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What Is the HR Leader's Role in Compliance and Ethics?

Following years of corporate scandals, companies and other large organizations have increasingly focused on developing compliance and ethics (C&E) programs to prevent and detect illegal and unethical conduct. Simultaneously, there has developed a field of people who design and implement these programs—C&E professionals. Yet, so much of this field is intertwined with human resources that it is essential for HR professionals to make the most of this growing development.

What is it that C&E professionals do? They work in companies to prevent and detect misconduct. In a sense they are corporate crime-fighters inside companies. This is a multidisciplinary field, drawing on such areas as law, risk management, internal audit, security, IT, communications and HR. Although it includes compliance with the law, it is not the practice of law. Lawyers interpret the law, C&E professionals make sure all parts of the company understand and follow it, converting legal advice into operational reality. They also cover issues beyond the law relating to values and the company’s code of conduct.

How Is C&E Related to HR?

Both C&E and HR deal intensively with people. C&E’s mission of dealing with misconduct necessarily touches the realm of human relationships. No C&E program could work without the insights that are at the heart of HR.

HR also has, for years, dealt with many compliance issues—employment discrimination, harassment, wage and hour standards, immigration, workplace safety and employee privacy. These are also areas of concern for the C&E professional.

Because both fields rely on understanding employee conduct, there is substantial overlap in their functions. C&E people apply the U.S. Sentencing Guidelines’ due diligence elements that really entail specific management tasks that are needed for a program to work. These are heavily connected to HR, involving codes of conduct, investigations, discipline, hiring, exit interviews, promotions, incentives, training, employee communications and new employee orientation.

Why Is C&E Separate from HR?

This is a fair question, but one often asked of C&E professionals. Professionals in law, internal audit, security, risk management and corporate responsibility have asked the same question and even claimed the entire field as their own.

The fact that C&E is multidisciplinary is the cause of the confusion. It draws heavily on a number of related fields. How does it differ from HR? While C&E deals with the HR-related compliance areas it also deals with all the compliance areas, including antitrust, the Foreign Corrupt Practices Act (FCPA), securities law, government contracts, export, and product safety. The list is so extensive that not even an experienced lawyer could claim expertise in all the areas.

While C&E professionals must apply HR skills, they must also draw on legal for compliance elements, internal audit for compliance auditing, security for investigations, IT for controls on computer systems, and risk management for risk assessment. All of the areas are needed, and no one area is sufficient. C&E also has an unusually high-level policing function; C&E professionals must live up to standards set by the government and be able to intervene to stop improper conduct.

HR, on the other hand, deals with matters beyond the range of C&E. C&E deals only with misconduct; HR deals with day-to-day human issues of running the business. How does the company manage its human resources and achieve maximum results? How does it make the workplace fulfilling for employees and increasingly productive for the business? These important functions are outside the domain of C&E.

What Opportunities Does C&E Present for HR?

In recent surveys “compliance/ethics officer” has been rated one of the top 10 hot jobs. In Building a Career in Compliance and Ethics, Joe Murphy and his associate Josh Leet estimated there were between 150,000 and 250,000 full- and part-time positions in this field globally. They identified more than 800 job titles. Companies and other organizations worldwide are adopting compliance and ethics programs and peopling these efforts with C&E managers.

For HR professionals there are exciting prospects in this field. The field is not driven by the normal economic cycles but by the unfortunate reality that in good times or bad, there are always people looking for shortcuts, people who do not care about the law, and people who did not take the time to learn the rules. In good times people get greedy; in bad times they get desperate, and at all times companies must be on their guard to prevent misconduct. The factors that typically drive this market are government enforcement initiatives, litigation and aggressive press coverage.

The HR person looking at this field will find a new and dynamic frontier that covers varied subject areas—everything from environment, health and safety, to overseas bribery, privacy and securities fraud. There are also opportunities as consultants and vendors. No special degree or training is yet required in C&E. The experienced HR professional will be a valued participant in the C&E team, because of the key skills required in HR, and the familiarity with the HR-related compliance areas like harassment and immigration.

Can You Stay in HR and Still Participate in C&E?

You can also pursue the challenge of C&E, but remain an HR professional. The HR person can participate in interdepartmental compliance and ethics committees. These are a key element of effective programs, and HR certainly belongs on those committees. This can give the HR professional a window into this area, and allow substantive participation in the company’s C&E program.

The HR professional can also be a liaison for the C&E group within the HR department. This HR person is the contact for C&E matters and the source for assistance in such functions as investigations, discipline and employee communications. An HR professional can also become the subject matter expert in the HR-related risk areas.

Corporate Culture: A Special Call for HR

While there are many possible roles for HR people in the C&E field, one major development deserves special attention: The Sarbanes-Oxley Act of 2002, which carried with it high hopes of a dramatic and immediate reduction in fraud and gross misconduct. No such luck … at least judging from the continuing stream of misconduct stories in the press.

The U.S. Sentencing Commission probed the solutions to corporate crime in their review of the sentencing guidelines standards for compliance programs that led to revisions in 2004. What they heard was that codes of conduct, audits, compliance training, and “whistleblower” protection were all fine, but not enough. A key element is an enabling culture—an organization’s beliefs, attitudes, values and traditions. They heard that the proverbial “ounce of prevention” lay largely with an enlightened culture. The commissioners broke important new ground in their 2004 revisions, advising that companies must “promote an organizational culture” that encourages a commitment to ethics and legal compliance.

The new language acknowledges that systemic, daily, visible and even informal behaviors can form the foundation for a legally compliant organization. Culture enrichment also breathes life into a company’s quest for sustainability and responsible conduct. It is here where the HR professional has an unprecedented golden opportunity. It also intersects with recent survey findings showing that cultural leadership is among the top HR qualities sought by CEOs. It also shows why HR people are such a natural fit in C&E.

Building an Ethical Culture: The HR ‘To Do’ List

Of course, it takes more than conceptual buy-in for the HR professional to compliment the C&E function. Consider these recommendations:

1) Be a student of the game. Learn the key elements of current compliance law, especially Sarbanes-Oxley and the Sentencing Guidelines. Remember that outside the United States there are C&E program standards as well.

2) Personally model the ethical leadership behavior that you and your CEO want throughout the organization.

3) Insist that ethics, the code of conduct and values be included in every orientation/on-boarding meeting, operations review and training program. Make it “table talk.”

4) Become proficient in complaint investigation, but remember always to treat the accused and accuser with dignity and professionalism.

5) Be a forceful advocate of cultural decency:

a. Discourage executive pomposity including pretentious executive perks.

b. Encourage executive accessibility and visibility.

c. For necessary layoffs insist on thorough preparation, sensitivity and the preservation of human dignity.

d. Teach the power of humility and transparency.

e. Teach the power of “psychic income” (non-financial rewards), to promote and recognize ethical leadership.

6) Encourage colleagues at all levels to understand that respect, civility and decency are a leader’s leverage to build and protect an ethical culture.

In 2006, the Gallup Organization’s survey of employee commitment found that no more than 27 percent of employees are engaged or committed to their employer—a shot heard around the corporate world. Combine this with the impending talent shortage and worker demands for a responsible, responsive and ethical employer, and the case is made for HR professionals to seize the moment.

Where can you get more information?

There are a number of resources available on C&E, including books, magazines, conferences and organizations. Your own company’s C&E professionals may be a good source too. You can also contact the Society of Corporate Compliance and Ethics at



Codes of conduct & other standards




Exit interviews




Employee communications

New employee orientation

Risk areas

Employment discrimination


Wage and hour standards



Workplace safety

Employee privacy

Labor law


Steve Harrison, author of The Manager’s Book of Decencies (McGraw-Hill, 2007), can be reached at; Joe Murphy, co-author of Building a Career in Compliance and Ethics (SCCE, 2007), can be reached at


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