Why It Matters
Retaliation erodes corporate governance, discourages risk reporting, and can expose firms to legal and reputational damage. Addressing it is essential for maintaining effective compliance programs and protecting whistleblowers.
Key Takeaways
- •Retaliation against compliance officers is nearly universal
- •Executives view compliance as administrative, not strategic
- •“Four Ds” framework outlines typical retaliation tactics
- •Misconduct drills can strengthen leadership’s ethical response
- •Retaliation is a gradual process, not a single event
Pulse Analysis
Recent data from a nearly 1,000‑attendee compliance webinar makes it clear that retaliation against chief compliance officers is not an outlier but a systemic issue. When senior managers punish those who raise red flags, the flow of critical risk information stalls, leaving the organization blind to regulatory breaches, fraud, or product‑safety hazards. This silencing effect weakens internal controls, inflates the likelihood of fines, and tarnishes brand reputation. Moreover, the psychological toll on compliance professionals—fear, isolation, and career uncertainty—undermines talent retention and the very purpose of a robust compliance function.
The root of this hostility often lies in a leadership mindset that treats compliance as a bureaucratic checkbox rather than a strategic partner. Executives who believe they “know what’s best” frequently employ the so‑called Four Ds of retaliation: deny the allegation, demask the whistleblower, discredit the individual, and dismiss or demote them, sometimes even defunding the compliance budget. Such tactics create a climate of fear, encourage selective enforcement of policies, and signal to the broader workforce that ethical concerns are expendable. Over time, this erosion of trust can destabilize board oversight and invite external investigations.
To break this cycle, many compliance leaders advocate “misconduct drills” and formalized reporting protocols that simulate real‑world ethical dilemmas before they arise. By rehearsing the escalation path with board members, internal auditors, and outside counsel, organizations embed a documented response plan that senior managers cannot easily ignore when a genuine issue surfaces. Coupled with transparent budget protections and whistleblower safeguards, such proactive training reinforces an ethical culture, improves risk visibility, and reduces the probability of costly regulatory penalties. Ultimately, investing in these preventive measures protects both the compliance function and the company’s long‑term value.
More Notes on Retaliation Against CCOs
Not long ago I moderated a webinar on retaliation specifically against compliance officers, and two weeks later, I’m still not sure how I feel about it. Yes, it was great to hear all the advice that compliance professionals shared about how to withstand retaliation — but yikes, retaliation against compliance officers is so, so prevalent.
Indeed, the most striking part of the discussion was just the sheer universality of the experience. We had nearly 1,000 attendees, and everyone who spoke up said that they had suffered retaliation at some point in their careers. At one point I polled the audience on whether retaliation against compliance officers was “common” or “not common.” Then I watched the chat box fill up with people correcting me that choices should have been “common” or “very common.”
I don’t doubt that feedback at all, as depressing as it may be, but it brings us to an important and fundamental question: Why on earth would senior managers even do this?
Like, if you’re a CEO or general counsel who doesn’t want to confront tough ethical issues, why bother hiring a compliance officer in the first place? What do you think the person with “ethics and compliance” in the job description is there to do?
Webinar participants had lots to say about that. Many said management teams see themselves as “above” compliance; that the executive team knows what’s best for the business and what good ethical conduct is, and don’t need someone further down the org chart telling them they’re wrong. Compliance teams are more an administrative function, meant to assure that the rest of the company obeys policy and behaves properly.
I’d also say behavior like that is a sign of an immature or insecure leadership team. Leaders in that weak mold will see issues as management versus the compliance officer, rather than management and the compliance officer versus the problem.
If you see your senior leadership behave that way — thin‑skinned, defensive, prone to personalizing a problem — consider how long you want to stay employed there.
Preventive Measures to Take
Our webinar debated steps compliance officers could take to prepare their senior management teams for confrontations like these. For example, you could try a rehearsal or a table‑top exercise of how you would bring a matter to senior management, so that senior management would have a sense of how that situation might feel when it happens for real.
This idea does have its limits. It’s easy for people to behave ethically when they know they’re only going through a drill; doing so when that might cost you money, reputation, or your job is something else entirely. Lots of us are not nearly as brave as we’d like to believe when we’re put to a true test.
That said, I still like the idea of “misconduct drills.” If nothing else, you can get other senior executives to understand the procedures you’ll follow when reporting a compliance violation. You could even document those procedures in writing. Invite as many participants as possible, from board directors to internal auditors to outside counsel. Then when a real matter does arise, and suddenly senior management goes wobbly on doing the right thing, at least you’ll be able to say, “We’re following the same procedure we talked about and practiced before. What’s changed?”
Well, the consequences changed, from imaginary to real. And by making that painfully obvious, you might nudge reluctant leaders to follow through on the ethical behavior they promised before. People don’t like being cowards. They don’t like acknowledging their own hypocrisy. So if you rehearse misconduct crises and let them build up those muscles of ethical commitment, they might be more likely to flex those muscles rather than turn against you.
Separately, one compliance professional recounted a story of misconduct by the client of her former employer. The client had submitted suspicious documentation that would have brought significant product liability risk to her employer. She therefore tried to raise the issue with the client’s compliance team — except, the client didn’t have one. All she found was a general email address to submit misconduct questions, so that’s where she sent her query.
Which went directly to the client company’s board of directors.
The board received her complaint and hired outside counsel to investigate. That outside counsel then called her with the client’s executives on the line, blasting her for going over the client’s head.
It’s fascinating to think that another company’s immature compliance structures could come after you, but that is what happened here. Ultimately the effort failed; the compliance officer’s own management team supported her fully, which is good to hear. The compliance officer herself got a taste of what retaliation actually feels like, which I suppose is training we all need.
What Retaliation Looks Like
We also talked about what retaliation against compliance officers actually looks like, since it can take many forms. Compliance officers might struggle to distinguish between true retaliation and the merely mundane crazy things that happen in corporate life all the time. People retaliating against you will want to create that confusion, to give themselves plausible deniability while undermining your confidence. They’ll gaslight you.
Several people cited the “Four Ds of Retaliation” as defined by the great Ellen Hunt:
-
Deny the allegation
-
Demask the whistleblower, if he or she is anonymous
-
Discredit the whistleblower
-
Dismiss the person, either by demoting or firing them
Listeners also added a fifth D: defund, the compliance officer’s budget.
Perhaps the best insight came from a listener who said retaliation is a process, not an event. The aggrieved executive doesn’t say, “I retaliate against you,” do the thing, and then declare the matter closed. Retaliation might start with a series of small slights to probe your reaction, and then escalate if you refuse to back down.
And yes, we talked about the emotional pain of suffering retaliation too. You feel betrayed (and I think that’s even more the case for compliance officers than other employees because you were hired to raise concerns). You feel lonely. You worry about your financial stability and perhaps even your identity, if you love your job and what you do and suddenly you can’t because you’ve been fired.
Retaliation is a tremendously deflating experience, as you see the uglier, disappointing side of human nature. So it’s OK to cry in your car or talk to a therapist — or, yes, even quit.
We all need to remember that even corporate compliance is just a job. As Nick Gallo said on the webinar, nobody includes where they worked on their tombstone.
(If you have stories of retaliation you wish to share confidentially, you can email me at [email protected] or send me an encrypted message on Signal at RadicalCompliance.16.)
0
Comments
Want to join the conversation?
Loading comments...