If you asked corporate directors to rank their favorite board duties, overseeing compliance likely isn’t at the top of the list. Regardless, compliance is central to a board member’s fiduciary duties–and as we’ve seen many times before, failure to oversee compliance effectively can have costly implications for a company.
In this episode, Adina Storch, GC, Corporate Secretary & Chief Compliance Officer for Cedar Realty Trust, outlines the three aspects of compliance that all boards should have top of mind.
Compliance is an expensive thing not to get right. One significant compliance failure can easily wipe out months or even years of productivity gains.
Storch explains that compliance risk and employee satisfaction are inversely correlated, and she outlines various indicators (both formal and informal) that board members can use to gauge the health of the company’s culture. Storch also emphasizes the board’s role in mitigation: What procedures does the company have in place to reduce exposure in the event of a compliance failure?
“I can tell you, as a former litigator,” said Storch, “that the first place the plaintiffs bar who is mounting a claim against you is going to look is in your policies, procedures and manuals…It’s a very effective sound bite for a litigator to hang you from your own rope.”
Yet, in the absence of policies and procedures (i.e., an employee handbook), an organization will be held to a standard of perfection, explains Storch, which is a standard that no company or board wants to be measured against in a court of law. Storch closes her episode with advice to boards and organizations on how they can ultimately foster a culture of compliance.