How to Create a Successful Business Compliance Strategy That Will Encourage Your Company to Excel
How to Create a Successful Business Compliance Strategy That Will Encourage Your Company to Excel
by Francine Breckenridge, Chief Compliance and Legal Officer at U.S. Money Reserve
Business compliance strategy may not be the most compelling area in business, but it is crucial to running, growing, and managing a successful company. Essentially, a compliance strategy provides the legal rules of the road for your company depending upon where you do business and what kind of business you do. Whether you run a large or small company, this strategy is very important to ensure that your business continues well into the future.
The risks of not having a business compliance strategy can be huge. If your company runs awry of laws or regulations in your industry, it could cost you significant amounts of time and money to untangle the mess. While compliance is often thought of by some as a nuisance and a burden, not having a well-thought-out business compliance strategy can utterly destroy a business.
Below we detail five aspects of compliance strategy that will help your company excel in 2020.
What Is Business Compliance Strategy?
To the ordinary layperson, the term “business compliance strategy” probably sounds like a bunch of gobbledygook, but it is central to running a successful business.
Business compliance strategy, at its core, mitigates risks and helps companies stick to rules set by external regulatory bodies. Well-known laws like HIPAA and Sarbanes-Oxley are examples of laws that businesses have to abide by to stay aboveboard in their work.
Each business has different rules and regulations that it must follow to stay out of legal trouble. Rules, laws, and regulations can affect everything from how your business stores customer data to the process you use to resolve customer issues. It’s crucial, regardless of how large or small your business is, that you consult a compliance expert with legal experience in your particular industry to ensure that your business stays on the right side of applicable laws and regulations.
The consulting firm Gartner recently surveyed top compliance officers in the U.S. and found that there are five main sectors of concern for businesses for 2020. They include everything from political and market uncertainty to challenging shareholder demands and advanced data tracking. So how do you ensure that you are ahead of the curve? Read on to find out more.
Look Ahead, Not Just Back
One of the central tenets of a successful business compliance strategy is looking forward to the future of your business and not back. While it’s essential to learn from past mistakes and the mistakes of other companies in your sector, the main focus of compliance strategy must be on the future of the business.
Gartner research recently revealed that when compliance is too conservative and stuck in the past, it can cause significant delays and missed business opportunities that may cost businesses as much as $672,000 in value annually, per lawyer, for the median legal department. According to Gartner, the median legal department size is 26.5 lawyers. This means that, on average, organizations that are too conservative stand to lose around $17.5 million per year.
To prevent this kind of loss, your legal and compliance departments must have sufficient risk-taking know-how and structure for making recommendations to the business. Without clear guidelines for forward-thinking compliance, the company can be significantly handicapped.
Work with the Business to Encourage and Measure Growth
Those outside an industry often see compliance strategies as limitations to business growth. Yet in successful businesses, compliance works hand-in-hand with the rest of the company to encourage and even support the advancement of the company.
Deloitte Consulting suggests a few ways to help encourage and measure growth rather than hobble it. Suggestions include measuring how proactive and predictive compliance measures have been in the past (i.e., How have preventive controls impacted compliance adherence?), evaluating how successful compliance measures have been at keeping the company out of trouble, and showing how compliance has helped the business grow through smart investment and processes.
Compliance should be integrated into business as a partner and seen as a supporter of the company growth and goals, not as a barrier to them. This kind of integration must come from the top and form a key part of the ethos of a successful company.
Create a Nimble Compliance Plan
Technology advancement, the political environment, and the market are all evolving at an incredible rate. Compliance departments must keep up in order to continue to deliver and support growth in a business.
Creating a comprehensive and flexible compliance plan that can keep up with the times is crucial to not only ensure the survival of a business but also to keep it thriving. Rules and regulations are continually changing, which means that compliance departments have to keep up to support business changes.
To create a flexible compliance plan, companies must put processes in place that help remove bias from decision making. As McKinsey points out, bias in decision making costs companies money. Risk management and compliance must be part of the strategic priorities of a company to create a nimble compliance plan, according to McKinsey. Without these, compliance becomes siloed and cannot effectively do the job at hand. Better risk management and compliance can create a more resilient company in the long run.
Encourage Integrity
It goes without saying that ethics and integrity should always be the backbone of any successful compliance strategy, but how do you get those to trickle down into the rest of the organization?
As Gartner points out in their 2019 study, compliance departments and officers can strive to model the behaviors they hope to see in the rest of the company, but that doesn’t necessarily translate to an improved culture of integrity. In fact, Gartner says modeling has little impact.
The best way to encourage integrity as the backbone of your compliance strategy is to create a strong culture that models and promotes ethical behavior and ensure that managers know what good, ethical behavior looks like so they can model it for their reports. The Gartner study suggests that rewarding ethical conduct is also critical to encouraging integrity across the company.
Use Technology to Your Advantage
No bones about it: The world is changing and advancing at a breakneck pace — and companies and compliance departments should use technology to their advantage to keep up.
A recent Thomson Reuters study on top compliance concerns suggests that technology will be at the heart of the innovation happening in compliance strategy. Many companies are already making the shift toward leveraging technology to help get their work done. A study by Gartner from 2018 suggests that, in the next three years, the key to creating a flexible and adaptable compliance strategy hinges on technology investment — and firms are going to put their money into technology instead of spending it on outside counsel.
Perhaps that means your compliance department should look into advanced technology like fintech, regtech, or even AI to help support a smart and flexible compliance strategy that can evolve as the business landscape changes. Plenty of options on the market can help put technology at the center of any solid compliance strategy. The options are also simple and easy for people to use. By putting technology at the heart of your compliance strategy, you ensure that legal departments can continue to support your company as a business partner — and move at the speed of change that is required to keep up.
The Bottom Line
Business compliance strategy may not be the flashiest component of a successful company, but it is the key to sustained and consistent business growth. Creating a successful business compliance plan by following the five key steps outlined above will ensure that your company can grow and adapt to the rapidly changing business environment we all face.
Follow U.S. Money Reserve on Youtube
