Andrea Falcione, Managing Director in PwC's Performance GRC practice, and one of the chief authors of the report, offers additional insight on PwC's annual State of Compliance Survey's impact on modern manufacturing.
PwC recently released its annual State of Compliance Survey, a report designed to gauge the overall presence of corporate compliance officers across the manufacturing industry, as well as provide such individuals with the benchmarking data they need to both understand common industry practices today and to plan for more-effective and more-efficient compliance operations in the future.
While the report marks the 4th edition of its kind, this year it was boosted greatly by a significant increase in responses, creating a breadth of data never achieved before. “Last year, between 2012 and 2013, there was a 680 percent jump in participants, with over 800 respondents, and this year that number is well over 1,000,” says Falcione, adding, “It’s by far the preeminent survey within the space of compliance data, and this year we were provided with a really rich set of data.”
In addition to a greater flow of data, Falcione says she and her colleagues also tailored their questions in a manner relative to their feedback from previous reports, with one of the greater inquiries being, ‘What exactly does it mean to be a corporate compliance officer in today’s world?’
She says the role of a corporate compliance officer is a fairly new field, and adds that what they found is that a great majority of Manufacturing companies, or rather almost 70 percent, indicated that the CCOs in their company wear more than one hat, often serving as both General Counsel and Chief Compliance Officer. “We were surprised to see the percentage as high as it was, and it came to light that it’s generally challenging to be a chief compliance officer in today’s world, given the relative ambiguity surrounding the role” she says, adding, “As a result, the report aims to unveil the intimate relationship between compliance and business performance, and show that the two go hand in hand; something a great deal of manufacturers aren’t quite yet aware of.”
But they will be soon, Falcione says, adding that as the global web of manufacturing gets increasingly complicated from a regulatory and compliance perspective, a clear, defined chief compliance officer will be a necessity. “We’re seeing a large amount of companies expanding their reach around the world by extending their geographical borders and opening up new sites in foreign territories they may never have operated in before,” she says, adding, “and the presence of an active corporate compliance officer is going to be key to their sustained success in such areas.”
Manufacturing is currently one of the less-regulated industries, with only 35 percent of companies ranking monitoring and reporting as priorities in the next 12 months. However, Falcione says that the report indicates that the aforementioned factors of global expansion and increases in regulations, in addition to other factors such as complicated supply chains and environmental changes, will ultimately lead to management and boards of businesses across all industries pressuring their CCOs to deliver better information to help them identify organizational risks.
This means that manufacturing CCOs, which the report found don’t currently have a strong enough of presence at the C-suite table, could see their role change greatly in the near future, which Falcione says will benefit manufacturers greatly. “Compliance officers really need to be at the table upfront for discussions involving business performance and strategy, so that compliance implications, which are increasing more and more, are understood ahead of time,” she says, adding, “by making compliance officers more proactive, businesses can improve their overall performance and avoid making destructive mistakes.”
To recap the report, some of the key findings include:
- 52 percent of manufacturing companies report having an established compliance committee and 60 percent have a CCO in place;
- As international growth opportunities continue to expand, bribery and corruption risk remains at the top of the list for both current and future perceived risk in the industry.
- 52 percent report communicating information about compliance and ethics topics through internal social media;
- Almost 70 percent of manufacturing respondents suggest that the head of compliance formally reports to the General Counsel/Legal or CEO in their organization.
To view the report in its entirety, go to http://www.pwc.com/us/en/risk-management/state-of-compliance-survey/assets/pwc-state-of-compliance-2014-survey.pdf.
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