Corporate compliance programs are essential for organizations of all sizes to prevent illegal, unethical, or inappropriate behavior by employees. These programs mitigate risk, promote ethical conduct, protect the public perception, and promote the reputation of a company by ensuring that it stays in compliance with laws and regulations, both nationally and internationally.
In order to implement a successful corporate compliance program, it is important to understand the key elements that make up a program and the key players. Keep reading to learn more about these components and, ultimately, the recommended steps to build and execute a new program.
What is a Corporate Compliance Program?
By definition, a corporate compliance program is a set of policies, guidelines, procedures, and practices that a company establishes internally to ensure that its employees and agents comply with applicable laws, regulations, and industry standards.1 The programs have a number of positive impacts that result in a company’s regulatory well-being, including increased transparency and accountability, improved employee morale, and better corporate governance.
The Elements of a Corporate Compliance Program
In order to create a program that effectively prevents legal and regulatory violations, detects misconduct, and promptly addresses issues that may arise, several elements need to be present. These elements include:2
- Written policies and procedures—spell out the company’s expectations for ethical behavior and compliance with any relevant laws and regulations
- Employee training and education programs—ensure that all employees are aware of the policies and procedures and understand their responsibilities and contributions toward keeping the company compliant
- Systems for monitoring and detecting—alert key players to potential compliance issues, and include regular audits and internal investigations
- Procedures for reporting and addressing concerns—include a mechanism for employees to report potential violations anonymously and without fear of retaliation, such as a hotline or anonymous web portal
- A system for enforcing compliance—includes disciplinary action for violations of the policies and procedures
- Ongoing review and evaluation—ensures the compliance program stays effective and up-to-date with changes in laws, regulations, and industry standards
Steps for Implementing a Corporate Compliance Program
There are multiple frameworks depending on your industry, and the current state of your compliance program. Below, we will explore a common five-step process:
- Conduct a risk assessment
- Develop policies and procedures
- Train employees
- Monitor and audit for compliance
- Establish reporting and investigating processes
1. Conduct a Risk Assessment
Begin by identifying and assessing the compliance risks specific to your industry, jurisdiction, and business activities. Evaluate potential areas of vulnerability and prioritize them based on the likelihood and impact of non-compliance.
2. Develop Policies and Procedures
Collect any policies and procedures you already have in place, and develop any that do not already exist.3 Be sure that the final set of policies and procedures address the identified risks from step 1. Ensure that they are clear, accessible, and aligned with applicable laws, regulations, and industry best practices. Be sure to involve key stakeholders, such as legal counsel, in this step.
3. Train Employees
Provide regular training and awareness programs to educate employees about compliance obligations, policies, and procedures. Many regulations require training, so if that’s not something you’re already doing you will want to establish a training program as soon as possible.4 Tailor the training to different roles and levels within the organization and consider using engaging methods, such as workshops, online programs, and case studies.
4. Monitor and Audit for Compliance
Establish a robust monitoring and auditing system to assess compliance with policies and procedures. Conduct regular internal audits, review processes, and monitor key performance indicators to detect and address potential compliance issues promptly. Audits should ensure that policies are up to date and look outward at any new regulations that may have gone into effect.
5. Establish Reporting and Investigating Processes
Create a secure and confidential reporting mechanism and make sure that employees know how to use it. Once a report is made, you will need to know how to proceed. During this step, be sure to write out a framework on how any non-compliance claims will be investigated. Holding individual players and groups accountable for non-compliance is essential for maintaining a healthy compliance program. It’s a good idea to be up front about the disciplinary guidelines and protocols that will be enforced if a violation occurs.3 If nothing is done in these instances, employees will not take the program seriously. Accountability is key.
Key Players in the Compliance Program
Again, a company’s compliance structure should be risk-, industry-, and corporate-culture specific. Examples of key roles include:
Corporate Compliance Officer
This person is responsible for managing risks by ensuring state and federal laws and internal policies are being followed. They create policies, audit processes, and find meaningful methods to track compliance throughout the company.5
Corporate Compliance Analyst
This person acts as the gatekeeper to compliance at the organization, both for internal compliance programs and for audits being conducted by outside agencies. This role is responsible for conducting internal reviews of policies and procedures around ethics and compliance programs.6
Ethics and Compliance Manager
This role creates and implements policies and procedures around compliance and ethics and is responsible for maintaining documentation of business activities related to these policies. The manager conducts regular audits to determine if compliance programs are effective and that protocols are being followed by employees.7
Chief Ethics and Compliance Officer (CECO)
More and more, companies are tasking an executive with responsibility for overseeing its compliance programs. This person may sit in the legal, financial, or administrative department, or atop a separate organization. Usually, the CECO will have dual reporting responsibilities, both to senior management and to the company’s Board of Directors, usually through its Audit function.
Play a Key Role in Corporate Compliance With Pitt Law
Interested in playing a role in corporate compliance at your company or in a future position? Pitt Law’s Online Master of Studies in Law (MSL) program is here to help those without a JD degree learn what they need to get ahead. Choosing the Corporate Compliance specialization helps you set yourself apart as a leader in business with in-demand legal knowledge and skills. Small class sizes and individualized attention will set you up for success during your master’s program and after graduation. If you’re not interested in pursuing a full master’s degree, you can choose the stand-alone Online Corporate Compliance Certificate program.
As you consider Pitt Law’s Online Master of Studies in Law (MSL) program or one of our graduate certificate programs (also offered online), know that our admissions advisors are always on standby to answer your questions, clarify admissions requirements, and discuss what this degree can do for you. Schedule a call today.
- Retrieved on May 22, 2023, from investopedia.com/terms/c/compliance-program.asp
- Retrieved on May 22, 2023, from amgen.com/responsibility/a-healthy-amgen/business-ethics-and-compliance/elements-of-an-effective-compliance-program
- Retrieved on May 23, 2023, from powerdms.com/policy-learning-center/how-to-create-an-effective-compliance-program
- Retrieved on May 23, 2023, from reciprocity.com/5-steps-to-developing-a-corporate-compliance-program/
- Retrieved on May 22, 2023, from glassdoor.com/Career/corporate-compliance-officer-career_KO0,28.htm
- Retrieved on May 22, 2023, from glassdoor.com/Career/compliance-analyst-career_KO0,18.htm
- Retrieved on May 22, 2023, from glassdoor.com/Career/manager-ethics-compliance-career_KO0,25.htm