Compliance is Evolving – Is Your Business Keeping Pace?

The compliance space is changing rapidly, but where we are at now evolved as a reaction to well-publicized organizational failures in the 1970s. Watergate, Enron, and WorldCom are just a few well-known examples, though many more exist.

1977 was a banner year for compliance. After two years of deliberation on discovery made by the Watergate Committee and the Church Committee, the Foreign Corrupt Practices Act was passed. This game-changing piece of legislation was the first law in the world that governed domestic business conduct with foreign government officials in foreign markets.

More recently, the 2002 Sarbanes Oxley promulgated new controls for businesses in response to the Enron debacle. The U.S. isn’t the only nation passing legislation, either. In 2010 the United Kingdom issued the UK Bribery Act, replacing outdated legislation like the Public Bodies Corrupt Practices Act of 1889. Similarly, France passed Loi Sapin II in 2016, which provided a new legal framework to fight corruption.

This collection of government regulations changed the function of compliance and paved the way for the now-common role of Chief Compliance Officer. As new regulations are introduced, it’s increasingly vital for companies to ensure they don’t run afoul of the applicable regulations. But, is a traditional CCCO the best person for this job?

“How can I be more relevant in the boardroom?!” – Every CCO

Too many Chief Compliance Officers remain frustrated by their failure to demonstrate delivery of real business value. They’re seen as out of touch and ineffective. The department is viewed as a cost center, the department of “NO!”, and CCOs are assumed to be unaligned with business imperatives and direction.

It’s no surprise that many compliance efforts flounder.

I’ve always found the word “compliance” to be limiting, a word dripping with baggage. To comply is defined as:

(1) The action or fact of complying with a wish or command; or,

(2) Excessive acquiescence.

Nothing about this word implies excellence, nor does it signal the enablement of growth. It’s all about meeting the minimum acceptable standard.

It’s time to stop playing defense

As a result of this mindset, this industry has been plagued with programs that are solely focused on playing defense. Companies deploy annual trainings and “check the box” with employee signatures on Codes of Conduct.

It’s all done with the sole aim of placating the regulator, but times are changing.

Business + Ethics = A Better World

At Convercent, we’re on a mission to drive ethics to the center of business for a better world. Now, we all have to answer the question, “How?”

  • How do you drive a company to reach for and achieve a higher ethics standard?
  • How do you foster excitement for this never-ending journey?
  • How can we illustrate the importance of hopping on this self-reinforcing positive feedback loop?

To answer these questions, I have a proposition.

From the ashes comes integrity

I propose that you push ethics to the center of your business world by cultivating a culture of integrity within your organization.

Integrity: The quality of being honest and having strong moral principles; or the state of being whole and undivided.

It’s an active word that:

  • Embodies the unification of the organization’s Vision, Mission, and Values.
  • Speaks to the need to be whole, all actions aligned and integral to the mission.
  • Is not open to interpretation or debate.

Some forward-thinking businesses are already operating with integrity. We’ve even seen a new role emerge in these organizations, one that focuses on integrity: Chief Integrity Officer.

The CIO isn’t impeded by outdated perceptions about the function of compliance. They ensure adherence with laws and obligations, but that’s merely a side effect of driving a high performing, high integrity business. Because they’re actively engaged with the business leadership, the whole organization acts with integrity.

The Chief Integrity Officer isn’t lost in academic debate because they’re too busy driving value. And while we don’t want to be playing defense all the time, they’re a business’s only true defense in this new age of social media and the court of public opinion. A CIO can ensure that your company’s values and your employees are in alignment; that what your company talks, your employees walk; and what your company aspires to be, your employees effect.

What’s in a name?

I know, on the surface this all sounds like an exercise in semantics. But, I disagree. “Chief Integrity Officer” isn’t just a name change.

Freed from the limitations of the past, this active role is being redefined with a newfound purpose. Modern CIOs assume more responsibility, incorporate cultures, collaborates with HR and other departments, and so much more.

Simply put, the CIO role brings ethics to the center of business.

Integrity: Your path to success

With the acceleration of the speak up culture and organizational accountability that social media is enabling and amplifying, companies need to incorporate integrity into every level of the organization.

There’s no debating it: high integrity companies outperform others by a significant margin. Depending on the studies you review, these companies have experienced a 6-8% increase in shareholder returns.

Welcome to the dawning of the Age of Integrity. It’s time to burn down your compliance organization. From the ruins, drive the emergence of an Integrity team. Put your values at the forefront and deliver real stakeholder returns across financials, social responsibility, employees, partners, and investors.

I think you’ll be pleasantly surprised by the results.