Compliance Programs Need More Employee Incentives
Is your company using the right employee incentives to meet its compliance aims? That was one of the questions put to a recent gathering of 40 global chief compliance officers in Londonand for nearly half the CCOs, the answer was no.
According to the 2013 Global Compliance and Ethics Data Survey, released today by the consultancy Consero and Applied Discovery, 43 percent of the surveyed CCOs, who came from the U.K. and across Europe, felt that their companys performance appraisals and employee incentives ran contrary to compliance and ethics standards.
By comparison, 55 percent of U.S.-based chief compliance officers surveyed last year also said incentives and ethics standards didnt match up.
So while the view may be slightly rosier on this issue in Europe, the global numbers still show a need for improvement in bringing employees into the compliance fold, according to Consero CEO Paul Mandell.
This question indicates that there is something of a breakdown between the development of the rules [within a company] and the manner in which employees follow those rules, he says.
In order to foster an ethical corporate environment, Mandell suggests that companies first have to identify what the rules are that need to be followed and what kind of culture is desirable. Then, they not only have to train and educate employees, but also create incentive plans to reward desired behavior. Mandell says, If employees are not incentivized . . . they wont follow those rules.
The benchmarking survey also got at the ongoing debate over whether a companys compliance function should be separate from the general counsels office. When participants were asked whether they thought the GC should serve as CCO, too, 72 percent of the respondents said no.
[T]he international trend would seem to support a sense of mutually exclusive duties between the general counsel and the chief compliance officer, the report says. The GCs task is to defend the company, while the CCOs is essentially prosecutorial.
Mandell elaborates: The chief compliance officer is, I think, viewed more as a watchdog for the company and the party responsible for identifying the rule, and helping the company steer clear of any kind of violation.
But Mandell also says a GCs job varies greatly from one company to the next, and that feeds the tension over whether the CCO and GC roles should be held by different people. I think that tension is likely to lead to greater separation over time, Mandell says, but I dont think that tension will go away.
Most survey respondents said that, in their role as CCO, they have sufficient level of access to the CEO (83 percent said yes) and to the board of directors (80 percent said yes). But that doesnt necessarily mean theyre getting a seat at the table alongside other members of the C-suite. Less than half (48 percent) said their compliance departments are integrated into corporate decision-making and strategy.
Top of mind for the compliance officers surveyed is training for employees. Asked to describe their biggest priorities, 75 percent said educating employees on compliance issues and regulatory trends. That was followed by identifying compliance issues and threats in advance (72 percent) and fostering a company-wide culture of compliance (67 percent).