Who Should Be Responsible for Compliance in a Small or Midsize Company?

When you think of corporate compliance, it’s easy to picture large, global companies with entire departments dedicated to legal and regulatory matters. But compliance isn’t just for big businesses. In today’s complex environment, small and midsize companies face many of the same risks—and regulatory expectations—as larger organizations.

The challenge for smaller businesses is: who owns compliance? You may not have the budget or headcount for a full-time Chief Compliance Officer. But regulators, customers, and partners still expect you to have a credible compliance program.

So who should take responsibility? How do you structure compliance in a way that fits your company’s size, resources, and risk profile?

In this blog, we’ll break it down.

Why Compliance Matters—No Matter Your Size

Before we talk about ownership, let’s start with the why.

Whether you’re a startup, a growing professional services firm, or a mid-market manufacturer, your company faces real compliance risks:

• Privacy laws (like GDPR, HIPAA, or state-level privacy acts)

• Employment laws (harassment, wage & hour)

• Anti-corruption laws (FCPA, the Anti-Kickback Statute)

• Data security requirements (cybersecurity regulations, customer contracts)

• Industry-specific rules (healthcare, financial services, government contracting)

• Contractual obligations (compliance certifications required by business partners)

And beyond legal risks, there are reputational and business consequences when compliance fails—especially in today’s environment of transparency and rapid information flow.

Bottom line: small and midsize companies need compliance programs just as much as large ones. The scale may be different, but the core principles are the same.

What Makes a Compliance Program Effective?

You don’t need an elaborate program or a big budget. But you do need a structured, risk-based approach that covers the essentials:

• Clear written policies and procedures

• Leadership accountability and oversight

• Training and communication

• Monitoring and auditing of high-risk areas

• Accessible reporting channels

• Consistent enforcement of standards

• A process for investigating issues and taking corrective action

  
  

Whether you’re 25 people or 2500, regulators expect you to take compliance seriously. key is scaling the program appropriately for your business.

Who Should Own Compliance in a Small or Midsize Company?

Leadership Accountability is Non-Negotiable

First and foremost: compliance starts at the top.

• Your Board of Directors (if you have one) and/or your CEO must take ownership of the company’s compliance culture.

• Regulators look at whether leadership demonstrates "tone from the top." They want to see that compliance is a business priority—not just delegated to a junior employee.

• Even if compliance tasks are handled by others, the ultimate accountability should reside with senior management.

When to Appoint a Dedicated Compliance Officer and Why Compliance and Legal Shouldn’t Always Be the Same

At some point in your company’s growth, it will make sense to appoint a dedicated Compliance Officer (even part-time or as a defined role within someone’s job scope). Signs it may be time:

• You’re in a heavily regulated industry

• You’re managing multiple jurisdictions or international compliance.

• You face increasing contractual compliance requirements from customers and partners.

• You’re seeing growing third-party risk from vendors, agents, and contractors.

• You’re scaling beyond 100–200 employees.

Why compliance should be independent from legal:

• While it is common in very small companies for the General Counsel (GC) or Legal function to manage compliance initially, regulators increasingly expect that Compliance and Legal be separate and independent functions as a company grows.

• Legal advises and defends the company in potential litigation or enforcement actions.

• Compliance is tasked with detecting and preventing misconduct—and sometimes must investigate or raise concerns about conduct involving Legal, executives, or Board members.

Regulatory guidance supports this separation:

• The U.S. Department of Justice (DOJ) regularly signals that Compliance should have independent reporting lines to the Board or Audit Committee where possible—not be subsumed entirely under Legal.

• The U.S. Department of Health and Human Services, Office of the Inspector General provides guidance that a compliance officer should "report either to the CEO with direct and independent access to the board or to the board directly" (HHS-OIG, General Compliance Program Guidance 27 (2023)).

• Industry best practices increasingly expect Compliance to have its own leadership, authority, and voice in the organization.

In small and midsize companies, this may evolve gradually:

• Initially, Legal may oversee compliance tasks.

• As risks grow, assign dedicated Compliance leadership, even if part-time.

• Over time, establish a separate Compliance function with clear, independent oversight and escalation pathways.

Avoid the "Nobody Owns It" Trap

Perhaps the biggest risk in small and midsize companies: compliance falls through the cracks.

Everyone assumes someone else is handling it. Or compliance is an afterthought until a crisis hits.

Pro tip: No matter how small your company is:

• Assign clear responsibility for compliance oversight at the executive level.

• Define roles and responsibilities across legal, HR, Finance, IT, and Operations.

• Formalize compliance ownership and reporting in governance documents.

Without clarity and accountability, compliance risks will multiply—and regulators will notice.

Final Thoughts

Compliance is a shared responsibility—but someone must own it.

In a small or midsize company:

• Leadership must be visibly engaged.

• Clear ownership of compliance tasks and program elements must be established.

• The structure should scale appropriately with your business’s size and risk profile.

You don’t need an army of compliance officers. But you do need a program that is intentional, risk-based, and embedded in your business culture. If your company isn’t sure who owns compliance—or if your compliance program is starting to feel ad hoc—this is the time to step back and put structure in place.

Compliance done right protects your business, your customers, and your future. And that is worth investing in—no matter what size your company is.