Day 15 of One Month to Innovation

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. 

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. However, a Regional Compliance Committee can will 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 Regional Compliance Committee 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 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 Regional Compliance Committee, 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 that all of business objectives are achieved in a legally compliant fashion. A Regional Compliance Committee does not have primary responsibility for internal investigations but is charged with reporting any known compliance issues to the CCO. 

A Regional Compliance Committee 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 Regional Compliance Committee 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 Regional Compliance Committee should include some or all of the following: (a) the Vice President of the region; (b) the regional Ethics and Compliance Director; (c) the regional Legal and Compliance Director; (d) the regional HR Director; (e) the regional Finance Director; (f) the regional Trade Compliance Director; (g) the regional Supply Chain Director; (g) the regional Sales Director and (h) senior representatives of Operations in the market. This composition of the Regional Compliance Committee, 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 Regional Compliance Committee. 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.
• Advice 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.
• Reviewing 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 Regional Compliance Committee operationalizes compliance into a company’s operations where the business operates. This sort of approach follows the Department of Justice mandate, articulated in the Department’s Evaluation of Corporate Compliance Programs for companies to move the doing of compliance down into the business of the organization, or operationalize compliance. The make-up of a Regional Compliance Committee, while including compliance representatives, is also populated by representatives from other disciplines within the global organization. This allows a fuller, richer and more holistic approach to not only compliance advice. 

It 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 Regional Compliance Committee can provide your compliance program a unique structure to perform these functions. 

Three Key Takeaways

1. Innovation can occur in structural changes to your organization.
2. A Regional Compliance Committee puts compliance closer to the ground in geographic regions outside the US.
3. A Regional Compliance Committee facilitates execution in your compliance program. 

This month’s podcast series is sponsored by Oversight Systems, Inc. Oversight’s automated transaction monitoring solution, Insights on Demand for FCPA, operationalizes your compliance program. For more information, go to OversightSystems.com.