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What Factors Define A Good Compliance Culture?

Compliance is a team effort, and every member of the organization has a role to play in developing the desired culture. If a company aspires to operate with integrity and inspire trust, efforts can’t be limited to just leadership.

While they do play a fundamental role, compliance needs to be an ideal followed at a personal level. Only then can it become an active part of the culture. Here’s a breakdown of the impact had by different roles in building a compliance culture.  

Tone from the Top

As an entity of the compliance architecture, the top management serves two important purposes. First, it acts as the authoritative body it is.

The top management has a direct hand in the planning, assessment, and delegation of duties. They approve policies, define the ethics program, and align incentives to company standards. 

Board of Directors – The Authority

In some cases, the members of the board may also adopt a proactive stance within the program. They could be active members of the oversight team and may even institute corrective action if necessary.

The other purpose is to serve as a culture advocate. Employees emulate those in power, and this influence is common among both the Board of Directors and top-level management. As such, these individuals should be held responsible for acting in a manner that promotes a culture of trust and integrity. 

Top management – The Culture Advocates  

Senior management are the leaders that must set the right example. This is the underpinning of a strong and sustained corporate culture. Leadership must exemplify the desired values of the workspace culture, and any less-than-perfect execution undermines the effort.

Companies should rally the top management to incorporate values of integrity and trust in day-to-day business interactions, as this is a strong starting point. Top management should also be viewed as a transparent body that’s open to feedback and growth. Driving home these ideals is the right step in the journey of cultural advocacy.

Golden rule: Employees who witness leaders living the company culture are likely to follow suit.  

Middle and lower management – The Frontlines

Instead of leaving compliance efforts like culture building to just one department, companies should involve other managerial teams as well. Cultural initiatives demand support and must be monitored on a team level. Companies gain better insight into progress and pitfalls with managers and team leaders on the roster.  

What’s more, these managers serve a greater purpose than being just another part of the oversight vertical. Some may even carry influential traits that can be leveraged for better propagation of the mission.

Tangible ways to utilize these personnel would be to have them man the positive incentive program. Through a governance tracking tool, these managers can serve as the first line of acknowledgment for ethical and culturally-sound behavior. 

Industry and Regulatory Requirements

Another important factor influencing the organization’s compliance is the industry, regulatory, and market requirements.

In order to build a compliance program that goes above and beyond, deeper insight into regulation is the key. Frameworks are constantly evolving, and more so with each passing year.

Thankfully, these regulatory bodies are often vocal about their intent and rationale. Companies would be wise to consider these attributes of reform when planning as they could serve as foundational pillars for their respective programs.

After all, the intent of any compliance system is to ensure it aligns with the regulatory framework it operates within. 

Policies and Habit

Policies establish the standards expected by the organization. Policies are the foundation of compliance programs. Companies can use it to instruct employees on ethical interaction in day-to-day business dealings, and it can aid decision-making, further boosting corporate performance.

The next important aspect of compliance culture is encouraging employees to build a habit of compliance. Mostly, employees hide documents/things because of deep-rooted fear. The management should make a culture of transparency, and employees should make compliance a habit and be fearless about reporting any non-compliant activities. 

Technology

Before, compliance management was more laborious work as companies relied on spreadsheets, documents, emails, and a lack of audit trails. This made the process strenuous and prone to risk at the same time, as there was no proper record to prove if things went wrong.

This ultimately would cost a lot to the companies, and many a time, companies would have to shut down due to improper governance risk and compliance. However, with technological advancement, compliance management has become a lot easier these days. Now, companies need not have big computers that need to store huge data.

Instead, they can use GRC SaaS software where data can be gathered and stored securely on the cloud. A robust GRC software streamlines your compliance, governance, and risk management functions and helps you achieve your compliance goals.  

 

VComply

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PlanetCompliance does not claim to be exhaustive, instead we are helpful for any contribution from our users, and the content on this platform does not constitute legal advice.

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