The Compliance Officer Day Blog accepts contributions from guest authors and members of the E&C community. Enjoy this guest blog post on the past, present, and future of ethics and compliance from Alison Taylor. To pitch a story to us, email firstname.lastname@example.org with a summary of your idea.
Compliance is a relatively new profession that has become increasingly defined, empowered, and impactful in the past two decades. Saying you work in compliance may never make you shine at a fashionable party, but the truth is, it’s one of the more interesting, rapidly evolving roles in the modern corporation.
The compliance profession emerged from the 1987 Federal Sentencing Guidelines. Its defining concept is to serve as a form of internalized law enforcement whose efforts are focused on establishing policies and processes to ensure that employees do not violate laws, ethical standards, and norms. Corporate scandals continue to occur despite sustained effort by the profession, and government enforcement efforts have grown apace.
Companies have responded by investing in compliance efforts, and the significance of the role has grown, along with the liability for failure. As the compliance profession has matured, practitioners and regulators increasingly acknowledge that compliance does not work in a vacuum and must take full account of organizational context and culture.
Even the most talented compliance officer in the world will fail if:
- Employees are given incentives to meet unrealistic sales targets.
- Organizational leaders signal that it’s OK to ignore compliance procedures in certain circumstances.
- The chief compliance officer lacks C-Suite and board access, independence, and resources.
Compliance professionals understand all this. As a result, they increasingly conduct their own due diligence before accepting roles in which they won’t be able to succeed. Companies that are serious about compliance are integrating it into core business strategy, making this a fast-track career path and giving the compliance team a seat at the table.
That’s where we are today. I predict that future compliance teams will need to take into account a number of critical emerging issues as they develop new skill sets to address evolving organizational needs.
Three important trends to watch:
- Culture and behavior
The compliance field is increasingly aware of the limits of an approach based on identifying and sanctioning ‘bad apple’ employees and it is giving greater consideration to the behavioral aspects of organizational culture. A wealth of considered research addresses how employees are motivated and socialized into the organization, where they can come to rationalize and justify wrongdoing when it’s facilitated by the overall culture.
Future compliance teams will need to develop a much deeper understanding of group dynamics and the behavioral drivers of both misconduct and integrity. The study of human behavior and motivation — and the implications of this for the design and execution of compliance programs — can add much to a compliance officer’s skill set.
- Disruption and innovation
Ensuring that the organization adheres to laws and regulations will remain the bread and butter of compliance professionals, but expectations for the role are changing. Regulatory frameworks are becoming less consistent and more diffuse across regions, and compliance teams must increasingly grapple with emerging ethics-and-risk considerations in areas such as artificial intelligence, product innovation, cybersecurity, and other domains whose pace of technological change is outstripping regulatory attention. With this has come a focus on responsible employee behavior — beyond compliance — and on anticipating and preparing for yet-to-be-defined challenges.
- Ethics beyond compliance
Human rights issues such as modern slavery and human trafficking are also moving from soft to hard law, necessitating closer engagement by compliance in areas traditionally covered by the organization’s sustainability and corporate responsibility function. More broadly, the growth of economic and political nationalism — and growing doubts about the ability of governments to drive progress in sustainable development — have opened up a leadership role for the private sector.
Public trust in corporations has reached new lows. Data leaks and hacks increasingly mean that companies need to act as if their internal data, conversations, and decisions might be made public at any time. This evolution in transparency has necessitated a far more structured focus on corporate values and reputation.
Compliance officers of the future will need to work with other functions to ensure that a company’s decisions and messaging are aligned with its core values.
I am delighted to have the opportunity to prepare compliance officers for this disruptive and exciting future. In spring 2018, I will teach a class at Fordham Law School’s new master’s program in corporate compliance. Entitled Risk and Responsibility in Organizations, my course will help prepare students to tackle some of these emerging areas with an understanding of how compliance fits in the wider organization. While the program will provide in-depth training on core aspects of managing a compliance program, the class will also introduce students to emerging areas that stand to gain prominence and traction over the long term.
Alison Taylor leads BSR’s sustainability management practice and also works closely with its energy and extractives member companies. She focuses on approaches to sustainability through risk management, strategy, stakeholder engagement, transparency, ethics and governance, and organizational change. Previously, Alison was a senior managing director at Control Risks, where she helped companies operate with integrity, particularly in high-risk environments. She has also worked at Transparency International, PricewaterhouseCoopers, and IHS Global Insight. She is a board member of the ethics organization Center for Business Ethics and Corporate Governance. She is also an Adjunct Professor at Fordham Law School. You can read more of Alison’s writing on Harvard Business Review.