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Monday
Apr132015

Mike Scher explodes dangerous myths about compliance officers

One of the most important developments in our profession is the emergence of Compliance 2.0, as championed by Donna Boehme and others. What is Compliance 2.0?

It starts by untethering the compliance department from the general counsel. That change alone redefines compliance officers and what they do. It takes them out of an advocacy role, where the company's interests have a narrower definition that doesn't always work for compliance.

With compliance out of the general counsel's office, compliance officers are now expected to make independent decisions based on the law and codes of conduct. They aren't there anymore to be window dressing, and a scapegoat when things go wrong.

But change is never easy. And moving from Compliance 1.0 to Compliance 2.0 is no exception. To get there, some myths about the compliance profession need to be exploded. The myths were born during Compliance 1.0 and will hold back the change we (and the DOJ and SEC, among others) want to see.

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Here are some myths about compliance officers that belong in the trash heap of history:

Myth Number One: Lawyers should always make more money than compliance officers. Traditionally company lawyers have out-earned compliance officers. One reason is because lawyers have been seen as advocates and the company's first line of defense. In contrast, compliance officers were seen more as staffers who communicated policies and helped train employees, and chased the mountain of paperwork generated by the compliance program.

But today, Compliance 2.0 puts compliance officers on the front line of many of the company's crucial business decisions. And compliance officers are always held accountable now by the DOJ and SEC. We need a new pay scale to attract and reward the people of talent, skill, and fortitude needed in our Compliance 2.0 world.

Myth Number Two: Compliance officers don’t do as much as lawyers. During the Compliance 1.0 era, real problems that needed to be investigated or solved fell to the legal department, and never to compliance. That was mainly due to the perception created by the attorney-client privilege that only lawyers could or should handle the thorniest of issues.

Yet as the GM case and others have now shown, the legal department is often too much of an advocate to really solve some of the hardest problems -- those involving ethics and compliance. What the GM case demonstrated is that the compliance department may well be better equipped to deal with some of the worst problems a company might face.

Myth Number Three: Surviving in a compliance job means being ineffective. During the era of Compliance 1.0, compliance officers had little protection when they stood up to the powerful executives who had their own agenda. It didn't take a genius to know that a compliance officer battling too often against the corner office would soon be looking for a new job. That still goes on in some backward companies that haven't recognized or embraced our new Compliance 2.0 world.

But it's time to say goodbye to the myth that compliance officers can't be strong. Let's think of it now as the Lion of Compliance versus the Wolf of Wall Street (with thanks again to the actual Lion of Compliance, Donna Boehme).

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There are more dangerous myths about compliance officers that need exploding. I've used my allotted pixels for today. Let's continue this discussion in another post. 

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Michael Scher is a senior editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He can be contacted here.

Reader Comments (1)

An excellent commentary.

Compliance (like internal audit) is not about advocacy. It is about ensuring contractual requirements are met. Advocacy is important, but the goal is not to fight the government. The goal is to: (1) know what the government requires compliance-wise, (2) ensure your people do as well, (3) put in place a plan and procedures to comply, (4) make compliance (like safety and security) part of your firm's culture, and (5) establish an effective protocol on how to handle compliance failures.

I liked Mike's point about independence. To be effective, a compliance officer needs to be high enough up in the organization to be heard. Making the compliance officer a direct reportee to corporate leadership signals the high importance of compliance to the organization and elevates compliance to equal footing with other core functions. As a direct reportee, the compliance officer directly communicates with decision makers and from strictly a compliance perspective. As a direct reportee, the compliance officer is in a better position to make a stand, if needed.
April 13, 2015 | Unregistered CommenterDave Anderson
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