The Path to Developing Strong Compliance Professionals

Strategy #1: Buy Compliance Talent

The first strategy is straightforward ─ you go to market to acquire talent someone else has already developed, similar to how large-market sports teams siphon talent from small-market teams. Thanks to the adoption of a more distributed workforce coming out of the pandemic, it’s easier today for firms to access a global workforce. The problem that arises with this strategy is you frequently get into bidding wars for talent. What’s more, these candidates are often hired guns who prioritize their career progression above everything else. You might land them, but they may bring with them unreasonable expectations for the position. And will they stay? Another consideration when bringing aboard external talent is that it will take a full year for the new person to integrate into your culture and not only understand your specific business, but more importantly, why things are done the way that they are. While we all work in the same business, no two firms are alike, and this often takes time for the external hires to fully comprehend and appreciate.

While landing a topflight compliance officer may be exciting, is it really the best strategy in the end?

Strategy #2: Build Compliance Talent

The better path to follow? Develop your own talent. While this path presents more challenges than going to market and buying the skills you need, developing in-house talent delivers more rewards in the long run. The question is: How do you do it?

For many reasons, I prefer to internally source new compliance team members from other areas of the company. Why? Because it’s essential that compliance officers possess an in-depth understanding of the business that they’re trying to regulate. And where better to look for talent who understand the various aspects of your firm’s activities than in those departments? Look to the trading, operations, and marketing departments for your next compliance hires, so that they can bring the real-world experience to compliance. They already know the business function, and you can teach them about the regulations and governing bodies.

Developing Compliance Talent

My theory is that the following three components apply when developing strong compliance professionals.

Development is continuous. Some professionals show strength in certain knowledge areas, but they’ll always need to learn new or expanding facets. So how do we close these knowledge gaps? As part of your employee performance reviews, most if not all firms require employees to set goals for the coming year. As part of the performance process, I require staff to commit to goalsetting in each of these knowledge areas. This applies to all levels within the compliance department.

Business Knowledge

When you hire internally, one benefit is that your new compliance officer will already have some business skills built in. However, you may need to provide further training on the rules and regulations governing the activities for those departments they’re unfamiliar with. Typically, this is not the biggest challenge in bringing on new compliance professionals.

Regulatory Knowledge

Certainly, a learning curve exists for internal employees transferring to compliance with regards to regulations. Although this does not normally pose a big problem in their area of expertise, a firm can confront the challenge of growing that knowledge box more broadly and deeply. Think about other avenues available to you for growth opportunities for your staff. If your team is large enough, you also can assign projects with a senior and junior team members. The junior team member can listen, learn, and start to do some of the project work on their own. This helps you achieve ancillary benefits from the project that are separate from the individual project goals.” Something to that effect? First, you have given both employees “stretch assignments,” which are important for staff development. But you’ve also built-in redundant coverage, so in the event of vacations, illness, or a team member leaving, you have someone with firsthand knowledge of where the project stands and can step in as needed. As a CCO, I often would bring in others for development reasons, and they frequently were not direct reports. This approach also gave me a firsthand view of an employee’s capabilities and potential.

Communication Skills

The rubber meets the road with communication skills. After all, what is the value of business and regulatory knowledge if the compliance officer struggles to share the information with others? I’ve found this especially true for managers and upper management at companies. Once compliance officers reach management, they presumably possess the required functional knowledge and should focus on developing their communication and soft skills. Over the years, I have strongly recommended Toastmasters International, which is inexpensive, offers classes in every location that I have ever had staff, and gives people the opportunity to practice communicating in a safe environment.

Try some out-of-the-box thinking. Your staff will grow more engaged, stick around longer, and serve as a great internal recruiter for your team.

Modern Compliance Virtual Meeting

Attention compliance and risk professionals! Cutter is inviting members to attend the Modern Compliance Virtual Meeting on Wednesday, June 15, at 11 am EDT, where we’ll cover the following areas:

• Understand how your peers are managing compliance in a review of the 2022 Cutter Benchmarking survey results
• Get an update on how technology can assist electronic communications oversight
• Hear thoughts on how investment guideline compliance process and technology continue to advance and adapt to product innovation and unique client requirements

Register for the Modern Compliance Virtual Meeting today.