Podcast: State of the Compliance Community
Today we have another Radical Compliance podcast, this time to talk about the community of ethics and compliance professionals and the challenges of keeping that community engaged. To unpack those issues I called up Gerry Zack, former CEO of the Society of Corporate Compliance & Ethics and the Healthcare Compliance Association.
As compliance folks might know, Zack resigned from SCCE and HCCA in October after seven years at the helm. His departure took many by surprise, including me. So Zack and I chatted about his decision to leave, the experience of leading both organizations through the covid pandemic, and the overall need for a community that compliance officers can call home — which is important both for a successful compliance program and a compliance officer’s sanity, but it ain’t easy to maintain.
You can hear our full conversation above, and I have a few of my own observations below.
Zack
First, Zack left because he and the board decided his tenure had run its course, not because of any specific event. His departure was “on very good terms with the staff and the board,” he said. “It might look sudden from the outside, but internally we could see the time coming when the change seemed right.”
Zack first arrived at SCCE and HCCA (which operate as a single corporate entity run by a joint board) in 2017. He then spent two years working alongside Roy Snell, one of the founders and the long-time CEO of SCCE-HCCA, before taking the reins as solo CEO in 2019.
So altogether, Zack has been running the organization for seven years. That’s a decent stretch for any chief executive of a professional association. A decades-long tenure like that of Snell, who ran the organizations for nearly 20 years, is the exception rather than the rule. “I’m very proud of what we’ve accomplished over these last seven years,” Zack said. “The organization is in very sound condition both financially and programmatically.”
(I have asked several board members and Dan Roach, the interim CEO at SCCE-HCCA, for their comment on Zack’s departure. Nobody ever replied to me, so all we have is their sparse announcement of Zack’s exit in October.)
What’s next? Zack didn’t divulge much, but said he will “continue to be involved” in the compliance profession. Whether that’s as an adviser to companies or serving on a board of directors somewhere remains to be seen.
Life During the Pandemic
Zack and I also talked about leading SCCE-HCCA during the pandemic, a challenge very much not on his bingo card when Zack took charge of the associations at the end of 2019. SCCE-HCCA canceled its in-person events (a prime money maker for both groups) by March 2020, and then operated virtually for the next 18 months.
“First we made the decision as a tax-exempt nonprofit organization to focus first and foremost on serving the profession, regardless of the financial consequences,” he said. “We had a mission to serve first, not to make a profit first.”
That led to substantial changes at both organizations, such as beefing up shorter, virtual offerings, on a wider range of subjects. It also led to those afore-mentioned financial consequences; revenue did rise for SCCE-HCCA every year from 2020 through 2023, but costs rose even faster and year-end assets declined in 2022 and again in 2023.
Zack readily admits those loss years were not pleasant, but they were not a surprise, either. “We budgeted for a loss, and we met that budget,” he quipped.
SCCE-HCCA has now found its financial footing again and is on the right path, Zack says. We won’t know exactly what that means until next spring when the organizations release their Form 990 tax returns for 2024, but here’s hoping for the best.
The Challenges Compliance Teams Face
I asked Zack what he sees as the principal challenge for compliance officers today. He did tick off a list of specific issues — cybersecurity, whistleblower programs, and the like — but to his thinking, the biggest hurdle for compliance officers today is still proving to senior management that a strong, robust ethics and compliance program can provide a strategic advantage to the business.
Compliance teams need to “push it forward,” Zack said, “from being a reactive function to one viewed as essential for strategic planning.”
I agree with Zack’s point; and have advocated for years that a business with a strong ethical culture and compliance program will, over the long run, be more durable and able to address issues more adroitly than its peers with a terrible culture.
I also think we’re starting to see that concept manifest in more concrete terms these days because so many issues that once upon a time were merely compliance risks are now also operational risks. (Sanctions against parties in your supply chain, for example; or strong policies and procedures for effective cybersecurity.) So it gets a bit easier to argue for investments in a strong compliance function, since those investments could help the company avoid missteps that carry serious financial and reputational consequences even without regulatory enforcement.
OK, but do a lot of companies get that? Perhaps not yet. Zack said he still sees plenty of compliance officers struggling with frozen budgets or other lack of support, such as their employer not covering SCCE-HCCA membership dues or paying for travel to training events.
Large businesses with high-profile compliance failures always find ways to fund a surge in compliance investments, he said. (True.) “The other 98 percent we never hear about have, for the most part, kept a tight rein on things.”
Look, I’m as much of a skinflint as anyone, but investing in strong compliance programs and in compliance officers — that matters. I hope companies see that, and I hope SCCE-HCCA can be that place of community and grounding for compliance professionals for many years to come.