The Wall Street Journal: Nearly Half of CCOs Say Incentives Hurt Compliance

Originally Published in The Wall Street Journal | June 5, 2013 | By Christopher M. Matthews

More than 40% of the chief compliance officers polled for a recent survey said their companies’ performance appraisals and employee incentive programs ran contrary to compliance and ethics standards.

The survey, released Wednesday by the Consero Group, found that 43% of chief compliance officers felt their employers’ incentive programs didn’t “positively support compliance and integrity objectives.” Three quarters of the CCOs, or 75%, also said that educating employees on compliance issues and regulatory trends was their biggest priority.

“CCOs have their hands full familiarizing employees with ever-changing rules, and they need to leverage incentives that support their efforts,” Paul Mandell, Consero’s chief executive, said in a news release. “These findings indicate that the task of matching incentives to desired employee behavior requires greater focus in the remainder of 2013 and beyond.”

The survey, which posed 15 questions to CCOs at multinational companies in March, also found that 72% of CCOs believed the role of chief compliance officer should not also be held by a company’s general counsel. A previous survey by Consero found that 60% of European general counsel also felt the roles should be separated.

Other findings from Wednesday’s survey include:

• 63% had 10 or fewer employees reporting to them, and 54% reported either no change or a decrease in their department’s staff from 2012.
• 57% reported budgets higher than 1 million euros, and 47% said their budgets increased from 2012 to 2013.
• 83% said they have a sufficient level of access to their CEOs, and 80% stated they have satisfactory access to their boards of directors.
• 80% said it was “important” or “extremely important” for their companies to work with ethical third-party suppliers.
• 28% responded that they don’t have sufficient resources to manage their compliance programs effectively, and 45% felt that their departments lacked adequate knowledge of relevant foreign regulatory requirements that affect their businesses.
• 55 %of CCOs reported salaries of 175,000 euros or more.