Download Three main responsibilities of an Ethics Officer

Three main responsibilities of an Ethics Officer.
The law requires many business companies to have an Ethics Officer (EO) plus a Legal Compliance Officer (LCC)
(or a combination officer - LCEO) operating at the "substantial authority" level of management. Beyond the legal
requirements, there are many practical business reasons for having an Ethics Officer and an operative corporate
ethics culture. Whoever is your Ethics Officer--- he/she has three big ethics culture responsibilities that require a
high level of ability -and a substantial time involvement. The big three responsibilities:

Responsibility for compliance. Ensuring that ethical procedures are (1) installed and (2) consistently
adhered to throughout the organization usually needs someone whose whole job is ethics. Someone has
to do the necessary work, and neither the CEO nor other members of the senior management have the
time required to install ethics cultures and then ensure ethics compliance. (That time requirement is one of
the reasons General Counsel often prefer to supervise, but not do, the work of an Ethics Officer.)

Responsibility for initially creating and then maintaining the ethics culture that the highest level of corporate
authority wants to have. A cohesive ethics culture is the glue that holds a company together as it moves
forward on a success track. Training executives and employees into the desired set of right conduct
principles is a most time consuming (repeat - time consuming) responsibility, with myriad details to direct.

Responsibility for being one of the key Knowledge and Contact Points. On issues relating to corporate
principles and ethics, the Ethics Officer, along with corporate counsel, is a knowledge and contact person
for officers, directors, shareholders, employees, customers, corporate trainers and educators, and even
suppliers. Certainly public authorities will regard the Ethics Officer as a key knowledge and contact point in
the company.
In creating the position of Ethics Officer, the CEO or Board of Directors underscores the importance the company
attaches to high standards of legal compliance and business ethics. More than that, the Ethics Officer is the
anchor of a successful corporate ethics culture.
No two corporations are the same. But most need a separate Ethics Officer in some relation to the legal
department. There are advantages and risks to all options, dependent on the particular company's organization
and strategic plan. Some companies combine the ethics officer's job with the duties of someone in the corporate
legal counsel department, to create a combined Legal Compliance and Ethic Officer. Some organizations split the
jobs and put them both under the umbrella of general counsel. Some companies have the corporate counsel as
legal compliance officer and put a separate ethics officer's job outside the office of the corporate counsel. Some
companies contract for independent outside services for the Ethics Officer.
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WHAT IS THE FUNCTION OF AN ETHICS OFFICER (EO)? An EO stands at the intersection between auditing,
internal control and management's legal responsibilities, and is the guardian of the company's code of conduct. The
EO acts independently. He/she supplies the top management with the necessary information for the corporate
leadership to act appropriately in instilling and maintaining the ethics culture the top management wants.
Your EO is the key person in your installation of an ethics culture. This means installing the ethics culture in
employees. This means installing the ethics culture in management personnel. Once the culture is installed, the
EO does the preventive maintenance and constant improvement and monitoring of the system.
Your EO must take the initiative to check that people are following the company's code of ethics, to discuss
applicable areas with your attorney, and provide you with tools you need. Furthermore, the EO must make sure that
the staff is well informed of the code of ethics and the professional rules, internal directives, and legal standards
that apply to that person's job description.
Why have an EO? The multiplication of regulations and regulatory authorities, with which companies are now
having to deal, motivates companies into having an EO. The increasingly difficult legal environment places
companies in a situation fraught with the risk of bad publicity, heavy fines, and maybe even criminal sanctions.
This mass of laws is motivation for having an Ethics Officer. No one knows all the law, and a solid ethics culture is
a main method in generally keeping away from doing things the law prohibits.
The plain fact of the matter is that without a solid ethics culture, all the checklists of laws are not going to get the
best legal compliance possible. Plus, the studies indicate that going beyond a penalty atmosphere to a social
culture of wanting to comply is what drives successful legal compliance. That is where ethics again comes in.
Complying with government rules and regulations requires a business to have an ethics program for a business.
As soon as the business reaches critical size, a specific individual need to be charged with the responsibility of
evaluating what needs to be done, setting up a system to see that it is done, and operating and monitoring the
system to see that it is done. That is your EO.
Besides being a good business idea, many governmental regulatory bodies or government contracts require the
business to have an ethics program with a corporate person of "high management position" overseeing the ethics
program.
If your CEO has to certify compliance with what are now the de facto minimum standards for corporate compliance
and ethics programs, your CEO must be able to point to his/her reliance on a high level person with substantial
authority who has operational control and responsibility for both a legal compliance program and also an ethics
program.
The de facto legal standard is you have to have a designated Ethics Officer and a designated Legal Compliance
Officer. For example, look at both the United States Sentencing Commission "Guidelines for Organizations"
(Guidelines) and also the Office of Inspector General [(OIG) at DHHS]'s Compliance Program Guidance documents
(Guidance Documents). Those guidelines identify essential elements of an effective corporate compliance program.
With respect to control and oversight of the program, the Guidelines practically mandate an EO in their
requirements that:
bullet "Specific individual(s) within the organization shall be delegated day-to-day operational responsibility for the
compliance and ethics program. [He/she/they]... shall report periodically to high-level personnel"
See the Federal Sentencing Guidelines. And see the Delaware Supreme Court case where Caremark paid $250
million to settle fraud claims because the court thought it was a per se breach of fiduciary duty by the board and
officers not to have a compliance program with someone designated to enforce compliance.
And last but not least, you need an EO because he/she is the logical ethics consultant to turn to when top
management has to go into "Crisis Mode". You need to establish an ethics consultant before you have a crisis. The
question is not "if" you will have a corporate crisis. The question is "when” you will have a company crisis. Do you
have a "crisis team"? If you do, you should have a designated ethics consultant available, on a prearranged basis,
to your crisis management team. To repeat: an EO is the logical prearranged ethics consultant to turn to when top
management has to go into "Crisis Mode".
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Essential Functions of an Ethics and Compliance Officer.
You get traveling down the right road if you have a legal compliance program and an ethics program that does the
following items. Do you have a combined legal compliance and ethics program in which you have confidence these
things are being accomplished?
I am sometimes asked for a job description or a core list what an ethics and compliance officer does. The following
list is not exclusive, and it is not the list applicable to all corporations. An Ethics Officer and a Legal Compliance
Officer (or a combination office) should have the ability, resources, and authority to:

Maintain a working knowledge of relevant regulatory issues, of professional or industry substantive codes,
and of federal and state laws and regulations

Maintain a working knowledge of relevant ethics issues, of professional or industry ethics codes, and of
ethics conflicts resolution techniques.

Develop / implement / maintain the compliance program

Establish a compliance focal point

Develop / implement / maintain Standards of Conduct, related procedures

Train affected parties. There are two aspects on which employees need training. The first is legal
compliance training. Employees need training on what the legal rules are and how to comply with them.
They need tools and procedures that ensure that when an employee leaves then his/her replacement can
step in seamlessly. The second is ethics training. An employee handbook is not an ethics program.

Establish reporting channels for employees to use without fear of retaliation

Monitor the compliance plan for periodic updates when needed

Reports to the highest level of corporate governance the effectiveness and operation of the compliance and
ethics program, in compliance with the standards of the Federal Sentencing Guidelines.

Coordinate/conduct investigations to resolve compliance issues

Establish / monitor controls for an effective compliance program

Establish procedures and do the needed compliance reporting

Oversee compliance investigations with company attorney and human resources personnel.

Respond appropriately if a violation is uncovered, internally (by management or employee) or externally (by
government or media).
Let me give you one tiny example of an essential function of a chief compliance officer. The task to "establish
reporting channels for employees to use without fear of retaliation" includes providing that anonymous reporting
gets proper attention. It is not enough for an employee or low level manager to report; the reports need evaluation
and action by someone other than the person who may be the subject of a reported ethics or legal violation.
Perhaps your company compliance officer will suggest that you use a company like Reportit, or Silent Whistle,
which are examples of a third party provider that provides the sSilent Whistle by Allegiance, Inc. - Anonymous
Feedback Solution security of anonymity to the reporting employee while delivering helpful information to the
company. The details of getting governmentally mandated "reporting channels for employees to use without fear of
retaliation" in place takes time, effort, and thought by your compliance officer.
Leonard Bucklin
Ethics Consultant
Used by permission.
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