In a world where business litigation and rule-bending are constantly in the spotlight, it can be so important to make sure your company has the right attitude towards compliance.
That doesn’t just mean the C-suite or directors who would take the heat if there was a failure to comply. No, a good compliance culture should permeate throughout the entirety of the business.
Compliance Can Drive A Business
In terms of driving you to success, there are countless financial, reputational, operational, cultural, and strategic benefits of having a good handle on compliance. And that’s the positive take—the list above can also describe the countless devastating impacts that can occur if compliance isn’t done correctly.
Let’s take reputational damage as an example, as really the underlying fabric is customer trust. According to Adobe, 44% of global consumers will spend at least $500 or more each year with the brands they trust most, while 55% say that once a company has violated their trust, they will never give them business again.
By keeping your business out of the spotlight for bad reasons, you’re staying in the ‘trusted’ pile, which is only helping to push your products and services. Customers don’t always read the small print, but there’s an underlying expectation that you do the fundamentals well. That includes things like keeping their personal information safe, so make sure you check the security on everything from your CRM to your domain registrar to your remote work devices!
This article will give you a few key considerations when it comes to compliance and how they might just help keep you afloat or, even better, thrive.
4 Key Compliance Considerations
There exists a deep well of items to discuss when it comes to company compliance. To give you a few primary considerations to think about, here are four key topics to start you off.
Risk Appetite
Though most large companies will almost certainly have specific teams whose role it is to oversee compliance with industry guidelines/national business rules, it’s not just down to them to keep things ticking along in the right way.
Every single colleague—and I mean every—should understand how their role relates to the overall risk profile of a company. That might be fairly easy for someone who has been in the business for a long time to understand. But is your company doing enough to ensure new hires at all levels understand the risks in their role?
Take a front-line sales colleague, for example. On the face of it, they might see themselves as a telephone operative whose role it is to ensure your customers know about your products, with a healthy dash of bringing them to life with a view to selling.
In reality, however, they are also the first rung of an underlying risk appetite ladder for ensuring products aren’t missold, which could lead to complaints, or, if done repetitively, litigation.
Employee Training
A solid employee training and development program will help colleagues to understand how they should think about risk, which in turn will help them understand how their role relates to the wider compliance of the business.
Of course, every successful business, at one point or another, will have to take some risks. However, these are usually the calculated type with several months’ worth of analytical data to back them up.
By not opening yourself up to unknown risks, you decrease the chances of losses through complaints, refunds, reputational damage, and regulatory action such as fines and impairments.
Compliance In Your People Management
HR compliance means ensuring your company policies and actions adhere to labor laws in your country, state, or municipality.
It can be so easy to create a negative HR situation by not following the right procedures or not knowing the right thing to do. Especially around something like pay—if you’ve accidentally paid out full wages to an employee who requires a garnishment, for example—you’ve got yourself a serious problem.
What is a garnishment? It’s an official order from a government agency to withhold a portion of an employee’s earnings to repay a debt. To ignore this, therefore, would be a direct contradiction to national laws. Ding ding ding! We have a potential sanction.
There are countless ways to run afoul of national laws and industry rules in the people space. Not storing colleagues’ data correctly, discriminatory job listings, and trade union interference are just a few with severe ramifications that spring to mind.
Put in Place a Whistleblowing Program
Of course, it helps if your colleagues want to do the right thing in the first place. That desire to care for the company and its reputation comes from instilling good values from the top down. If your company is often finding itself in hot water, it could be that there is a poor underlying culture toward compliance and risk.
A good whistleblowing program is essential for ensuring your colleagues know how to raise concerns and, importantly, that they know they’ll be protected by key legislation if they do.
Additionally, compliance in people management should extend to understanding and managing encumbrances like lien management to ensure proper adherence to labor laws and mitigate any legal risks.
A cultural issue might take a while to fix. Still, it’s definitely worth implementing an improvement strategy sooner rather than later—later could have serious negative effects on your bottom line.
Using Technology To Support Procedures
Giving your people the right tools for the job is essential for maintaining good compliance, especially in roles in the second line (risk oversight) and third line (audit) of defense.
Operational risk is the risk of loss resulting from ineffective or failed internal processes, people, systems, or external events that can disrupt the flow of business operations.
Giving your second line of defense access to operational risk management software can allow for better risk recognition, mitigation, and control frameworks with time-bound goals and actions.
By implementing smart technology solutions, such as operational risk management software and a barcode scanner app, you are, in effect, implementing mitigating actions in themselves.
The tech will help your company stay on track to minimize any compliance failures, which means you’re less likely to pick up any pesky fines or reputational damage.
A One-Stop Shop for Compliance
Additionally, by utilizing a digital one-stop shop for all your compliance needs, you’ll be able to access all of the surrounding metadata regarding your compliance program. Good data means pinpointing actions and strategies, as well as reporting (see below).
With the advent of working from home, a great way to ensure your people have the best advice all around the clock is to give your colleague access to a mobile app that has everything they might need in one place. Just make sure your mobile app deployment is compliant!
Tracking Compliance Performance
Compliance key performance indicators, or KPIs, are metrics that help you measure how successful your compliance performance is in relation to your strategic goals.
KPIs are super important across all facets of the business, and compliance is no different. As touched on above, the more data points you’re tracking around compliance issues, the more you’ll be able to glean from your performance.
So it’s definitely time to stop recording things manually. This list of key compliance metrics to report to your leadership is an excellent starting point.
ESG Surveys
Compliance metrics are also becoming increasingly more important to investors, as often found in their Environmental, Social, and Governance (ESG) surveys. Large investor groups use ESG surveys to understand the underlying risk of a company in relation to several factors like climate change, tax, and human rights policies.
All of the most well-recognized ESG surveys in the market have designated KPIs for compliance-related issues such as effective tax paid, board composition, fines paid, and data breaches.
ESG surveys will often first complete a scrape of the information you make available online and in your annual report. That means it’s not only important that you start tracking these metrics for internal use but also start publishing them publicly for performance transparency.
By tracking your company’s compliance metrics, not only are you able to keep ahead of the regulatory requirements and improve internal strategies, but you also get a competitive edge on your industry by outwardly publishing your compliance scores and vying for that much sought-after customer trust.
Compliance Doesn’t Need To Be Difficult, But It Does Need To Be Done Well
What used to be a perhaps yawn-inducing topic has flourished in both importance and excitement in the last 20 years. The advent of social media and all-too-eager-to-share dissatisfied customers and media outlets have resulted in a serious spotlight being placed on any company’s misgivings.
Setting the tone from the top is so important. Management should ensure a good underlying culture of doing the right thing, good oversight of risks, and a good handle on the numbers so that when things inevitably go wrong, you know why and how to fix it.
Technology, keeping abreast of regulatory developments, and good colleague training are your best friends here. Certainly, no items to be scrimped on in the next budget conversation anyways.
Jesse Liszka – Senior Communications Specialist, Paylocity
Jesse Liszka is the Senior Communications Specialist at Paylocity, a leading provider of cloud-based payroll and human capital management software. She is a highly experienced communications, client marketing, and content specialist with more than 12 years of experience. You can find her on LinkedIn.
