In the face of unprecedented enforcement risks, Chief Executive Officers are embracing the Chief Compliance Officer.
CEOs recognize that they need CCOs to keep the company out of trouble. General Counsels are still available and important to address legal issues to ensure compliance, but CEOs recognize that CCOs can keep the company out of any trouble. As a result, more CCOs are reporting directly to the CEO, more CCOs are joining the C-Suite and more CCOs are getting additional resources for the compliance function.
The marriage of the CEO and CCO is a perfect match. Both are responsible for overall performance of the organization. They share a common perspective – they see the company from a broad overview across all business units and geographic operations. Moreover, the CCO needs to cultivate a strong relationship with the CEO to ensure the CEO’s visible support for the compliance function.
CEOs are indispensable to a CCO in order to create an ethical culture. CEOs have to dedicate time and attention to the compliance function. It is more than just recording a message highlighting the importance of ethics and integrity. CEOs have to make their own personal commitment to external and internal messaging on the importance of ethics and integrity.
CEOs have opportunities to speak at industry conferences or participate in corporate integrity organizations. In the company, CEOs can take an active role in communicating the message directly to senior management and employees, as well as indirectly by requiring senior managers to play an active role in the compliance message and training.
Corporate cultures do not just appear out of thin air, nor is a company’s culture a random event. The CEO sets the tone by establishing priorities and communicating them through the organization.
The CEO can support a CCO’s efforts to promote ethics and integrity as a positive business strategy and an important way to reduce risks. CCOs and CEOs often reflect the same strengths and weaknesses. A committed CEO can improve the performance of the CCO and vice versa. It is a symbiotic relationship. A successful CCO often reflects a successful CEO and overall company performance.
As more CCOs join the C-Suite and establish a close working relationship with the CEO, corporate compliance is bound to improve. An independent and empowered CCO is an important factor in the overall success of a compliance program.
No longer are CCOs stuck in the lower levels of a corporate organizational chart begging for resources or for attention. Those days are gone and corporate governance is being transformed through the combined efforts of CEOs and CCOs.
In the end, the change in corporate governance has come about for one important reason: the CEO and CCO need each other.
