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Best Practice and Delivering Value The Future for Compliance

Releasing and refocusing resources

Achieving the major Step Changethat we have discussed in this paper requires a major cultural shift at all levels within an organisation if the transformation is to come about.

New skills will need to be introduced into Compliance departments and certain existing resources either redeployed or re-skilled. Boards and Senior Management will be pleased to hear that it is not simply a question of increasing the Compliance headcount (with the consequent impact on the bottom line), although to achieve this transformation there will need to be an investment in goodCompliance cost. However, the incremental revenues should far outweigh the additional costs. Put simply, Boards need to look elsewhere in an organisation for cost savings and not in the Compliance direction.

“There is often a temptation to cut back, or skimp, on Compliance assurance, on the theory that Compliance and legal staff do not increase the bottom line. That view of course is terribly mistaken… they assure that their firms retain and improve their reputation.”

Lori Richards, SEC Director5

However, this is not the only change required at Board level. Boards need to pro-actively support the transformation of Compliance which should be seen as just as important a part of value creation within an organisation as the corporate strategy department, or the most profitable business unit.

In the corporate pecking order, the Compliance Department should be seen (and promoted) as a training ground for management talent, an internal radar screen on the health of the business, and an instrument of senior management to help bring about lasting business change.

Boards need to break the culture of paying lip service to the importance of Compliance with one hand whilst talking down or cutting the budget for Compliance with the other. Against both the ever-increasing regulatory demands on the business and the imperative for change, this is an approach destined for failure.

Not unsurprisingly, perhaps, the greatest change needs to be achieved in the Compliance Department itself. Leadership, vision, creativity, pro-activity and outstanding communication skills all need to emerge in abundant supply. These skills will enable Compliance to align itself better with the business and to be seen as the catalyst for change that is essential. Group Compliance Directors need to recruit the required skills from industry, from the regulators and most importantly, from within their organisation, to blend the new with the old and to form a potent mixture that will effect change.

5 Mid-Atlantic Securities Forum, Philadelphia, Pennsylvania, March 2002.



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