I was at a conference earlier this year featuring a Chief Compliance Officer from a sovereign wealth fund with several thousand employees.  As he spoke, he elicited gasps when he said that all promotions had to be run through Compliance before they could be approved.  Since that conference, I’ve survey our clients, and I’ve found that a small but growing number of companies are implementing what once seemed impossible: Compliance is a becoming a gatekeeper to promotions at many companies. 

I for one am delighted with this trending best practice.  The benefits of it for companies are enormous.  They include:

1.      Weeding Out of the Bad Apples

In many companies, sales performance tops everything else.  Managers may identify “high performers” or champion those without a strong grasp on ethics if their numbers are good.  In some companies, HR files aren’t reviewed carefully to find previous disciplinary action when a person is being considered for a promotion.  Because of this, some bad apples may slip through the cracks and up the corporate ladder.  A review by the Compliance Officer should always include a review of any previous disciplinary actions, investigations and/or complaints.  In this way, a Compliance review can be an important safeguard from allowing a bad apple to create a rotten tone from the top.

2.      Allowing for Pro-Active Response to Concerns

Not everyone who has had run-ins with Compliance should be denied a promotion.  After all, some people receive warnings and get their act together.  Others are known to be troublemakers, but haven’t been in reprimanded formally.  When Compliance is asked to weigh in on promotions, they are able to suggest or require additional steps to help the new manager succeed.  Maybe the manager would benefit from additional anti-bullying or anti-harassment training.  Maybe the manager would benefit from whistle-blower training or being reminded about what constitutes retaliation.  When Compliance has a say early on in the promotion process, it can help the company protect its reputation down the line.

3.      Making Compliance and Ethics Commercially Important

If employees know that Compliance will be reviewing them on their way to the next tier in the company, they are more likely to be concerned with their own reputation for ethical behavior.  By placing Compliance in a role to review promotions, people will be inclined to proactively engage with the Compliance function, and make sure that their behavior doesn’t create a roadblock on their way to their next role.

4.      Showing the Corporation’s True Commitment to Compliance and Ethics

The cliché “put your money where your mouth is” applies to this emerging best practice.  Companies that choose to involve Compliance in promotion decisions signal clearly to employees that they expect compliance and ethical behavior from employees.  When CEOs appoint Compliance as a reviewer for promotions, they give power to their words and demonstrate that the tone from the top isn’t just lip service. 

Engaging Compliance in the promotions process makes good business sense.  It saves the company from unwittingly promoting problem employees, protects the company from reputational harm, allows for remediation where risk is known to exist, and makes the company’s commitment to compliance and ethics visible to all employees.  This trend is here to stay.  It makes business sense.