The Need for Compliance
Historically, we have never seen an era like ours when it comes to the ease of starting a business! There are start-ups all around us, in every nook and corner of the country (and in other countries also). Every single one of these start-ups and non-profits needs a compliance function. What is Compliance? It is a set of processes that are designed and formulated to ensure that employees and thereby the entire organization abide by internal rules of conduct and external rules and regulations. The set of processes might include various areas from your company’s written values, ethics, employee handbook, legal obligations etc. larger corporations have a definite compliance related department while it is slightly more informal in smaller organizations.
Why is compliance that important, irrespective of the size and age of the organization? Let us look at the reasons.
Accountability
Every business is accountable to the community, stakeholders, the Government, public et al. and compliance is what helps the organization stay grounded to the accountability factor involved here. Your business benefits from certain basic services and you use these services and resources to run your business and form a definite output. At every step of this procedure, you are accountable to every stakeholder and the community. Your employees sign their compliance policies and you can legitimately claim with your stakeholders that you and your employees comply with the compliance policies.
Building trust
When you run a business, you need documentation for trust building when you engage with other businesses. Your compliance policies come in handy when you are trying to establish your business as a standard. Organizations ensure compliance by adopting rules about proper communications and proper follow through. There is a set process that the management floats across and urges employees to follow with regard to all communication and the importance of following ethics. Every department has a definite Compliance point of contact and team that looks into it.
Risk of losing reputation
In case you have no compliance policies in place, it is easy to lose your organization’s reputation. Warren Buffet famously said that while it takes 20 years to build a professional reputation, it takes just 5 minutes to lose it all. A strict compliance policy ensures that the organization doesn’t invite such harm. And when you want to branch out, across geographies, across business unit sizes, you will always find that people want to stick to organizations with honest reputations. If you don’t have a reputation, you lose out on the scene pretty fast. A well-drafted compliance policy, well-informed employees who are able to apply compliance rules in their everyday work life make a
Rulebook on how to do things
You hire employees based on their skill sets. But how do you tell them how they go about with their tasks, in accordance with your organization’s central ideas? Your compliance policy comes in handy there. And when all actions are in accordance with compliance policies, the organization becomes extremely efficient. There is less rework involved in processes.
Powerful tool for long term change
There is a contrary view that focus on compliance is seen as the sign of a very rigid organization that is unwilling to let go of its old (and possibly anachronistic) ideals. But, studies show that a change in the company’s compliance policies (that are followed in every department, by every employee in every work related action) can result in an overall change in how things are carried out in the organization. These changes will be slowly absorbed throughout and will be valid in the long term. Training, code of conduct, communication and central values are what define an organization rather than the deliverable of the entire business. And compliance policies can have a lasting effect on these defining points of the organization.
Consistency
If your organization is not process driven and you are used to making ad hoc decisions, there is bound to be inconsistency throughout. Ad hoc decisions cannot be done away with. Some of these decisions have reshaped corporate histories and quite positively at that. But that being said, employees across hierarchies should have reference points for decision making. Decision making should be based on rules, policies and underlying principles. This ensures consistency throughout the organization.
Reduce errors
A well thought out compliance policy, able administration to enforce the same and the adherence to such rules will definitely weed out commonplace errors in the organization. This will increase overall efficiency and optimise human effort in the organization.
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