Once upon a time, in a developing country, there was an enthusiastic and driven compliance professional named Alex. Alex had just landed a dream job as a compliance officer in a prominent company that had its headquarters in a distant land. The company was renowned for its commitment to ethics, compliance culture, and maintaining the highest standards of conduct. Fueled by their passion for fostering integrity within the corporate world, Alex embarked on this new adventure with boundless energy and an array of innovative ideas.
However, reality had other plans. The subsidiary’s CEO, who had seemed like an embodiment of the company’s values from a distance, presented an entirely different persona up close while far from his supervisors, who work at the company’s headquarters. Despite public proclamations of support for the compliance program, it became evident that the CEO’s actions did not align with their words. Alex quickly noticed the CEO’s habit of conflicts of interest situations, corrupt actions, and moral harassment against the compliance team, was disheartening given the company’s principles.
But that wasn’t all. The CEO’s influence seemed to permeate throughout the subsidiary. The commercial team, rather than adhering to the established compliance guidelines, was taking a starkly different path. Alex was met with a puzzling scenario – an absolute contrast between the compliance-oriented scenario shown by the company’s headquarters and the reality he encountered in the subsidiary.
Faced with this disappointing situation, Alex was at a crossroads. The energy and ideas that had fueled their initial excitement now needed to be channeled into a new direction.
Cultural Misalignment Between Headquarters And Subsidiaries
The story above is a reality check that not every part of the company embraces the same principles and values. The distant headquarters’ mindset does not always translate seamlessly to the subsidiary’s culture.
In global business, a common scenario arises when companies’ headquarters, often located in more developed regions, exhibit a certain blindness to the realities faced by their subsidiaries in developing countries. This disconnect between the core operations and distant subsidiaries can have serious consequences, particularly in terms of reputational and financial issues stemming from a lack of control and understanding of the local culture.
Global company’s subsidiaries are across various developing countries, each with its unique cultural nuances and societal norms. The headquarters, however, might underestimate the influence of these cultural aspects on business practices.
Within the subsidiaries, local CEOs might perceive a sense of empowerment to navigate around the imposed compliance program. This perception often stems from the understanding that their supervisors at the headquarters are preoccupied with other strategic matters, and thus, may not be meticulously scrutinizing every decision they make or step they take.
Tips & Solutions
As a compliance officer, one may encounter the challenging situation of having to manage a dishonest CEO. Despite the well-established theories on ethics, compliance culture, and the importance of a strong tone at the top, you might find that these principles are not incorporated into the subsidiary’s culture and therefore are not being effectively practiced. The CEO may outwardly express support for the compliance program, but their behavior suggests otherwise. As mentioned in a previous article, it’s a matter of failing to “walk the talk“.
Dealing with an immoral executive is undoubtedly a complex task, but the efforts to address the issue head-on can play a crucial role in fostering a culture of ethics and compliance within the organization. In the face of such a challenging scenario, a compliance officer must navigate the situation with professionalism and determination.
Here are some strategies to consider, in this order of priority:
1- Maintain Your Integrity: Throughout the process, remain steadfast in your commitment to ethical behavior and professional integrity. Your actions will demonstrate your dedication to the compliance program and the organization’s values.
2- Stay True to Your Role: Regardless of the CEO’s behavior, uphold your responsibilities as a compliance officer and continue to promote a strong compliance culture throughout the organization.
3- Document Everything: Maintain a detailed record of all interactions, communications (with every role mentioned in these strategies, including Legal Counsel), and instances of unethical behavior. This documentation will serve as valuable evidence if you need to address the issue formally.
4- Provide Training and Education: Offer specialized compliance training for the CEO and the commercial team, emphasizing the value of ethical conduct and how it aligns with the organization’s long-term success.
5- Focus on Results: Demonstrate the positive impact of a strong compliance program on the organization’s reputation, risk management, and overall performance. Show how adherence to ethical guidelines can lead to increased stakeholder trust and financial stability.
6- Engage in Open Dialogue: Initiate conversations with the CEO to discuss your concerns and observations. Approach the situation with respect and focus on the importance of maintaining a consistent compliance culture throughout the organization.
7- Collaborate with Legal Counsel: Consult legal counsel on potential legal implications of the CEO’s behavior and actions. They can provide guidance on how to address the situation while staying within legal boundaries.
8- Engage the Compliance Committee: If your organization has a compliance committee, involve them in discussing the challenges you’re facing and gather their insights on potential solutions.
9- Seek Support from Higher Authority: If the CEO’s behavior continues to undermine the compliance program, consider escalating the issue to the board of directors or any higher authority within the organization that can address the matter impartially.
10- Seek External Guidance: If internal efforts are not effective, consider seeking advice from external compliance experts, consultants, or industry peers who have faced similar challenges.
Facing a challenging situation where a dishonest CEO, lack of legal counsel support, and higher authority indifference jeopardize ethical compliance, a compliance officer should consider to be prepared for leaving the company and seeking a better working environment.
Remember that the decision to leave is a step toward upholding one’s professional integrity. By prioritizing ethics and compliance, compliance professionals are making a conscious choice to work in an environment that aligns with their values and allows them to make a positive impact.
Get in Touch with Prae Venire
Managing compliance can become overwhelming, even with a committed and well-intentioned leadership team. That is why companies like Prae Venire exist, to provide comprehensive assistance in the pursuit of compliance. We are accustomed to supporting companies with training employees and developing robust programs. Contact our office today to learn more about how we can support you with effectively managing compliance within your organization.