Corporate governance is the most important predictor of compliance.  This may sound obvious but corporate boards move slowly.  In many cases, corporate boards move way too slowly.

Corporate failures usually rest on missteps and omissions by corporate leaders.  It is a rare case for a company to have a board that is forward-looking and in front of the curve.

In the last ten years, there has been a revolution in corporate governance.  Starting with Sarbanes-Oxley and ending with Dodd-Frank, this last decade will be remembered for unprecedented government intervention on corporate governance issues.  Whether it is right or wrong, it is likely to continue.  In response to the latest reports of corporate malfeasance, Congress will look to impose new and “better” corporate governance requirements.

Even without congressional intervention, there are significant trends in the corporate governance world.  These include:

Women on Corporate Boards – More women are serving on corporate boards but the number is still far too low in comparison to other countries.  Increasing the number of women on corporate boards will improve transparency and accountability.  There is no more room for the “all-male board.”  Over 70 percent of United States companies have at least one female director, while only 10 percent have three or more female directors.  Companies with women on the boards were more profitable than boards consisting of only men.  An interesting fact and one that is certain to spur an increase in women board members.   

Social Media Governance – The explosion in social media has been a curse and a blessing.  From a compliance standpoint, it has raised numerous risks for companies.  Social media has revolutionized communications with customers and information in the market place.  Companies have to quickly communicate on corporate matters to protect he reputation of the company.  At the same time, social media and the Internet have led to rapid disclosure of corporate malfeasance, exposing unethical or improper behavior.  Social media has to be the focus of disclosure requirements and public relations strategies.  Today, compliance professionals regularly incorporate these tools into every day operations and use them when necessary to address legal requirements.

Protection of Whistleblowers – Congress has taken an active role in expanding the protection of corporate whistleblowers.  Sarbanes-Oxley provided important protections to whistleblowers.  Dodd-Frank pushed whistleblower policies to a new level in part by providing financial incentives for whistleblowers to come forward.  Many companies have been slow to address this risk.  Triage programs need to be implemented for fast responses to whistleblower complaints.  Internal whistleblower protocols and protections need to be enhanced.  This is a serious risk and one that deserves full corporate attention.

Shareholder Social Activism – Shareholders have been more active in proxy seasons on issues of social responsibility.  Some companies have responded and embraced corporate social responsibility.  Other companies continue to reject attempts to impose social responsibilities.  Companies that deny this trend will likely be overrun.  It is the beginning of a new movement, one of social responsibility and corporate democracy.  There is no question that shareholders are demanding more influence on corporate governance.   This trend will continue.

Corporate Compliance – In response to the most aggressive enforcement environment in the last thirty years, companies have to pay more attention and devote more resources to compliance.  The FCPA is only one of many risks.  Depending on the specific industry, the risks can be multi-faceted.  In response, companies are examining new compliance structures and protocols.  The importance of a corporate compliance officer in a company is increasing rapidly and will continue to do so.