Compliance and Ethics Program - Effective Program Design

Effective Program Design

A high-performing compliance and ethics program is best organized as an integrated capability assigned to business functions/units while managed and overseen by individuals with overall responsibility and accountability. Compliance can be a daunting challenge, but it is also an opportunity to establish and promote operational excellence throughout the entire organization and significantly improve the overall operational performance.

Broadly understood, compliance is an important mechanism that supports effective governance. Compliance with regulatory requirements and the organization’s own policies are a critical component of effective risk management. Monitoring and maintaining compliance is not just to keep the regulators happy, it is one of the most important ways for an organization to maintain its ethical health, support its long-term prosperity, and preserve and promote its values.

On a more practical level, a compliance and ethics program supports the organization’s business objectives, identifies the boundaries of legal and ethical behavior, and establishes a system to alert management when the organization is getting close to (or crossing) a boundary or approaching an obstacle that prevents the achievement of a business objective.

Once an issue is detected, management must be prepared to respond quickly and appropriately to minimize the impact on the organization (and the community, as appropriate). Management should continuously improve its compliance and ethics program. This will enable it to better prevent, detect, and respond to similar misfeasance and/or malfeasance in the future.

Like any other core capability and/or process, the compliance and ethics program should strive to deliver tangible benefits and outcomes to the organization. Every organization is unique and has its own objectives. As such, several objectives of the compliance and ethics program will be unique as well. That said, there are a few universal program outcomes/objectives that a compliance and ethics capability should deliver. These include an enhanced culture of trust, accountability and integrity; prevention of noncompliance, preparation for when (not “if”) noncompliance occurs, protection (to the extent possible) from negative consequences, detection of noncompliance, response to noncompliance and improvement of the program to better prevent, protect, prepare, detect and respond to noncompliance.

An important aspect of a high-performing program, and one that cannot be overstated, is enhancing the culture. A strong culture that provides important benefits would including a “safety net” for when formal controls are weak or absent, and an open environment of trust, accountability and integrity – all of the ingredients that help drive overall workforce productivity.

A well-designed compliance and ethics program is only half the picture. Critical to its success and its ability to meet the challenges of constant change, increasing complexity, rapidly evolving threats, the need for continuous improvement requires organizations to have the commitment of both senior management and the board, adequate authorization and funding, the appropriate tools to facilitate measurement and rolling-up information, comprehensive training on the measurement process and an early socilaization of approach.