There are many reasons companies resist the idea of investing in an ethics and compliance program. It’s expensive, it’s time-consuming and it often necessitates a change in the way a company does business. At a time when budgets are being squeezed, a compliance practitioner may have a hard time convincing top-level management and the board of directors of the need for compliance.

But as more and more companies become embroiled in ethics and compliance investigations, it’s becoming clear that strong compliance programs are more than just a nice-to-have.

“Getting top-level management buy-in has always been the biggest obstacle to an effective program,” says Rebecca Walker, partner in the law firm Kaplan & Walker LLP. “Just ensuring that the business understands the importance of this function has been a challenge. And it’s one that I think we haven’t sufficiently overcome as a profession.”

Of course, there are times when companies have no choice but to recognize the importance of compliance. When an organization gets into trouble, particularly criminal trouble, they tend to be converted for awhile. "But even then, often the extent of buy-in diminishes over time," says Walker.

Engaging the board

That's why it's so important to get the board on board, so to speak.

“I think that the more engaged a board of directors is, the more likely that management will understand the importance of compliance,” says Walker. The CEO and senior management tend to pay attention when the message comes from the board of directors, she adds.

So the most important thing ethics and compliance professionals can do to overcome the lack of buy-in is to better educate boards on the importance of the program, says Walker.  “And in my practice, I’ve noticed that boards are becoming more sophisticated. They do understand more. They are more cognizant of what compliance is and what the program does and they’re getting reports from compliance officers on a regular basis. They have a more sophisticated understanding of compliance than we saw years ago. And that helps,” she says.

Business debacles

As organizations find themselves in the spotlight for compliance lapses, the value of a good program becomes more obvious. And especially in situations, such as the Morgan Stanley case, in which the Justice Department decided not to prosecute solely because of the strength of the company’s ethics and compliance program, the message is clear.

“Business debacles end up creating greater understanding of the importance of ethics and compliance programs. When that kind of news hits the Wall Street Journal and the New York Times and the people serving on boards read that, they do begin to understand,” says Walker. If the importance given to compliance by the government is clearly shown in this way, it has a trickle-down effect to boards and from there to management.

The power of peers

So if getting the budget for compliance comes down to the board of directors, educating them on its value is the best way to proceed, advises Walker.

“The most effective approach is just providing them with information periodically and continuously about what the ethics and compliance program does,” she says. “And, very importantly, what peer organizations do. Because boards tend to want to think that their organization is in line with the organization’s peer companies. So that can be really helpful. If your three main competitors all have very large compliance staffs and you’re struggling with a two-person office, that’s great information to convey to senior leadership and to the board.”