Friday December 30, 2011
Friday December 30, 2011
The term ‘Compliance Culture’ is used a great deal in discussing how to achieve effective regulatory compliance, particularly by compliance training organisations! However, if you do not define what you mean by this phrase then how are you going to take the appropriate steps to achieve it?
The term is discussed in ICA qualification workshops, where I ask a groups of up to thirty experienced compliance professionals what they think it means. After a little debate and discussion it usually comes down to two key requirements; 1) everyone in the organisation knowing that they have individual compliance responsibility, and 2) that they understand what is expected of them.
Whilst I agree that these two steps are required I also believe that this is still one step short of what is required to create a true Compliance Culture, and to date not one group has been able to identify this final step. To do so you have use simple psychology and understand that people tend to only do anything if there is a benefit to them of doing so. Therefore people will only want to be compliant if they can see a benefit in doing so. It is this ‘wanting’ to be compliant that is the final step in achieving a Compliance Culture.
It is easy to see the ‘negative benefits’ of effective compliance, such as avoiding regulatory action. But these tend to be major, and hopefully rare, events and not a part of day to day operations. Consequently it is not easy to use them as examples on a day to day basis. Saving cost and increasing revenue are day to day concerns for all senior management, and it is here that we should focus when demonstrating the benefits of compliance.
For example, the new product procedure in most organisations involves a project teams to have the idea, and then design the product and its distribution. This will then have to be reviewed to ensure that everything is compliant with the current regulatory regime. However if Compliance is involved in the actual design process, then whilst it might take just a little longer to get the product to market, when it does get there it is right first time. This benefits the firm in two key ways. One, it gets to market faster, and speed to market is critical in determining overall revenue from a new product, and two, it saves the considerable cost of the product having to go back through the product development process. This example demonstrates how effective compliance can actually increase an organisation’s revenue.
No one else is going to promote the benefits of compliance for us. We, as compliance professionals, should be looking for the opportunity of promoting the benefits of compliance in every meeting we attend and indeed every discussion we have. In that way, over time, the rest of the business will come to appreciate what compliance can do for them, what the benefits of compliance are, and will want to be compliant. In time a compliance culture will then be achieved.
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