oversight of conduct

How does your Board get an Oversight of Conduct in your Organisation?

By The Enforcd TeamThe Enforcd Team

In this 5th post in our series of blogs on the FCA’s increasing focus on corporate conduct, we look at how boards can get an oversight of conduct.

It’s a problem we often see in business. A corporation establishes a clear set of corporate guidelines but fails to follow them throughout the company. The problem – for all their good intentions the board fails to monitor compliance at the coal-face.

This was one of the key questions asked by Megan Butler of the FCA in her September speech to the FT Investment Management Summit Europe 2017.

Getting oversight

“How do your board and executive committee get oversight of conduct in your organisation? And how do you bring it into your discussions?” She said. “You want to know that the feedback loop is alive and working. AML, for example, is not just about process; it is about behaviour. Is the board able to stay abreast of these risks, and up to date with advances in mitigation activity?”

It’s no easy task especially in a large multi-layered corporation stretching across more than one region. Boards will have to ask themselves questions such as whether they should impose a single corporate culture or one which takes account of regional and departmental differences, and how do they monitor progress and compliance?

  1. Making it a priority:

    The first goal is to ensure monitoring corporate culture receives the attention it deserves at the board level. In those organisations with long-term executive tenure it is all too easy for complacency to set in.

  2. Getting out into the company:

    Boards can become isolated and it is difficult both to ensure decisions about corporate conduct and mission taken at the top filter down through all levels of the organisations. For this reason, it is helpful for board members to meet employees at all levels – to get out into an organisation and see what is happening at the front line. It is an opportunity not only to monitor compliance, but to communicate the main corporate mission to all participants.

  3. Collating metrics:

    Establishing a central cultural dashboard is a useful tool for monitoring corporate conduct in one place. It can incorporate data such as employee feedback as well as raising any concerns that might have developed. It’s a clear view of an organisation’s adherence to its corporate goals.

  4. Communicate:

    As well as gathering information from the organisation, boards can do their best to project communication out to the organisation as a whole. The rise of corporate intranets creates a useful knowledge resource for employees at all levels. It can also establish a communication link between workers on the front line and the executive branch.

Just as importantly, in an age in which the regulatory challenges facing companies are evolving rapidly, technology can ensure departments can access the latest information as and when they need it.

Staying up to date

When it comes to the regulatory environment, keeping pace with demands is tricky. Different departments will come under different pressures. Giving managers all the tools they need to stay abreast of developments will make it easier to install the same sense of corporate responsibility throughout the organisation.

Using a tool such as our Global Regulatory Intelligence Platform, staff at all levels can stay abreast of the latest regulatory developments in their areas.

For example, using our cases tab they can see a chart of the penalties for any sector in any year.

Using the knowledge section, they can see more general information about sector and the expectations of regulators.

Successful corporate conduct oversight requires a flow of information in both directions. Board members must get out into the business and understand what’s really happening on the front line. Meanwhile, individual staff members will need to build their understanding of what’s expected. At the same time, a company’s mission must be clearly communicated across the organisation and data analysed to see how it is being adhered to.