The role of the senior management on the success of compliance activities

Senior management’s job is about conveying messages in an inspiring way. Not just in meetings, but also by example. Find out the role of the senior management in the success of compliance activities.

Rising compliance challenges demand strong corporate compliance. Indeed, senior managers can play a vital role in maintaining an effective compliance program and maximize the innate benefits of the compliance activities. Let’s uncover what values can Senior Managers bring to ensure compliance effectiveness.

Major Tasks of Senior Managers by Paula Broadwell

In her biography of General David Petraeus, Paula Broadwell has listed 4 major tasks that Senior management can do to assist compliance functions.

#1 Get the right idea

The first step for managers is to imbibe a strong sense of social and ethical responsibility, focusing on the fact that compliance is the right thing to do for their business. Department of Justice (DOJ) representative Greg Andres says, “It is quite easy to avoid FCPA liability; simply do not engage in bribery.” This statement represents a big idea where senior managers can guide the way.

For instance, the shocking downfall of Enron was also to blame for management’s hiding financial problems through complex transactions. The Sarbanes -Oxley Act of 2002 was to prevent financial catastrophes like Enron. SOX implemented requirements for corporate accountability, with the provision to require CEOs and CFOs to certify SEC filings.

#2 Communicate the big idea down through ranks

Leaders should provide and exemplify necessary awareness to employees and concerned authorities to help them comply with rules and regulations. Compliance must be discussed in all possible meetings.

This practice is best led by General Electric that organizes a part of the summit, where senior management attends an annual conference and discusses “Compliance and ethics and the need of integrity in GE”. Likewise, the senior management cascades it to the middle management, focusing the risk under the violation of FCPA and other anti-corruption statutes. Then, middle management takes down the message to the whole company.

#3 Implement the idea on compliance

Senior management involvement outside of the Chief Compliance Officer allows them to have better visibility for funding and resources in the actual implementation.

Halliburton company created a Compliance Oversight Committee settlement of its shareholder derivative action for its FCPA matter. So, in addition to having the audit committee of the board looking at it from their perspective, Halliburton had senior management meetings biennially to oversee the compliance function within the company.

#4 Capture the best practices in compliance & lessons learned

This task is discussed by Lanny Breuer and other DOJ representatives at compliance conferences many times. Even the DOJ advocates a risk assessment as the foundation for any compliance program.

The Senior management should utilize the risk assessment that will eventually act as a road map that the company is going to take going forward.

Thoughts for the road

Senior management support is a hallmark of a successful compliance program. The discipline outside compliance can bring new perspectives and different ways to manage compliance risks.