Can You Trust Employees to Be Compliant?

by Francine Breckenridge, Chief Compliance and Legal Officer at U.S. Money Reserve

If employees have strong leaders and managers who can communicate what they expect, employees can be trusted to follow compliance. Here’s how to create the structure to succeed.

At the core of compliance lies trust. A company must trust its employees, managers, and outside parties to follow the correct compliance procedures in order to secure your business and ensure its longevity. Compliance and trust are bottom-line issues — not something to take lightly or brush off. A breakdown at any point in the chain can result in disastrous after-effects for both individual employees and entire corporations.

But how do you know if employees can be trusted to be compliant? How do you create a compliance structure that ensures employees will follow the rules and procedures designed to keep the business running securely?

It’s not easy, but if companies follow these five steps, businesses will be able to ease concerns about whether or not one can trust employees to be compliant and build a structure that ensures employees stick to the rules and regulations put into place.

Compliance Is a Cultural Issue That Goes Beyond Written Rules

Compliance goes well beyond just legal issues and rules — it includes cultural expectations and tenets that exist at the core of the company. It’s crucial to get these clear, concise, and correct before trying to put a compliance plan into place.

As I have written before, getting a robust compliance plan into place is crucial to ensuring overall growth, and you can take several steps to get there. Making sure that your corporate culture is moving in the right direction is the first step you should take to make compliance part of your employees’ everyday lives. In fact, regulators are taking a closer look at companies and their compliance standards to double-check that these are created and maintained by a cohesive executive strategy that actively promotes and enforces standards.

Compliance goes well beyond just written rules. It’s how a company collectively behaves both internally and outwardly. Top executives and their behavior largely impart company culture. If executives are abusive and disruptive to those down the chain, one can almost guarantee that those employees are managing their reports the same way. If executives are behaving in an unethical way, then you can almost guarantee that the rest of the employees are following that example.

All this goes to say that managers directly translate behaviors to their reports. Good managers beget good employees. Bad managers not only hurt the company culture and chase off talented employees, but they also convey bad culture to their reports. A bad manager can be like a cancerous growth that spreads throughout the corporate body and does far more damage than any compliance department can contain. Ensuring that you have skilled and talented managers is crucial to protecting your company and your employees and fostering a culture of compliance.

Get Clear on the Rules of the Road

One of the best ways to ensure that employees are compliant, in addition to hiring stellar managers who impart the right kind of culture to their employees, is to get crystal clear on what the company expects from its employees. As a leader, you must take this crucial step to begin to build the culture of compliance needed to ensure the longevity of the business. If you aren’t clear about what you expect, then managers and employees don’t get the opportunity to act in a way that supports your compliance goals.

The key to describing the behaviors you want to see lies beyond just providing an employee handbook and asking people to sign documents acknowledging their understanding of such documents. It also goes beyond annual training and seminars.

As a compliance leader, you need to repeat those lessons and demonstrate them on a regular basis. Modeling is a fantastic way to ensure that the rules and correct behaviors are followed. It can also pay dividends to use examples from other companies in your industry to show how following compliance rules and regulations can benefit both the individual and the company as a whole.

Don’t just take my word for it, though. Gallup did a meta-analysis of employee engagement back in 2016 showing that business units with high employee engagement have 28% less internal theft or shrinkage and 21% higher productivity than their bottom-quartile counterparts. As NAVEX points out, “Higher workplace engagement also leads to other positive outcomes, including lower absenteeism (37%), fewer patient safety incidents (41%), and fewer quality defects (41%).”

Sure, writing your compliance procedures down and sharing them throughout the company is an excellent first step toward trusting your employees, but without the actions and behaviors to back these policies up, such procedures can be hollow and empty. By embodying the activities that a company wants to see, business leaders can show how they expects employees to behave, which provides a much more impactful example.

Hire the Right People From the Get-Go

Compliance begins at the point of hiring. If you don’t hire the right people, your compliance plan will fall apart, and you won’t be able to trust your employees.

During onboarding, you should make sure that new employees understand how integral compliance is to the daily performance of their jobs, their reviews, and their compensation. Imparting an understanding of how best to manage risk when you bring new people into your company is a very important part of cultivating trust.

This is especially important when you are training managers because they will become the envoys of your compliance values for those they manage in your company. It will also help employees link their personal and professional goals with the overarching goals of the company as a whole and make your compliance goals their own.

Part of this process should include imparting an understanding of how the rules of the road help employees get their jobs done. That means helping them take ownership of the impact their actions have on the overall health of the company. To help convey this message, you should use positive reinforcement and recognition of those who are already making ethical choices in their daily jobs.

Publicly Recognize the Positive Contributions that Employees Make Toward Your Compliance Goals

As I mentioned above, part of trusting your employees to do the right thing means encouraging them and recognizing how their contributions support the compliance goals you are working to build into your culture.

It’s no secret that positive reinforcement works wonders to raise employee morale. It is a powerful tool to publicly demonstrate the type of behavior you expect from your employees and your managers. Everyone likes to be recognized for their contributions to the collective, and this recognition is a great motivator for employees. It also builds a culture of trust and support that can attract better prospective employees, and it improves morale for those who currently work at the company.

At the same time, while it is important to acknowledge the good acts of your employees, you shouldn’t gloss over poor actions. Reinforcing that there are consequences for running awry of compliance is also an important part of building a culture of trust among your workforce. It’s best to use this tool sparingly, however. Typically, the carrot will get you more than the stick.

Educate, Educate, Educate

Part of building trust in a company includes educating your employees about what you expect. This can take many forms, from online programs to offsite events that act as both team-building forums and educational tools.

Education about your compliance rules shouldn’t just take place once when a new employee is hired. Education around expectations of what is right and wrong within your specific industry is crucial to ensuring that your company does not run awry of compliance rules. Since laws, regulations, and rules governing your particular industry are continually evolving and changing, you must offer continuous education for your employees so that no one accidentally steps out of line.

Managers should be able to understand and explain how the values related to compliance apply to the roles performed by employees on their teams. If they can’t, it’s clear that you need to give them the right tools to do so, and that includes education.

One other thing to note about educating your employees is that, in most cases, it shouldn’t just be a once-a-year event. Compliance and education should be ongoing and continue to support the ever-evolving nature of your business and its needs. It should operate in lockstep with the changing conditions in the economy and the world since businesses do not operate in a bubble.

The Bottom Line on Trusting Your Employees to Be Compliant

Employee compliance comes down to trust. Do employees trust that their managers are doing the right thing? Do you, as a leader, trust that your counterparts are doing the right thing?

To build trust among your workforce, you need to take specific steps to communicate, reinforce, support, and educate your employees about the rules of the road. Those activities go well beyond writing an employee handbook and expecting everyone to follow the advice in it. As a company leader, you must personally embody the traits you want to see in your employees and celebrate when those who report to you do the right thing. You have to offer continuing education as the rules of the road and the economy and business change, and you have to ensure that you hire the right people from the start.

If you follow the five steps I’ve outlined above, you can build a company culture that encourages compliance and supports both the overarching business and the individual employees who make it work. These actions will help you build trust with your employees so you can continue to grow your business and do good work.