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The Rise of Corporate Compliance

Written by Scott Harrison

The steady rise of corporate compliance and its development as a separate entity from the legal function has been creeping into Asia for close to a decade now. Yet there is still considerable confusion about the role and the skills needed for the role to be executed successfully. 

In Asia, the compliance function began separating out from the legal department in many multinationals about a decade ago. That’s not to say that legal teams don’t still cover the function. Many still do. But the trend has set in for a standalone compliance function, most often reporting into the Global Head of Compliance based in the US/Europe. From there, the reporting line can be into the Global General Counsel or a separate management audit committee at the board level. 

The corporate compliance function within the pharmaceutical and healthcare industry is very well developed because it is driven by regulators looking to manage risk and enforce standards. Regulatory compliance professionals have very clear mandates for working with their employers and advising on laws, regulations and best practices. Failure to comply with regulations could result in legal fines or worse.  However, what’s the impetus for hiring compliance professionals where organisations are less heavily regulated? 

Many firms have their own ‘gold standards’ on hiring and their own best practices, which can be even more stringent than what a local regulator could envisage. These codes of practice outline job responsibilities for their staff and expectations around interactions with colleagues, customers and even the government. Effectively, these best practices are about business ethics and the firm’s commitment to integrity.  They can span conflicts of interest, bribery, entertainment, and even whistleblowing. Large, well-known firms often have very strong corporate compliance cultures which are world-leading and we have seen numerous professionals gain their compliance experience in such organisations before moving onto new firms to establish the same function elsewhere. 

With the roll-out of a raft of new government regulations across the world over the last decade, companies and employees must now comply to even more stringent standards of conduct. These include 

  • Anti-trust policies – Anti-trust policies must be managed to ensure the business, its directors and all its employees are operating within competition laws. 
  • Data privacy/protection and GDPR -– Data protection laws vary from country to country but need to be adhered to if a business operates within the country’s boundaries. The recent strengthening of laws in Europe (GDPR) and impending China cyber-security law amendments mean organisations need to focus on building out robust data handling programs.  
  • Anti-bribery and corruption (ABC) – The US (FCPA), UK (Bribery Act) and China anti-bribery and corruption laws are just three examples of measures in place internationally that compliance teams in commercial organisations need to pay heed to. 
  • Industry-related compliance – Many industries have complex and ever-changing regulations governing business best practices and compliance with legal frameworks, notably healthcare and life sciences, media, technology, aviation, energy, and manufacturing. 
What exactly does the compliance professional do? 
With the aim of promoting a culture of compliance best practice, the office is responsible for anything from rolling out and communicating policies and developing training materials on codes of conduct to working with auditors to coordinate and direct investigations. The office provides interpretation of policies and procedures and advisory and monitoring services across the firm. To be successful in such a role requires excellent communication and interpersonal skills. 
 
Where are the skills coming from? 
The short answer – many different places. As compliance is a relatively new function, it has been a challenge for most employers to hire competent people interested in the work into these roles. There is also a growing realisation that the skills involved in setting up the function differ from the on-going management of the function. In many instances, our clients have tended to hire a lawyer for the senior / “head of” role and often moved someone across from the existing legal team. There is often some education and persuasion required for lawyers to take on such a position. However, the carrot tends to be the “head of” title and the opportunity to manage the function.  Mostly, lawyers moving into these positions have come from inhouse roles but, given the rise of the regulatory lawyer, even private practice lawyers can make the move into the compliance function. 
 
The talent pool also includes senior management, who most likely are the champions of the values and best practices of a firm and have direct access to the CEO for sign off and support. Compliance teams, in general, are only successful if endorsed by senior management within the organisation. A good compliance culture needs to be driven from top to bottom and is dependent on a positive relationship with each business unit.   
 
Professionals with an internal audit / Big 4 background are also very popular within the compliance function. Non-legal professionals, such as internal auditors, finance professionals covering regulatory matters within specific industries and senior management who might be country-level management, can also add value when tasked with regional compliance work. 
 
In this case, compliance usually covers regional remits, mainly looking after general compliance, antitrust, anti-bribery and corruption, internal investigations, the roll-out of ethics and related compliance programs, training and reporting to global heads of compliance. In listed companies, however, lawyers or Chief Financial Officers (CFOs) will be responsible for programs. It is imperative that recruitment partners fully understand the remit of a compliance hire, the landscape within which the organisation operates and the compliance culture. The talent pool in Asia is finite and the compliance function is still developing. However, if clients can understand the limitations and be flexible with different recruitment tactics, a solution can be found. Communication is very important when working with recruiters and it is important to recognise that as the market evolves, it will be an ongoing education process for everyone. The key is to be flexible and consider creative solutions that help us find the perfect professional for each role. 
 
At Aquis Search, we have successfully completed numerous, complex searches for clients with diverse and unique needs within the compliance function.