Whether you’re a food, beverage or beauty brand, compliance is a cornerstone of your company’s success. And increasingly, brands are seeing the value of enlisting someone to focus on industry legislation.
But should that person be a full-time hire, or would your company benefit from outsourcing regulatory work to a specialist compliance agency?
To help you decide, Hooley Brown has been looking into the rise of the CCO and the pros and cons of internal recruitment versus agency support.
What is a CCO?
CCO stands for Chief Compliance Officer, a relatively new role in the CPG industry.
As regulations become more complex and demanding, many brands hire CCOs to ensure their business follows the latest legal frameworks. The CCO’s day-to-day responsibilities can include:
- Ensuring the company and all its products meet industry regulations
- Understanding how legal requirements vary across consumer markets
- Liaising with regulatory bodies on complex compliance issues
- Supporting NPD to ensure the use of internationally compliant ingredients
- Validating product claims against industry regulations
- Developing product specification documents
- Creating plans for meeting local and import regulation procedures such as trademark applications, organic accreditation and product registration
What are the pros and cons of hiring a CCO?
For many CPG brands, the main benefit of hiring a Chief Compliance Officer is a high-level focus on legal positioning. This reduces risk when launching and selling products across international markets, as non-compliance can quickly tarnish a company’s reputation.
Within smaller firms, another senior team member is often managing compliance duties. But as they become overstretched, necessary paperwork and protocols can slip through the net. Bringing a CCO on board makes sure this doesn’t happen (and gives other leaders more time to focus on their specialism).
But there are some downsides to consider. For example, team members don’t always welcome CCOs; some view them as the ‘No person’, interfering with product innovation. They may have less authority than other senior executives, as they don’t always get involved in daily operations. And they rarely have a dedicated budget, which means they share resources with other departments.
Relying on the expertise of a CCO also puts a tremendous amount of pressure on one person. However experienced they are, it’s difficult for one individual to keep pace with every local and international regulation update. These changes aren’t always easy to find, and often they’re only accessible in the local language.
The weight of expectation is felt heavily by CCOs: Corporate Compliance Insights research has found that 69% of Chief Compliance Officers feel stressed about the speed at which regulations change, and 59% feel burnt out by their job.
The other significant factor to consider is cost. The average Chief Compliance Officer salary in the USA is more than $230,000. In the UK meanwhile, a CCO can command a salary between £60,000 and £160,000 per annum, depending on the sector and their experience level.
There are also recruitment fees to pay and other costs associated with employing a new full-time staff member. Plus, if the CCO leaves, so does all their brand knowledge and expertise.
Why do some CPG companies outsource compliance to an agency?
Given the considerable expense of hiring a CCO – plus other drawbacks – it’s understandable that many food, drink and beauty brands are reluctant to invest in a permanent senior compliance person. Even within companies that want more regulatory support, a CCO is sometimes beyond the available budget.
A cost-effective alternative to hiring a Chief Compliance Officer is collaborating with a specialist compliance agency. Someone who understands the ins and outs of CPG industry regulations across the globe and can provide tactical guidance.
What are the advantages of using a compliance agency?
As a CPG compliance agency ourselves, Hooley Brown sees the many reasons that brands choose to outsource regulatory support first-hand. These include:
- Flexibility – compliance agencies can work with brands on a retainer or project basis
- Cost-effectiveness – a flexible set-up makes compliance agency support more affordable than an in-house CCO, as brands don’t have to employ someone full-time
- Wider knowledge pool – CPG companies aren’t just benefitting from one person’s expertise; they’re gaining access to a global network of food and beauty regulation experts
- Targeted expertise – a good agency will have a mix of regulatory specialists in their team, which they can match to a brand’s compliance requirements
- Less risk – even if one person leaves an agency, others can continue providing expert support; companies aren’t putting all their eggs in one basket
Compliance agency versus CCO: is it always an either/or decision?
We may have given the impression that CPG brands need to choose between hiring a Chief Compliance Officer or outsourcing regulatory support to a compliance agency. But that’s not the case. In reality, many companies prefer a ‘best of both worlds’ approach, especially as their business grows.
The CCO is a consistent source of knowledge for managing day-to-day compliance. Their chosen compliance agency provides deeper expertise and targeted resources to handle more complex regulatory requirements.
Hooley Brown works flexibly with our CPG clients in many different models. Some brands outsource everything to us on a retainer basis; others bring us in for strategic projects to augment their in-house compliance capability. The advantage of an agency setup is that we can curate bespoke teams for every brief to meet our clients’ needs within their time frame and budget.
If you’re thinking of outsourcing regulatory work to a compliance agency, we’d love to have an informal chat with you. Drop us a line to set up a no-obligation briefing call.
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