“Why not go out on a limb? That’s where the fruit is.” — Will Rogers
” Change is the law of life and those who look only to the past or present are certain to miss the future.” — John F. Kennedy
The compliance profession continues to evolve and grow. More lawyers and law students are seeking knowledge and training in the field of ethics and compliance. There is a reason for that.
Donna Boehme, a leader in the ethics and compliance field recently wrote an important column on Compliance 2.0, and the death of Compliance 1.0. (Here and Here). Michael Scher, another compliance leader, has several important postings on this issue on the FCPA Blog (Here and Here).
Donna’s point is straightforward (as only Donna can do): an independent and empowered CCO who sits in the C-Suite is the inevitable best practice/model for corporate governance. As she noted in her column, the old model, Compliance 1.0, where the CCO sits in the legal department, reporting to the Chief Legal Officer, is dying or already dead.
Donna knows what she is talking about. Her ability to cut through issues, point out the benefits of an empowered CCO, and advocate on Compliance Model 2.0 is well-known and unmatched. She has been called “The Lion of Compliance,” and those who know her will quickly agree with that title.
CCOs have an important professional history. They started out in the backwaters of legal and sometimes audit shops, seeking influence to implement proactive strategies to enhance corporate ethics and improve legal compliance. It was only through the sheer efforts of compliance professionals, with help from the federal government (HHS) and later the US Sentencing Commission that CCOs were recognized as a legitimate and powerful governance force for corporate ethics and compliance.
In the ruins of the WorldCom, Enron and others, along with the late-decade financial meltdown, empowering CCOs was seen as a critical initiative. As corporate scandals continued to be reported, public disgust and shock eventually pushed companies to find a new solution: instead of relying on a Chief Legal Officer/CCO, who wears two hats between legal and compliance, CCOs were empowered as proactive forces of independence and caretakers of the company’s culture and legal compliance programs.
Financial institutions, Oil and Gas companies, Healthcare providers, and other companies have quickly embraced this model, recognizing the obvious benefits of an empowered CCO.
We still see occasional whimpering from a few professionals seeking to maintain the old Compliance Model 1.0 – It is hard to figure out why they cannot let go. As Will Rogers reminds us, the fruit is at the end of the limb, not buried deep in the trunk of the tree.
Donna Boehme has never argued that her governance model is a flat and non-negotiable solution for every organization. She is a lot smarter than that. In fact, she recognizes that there are situations, particularly in smaller non-regulated companies, where legal and compliance can effectively work together in a common structure.
What is non-negotiable is the question of access, authority and independence of the CCO. If a CCO is buried deep in a legal office, the CCO is unlikely to have adequate access and authority to interact with senior executives. By contrast, an empowered CCO is an important check and voice at the table, reminding everyone of the benefits of promoting an ethical culture and ensuring legal compliance. They are the guardians of the corporate culture – a critical asset in today’s global marketplace.
To those who embrace the future of the compliance profession, you are the lucky ones who will immediately enjoy the fruits of a robust ethics and compliance function. And to those who continue to cling to the past and resist change, history has shown us repeatedly how your future will turn out — filled with regrets and poor performance.
Will Rogers and John F. Kennedy recognized the importance of change as the “fruit” of the tree of life, and the “law of life,” respectively. In the corporate governance world, change can be the difference between life and death of a company. A company’s culture is the lifeblood of the company, and change can be a valuable asset in the field of ethics and compliance.
