Today I conclude my two-part series on the role of a Compliance Committee Chair. However, first I wanted to honor Barbara Bush, who died Monday. She was as beloved a First Lady as America has seen, certainly in my lifetime. In Houston, she was a near mythic figure for her generosity, love and commitment to the city after the Bushes returned in 1993. According to her obituary in theNew York Times(NYT), “the Bushes had celebrated their 73rd wedding anniversary in January, making them the longest-married couple in presidential history.”

Personally, Mrs. Bush “was regarded as unpretentious, a woman who could wear fake pearls, enjoy takeout tacos, walk the dog in her bathrobe and make fun of herself. Perhaps adding to her appeal, she conformed to the popular view of an old-fashioned grandmother, with her white hair and matronly figure; though she was almost a year younger than her husband, many thought she looked much older.” My personal favorite Barbara Bush one-liner was when she announced to her husband “Watch out or I will tell who was my favorite president”. Perhaps the final word should come from Mrs. Bush herself, who once said, ““I want to be known as a wife, a mother, a grandmother. That’s what I am. And I’d like to be known as someone who really cared about people and worked very, very hard to make America more literate.””

The role of a Chief Compliance Officer (CCO) is that of a doer. However, if you move up to the Board of Directors and become the Compliance Committee Chair, your role changes. This post will consider the remaining points from Stanislav Shekshnia’s Harvard Business Review (HBR) article, entitled “How to Be a Good Board Chair”, from the perspective of the Chair of a Board of Director’s Compliance Committee.

  1. Measure the inputs, not the outputs

This prong clearly sets out one of the key differences in being a CCO and a Compliance Committee Chair. At the Board level, the key is to measure the quality of your inputs so that you can develop better oversight. These include people, committee agendas, committee materials, committee processes and committee minutes. Of these by far the most important is the people part; that is, a Compliance Committee needs real compliance expertise. If there are knowledge gaps in this area, the nominating committee should be engaged to find such an individual.

The remaining inputs can be assessed through Compliance Committee evaluations and your outside consultants’ reviews. As Compliance Committee Chair, you should ask how your agendas cover compliance strategy, compensation and succession, investments, risk, and disclosure. You should ask the other members to evaluate the Compliance Committee meetings for length, candor, airtime allocation, engagement level, and resolutions. Finally, you should seek “feedback on his own performance: How well does he frame questions, facilitate exchanges, articulate decisions, and conduct reviews?”

  1. Be the Chair, not the boss

It may be tempting to see the role of the Compliance Committee Chair as the boss of the CCO. However that is not the proper perspective. As a Chair, your role is to represent the Compliance Committee and full Board. You should keep the other Compliance Committee members well-informed and be a conduit for information and subject matter expertise to the full Board. It is the role of the Compliance Committee to be the collective boss of the CCO and make sure it “provides the goal, resources, rules, and accountability” the CCO needs within the organization.

To do so, you need to provide what every boss should provide to their subordinates: motivation, control, advice, and mentoring. You should organize the Compliance Committee content and the communication process so that the CCO has these tools and understands them. If you are a retired senior compliance executive, you can mentor the CCO but understand it should be based on your experience in communications and leadership from the CCO role, not as a substitute for the current CCO.

  1. Be a representative with the shareholders not a player

While the Board Chair will be the public interface of the company, as the Compliance Committee Chair, you may be called on to fulfill that role for the area of ethics and compliance. Here regulations may require limited communications but even if they do, you must ensure equal and fair treatment for all shareholders, both big and small. These communications must be the collective voice of the Compliance Committee and not simply the Compliance Committee Chair as an individual.

Properly viewed shareholder input is not to be feared and can be a valuable asset. The Compliance Committee can benefit from their experience, knowledge, networks, and other resources, if they stay out of the boardroom. The key is engagement in a meaningful way through listening (another leadership skill), by posing appropriate questions and reporting this information back to the Compliance Committee and if warranted, the full Board. In this #MeToo era, I think it is incumbent that shareholders be communicated with fully on the Compliance Committee’s response to this issue.

The author concludes by noting that ultimately, the challenge for the Compliance Committee is not really about traditional leadership at all and certainly not the leadership they may have exhibited as a CCO. This is not to demean or lessen a key Compliance Committee function: counseling and supervising the CCO and overall compliance regime. However as a Committee that responsibility is collective, and the Compliance Committee Chair’s job is to enable the full Compliance Committee to be effective. This is done through facilitation and not command. The Compliance Committee Chair role is to create the conditions under which the entire committee can have productive group discussions. Finally, “good chairs recognize that they are not first among equals. They are just the people responsible for making everyone” a good member.

 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2018

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