The Case For The Global Compliance Function
There comes a time in the history of every global company when its executive leaders wish they had seen something coming.
It might have been a warning about potential trouble ahead. It could have taken the form of a complaint from a customer, employee or business partner. And it may have sounded like something trivial the first time it surfaced, only to expand in impact and create unforeseen challenges.
Whatever the case, particularly when red flags escalate into a full-blown crisis, hindsight always serves up important management insights and, occasionally, even some humble pie. In the best of cases, hard lessons are learned and leaders evolve. In the worst, people can get hurt, reputations can be damaged and profits can really get squeezed.
This is why it is important never to underestimate the value of the corporate compliance function.
In the world of public, exchange-listed companies, the compliance function plays an essential role in the governance structure, ensuring alignment with the law, and providing a framework for managing matters of organisation culture. But, that is, only on one condition.
The act of consistently enforcing compliance gives a company the canary in the coalmine signal – and system – to prevent, identify and mitigate the impacts of violations of company policy.
The compliance function is even more critical for privately owned companies.
And in the realm of globally distributed family-owned businesses, it may be the very key to determine enterprise success or failure.
Executives who have worked for family-owned businesses already know just how lacking these companies are when it comes to investments in corporate governance. In some cases, these global enterprises completely lack any effective governance or governance structure.
In these environments, two types of leaders are revealed: those who are appointed for political reasons, and those who are promoted purely on their merit and fit with the culture.
This ultimately results in the concentration of real power and authority in the hands of those who are politically aligned with one another, while the actual owners of the family-owned business never gain access to the truth of what’s happening within their own business.
Think about it. If there are no whistle-blower protections, or if the compliance function is owned by a leader who also owns, for example, the finance function, how can serious, evidence-based concerns about the conduct of the business and its management team ever be properly exposed to the light of day?
Corporate compliance turns the heads of leaders with something to hide or a politically driven atmosphere. Its purpose is to help companies avoid and detect violations of company rules and norms, and it brings the capacity to protect organisations and individual leaders from costly lawsuits, and worse.
Taking compliance more seriously is important business, and creating and sustaining the system that can trigger warnings about major risks and problems for the organisation is something for which every global leader should advocate and take seriously in good times and bad.
Copyright © TRANSEARCH International
Other Thought Leadership
TRANSEARCH hosted various c-suite executives in 2022 to discuss challenges like high energy costs and supply chain disruptions. The results revealed six key levers for companies to survive these challenges: People, Culture, Leadership, Reputation, Resilience, and Proactive, Empathic Communication. The study will continue in the 3rd quarter of 2023.
Dr. Carlos Davidovich MD. explores the neuroscience of biases and where they are located in our brain, the negative consequences of unconscious cognitive biases and the connection between biases and Diversity and Inclusion.
Ponder long enough and you might recall hearing at a business conference or reading a blog post from a renowned futurist, author or social commentator some time ago that while things to come remained as always unpredictable, it was likely that the pace of change in our times would indeed accelerate. Looking around at the ways our lives and work have been altered in the past 24 months alone,
Breakthrough technology, uncertainty, the increasing speed of change and the redefinition of 'work' demand an organisation that is a fit for the 21st century (built to change). We refer to it as 'succession planning.' A better description would be 'planning for success.'
TRANSEARCH India invited a panel of CEOs and board members, to discuss the topic – 'CEO Conversations: What Boards Expect'. The panellists also debate the importance of agility, culture, succession planning and diversity as key tenets of good governance and purpose-led leadership.
More than anything, agility is a way to think, it’s a mindset, and as such, without 'leadership' you still don't have much. The type of leadership required exudes, encompasses, encourages, and expresses agility in everything the leader does. Which leads us to the 'The Way of the Dolphin'.
One of the reasons a weekend respite from one’s executive leadership responsibilities – or a longer holiday break away from the office – can be so productive for one’s state of mind is because it allows us the time to reflect on our work and absorb important lessons learned by others. There is no shortage of illuminating quotes, allegories and simple epiphanies circulating on the Internet,
While so much of the world around us is changing, there will come a time when people around the world will look for signs, evidence and leaders in whom they can believe and put their trust for better things to come in the future. There is no better economic and social flashpoint to prove this point than the continuing global struggle to contain the spread of COVID-19,