, CEOs are most focused on three organizational attributes:
Source: IBM.
While those may be almost involuntary initial reactions, effective compliance professionals need to find a way to contain them, Dell adds. “Don't take it personally.” Instead, compliance professionals need to think of themselves as clinicians or consultants, removing their emotions as much as possible from the equation. Then, they're in a better position to honestly assess whether they can make changes to their communication style, for example, to gain traction from senior management.
“The majority of people want to do the right thing,” Slavin says. Compliance professionals can build on that desire and show how their programs allow employees to operate ethically, which also helps to create a high-performing work environment.
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