Who Cares About Regulatory Compliance Anyway?!? (And Why Sales & Marketing Should)

"Culture drives great results.” ~Jack Welch

“Treasures of wickedness profit nothing: but righteousness delivereth from death.” ~Proverbs 10:2

Recall the last time you engaged in your organization’s annual budget process. If you are like many Chief Compliance Officers, your Chief Financial Officer probably wasn’t offering huge increases in your budget. In fact, you were likely asked (or told) how much of a budget reduction target you would be expected to achieve in 2014. It’s enough to make you want to declare, “Really?!?”

In this era of exponential increases in domestic and international regulatory compliance obligations, we are planning strategically to meet the monitoring and reporting challenges with enhanced governance, efficient technology applications, and increased staffing. Yet we are frequently challenged financially to justify our alleged expense-side burden on the income statement, while our revenue-producing friends across the income statement aisle often escape the budgeting process unscathed—or even emboldened. We must partner with them.

Why do I believe that we must engage our colleagues in Sales & Marketing to share our commitment to enterprise-wide regulatory compliance? Well, it certainly begins with the “tone at the top” set in the C-suite, thus implying that all production, revenue, and administrative leaders must be equally and uniformly committed to your organization’s Code of Conduct. And while I am not implying that our Sales & Marketing employees are solely responsible for regulatory fines and sanctions, exposure to the marketplace does generate the overwhelming volume of regulatory action for any organization.

So, let me ask you a few questions…

· What product or service does your organization sell?

· What is the profit margin on each unit sold?

· How many units must you sell to recover the income consumed by a large regulatory fine, attendant civil litigation, and associated loss of revenue from brand reputation depreciation?

Apply that calculation to the recent J.P. Morgan Chase $13 billion U.S. Department of Justice settlement. Someone at that bank is going to have to sell a slew of mortgages and auto loans to recapture that lost revenue!

So, let me ask you a few more questions…

· What is the aggregate cost to invest in training each of your employees to comprehend and practice ethical and compliant behavior appropriate for their job classification at your organization?

· What is the aggregate cost to invest in implementing appropriate internal controls and continuous monitoring systems to prevent, detect, and mitigate compliance failures at your organization?

· Is the sum of those two investments less than the cost of a large regulatory fine, attendant civil litigation, and associated loss of revenue from brand reputation depreciation?

Notwithstanding the painful financial cost of fines and litigation, salespeople viscerally understand the burden of attempting to sell a product or service that has become a perceived societal pariah. [Think Arthur Andersen…Enron…the Ford Pinto.]

When we train our Sales & Marketing colleagues to understand pertinent consumer protection regulation and encourage those colleagues to leverage management, the Code of Conduct, and your Compliance team to detect, report, and mitigate compliance risks, everyone wins. Let’s face it…sales incentives and corporate bonuses are larger for everyone in the company when left undiminished by preventable costs of fines, litigation, and lost sales. And that, my friends, is why Sales & Marketing should care about regulatory compliance.