Innovation can come in various forms for an organization. Innovation can appear in a structural form. You can move compliance more deeply into your organization with new or different structures. One I have seen have success is a Compliance Committee more closely tied to the geographic market in the field or the Regional Compliance Committee (RCC).
Two of the most common compliance focused committees are those at the Board level and those which sit between the CCO and the Board, usually consisting of senior executives such as members of a company’s Executive Leadership Team (ELT). However, a RCC can help the corporate compliance function to more effectively ensure employee and business partner engagement with compliance by integrating compliance into every aspect of functions and generating the necessary information to continuously improve the overall compliance function. A RCC can also operate on multiple planes to fully operationalize compliance in a company, augment the internal controls and make the company a more efficient and profitable entity.
Purpose. Most companies have a Board committee dedicated to ethics and compliance or something like a Board Audit Committee which the CCO will report directly into. Once again, there are many companies with senior executives populating another level of oversight with a Compliance Committee between the CCO and the Board. A RCC, formed at the regional level, helps to create more direct ownership, accountability, and valuable transparency. This moves compliance down into all levels of a company’s operations. This approach also significantly improves the consistency of compliance execution and helps to ensure business objectives are achieved in a legally compliant fashion. A RCC does not have primary responsibility for internal investigations but is charged with reporting any known compliance issues to the CCO.
The RCC can provide clear and frequent compliance-related communication on related matters throughout the region, strengthening a company’s compliance culture. It allows compliance topics to be more thoroughly discussed at regularly occurring operations meetings. A RCC can have communication structures designed to facilitate communication up the chain and down the chain. This allows a CCO to have a more direct set of eyes and ears closer to the ground. Finally, the committees give the compliance function greater visibility within the organization because compliance has been moved further into the middle and lower levels of the organization on a daily basis.
Composition. One of the key elements of the committees are their makeup, which is market centric. A RCC should include some or all of the following Regional roles:
- Vice President;
- Ethics and Compliance Director;
- Legal and Compliance Director;
- HR Director;
- Finance Director;
- Trade Compliance Director;
- Supply Chain Director;
- Sales Director; and
- Senior representatives of Operations.
This composition of the RCC, coupled with their structures, allow compliance to be fully operationalized into the Company’s global organization.
Authority and responsibility. There are multiple possible responsibilities for a RCC. Some of these possible responsibilities include:
- Assisting in identifying not only potential compliance risks in the region but also reputational risks to the organization.
- Establishment of goals and metrics to measure against these compliance goals in the region.
- Exercising oversight of the implementation and effectiveness of the company’s global compliance program in the region.
- Reviewing and monitoring implementation of Code of Conduct in the region and assisting in the identification of best practices, alternative strategies and local initiatives to enhance the compliance program.
- Assuring to the CCO and the senior leaders of operations that compliance goals and requirements are both established and communicated across the organization.
- Advise management of its assessment of the compliance program, ethics and compliance risks in the region and steps taken to both manage and lessen such risks.
- Review the company’s helpline complaints and other information to assure the region that appropriate steps are taken to modify the compliance program to reduce identified ethics and compliance risks.
The innovation represented by the formation of a RCC operationalizes compliance into a company’s operations where the business operates. This approach follows the DOJ mandate to move the doing of compliance down into the business of the organization or operationalize compliance. The make-up of a RCC, while including compliance representatives, is also populated by representatives from other disciplines within the global organization. This allows a richer and more holistic approach to not only compliance advice.
All of this works to adds a dimension not often seen or even discussed in the compliance profession. The accountability and oversight down to the regional level and the compliance monitoring, reviewing, assessing and recommending that is deemed to be necessary will provide additional endorsements up through the organization that it is actually doing compliance. In compliance, it is execution where the rubber meets the road. A RCC can provide your compliance program a unique structure to perform these functions.
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 email@example.com.
© Thomas R. Fox, 2020