Building up an effective virtual compliance team

Julien Maillot

Running a compliance function through a virtual team (when the reporting is dotted line rather than direct) is certainly challenging; however, sometimes there is no choice but to operate through this model. While the preference is to have direct reports and a full non-virtual team, the reality is that a hybrid role may be necessary due to the size of the operations or the number of countries to cover.

This article discusses the things to think about when implementing a virtual compliance team, and the systems that can be put into place to maximise the effectiveness of virtual teams.

Will the team secure enough time for compliance?

A challenge for anyone who lends their time to compliance as part of a virtual team is finding the time to actually spend on compliance. While it often comes down to the actual person and how they manage their time, the chief compliance officer could consider talking to each virtual team member’s direct manager to reach an agreement that the employee spends a certain percentage of their week on compliance. This should be documented and formalised as part of their employment agreement or their HR file. Ideally there should a system in place to record the time spent on compliance. Without going into a large and complex system or recording time online or through some tool, it might be easier to record the time through their normal reporting or when they have one-on-one meetings with the chief compliance officer.

Do the shared resources have core skills for compliance?

When the team is comprised of shared resources from the sales, operations, HR or finance teams they simply don’t have the experience in compliance. While they can certainly run the training initiatives, set up meetings and facilitate sessions, they may not have the experience to actually give the training, conduct investigations or really participate in the compliance function. When appointing these resources, best practice is to have them complete a detailed course in compliance. They need to understand how compliance programmes work. They also need to understand the legal background in detail and be able to back up the training with some knowledge of recent cases or examples that can be relied upon when a recalcitrant employee tries to argue that compliance is a waste of time. Time should be invested in gathering the team together and having them complete training together. They will enjoy meeting each other and working together as a team and the networking will aid in their team building.

Do we invest in tools to help the virtual team?

The biggest mistake in setting up virtual team members is appointing someone then forgetting about them. The virtual team needs investment – especially investment of the chief compliance officer’s time. They need to have regular conference calls, at least one or two global “all-hands” meetings, and some form of shared portal for collaboration. Simply appointing someone as a virtual compliance person and not managing them or not investing in tools for sharing and collaboration is a wasted opportunity.

Does the team have a clear vision on compliance?

It is common for a virtual team to lack a shared vision of compliance. This is often because they have come to compliance through a different role and are looking at it through a different lens. Very often when they are “local” staff in the global markets, their views are skewed because of cultural norms. Much work needs to be done to make sure that the virtual team is absolutely in sync with the global compliance objectives. Even if team members have personal views that are not aligned with the global corporate perspective, it is important to coach them that they will significantly reduce the effectiveness of their compliance message if they let out their personal views to others in the company. They need to be told to “talk the talk”, even if their personal views do not align.

Does the team understand their roles and execute them properly?

Virtual team members often only focus on organising training or becoming local “police”. While these are important parts of their role, it is much more than just that. The role should be filled by someone who has the ability to counsel business partners locally, conduct reviews and support executive decision making when it comes to ethics and questionable practices. The virtual staff must be coaches to the local teams and regarded as essential members of the global compliance team. Not everyone in every country will be able to step up to this level, particularly in a part-time role; however, there are steps that can be taken to help them not fall into the exclusive role of trainers or police by helping them build in time for coaching. Set them goals relating to coaching and measure their effectiveness as a coach.

Do we have a system to monitor the virtual team’s effectiveness?

Sometimes a member of the virtual compliance team can provide a strong compliance voice but, over the years, become too close to the local business teams and lose their objectivity around compliance. This is even more complicated when you hire local people that feel under pressure to support the local senior executive that they report to and who hired them. This can be overcome by monitoring and perhaps changing the virtual compliance officer every two or three years. The role can be developed as a transitional role, and seen as a reward for someone moving up the executive ranks in the company. Rotating positions is also a good initiative and works well to counteract the closeness that develops between the virtual compliance officer and the business.

Do we have clear reporting lines?

Because of the virtual element of the compliance team, reporting lines are almost always going to be solid to local management. If your company has a mechanism to officially record dotted-line reporting, then do so. When possible, it is better to include the reporting lines in the HR system as it lends legitimacy to the role and makes it part of the person’s employment, not just something where they are helping another group.

What will the team receive as compensation for their extra duties?

The virtual resources will often want to be compensated for the work that they are doing over and above their current roles, and it is unreasonable to expect many people to take on additional responsibility (particularly a compliance responsibility, which may have additional legal liability) unless they are compensated. Therefore it is important to have a compensation system in place and to get it right. The compensation might be the opportunity to travel and attend meetings (being involved as a regional compliance person virtually might be a prerequisite to a higher executive position), or it may be a bonus that is over and above their normal compensation. Either way, it is perfectly reasonable to give the virtual team member some compensation for the great work that they are expected to do.

Do we have a system to track and control expenses globally?

Because the virtual team are incurring costs (such as travel) on compliance’s behalf, one challenge to address is the fact that these costs are often charged to the employee cost centre, which is almost always their direct manager. In order to make the virtual team work there needs to be financial mechanisms in place to charge expenses (especially travel) away from their existing cost centre to the cost centre where compliance is based. This requires finance to arrange the recharging of costs internationally, which is often subject to rules and rarely done. Making this work will go a long way to ensuring that the direct manager supports compliance, as they will no longer see the using of their staff for compliance initiatives as a “cost” for them.

How will the team communicate?

There is no doubt that a global virtual compliance team is harder for the chief compliance officer to manage. To make the team easier to manage, an email alias and common collaborative portal (such as SharePoint or Yammer) should be set up, the entire team should speak semi-weekly via a conference call, and an annual meeting should be arranged where the team can get together for training and discussions on goals. This should be combined with excellent communication to the direct line managers, keeping them up to date and engaged in what is happening.

 

Many companies use a virtual compliance team to implement a third party compliance programme as it applies to distributors and resellers. As this is an example of a compliance programme that includes the business at its heart (as it is their business partners that the programme is trying to manage), it is even more important to leverage the business teams as part of the compliance teams. The sorts of people that are most likely to form part of that team are channel operations staff or maybe those that look at credit management. These are often great on-the-ground resources to supplement the global compliance team in implementing a third party compliance programme.

 

 

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