How Compliance Officers Conquer Stress

Few question whether the compliance officer job is stressful. Finding ways to cope can make the difference between just treading water and running an effective compliance function.

And the pressure is only getting worse. The volume of regulations continues to expand, as well as the responsibilities that many compliance officers are expected to handle. In addition, compliance officers at some companies lack the executive support they need to effectively do their jobs. 

In fact, 58 percent of compliance officers responding to recent survey by the Society of Corporate Compliance and Ethics (SCCE) and the Health Care Compliance Association said they'd considered leaving their positions over the past year, due to the stress associated with the job.

These findings should trouble not only compliance professionals, but other executives and board members, says Donna Boehme, principal with consulting firm Compliance Strategists. When compliance officers find themselves unable to do much more than tread water, “it's a perfect storm for compliance disaster,” Boehme says. That's because compliance officers in those situations are forced to deal with emergencies that have already occurred, rather than working to prevent them in the first place.

The convergence of several factors is boosting the number of demands and stress factors that compliance professionals face. One is the constant need for transparency, says Kevin Espinosa, commercial practice leader at consulting firm Compliance Implementation Services. The scrutiny from regulators to ensure that the information provided is accurate “has created a risk environment that puts demands on the compliance officer.”

The continually expanding volume of regulations makes staying on top of changes to the laws difficult and time consuming. More than one-third of respondents to the Thomson Reuters Cost of Compliance Special Report spend more than an entire day each week just trying to review and understand new regulations.

The sometimes adversarial relationships between compliance professionals and colleagues in other parts of an organization also take their toll. The SCCE/HCCA survey revealed that nearly three-fifths felt either isolated from other departments, or that the relationships between their areas were adversarial.

Executives in other parts of most organizations often lack a clear understanding of just what the compliance department does. This is due, in part, to the fact that the compliance function is still evolving, says Roy Snell, chief executive officer of the Society of Corporate Compliance and Ethics. “The role of the chief compliance officer is relatively new.”

At the same time, funding—or, more accurately, a lack of funding—adds to the stress level of many compliance professionals. Nearly three-quarters of respondents to the SCCE/HCCA survey indicated that their departments' budgets fell short of what actually was needed.

The range of responsibilities assumed by many compliance officers often is due to more than simply a lack of resources and the growing volume of regulations. Several other subtle sources of stress come into play, says Boehme. These include a “lack of positioning and empowerment, and a lack of a clear mandate and senior management support to drive the compliance agenda through powerful and uncooperative areas of the business.”

The lack of empowerment creates stress. “Even the most diligent CCOs often operate in an adversarial environment and find the continuous struggle upstream to be overwhelming,” Boehme says. “The single most important variable is how much tangible and visible support the chief compliance officer gets from the board and management,” Boehme says. This support should include a written mandate and a reasonable allocation of resources and support from other areas within the organization, including human resources, legal, audit, and IT, she adds. The compliance area shouldn't have to beg for cooperation from business lines, Boehme says.

“Even the most diligent CCOs often operate in an adversarial environment and find the continuous struggle upstream to be overwhelming.”

—Donna Boehme,

Principal,

Compliance Strategists

In a speech earlier this year as part of the Compliance Outreach Program, Carlo di Florio, director of the Securities and Exchange Commission's office of compliance inspections and examinations, said as much. “The business is the first line of defense responsible for taking, managing, and supervising risk effectively and in accordance with laws, regulations, and the risk appetite set by the board and senior management of the whole organization.”

Culture of Ethics

While the challenges are real, not every compliance officer is ready to call it quits. “Some times are stressful, but not so stressful that I'd consider quitting,” says Ellen Martin, vice president of ethics and business conduct with Boeing's office of internal governance.

Martin credits her outlook to the approach Boeing takes when it comes to fostering an ethical culture. For starters, the internal governance office proactively strives to identify and raise awareness of issues that could arise from changes in the business environment or in regulations by working closely with internal colleagues in other departments, as well as with outside organizations that monitor pending regulations. “We maintain connectivity in the industry and work with our partners in the company,” Martin says.

Boeing also continually focuses on developing leaders who can manage these shifts. “We stay in front of the changing environment,” she says.

The head of Boeing's office of internal governance, Wanda Denson-Low, reports to the chairman and CEO, and is a member of the executive council committee. “That sets the tone for the entire company and gives incredible visibility to the work we're doing,” Martin says. With Denson-Low a peer member of the executive council, along with the business unit leaders, employees see that how they conduct business is as important as the results they achieve.

While an organization's board and business units need to be willing to get behind the compliance function, compliance officers must also play a role in garnering support. “You can't be chicken and you also can't be Chicken Little,” Snell says. In other words, compliance officers have to be able to speak professionally with their colleagues about tough issues, without hitting them with every little issue that comes up.

Rather than limit or even avoid interactions with other areas, compliance professionals need to seek opportunities to partner with business unit leaders. The goal is to “develop cross-functional teams that are owned by the business and supported by compliance,” Espinoza says.

That's the approach Boeing takes, Martin says. Each business unit has an ethics executive on the leadership team. While they report to Martin, they partner with the business units and essentially have an independent reporting relationship. “The ethics executives have amnesty,” she continues. “They can have the tough conversations.”

Parallels to Audit

Another way to garner support is to draw parallels between compliance and internal audit. Most executives have accepted the independence and importance of the internal audit function, Snell points out. They also can emphasize the fact that both audit and compliance build stronger, more competitive organizations and can prevent very destructive events from occurring, Snell adds. The idea is to talk not just about the regulations, but to provide an over-arching picture of the compliance function.

If it's possible to have several executives attend a compliance conference for a day or two, where they'll meet compliance professionals from other organizations, Snell says. “They can see that this is a nationwide movement, encouraged by the enforcement community and supported by intelligent people.” They also may come to realize that compliance doesn't make the rules, but is trying to enforce the regulations and policies made by others, Snell adds.

Additionally, compliance officers should convey the positive aspects that their departments bring to an organization; namely, “an ethical culture, more integrity, and more respect,” Snell says. These attributes can help organizations attract and retain better employees, which should help their bottom lines.

In fact, SCCE is reaching out to business leaders in other functions, through groups like the Society for Human Resource Management and the National Association of Corporate Directors. The goal is to provide more information on the role of the compliance officer and the function of the compliance program.

It's critical that the compliance profession, working with others, address the issue of stress. Otherwise, good people will leave, and the profession will become less effective, Snell says. He remains optimistic that the compliance profession will find ways to meet the challenges. “We've just got a great deal of growing pains,” he says.