Creating a Culture of Compliance: Why Departmentalization May Not Be the Answer
![handle is hein.journals/hbuslj10 and id is 83 raw text is: Creating a Culture of Compliance: Why
Departmentalization May Not Be the
Answer
Michele DeStefano*
Over the past few decades, as corporate criminal liability rules,
sentencing guidelines, and settlement incentives have changed, there
has been increased emphasis on and resources devoted to the
compliance function at large publicly held companies. In this article,
Professor DeStefano traces the development of the compliance
function at large corporations and questions the recent mandate by
certain governmental entities that malfeasant corporations designate
a chief compliance officer and separate the compliance gatekeeping
function from the legal department so that this chief compliance
officer does not report to the general counsel. She categorizes the
types of arguments made for and against departmentalization and
then analyzes them from the perspective of the public's objectives to
increase detection, monitoring, and prevention of corporate
misconduct. By examining secondary literature, surveys, and
interviews she conducted with 70 general counsels and chief
compliance officers, she hypothesizes that preemptive
departmentalization may not be in the public's best interest. It may
not increase transparency into compliance transgressions at
corporations, actual compliance by corporations, or the commitment
by corporations to a culture of compliance and ethics. Further, such
structural reorganization of the compliance function may generate
consequences that offset the potential benefits of departmentalization
and create a sense of false complacency that distracts from
substantive cultural change that is integrated throughout the
organization. Ultimately, she concludes that a focus on culture and
informal norms may have more potential to meet the public's
* Associate Professor of Law, University of Miami School of Law and Founder,
LawWithoutWalls [formerly Michele DeStefano Beardslee]. Email: mdestefano@law.
miami.edu. I am grateful for comments I received at the AALS 2012 Business Section session
and at the recent 2013 Fordham Law Ethics Schmooze. I also thank David Abraham, Mary
Coombs, Bruce Green, Sean Griffith, Hakim Lakhdar, Nicola Sharpe, Robert E. Rosen,
Hendrik Schneider, Leo Staub, William H. Widen, and David B. Wilkins for their advice, input,
and comments. Also, I thank Josh Brandsdorfer, Peter Cunha, and Anna Vino for their
research assistance. All errors are mine.
HASTINJGS BUSINESS LAW JOURNAL
71](ViewImageLocal?handle=hein.journals/hbuslj10&div=7&collection=&method=preview&ext=.png&size=3)
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Creating a Culture of Compliance: Why Departmentalization May Not Be the Answer
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