Constantly, businesses look to balance risk versus investment. It makes sense, as some studies show compliance training costs of $10,000 or more (Semantics Scholar, p286) for employees in heavily regulated industries like finance or healthcare. The trade-off between tremendous sums of money and vulnerability to risk is a tricky, unique balance for enterprises. However, constantly tweaking this balance of investment over risk is what inspires innovation (and maximizes revenue). A company that always looks to optimize the balance between cost and risk is, generally speaking, a company that incorporates strategy into their processes. Below, we share the steps your enterprise can take in order to turn compliance from a chore into a strategic, competitive advantage.
Shift of Focus to Internal
The current perception of compliance is dated: it hinders both optimizations internally and regulation externally. A study by the Ponemon Institute suggests that an external focus on compliance with laws and regulations is the number one driver of compliance efforts. In short, companies comply with regulations to avoid external consequences. Although not every industry regulation is viewed as well-thought-out, the laws in place are intended to create sustainable, safe places to do business. Enacting compliance because you have to is one thing, but there’s a shift in culture when companies enact compliance because they believe it’s the right thing to do.
More than 70% of millennials believe that businesses are more focused on their profit goals than their impacts on society. By communicating the company’s decision to uphold high ethical standards, companies create the cultures that the future workforce demands. The workplace culture is more important than many employers realize. On average, millennials are willing to give up as much as $7,600 annually in exchange for a better work environment. This is a huge shift from previous generations, where the salary was always the number one factor in job selection. By pivoting compliance from a ‘to-do’ requirement into an element of the company values, recruiting, and retaining top talent becomes much easier.
Additionally, the reputation and public perception of your company are more critical than ever. Today’s customer, plugged into the news and social media streams 24/7, has higher ethical expectations of the firms with which they do business. Pointing to your company’s record of above-and-beyond compliance adherence on hot-button topics such as pollution or protection of private data will go a long way in protecting your reputation.
An Appetite for Risk: Executive Buy-In
By maintaining your own high internal standards, adhering to ever-changing regulations becomes less expensive and time-consuming. However, the perceptions, attitudes, and perspectives of a company’s leadership team will directly impact all organizational outcomes. For an effective compliance strategy that works from the inside outwards, compliance officers need a firm understanding of their leaderships’ buy-in or their commitment to the compliance program.
Having a firm awareness of executive buy-in is the first step towards your company’s competitive advantage. Recent studies show non-compliance penalties costing double (or more) of a compliance program’s typical costs, and that tends to be one of the strongest factors in leaders’ decision making. Spending too much on a compliance program isn’t very palatable for many leadership teams, but the penalties for spending too little are completely unacceptable. Compliance officers who want to create competitive advantage have to consider when innovations are necessary, and if the potential risk is worth it--regardless of if fines are not imminent. Then, officers have to illustrate the value in order to get leadership executives on board.
How likely would your executives accept any amount of future risk, or invest money to address it?
For some company leaders, radio silence is exactly what they want to hear from the compliance staff. Radio silence means no fines, and no company mentions in the headlines. Unnecessary risk management isn’t exactly a topic of interest. This presents a challenge for compliance professionals who want to make necessary improvements to optimize program effectiveness.
No enterprise is too large not to consider the threat of a newer, more agile competitor. Large corporations are under more pressure due to digital advancements and rapid globalization, enabled by the latest and greatest in technology startups. Old business models tend to become obsolete quickly in the face of new, innovative models. If the Uber for healthcare or financial services arrives, ready to disrupt their respective industries, the internal culture of compliance allows even the largest of corporations a strong competitive advantage.
Solutions for Compliance Training Programs
Certainly, stingy C-suite executives and unethical company culture are at fault for many compliance failures, but this fact doesn’t imply that lack of funding is always the core problem. Studies are unable to prove if more money alone creates a more compliant company.
As regulations increase and training budgets stagnate, the everyday compliance officer is expected to do more with less. The needs of a compliance program are complex and vary based on departments. Putting the different needs across departments into one comprehensive, cost-effective program is the ultimate challenge. Some experts suggest the solution is automation - a checks and balances tool. Strategic software solutions can increase the efficiency and effectiveness of compliance programs, ultimately increasing ROI.
Training Tracker enables compliance officers to focus their energy and attention on pursuing that ultimate balance between risk and investment. By automating reminders for when certifications expire or compliance tasks come due, less time is spent managing deadlines and keeping track of training needs. Learn more about Training Tracker as the ultimate compliance tracking software, or try it for free for 30 days.