Establishing compliance procedures and practices is the first step toward protecting your business. However, just putting these practices down on paper is not enough. It’s equivalent to creating traffic rules and hoping everyone understands and follows them. A company’s leaders and staff must take other steps to ensure compliance practices and procedures are working efficiently.
Without efficiency and cooperation, compliance programs are more likely to fail. When compliance is mandatory, failure can lead to fines and penalties. Failure can also spell the end of a company’s existence, even when compliance programs are optional.
That often happens because a business has lost its reputation and the public’s trust. These are things a good compliance program can help you build. Let’s discuss why efficient compliance practices are important and how to bring them about.
1. The Wrong Technology Leads to Poor Assessments
Imagine tracking and managing every possible threat, regulation, and industry standard through spreadsheets and word processing documents. You’d probably spend more time trying to update and ensure the accuracy of those files than implementing what’s in them.
Some documents might never make it to all employees’ desks or inboxes. A few files could become outdated and irrelevant. Others might get stored in the wrong place and forgotten.
Despite the inefficiencies and oversights that can happen with these technologies and methods, some companies still try to use them. As a result, transparency and visibility suffer. Internal controls are also weakened or nonexistent, making monitoring measures like audits extremely challenging. And as regulations and industry standards change, employees are left in the dark, and companies struggle to keep up.
Governance, risk, and compliance tools, on the other hand, provide a holistic approach to managing compliance. A GRC tool increases transparency and visibility by assessing practices throughout an organization. Such applications assess risk from multiple sources, helping leaders identify weak points or vulnerabilities. Employees also have a centralized means of disseminating information related to compliance practices and changes.
Many of the inefficiencies separate spreadsheets and word processing files create are resolved or mitigated through scalable technology. This leads to more comprehensive risk assessments and the application of suitable solutions for compliance-related questions. Simply put, you can cover all your bases because you know which ones exist.
2. Not Addressing Employees’ Reports Creates Complacency
A good compliance program includes two-way communication between staff members and a compliance officer or team. Employees need a way to report concerns and suspected violations of practices and procedures. Staff members should also have a way to raise questions and get answers.
Companies often implement reporting methods like online forms and hotlines. But these measures can seem impersonal, and employees may also seek face-to-face communication through supervisors and HR reps. Team members sometimes want immediate answers and reassurance that their voices will be heard. When employees receive inadequate responses or none at all, they may perceive that their input and compliance don’t matter.
This can cause complacency and derail the purpose of a compliance program. Complacency may prompt employees to take shortcuts, neglect responsibilities, and show less initiative.
Compliance procedures and practices rely on people to enact them and hold the guardrails up. Making sure you respond swiftly and fully to staff members’ concerns begins with a robust compliance team.
If there aren’t enough internal point people, consider hiring vendors to help fill the gaps. Establish acceptable time frames for acknowledging and resolving employees’ reports and questions.
Involve your staff in the design of these procedures and ensure they know whom to go to with their concerns. Also, monitor communication flows and response and resolution times. That way, you’ll know whether they’re effective or need tweaking.
3. Improper Training Leads to Insufficient Execution
Handing employees guidebooks about compliance practices and expecting them to execute the information well is usually unrealistic. Some won’t read the information, while others will only skim through some of it.
Everyone who does dive into the details may come away with different interpretations of the material. With this hands-off approach, you risk the chance many employees won’t know how to apply what they’ve read.
There is also the risk people won’t recognize when they need to follow appropriate compliance practices and procedures. A failure to document who’s received training and what procedures were communicated can also increase your company’s risk. Say an employee ends up misusing sensitive customer information and commits fraud. Without documentation that the employee received training on proper use and storage of customer data, the company could be liable.
With documented training on proper customer data practices, that liability will transfer to the responsible person. The company needs to show employees received training and acknowledged understanding. You can test and document staff members’ comprehension of practices before and after training to help measure their effectiveness. But if you neglect sufficient employee education about compliance, you can’t expect them to execute practices well or at all.
Optimizing Compliance Practices
Compliance practices guard your business against risks and help establish trust with customers. However, compliance procedures and practices don’t do much good if they’re just words stored in a file somewhere. It’s up to business leaders and their followers to carry those practices through and ensure they’re working efficiently.
Replacing insufficient technologies, communication flows, and training practices with more thorough methods can optimize a compliance program’s results. When risk assessments are holistic, employees feel heard, and training is comprehensive, compliance practices work the way they should. Most of all, companies reduce the chances of being caught off guard and facing avoidable consequences.