By Matt Kelly
If the business where you work is smart and lucky, eventually it will hit an expansion phase. This is good news for the company, and, in theory, good news for ethics and compliance officers.
Expansion phases, however, might not feel like good news in practice. When companies jump into “the big world” for the first time – foreign markets, new product lines, new divisions gained through acquisition – those can be some of the most frustrating periods of a compliance officer’s career. Without proper planning to manage policy and to align compliance objectives to corporate strategy, you’re sunk.
So what kinds of planning and alignment help corporate ethics programs the most, before expansion phases spin out of control? Here are four.
Secure the Independence & Authority to Manage Risk
You will need a lot of it. New operations bring new employees, new regulations, new risks— and, yes, new misconduct. A global chief compliance officer needs to command the respect of new employees to keep the compliance program effective.
For example, a division head in a newly opened Far East operation may pay lip service to corporate compliance goals, while running operations locally as he or she believes appropriate. Or a newly acquired business unit may have a local general counsel who has guarded that unit’s regulatory compliance program until now.
More broadly, chief compliance officers also need more authority because expansion phases entail larger planning. If the compliance officer cannot be part of that conversation about strategic goals, the compliance program you have (or that you build) may not be fit for purpose. A rapidly growing company is shouldering many more risks. If that happens without thought for compliance – without the compliance officer being part of that conversation – then the compliance program isn’t based on risk. Which is the cardinal sin of ineffective programs.
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