Clout and the compliance professional

Many years ago, early in my compliance & ethics career, I had the great good fortune to communicate with and then meet the outstanding Australian scholar, John Braithwaite. John impressed me for having the distinction of disproving his own theory.  He was researching the reasonable assumption that the amount of resources put into a workplace safety program was directly connected with improved results. 

Now workplace safety, unlike other compliance areas, is readily measurable in terms of results.  If the safety program is effective, working mothers and fathers get to go home from a safe day at work to be with their children.  You know:  it either works or it doesn’t. 

So John proceeded with his study of literally what happened at the coal face.  But John displayed none of the usual confirmation bias.  Instead, he proved his own theory wrong, and unearthed a much more important theory:  that the clout of the safety people was the true indicator of success in a safety program. 

This was an underpinning for my own analysis.  As a student of political science this had enormous appeal. While Lord Acton wisely said “power tends to corrupt, and absolute power corrupts absolutely,” it is also true that power in the right hands is a very useful tool.  And if compliance and ethics people are to be effective they need power.  In John’s colorful words, if the line managers can “roll” the safety people then injuries will follow. If senior managers can “roll” the compliance officer, innocent people will be harmed by dangerous organizational misconduct.   

Back in 1993 my mentor, Rutgers Professor Jay Sigler,  my longest-term compliance colleague, Jeff Kaplan, and I were putting out a new publication on compliance, Rutgers University’s Corporate Conduct Quarterly (“CCQ”, published by Rutgers Camden, NJ, campus). (CCQ subsequently merged into ethikos, which even later became part of SCCE where it resides today.)  I invited John Braithwaite to co-author a piece for CCQ on the importance of clout in compliance programs.  I will admit that I was definitely the junior partner in this venture. 

Here, from over 30 years ago, are our cautions about clout for the compliance officer.  How do you think we did?  Do these still ring true?

“1. Resources sufficient to do the compliance auditing task;

2. Senior manager rank for the compliance officer;

3. Routes of corporate communication that work from the compliance staff:

    a) direct to the line personnel accountable for solving any particular compliance problem; and

    b) direct to the chief executive and the audit committee of the board;

4. A documented history of backing for compliance staff against line managers in tests of strength;

5. A documented history of disciplining line managers who ignore the recommendations of compliance staff or drag the chain in acting on them;

6. Policies that require implementation of the recommendations of compliance staff unless those recommendations are overruled over the signature of a top management officer, or in some cases, the audit committee itself;

7. Evidence that the compliance staff enjoys sufficient respect from line managers for them to participate with line managers in designing plans of action to prevent recurrence whenever a compliance problem arises. For each serious problem, there is documented evidence of a plan of action being prepared, where the plan is the responsibility of line managers, but is negotiated, approved and monitored by the compliance staff. It is documented that the compliance staff signs off that the plan they approved has been implemented; and

8. A record of rewards, incentives and advancement for effective compliance staff comparable to those for production and sales personnel, and sufficient to attract the best and brightest managers.”

I especially like the last one, which calls for our readers to get more rewards, money and promotions.  Note that this is similar to the DOJ guidance (decades after our article) asking about the treatment of compliance staff. 

If the compliance officer lacks real authority, or the more direct term, “clout,” then the compliance program lacks what it needs to endure in tests of strength. This means the ability for this champion of compliance and ethics to stand up for what is right when dealing with others in the organization.  In my experience this was true when we first wrote this, it is true today, and it will remain true in the future.