Ten things a CEO can do for a CCO

August 5, 2015 Scott Lane

Here are ten things that CEOs can do for their CCOs to get the maximum from their investments:

1. Appoint a CCO

It goes without saying that you should appoint a CCO to the company. The CCO should not be employed merely to meet a regulatory requirement from the SEC or another regulator; it should be a real assignment that comes with all the necessary support and infrastructure. Don’t fall into the trap of appointing a CCO in name only and shoving that person into a dark internal office while hoping that they don’t cause you any trouble. Those days are over. CCOs are being held liable for their acts and the acts of you and the company, so you want a CCO that will actually do the right job. You should be involved in the hiring – don’t just delegate it to HR or legal. It’s an extremely important hire and requires your involvement.

2. Allow them access to meetings

Appointing a CCO and then hiding them is not really a viable option. The CCO needs to be invited to meetings and participate in management. If you think that the CCO isn’t strong enough to participate in meetings, then either have them trained or find another one that you feel confident about. The CCO should be able to walk into any meeting and participate, whether the meeting is about company strategy, operations, or specifically about legal or compliance areas. If you think that the CCO has some of these skills and not others, invest in getting them training to develop those skills. It is in your best interest to do so and they will add much more value in their roles.

3. Treat them as a C-suite member

The CCO is a C-suite member and should be treated as such. If there are certain benefits or perks to being part of this group, then the CCO should be entitled to them, provided they are adding value to the extent that is expected of a C-suite member. It is important to the CCO that they are not only seen to be of authority across the company – they must actually have the authority and the ability to step in and out of meetings like many C-suite executives. Good C-suites know a small amount about a lot of things, and that is especially important for a CCO. There is no way to get that experience unless the CCO is treated as an executive and is not seen as a second-class employee whose only role is keep you out of jail.

4. Change the reporting line

It is important to determine where the CCO actually reports. Historically, the profession developed as part of legal and finance teams; however, the skills needed are actually more around sales, channels, business, process, operations and change management. In any event, the CCO role belongs in the C-suite and therefore should report to you. While CEOs are desperately trying to reduce their direct reports (which is very reasonable) there are a few roles that really need to be direct; the CCO is one of those.

5. Stand up for them

The CCO needs credibility to be effective. Otherwise, the stigma of being a back-office audit function will stymie the development of the role and the CCO. If you don’t stand up for the CCO and invest in giving them street cred, then it is likely that they will never graduate to being a valued business partner. You can do this in a number of ways, but the more public and wider the credibility given the better. Ask the CCO to participate in side projects and key business objectives. Have them attend your meetings and sit next to you in a few to allow other members of staff to see the value and trust that you place in that person.

6. Allow them to be a change agent

If you have the right CCO, they should be a change agent. Most companies are somewhere along the path of ‘good compliance’ to ‘great compliance’. Many are not even at the ‘good compliance’ stage and are barely able to staff a compliance team beyond auditors and box checkers. If you want to have a great compliance team that adds value to the company then you need to allow them to make changes. Support those changes positively and give them the scope to look at processes and procedures and replace them with simpler ones. Challenge the CCO to examine the whole scope of the way that compliance is treated across the company and give them the power and support they need to change it. If the CCO is not changing things and making them better than before then they are not doing their job properly.

7. Staff appropriately and support budgets

Employing a CCO and then not giving them any budget is just absurd. It would be like staffing a CFO and saying ‘You can’t hire anyone, you have no budget for IT, no accounting system, no audit support, no external consultants, no training, no staff development – let alone staff – and please don’t do anything that will incur any expense as there is no budget’. This is totally unacceptable for any C-suite role. If you are going to invest in a CCO then the CCO needs to have resources. They will need to brief outside counsel and compliance consultants, conduct reviews and risk assessments, carry out investigations, build and rollout training, and engage due-diligence providers. The purpose of the CCO and the team is to build and improve the company’s compliance programme. Even the most basic company will need resources from external advisers to make this effective. If it is okay for the HR, finance, legal, sales and marketing teams to engage people to help bring in best practices and resources, then it should be fine for the CCO.

8. Allow them some independence

Riding roughshod over the CCO is probably not the best approach to building lasting friendships and a collegial environment. The CCO has their skills and you have yours. The CCO is not trying to be the CEO, and likewise you shouldn’t try to be all things compliance. The CCO should be the consigliere to you, and you should rely on them to add value to you and be a sounding board, supporter, adviser and counsellor. Give them the independence they need to approach outside companies, to seek advice and to report matters to the board or audit committee as required. The CCO is not trying to go around you, but in many cases the sensitive matters that they might be involved with require independence. Expect the CCO to go to the board or audit committee directly for some matters – it is part of their job so you can’t hold it against them when it happens. If you build a strong relationship with the CCO, you can be assured that they will only liaise directly with you when they really need to.

9. Communicate with them

CCOs and CEOs need to communicate well and often. There is nothing worse than having an issue come to your attention without being previously briefed by the CCO. What the CCO has to say should also not be seen as all ‘bad news’ and it should not be frustrating to always hear about the bad things. The CCO has an obligation to keep the meetings short, practical, full of useful information and business focused.

10. Trust them

This is probably the most important element between a CEO and any of their direct reports, and the CCO is no different. Trust between you and the CCO is essential; in the CCO’s mind, they will think that if things aren’t going well they should just get up and leave as there are plenty of other jobs out there. The best way of showing trust is to show that you value and respect the CCO. Trust is built not deserved, however, so new CCOs will have their own obligations of building that trust quickly and showing you their value.

 

 

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