What does it take to keep your Chief Compliance Officer (CCO) when the pressure is on? In 2014, I interviewed CCOs and presented my findings in an article published in Ethisphere magazine. Back then it was clear that having CEO and board level buy-in for ethics and compliance programs was the key reason CCOs remained engaged and were able to retain the best and brightest within their compliance departments. That’s all still true today along with some well-deserved recognition and increased visibility for the best-of-the-best in the CCO seat.
A CCO must have excellent communication skills and the leadership gravitas to deal effectively with government pressure from the outside, as well as management and board pressure from the inside. They must be savvy influencers and have high emotional intelligence. Add to the list the ability to architect, execute, monitor, and maintain an effective compliance program, as well as the personal risk now inherent in the role, and it quickly becomes clear that a talented CCO is critical to company performance. Companies must place a high priority on retaining these key leaders.
Turnover in top functional leadership is always a concern, and the compliance organization is no exception. Indeed, the departure of an established CCO can cause a stock price swing not unlike a CEO exit. Although the landscape has changed somewhat over the past four years, it is still clear that CCO job satisfaction is inextricably linked to the many ways that companies express commitment to the compliance program.
Compliance leaders want to work for companies that already value compliance, so tone-at-the-top is a critical starting point for an effective program and a satisfied CCO. When a CEO clearly and regularly communicates the company’s commitment to its compliance program, the roots of a compliance culture can take hold. The CCO can then leverage that message to ensure that it is felt throughout the organization. This requires the CCO and compliance team to be accessible to those in the business operations, particularly the middle managers who drive the day-to-day activities.
Architecting a compliance team and a process that will be a conduit for change on an organization-wide scale is a top goal for most CCOs, but meeting this challenge requires another expression of commitment by the company — allocation of resources. There must be substance behind the compliance message in the form of budget and headcount. Good intentions do not an effective compliance program make. Lip-service is not enough; it takes people, time, and support in many ways.
Inadequate resources severely limit the CCO’s ability to get the job done and meet objectives. Not surprisingly, compliance leaders with the highest levels of job satisfaction express confidence that the compliance program is comprehensive and working to monitor and mitigate risk across the enterprise. To carry the load, compliance professionals — and the executives and board members who rely on their counsel — unanimously agree that the CCO needs a seat at the table.
By giving the CCO a place among the executive leadership, the compliance chain of command is clear. The CCO needs the authority that comes with sitting at the table, ensuring that any compliance concerns are heard. When something goes wrong, and regulators come knocking, robust and thoughtful compliance leadership provides a better line of sight to the problem. A recent development is the stand-alone compliance committee of the board. Frustrated by getting only a few minutes before the entire board following the financial team during audit committee meetings, some enterprising CCOs have carved out a committee of their own. Board members are more engaged than they were four years ago, and a compliance-only committee allows for more thoughtful and thorough discussion of compliance concerns.
Further, the integration of compliance activities into the business operations from the top down will give a company its best shot at showing regulators that a path was planned and that it leads somewhere. A reporting structure that allows the CCO the necessary influence to drive change will ensure that the operational risks taken in day-to-day activities are in line with the company’s established tolerance.
Along with gaining a seat at the table, CCOs are seeing a rise in compensation, reflecting the high market demand for expert compliance guidance. This trend is likely to continue while compliance teams are in ‘build out’ mode and certainly is a factor in CCO job satisfaction. The focus on rising salaries is largely a function of increased responsibility; the CCO must sign on the dotted line that the organization is in compliance. This level of personal risk requires in-kind compensation.
Hiring and retaining a great CCO is a challenge, but no greater than that which CCOs face in today’s regulation-intense environment. To be effective, a CCO needs commitment from the board and executive management to the compliance mission and goals, as well as the resources to build and develop a solid infrastructure and well-trained teams. CCOs want compliance to be visibly valued and, through leadership buy-in, integrated into the fabric of their organizations.