A dispersed compliance function

At a recent conference, Ben Heineman, the former general counsel of General Electric, gave his views on the optimal compliance function. At GE, the compliance staff were embedded in the functional unit that they worked for. For example, there were environmental compliance staff in the plastics division; there were environmental health and safety compliance staff in all the manufacturing units. General Electric had no single head of compliance; instead, it had a council of compliance professionals from the various business units and who coordinated activities.

Heineman believes this decentralized model serves a company better than if there is a global head of compliance overseeing widely different functions and practices. The recommended structure also reduces the number of direct reports to the CEO, or to another officer, such as the general counsel (See my post of July 25, 2007 about where compliance should report, and multiple references.).

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