As a practicing compliance professional, I’ve often found that the relationship between the Compliance and People (HR) function is one of the most critical drivers of a compliance culture. While modern compliance frameworks emphasise tone from the top and alignment with Governance, even the most noble, board‑endorsed ambitions will inevitably fail without an able group of implementers—key among them, the People function.
This is the second piece in my tribute to the Compliance-HR relationship. The first piece focused on Non-Financial Misconduct (NFM) in the wake of the FCA’s new regulatory guidance. This second one finds itself on the more philosophical side as it compares and contrasts some of the key aspects connecting Compliance and HR.
Committee Work
A clear common denominator for Compliance and HR is the reliance on the work of committees and other organised fora with memberships, agendas, and rules of procedure—not simply “meetings.” The topics will naturally be different. HR might chair a thematic forum such as a Wellbeing Committee or Remuneration Committee, or be responsible for convening the Works Council or other applicable employee body. Compliance, on the other hand, will typically convene in committee form for one of two reasons: (1) a scheduled review (such as quarterly, or annual compliance reviews), or (2) in response to suspected wrongdoing, i.e., an internal investigation. The latter will also often involve HR, primarily to draw on their labour law expertise, as the personal consequences of misconduct will more often than not lie in the labour law domain.
As a historical side bar, in Central Europe, the precursor to the modern compliance committee (the “disciplinary committee,” or “ethical committee”) would typically be facilitated by the People function, and some more historical organisational structures continue to draw on this legacy.
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Committees will often be targets of scorn, including in the memeoverse (as in “death by committee”). Such scorn might be especially abundant in organisations with a high commercial drive. As a true-blue institutionalist, however, one must argue not only for the “stickiness” of institutions such as committees, but also for the socialising and stabilising phenomena of organised fora for any corporate organisation. And as a rational choice institutionalist, one might go a step further and argue that they are also key to individual utility maximisation—in ways that the individualists walking among us (be they in Sales, Marketing, or Account Management, or elsewhere) will be reluctant to explore.
Paperwork
This is another “death by” domain—and one that I believe warrants a separate discussion (I’m now thinking also a future post)—but the comparison to be drawn here is that HR and Compliance equally have a true claim to “serious” paperwork. The potential risk of “death,” I believe, figuratively speaking, looms in the absence of paperwork. Consider simple questions such as these:
- Would you perform a job without a written employment contract, or written company policies?
- Would you appreciate being summoned by a public authority to give testimony in a case where the only evidence you have is your recollection of events?
Strong Business Partners—Not Your Best Friends
Ideally these days, both the Compliance and HR functions will adopt a “business partner” approach—as opposed to a position of authority only. “Business partner” being a buzz term that has featured in just about any Compliance manifesto / working group / job interview over the past decade or so, and which finally seems to be losing some of its momentum. That said, whatever we might call it in the future, this is a philosophy on the (perhaps far) preventative end of the Compliance spectrum—as important as, but arguably not more important than, the detective or corrective dimensions.
As partner-like as the relationship might get, I am convinced that your colleagues from Compliance or HR will not primarily be the ones with whom you’d wish to get inebriated at the company Christmas party. (By the way, you should not get inebriated at the company Christmas party—there are both clear moral and rational arguments against doing so.)
Perhaps the most obvious reason for which Compliance and HR will not be your work friends is that the performance of these functions relies on a high level of independence from the business, while at the same time it usually entails answering to the highest levels of management, and in some cases, directly to the Regulator.
While they will not be your friends, their operational independence and separate lines of reporting and accountability also mean that they may become your strongest allies if you are treated unfairly. Because what ultimately underlies both compliance law and labour law—the guiding frameworks of the respective functions—is a shared fundamental rights logic. Although developed in different historical contexts, both fields rest on the recognition that individuals require protection from abuses of power, conflicts of interest, and the negative externalities of the economic order we know as capitalism.
And on the flip side, Compliance and HR can and should be “friends” (not in the personal sense, of course) with each other. As I argued in a previous piece on modelling the DPO function, such an “Educated Friendship” might well be worth institutionalising. It not only acts as a built-in control where members of either function may be conflicted out of a decision, but also helps develop a stronger compliance culture and embed it organically across the organisation in ways that no policy, training, or communication campaign can ever fully achieve.
The Right Thing on Tuesday 