When business leaders think of corporate compliance, the first thought that springs to mind is keeping their company out of hot water. Yet there’s more to compliance than creating policies that lower the risk of business-ruining ramifications.
Corporate compliance begins with your company culture and can be an enormous strategic advantage that, like technology, pays for itself. Still, it can be challenging to get right. That’s why it’s important to step back and ask yourself: What is corporate compliance?
What Is Corporate Compliance?
To be compliant is to adhere to industry and organizational standards and/or policies. In simpler terms, compliance are the set of expectations employers put in place to ensure their employees follow the rules that apply to the industry and organization. Corporate compliance covers both internal compliance and external compliance with regulations — the laws of a government that prescribe how a business should conduct itself.
With external compliance, all that matters is that the business follows the law. But corporate compliance also extends to a business designing its own internal compliance structure — all the policies and procedures that lead people to achieve a certain standard of behavior and to recognize, prevent and report illegal or unethical conduct.
Enforcing corporate compliance means obeying laws and regulations and detecting rule violations and noncompliant acts, like tax evasion or fraud, that could cause an organization to incur fines or litigation. Let’s examine some best practices on how to create a successful compliance program in your corporation.
How to Create A Successful Compliance Program
Leaders need to identify risk areas and promote the company’s core values across the organization. A transparent code of conduct will make expectations clear about disciplinary measures and can help employees follow procedures and identify noncompliance, as well as educate them on how they should speak up against wrongdoing. In short, create a corporate culture from which compliance naturally follows.
Assess Risk And Performance
Companies need to assess how their compliance programs are performing at regular intervals to track their progress. For example, companies can start by auditing employee adherence to protocols and monitoring the reporting metrics. And compliance officers can conduct regular risk assessments to ensure they stay proactive in keeping up with industry enforcement trends and preventing compliance violations.
Drive Culture From The Top Down
It’s incumbent upon leadership teams and board members in a corporation to lead by example. This helps create a happy and healthy work environment that reflects what the organization stands for and models the professional behavior expected from employees.
How A Corporate Compliance Program Affects Your Success
Failure to fulfil regulatory compliance can leave organizations open to significant risk. Businesses that increase compliance can create an environment that mitigates the risk of bad behavior, such as fraud, abuse and discrimination. A truly effective compliance program can mean fewer mistakes and the earlier that these mistakes can be identified before escalating. This can provide companies with more time to keep on the right side of the law.
In the long run, protecting your business from risk has a significant return on investment (ROI). In the unfortunate event that a company violates a rule, a compliance program can help them in court. It could help vouch for an organization’s good faith effort to comply with the law and can even lead to greater leniency and lower penalties from prosecutors.
Corporate compliance can also help preserve your brand reputation. Thanks to social media and the internet, news of a company breaking a code of conduct or behaving noncompliant can travel fast. Effective compliance ensures that you don’t wake up one morning to find your company on the headlines of breaking news.
Attract More Opportunities
A well-ran program can help bolster your ethical standing. Corporate compliance not only helps your business hire top talent, but it also makes your business a more trustworthy partner for other businesses looking to make corporate relationships. In that way, a robust compliance program can also be a competitive advantage.
The Real Value Of Corporate Compliance
A company’s culture is a gauge of how strong and effective its corporate compliance program is to the business. The bottom line is, the purpose of corporate compliance and creating an effective compliance program is to protect your company from unnecessary risks, litigation and bad press.
Getting your people to act with integrity and to do the right thing is the goal. Not just because they need to, but because they’re motivated to comply.