Redefining the Role of the Chief Ethics and Compliance Officer

What’s the future of learning? In one section of Skillsoft’s 2022 Lean Into Learning Report, my colleagues and I shared some insight to help demystify the year ahead with respect to digital learning and workforce transformation. Our goal was to provide predictions on how employers and employees will move forward with a mindset of mutual growth.

One of the themes that emerged throughout our discussions was adaptability. Employees don’t view work in the same way they did even just a few years ago. And pressure has never been greater for employers to proactively plan for the future to stay current, relevant, and competitive.

That’s why so many organizations are looking critically at their compliance function to find better ways to reduce their risk exposure – and continuing to shift the role of Chief Compliance Officer (CCO) beyond ownership of regulatory compliance and further into stewardship of corporate culture.

Years ago, the executive role of Chief People Officer (CPO) rose in popularity. Organizations realized that if they were going to refer to their people as their most valuable assets, then their people deserved executive-level representation. CPOs are responsible for overseeing human resources and ensuring that employees have what they need to effectively do their jobs.

I predict, and admittedly hope, that 2023 will be the year of the Chief Ethics and Compliance Officer (CECO) — a nod to the increasing value that organizations are placing on both ethics and compliance. The role of CECO has been on the rise for many years, but it continues to accelerate.

CECOs are responsible for ensuring an ethical and compliant culture throughout an entire organization so that employees understand the behaviors expected of them and are accountable to those behaviors — at every level. For many CECOs, this responsibility starts with developing the organization’s code of conduct and creating employee training programs to ensure compliance. It continues as CECOs are responsible for setting up the infrastructure and guardrails (also known as controls) to operationalize, measure, monitor, and report on compliance requirements, protections, and corporate culture.

As the CECO role is being elevated around the world, we need to think carefully about the responsibility it shoulders – or should shoulder.

CCOs have traditionally been responsible for adherence to laws, rules, regulations, and policies. Compliance tends to be all or nothing – you are either “in compliance” or you are not. But as we’ve seen over the last 5 - 7 years, the role of a CECO introduces ethics into the equation.

Ethics is all about doing “the right thing.” As a result, CECOs are the stewards of corporate culture. They have become responsible for regulatory, societal, cultural, and legal risk – an objectively more complex job description than that of a Chief Compliance Officer, which has traditionally focused on regulatory compliance alone. Basically, CECOs do more than make sure people comply with laws. They shape corporate culture and integrate ethics and ethical decision making into business practices.

So, what role do ethics play in your business practices and corporate culture? Ethics are a crucial way to establish a standard of behavior for your organization, its employees, and stakeholders. Ethics refer to a set of principles that guide individuals and organizations to do what is right, fair, and just, even in the absence of rules, laws, regulations, or policy guidance.

When companies prioritize ethics in their culture – by appointing a CECO, for example – they create a positive work environment that is built on trust, integrity, transparency, and accountability. In turn, this enhances the company's reputation, improves employee morale, and increases stakeholder confidence.

Here are some ways ethics can shape corporate culture:

Establishing company values: Ethics help companies establish a set of core values that reflect their purpose, mission, and vision. These values can guide employees in their day-to-day work and help them make decisions that align with the company's goals.

A CECO can expect to work with other executives and stakeholders within your organization to develop a code of ethics that can be used to guide employee behavior and decision-making. They will also be responsible for communicating this information to employees, customers, and stakeholders and taking the lead on monitoring the company’s performance on ethical issues. A CECO may also be tasked with reporting on progress in this area.

Building trust: When a company adheres to ethical principles, it builds trust among employees, customers, and stakeholders. This trust can help to foster positive relationships and create a strong reputation.

The CECO’s role in building trust is to foster open communication by creating channels for employees to report ethical concerns or violations. This is a useful way to ensure that issues are addressed in a timely and effective manner. It can also be an important way to hold employees accountable for their actions.

Encouraging accountability: A culture of ethics encourages employees to take responsibility for their actions and decisions. When employees are held accountable for their behavior, they are more likely to act in ways that align with the company’s values and principles.

Your CECO can encourage accountability by communicating clear expectations for your team through training programs, company-wide meetings, and other communication channels. When employees have the resources they need to act ethically and make ethical decisions they are better equipped for success. Don’t forget to establish channels for employees to report ethical concerns or violations.

Enhancing transparency: Ethics also promote transparency within your organization. After all, when employees understand the company’s values and principles, they are more likely to communicate openly and honestly with each other and with stakeholders.

One way for a CECO to enhance transparency is by encouraging employees to disclose any conflicts of interest, financial interests, or other relevant information that may affect their decision-making. Another way is to take the lead in publishing your organization’s ethical guidelines and annual sustainability reports.

Ensuring compliance: Finally, ethics help to ensure that companies comply with legal and regulatory requirements. This helps to protect the company's reputation and avoid legal or financial penalties. CECOs need to stay informed about changes in laws and regulations that may affect the company’s compliance obligations.

Overall, incorporating ethics into corporate culture can help to create a positive work environment that fosters trust, accountability, and transparency. It can also help to improve your organization’s reputation, increase stakeholder confidence, and ensure compliance with legal and regulatory requirements.

And while the Chief Compliance Officer role is in no danger of going extinct, I do anticipate ethics being an increasingly important component in the year ahead. After all, it already has created a solid foundation for acceleration.