CCO Insights

What Is Compliance Management?

Today we continue our Compliance 101 series with a look at the most important resource a corporate ethics and compliance program has: the Chief Compliance Officer, leading the charge for effective compliance management.

I’ve long been bullish about the demand for compliance officers as the business world continues to become more globalized, more interconnected, more regulated, more transparent. Even if we don’t see huge growth in jobs with “compliance officer” in the title, we will see brisk demand for people who do what compliance officers do — building or administering programs that reduce the occurrence of regulatory violations and ethical misconduct.

So if that’s what a compliance manager is supposed to do, what are the skills or traits a person should have? We can identify four main categories.

Traits of Good Compliance Managers

Technical proficiency. A compliance officer needs to understand laws, rules, and regulations that dictate how a corporation should behave. Increasingly, he or she also needs to understand how technology can help to fulfill those obligations: which data to feed into data analytics programs, or what reports to pull from vast troves of data.

Business acumen. Even when you understand what the law requires and technology allows, you also need to understand how all those issues apply in a specific company. For example, it’s not enough to know what the Foreign Corrupt Practices Act (FCPA) prohibits; you need to know how those constraints apply to your own organization, working with actual customers, resellers, business partners, and shareholders.

Leadership skills. Compliance officers generally run a team. Whole libraries have been written about how to cultivate talent, inspire direct reports, resolve conflict, and so forth. We don’t need to repeat those skills here, but we do need to acknowledge that compliance management requires them; a CCO won’t succeed otherwise.

Interpersonal skills. Beyond leading his or her own team, a compliance officer needs to navigate complex corporate structures: working with internal audit or HR, persuading sales to implement a new procedure, training new hires on ethics policy, and much more. That’s not leadership — it’s persuasion, which depends on an ability to build trust or rapport with others.

From Four Traits to Compliance Management

Those traits define what a skilled compliance manager does. That still doesn’t quite capture what compliance management is, and what compliance managers will need to do in years to come.

The word “management” originally descends from the Latin manus, which means “hand.” By the 1500s, the Italians had devised a related verb maneggiare, which means “to put a horse through its paces.”

That concept captures a lot of what we want to convey about compliance management. For example, horses do a few basic tasks: carry baggage, run a race, plow a field. Every horse is unique, and exactly what task a horse might do will vary endlessly. Still, if you take the basic steps of caring for the horse, demonstrating authority, and training it patiently, almost every horse could do what you need it to do.

Compliance management is a lot like that. The specific risks you face, depending on your organization’s business model, people, and processes — that can vary endlessly, too. You want to achieve several basic objectives such as better regulatory compliance or fewer lapses of ethical misconduct, but those are abstract ideas. Every compliance officer will need to identify the objectives specific to his or her own company.

Once you do that, however, achieving those objectives will depend on some mix of those four managerial traits outlined above. You’ll always need to understand the law, technology, and business operations. You’ll always need to lead subordinates and persuade peers. That’s a success at compliance management.

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