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Compliance, HR Must Work Together

July 2, 2013

Compliance and human resources have always had a love-hate relationship. Now
some companies are finding that getting them aligned can yield large benefits
for both functions and improve the organizational culture.

That's no easy task, however. At many companies, gaps in communication and
collaboration between compliance and human resources continue to persist. "In
general, there isn't a consistent, strong link between the functions," says Alex
Weisgerber, a senior consultant with global professional services firm Towers
Watson. "The two groups simply haven't found many opportunities to collaborate
in supporting organizational performance."

Shanti Atkins, president and chief strategy officer for ethics and compliance
advisory firm NAVEX Global, has observed similar trends. HR is responsible for
implementing compliance-related processes- training and investigations, for
example-but doesn't always have a seat at the table to inform how to roll out
those processes, Atkins says.

Without communication and collaboration between compliance and HR, the company
lacks a unified view of several processes that are important to building a
strong, ethical culture. "That can lead to duplication of efforts, which wastes
resources," says Andrea Falcione, senior vice president of client services and
chief ethics officer at SAI Global.

Companies that do tend to have strong cross-functional working relationships are
those where both compliance and HR equally have a seat at the table, Falcione
says. "An organization where you don't have silos and have people working
together to solve problems is generally a healthier organization than the

So how, then, can compliance and HR foster a better relationship?

The first challenge to overcome is the "deeply held stereotypes that legal,
compliance, and HR typically have of each other," says Atkins. "It's important
to talk about those if we are to get past them."

The perception that the HR function is not a strategic player in the company-
that its central function is to manage paperwork, schedule training sessions,
and mediate mundane spats such as who hogs the best space in the parking lot-is
far from reality, Atkins says.

Getting employees to function as a coherent, engaged unit has to do with people,
not policies-and people issues are exactly where HR excels, or course. HR has
its finger on the pulse of employee culture, Atkins says, because it is the
primary channel employees use to complain when there is a problem-and those
problems are usually a warning sign of wider compliance-related issues.

"Research shows that people issues are among the most significant risk factors
organizations face," Weisgerber says. "They are also among the least well
managed under current enterprise risk management practices."

Following the completion of an enterprise- wide risk assessment, it's important
to involve HR early on in the process of developing a plan to mitigate risks,
and to specify what role HR will play in that process, Atkins advises. "It's a
very simple point, but one that is missed over and over again," she says.

"Boards are increasingly asking their executive teams to identify and address
major people risks," says Weisgerber. "The HR-compliance partnership can help
anticipate this request and set the organization's human capital risk management
agenda proactively."

HR isn't the only department saddled with misperceptions of its goals. The idea
that the compliance and legal departments care only about "checking the box,"
says Atkins, ensuring the company remains in compliance with laws and
regulations, and don't care about people issues is also unfair. These labels are
"exacerbated by a lack of cross-departmental communication," she says.

Both compliance and HR would go a long way to engage in routine, formal dialogue
about their respective roles. "They should start by looking at processes where
their efforts overlap and think about opportunities to partner, rather than work
in parallel," says Weisgerber.

Even though compliance and HR are better offwhen they work well together, "there
is-and should be-a clear separation of duties and objectives between the two
functions," says Falcione. "Collaborate, but separate."

"Both HR and compliance should evaluate governance practices for the programs
they manage and understand where and how much the other could be involved," says
Weisgerber. For example, he says, "be very transparent about process and
decision rights, so that there are fewer missed opportunities to collaborate."

Molding Corporate Culture

When compliance and HR align, they can better assess the company culture and
fine tune how compliance and HR practices can evolve that culture in a positive
direction. "These functions should engage in conversation about how employees,
and the actions they take, can create risk and opportunity for the
organization," says Weisgerber.

A survey of employees, for example, can reveal ethical concerns and also measure
engagement, providing an opportunity for compliance and HR to collaborate. "More
of our clients are recognizing the value of doing surveys to help mold corporate
culture, and to help figure out where there may be problems within the
organizations from a cultural or compli ance perspective," says Falcione.

At companies where human resources owns the survey process, compliance can play
a role by ensuring that the survey includes questions about corporate culture,
about how compliance concerns are raised and addressed, and about the tone of
management communications. Similarly, HR and compliance can work together to
come up with key performance indicators. "Compliance should collaborate with HR
to add compliance- and ethicsrelated performance metrics into the performance
appraisal process," advises Falcione.

Employee training provides another area opportunity for collaboration between
compliance and HR. This means not just training employees, but also middle
managers to make sure that an organization is fostering an open-door environment
so that middle managers know what to do if an employee brings them a report of a
problem or concern. "HR can be really invaluable in terms of spreading that
message and helping to educate management on what an open-door policy really
means," she says.

"It's important to create a speak-up culture," Atkins says. Encourage employees
to make complaints early, and give them multiple avenues to make complaints.
It's also important to ensure that disciplinary measures are handled
appropriately and consistently, she says.

Having a centralized incident management system is an essential part of this
process, Atkins says. Without a centralized incident management system, employee
matters are often tagged as either compliance related or HR related, depriving
the company of getting a holistic view of its overall risks.

Compliance and HR should also have equal oversight of the company's
whistleblower hotline. At SAI Global, for example, Falcione co-owns the hotline
with HR, "so whenever something comes into the hotline, we both get visibility,"
she says. By sharing the whistleblower hotline, Falcione adds, both departments
also have a "sounding board for asking questions: 'Here is how I would handle

What do you think?'"

A chief compliance officer of a global energy holding company who preferred to
remain anonymous, says the company's compliance function engages HR when
investigating allegations obtained through the whistleblower hotline. In
addition, weekly meetings are held between compliance and the head of HR on
assigning tasks in connection with the investigations, he says.

In any company, effective inter-departmental collaboration "starts at the top,"
says Falcione. If you have senior leaders that foster the importance of
collaboration and are working together, the more likely you are as a company to
break down barriers.

"In general, there isn't a consistent, strong link between the functions. The
two groups simply haven't found many opportunities to collaborate in supporting
organizational performance."

Alex Weisgerber, Senior Consultant, Towers Watson


Below is an excerpt from NAVE X Global's "Five Key Steps to Aligning HR, Ethics,
and Compliance."

Carrie Penman, president of the ethical leadership group of NAVE X Global offers
these concepts on how human resources professionals can work toward better
cooperation with ethics and compliance.

Recognize the stakes: There's no better way to get everyone on the same page
than to have a frank discussion of the consequences of failure. Assess your
current status. Identify the risks-legal, ethical, and reputational-that are
increased by a continued lack of efficient cooperation. Also, understand that
your board and government regulators will have little sympathy if your turf
battles result in a compliance failure.

Assess the current structure: Best practice ethics and compliance programs have
always relied on strong relationships not only with HR, but also with legal,
audit, security, and others. Identify and map all the various parties in your
company that have assigned ethics and compliance responsibilities-it's probably
more than you think. You can't improve the status quo until you know who the
players are. Once you're done, ensure the structure promotes the ability to work
in an integrated and coordinated fashion.

Learn the lingo: Every specialty has its own lingo and HR, ethics, and
compliance are no different. Often times when it seems we are "talking apples
and oranges" it turns out we both have the same fruit in mind. It's essential
that all parties have a working knowledge of the key laws, requirements, and
acronyms commonly used by each function. Start by creating a glossary. It's an
easy way to avoid misunderstandings later and helps to ensure consistency across
all related policy documents.

Leverage your communications and training expertise: In most organizations,
there are a number of risk-based communications and training efforts that
straddle HR, ethics and compliance. These include: harassment, discrimination,
privacy, and recordkeeping. Consider developing a "curriculum map" for these key
training areas. That is, a comprehensive training plan that defines appropriate
target training groups, sequences the training to cover necessary topics, and
ensures adequate refresher courses, while at the same time not overwhelming the
learners or your resources.

Ensure there are multiple avenues for employees to raise concerns internally:
The organization most likely has several avenues already in place for employees
to formally raise concerns including the separate options of the hotline and
human resources. Don't fall into the turf battle trap on "whose issue" it is.
Instead, appreciate that the employee raised it internally and not to a
regulator. What is most important is having a combined case management system
that provides leadership visibility of cases from all of the available reporting

Source: Copyright Compliance Week 2013

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