What skills will be needed for the mid-century Chief Compliance Officer (CCO) [yes just a few more years to 2030 and ‘mid-century’]. Moving into the CCO chair today is far beyond compliance expertise and legal knowledge. What CCOs need even more as we move into 2030 and beyond are strong social skills. Compliance is becoming more complex and tech-centered; workforce diversity is growing; and firms face greater public scrutiny than ever before. These requirements are far beyond a Foreign Corrupt Practices Act (FCPA) or even compliance course in law school. Going forward, CCOs will need to be adept communicators, relationship builders, and people-oriented problem solvers. To succeed in the future, companies will need to focus on those skills when they evaluate CCO candidates and develop in-house talent in their compliance function. In a recent Harvard Business Review article (HBR), entitled “The C-Suite Skills That Matter Most”, authors Raffaella Sadun, Joseph Fuller, Stephen Hansen, and PJ Neal looked at this issue in the context of the Chief Executive Officer (CEO) position. I have adapted their work for the CCO role.
Previously, companies could look for good technical skills in a CCO. But today, companies need to seek out and hire CCOs “who are able to motivate diverse, technologically savvy, and global workforces; who can play the role of corporate statesperson, dealing effectively with constituents ranging from sovereign governments to influential NGOs; and who can rapidly and effectively apply their skills in a new company, in what may be an unfamiliar industry, and often with other colleagues in the C-suite whom they didn’t previously know.” Getting it wrong can be a disaster for the company. Witness the train wreck involving the Activision Blizzard, Inc. CCO, when that company’s scandal broke.
Previously, the CCO had to use influence to try and get compliance accomplished in an organization. In the early part of the past decade, Jenny O’Brien talked about about techniques for a CCO to employ to help influence decision-making within an organization.
- Understand the products and services that your company offers but also the challenges that your business development team will face out in the world.
- Active Listening. Work constantly at active listening, which is listening, thinking and then speaking.
- Connections with other functions in an organization.
- The CCO does not need center stage.
- Make a win look like a win for everyone.
- The Triple ‘C’- Calm, cool and collected. Don’t let them see you sweat.
- Know your stuff.
However, the authors demonstrate that these soft skills are no longer enough for a CCO, even one with high technical competence in compliance programs. A critical first step is to develop greater clarity about what it now takes for a CCO to succeed as the range of necessary skills appears to have expanded. This is more than the ‘soft-skills’ approach articulated by O’Brien but more ‘social skills,’ “including a high level of self-awareness, the ability to listen and communicate well, a facility for working with different types of people and groups, and what psychologists call “theory of mind”—the capacity to infer how others are thinking and feeling.”
By looking at the reasons for these changes, the authors identify several areas that CCOs previously were not required to understand but are now mandatory for a mid-21st century compliance program.The focus on social skills is especially evident in large companies. This is even more true “at publicly listed multinational enterprises and those that are involved in mergers and acquisitions. These patterns are consistent with the view that in larger and more complex organizations, top managers are increasingly expected to coordinate disparate and specialized knowledge, match the organization’s problems with people who can solve them, and effectively orchestrate internal communication. For all those tasks, it helps to be able to interact well with others. It also reflects the web of critical relationships that leaders at such firms must cultivate and maintain with outside constituencies.” This of course includes the five sets of stakeholders identified in the Business Roundtable’s Statement on the Purpose of a Corporation. Again this reality is even considered in the 2013 COSO Internal Control-Integrated Framework.
There is no bigger change to the skill set of the CCO than around information and information-technology systems, i.e., data and data analytics. The authors cited to Peter Drucker for the following, “The more we automate information-handling, the more we will have to create opportunities for effective communication.” This means the CCOs and corporate compliance programs which “rely significantly on information-processing technologies today also tend to be those that need leaders with especially strong social skills.”
In compliance, when companies automate routine compliance tasks, “their competitiveness hinges on capabilities that computer systems simply don’t have—things such as judgment, creativity, and perception. In technologically intensive firms, where automation is widespread, leaders have to align a heterogeneous workforce, respond to unexpected events, and manage conflict in the decision-making process, all of which are best done by managers with strong social skills.” The authors conclude, “as more tasks are entrusted to technology, [CCOs] with superior social skills will be in demand at all levels and will command a premium in the labor market.”
Another new area is in social media and networking technologies. As companies move away from shareholder primacy and focus more broadly on stakeholder capitalism, as outlined in the Statement on the Purpose of a Corporation, CCOs will be expected to be public figures. They will meet and “interact with an increasingly broad range of internal and external constituencies but to do so personally and transparently and accountably.” Moreover, CCOs, and other corporate officers, will be required to operate in “real time, thanks to the increasing prevalence of both social media (which can capture and publicize missteps nearly instantaneously) and network platforms such as Slack and Glassdoor (which allow employees to widely disseminate information and opinions about their colleagues and bosses).” CCOs will be required to “be constantly attuned to how their decisions are perceived by various audiences. Failing to achieve their intended purposes with even a handful of employees or other constituents can be damaging.”
Join us tomorrow where we consider the way forward for the CCO role at mid-century.
