Role of Leadership in Tackling the Compliance Issues in an Organization

Commitment from the leadership is essential for establishing a robust compliance culture. The timely intervention of top management helps to mitigate the vulnerabilities in compliance strategies.

What does compliance mean in the context of a business?

To put it simply, compliance refers to conducting a business while sticking to the defined rules and ensuring that it operates responsibly. There are many external and internal regulations that a business has to follow during its operations, and deviating from these established set of rules could cause irrevocable damage to the business and also the customers. These regulations touch all aspects of the business, including its workflow and how it handles the staff and customers.

Non-compliance is a costly affair and clearly a risk that businesses cannot take. It could drag the business into complicated criminal charges and penalties. Besides, non-compliance could risk the safety of operations. A company that doesn’t follow the safety rules strictly faces potential risks such as fire or injuries. Having a good compliance procedure in place improves the public relations and also brings higher employee retention.?

Every business requires a comprehensive corporate compliance program to mitigate the risks of non-compliance and improve overall business productivity. However, the success of a compliance program depends on commitment from the entire workforce and especially the leadership.

In this article, I put forth my views about how the top management can ensure regulatory compliance of the organization. A leader has to be updated about the various regulations and keep track of all the relevant compliance issues. Their role has to go beyond just supporting the compliance procedures. Leadership has to work towards modeling a culture of ethics and compliance at the workplace.?

How top management can ensure compliance

I have come across many situations where the top management is not serious about process compliance. Adherence to the rules and regulations happens only when there is a firm commitment from the leadership. The management has to take complete ownership of compliance so that the importance of compliance is clear to all employees.?

Here is how top management can support the development and implementation of an effective compliance program.

• Thorough knowledge - Leadership has the responsibility of developing a comprehensive compliance program and ensuring that it is strictly implemented across the organization. Hence, the leaders have to keep themselves updated about the in and out of compliance policies and procedures. Extensive knowledge of the compliance requirements will help the managers in guiding their team, taking proactive measures, and ensuring overall organizational compliance.
• Cover all aspects - Management must work to ensure that the program covers all aspects of compliance, including the rules related to regulatory agencies, shareholders, customers, and employees. These stakeholders would want information about the plan to make sure that their interests are also covered. Hence, while creating the compliance program, the management must take into account the needs of all the stakeholders.?
• Adherence to the plan - Visible support from the management motivates employees to adhere to the compliance program. Management has to provide the required support for executing the plan and tackle even minor deviations. The compliance policies must be communicated clearly across the entire organization to gain the commitment of all departments. Leaders must walk the talk and demonstrate their commitment to compliance in all their actions. When employees see the top management adhering to the rules, they follow suit.
• Act on the facts - After executing the compliance program, management also has to ensure that it is effective. For this, it is essential to regularly monitor the response to the program. We should base the actions on facts and not assumptions.?Management has to collect information regarding the performance of compliance program and also the employee response to the compliance program.
• Accessibility - Leaders have to be accessible whenever there is any compliance issue in the organization. Employees and other supporting departments would need constant access to the leadership so that any issues related to compliance are resolved on time. Transparent communication and ongoing support from the management are vital at this stage for the strict implementation of the compliance policies.
• Monitor and respond - The step towards total adherence to compliance is a lengthy one. After implementing the compliance plan, the management has to understand the response to the plan and identify areas that require improvement. Regular monitoring of its progress and revisiting the areas that need additional attention will ensure that compliance risks are completely mitigated. Correct the deviations and implement additional measures as required to ensure higher adherence to the compliance program.

To sum it up

As a business grows and introduces new products or expands to new markets, it gets exposed to varying regulatory requirements. Many rules might be contradictory and challenging to follow. To avoid non-compliance, an organization requires a strong commitment from the leadership. The top management must clearly demonstrate their dedication towards compliance programs to both external entities and internal staff. They must be visible and accessible to resolve the compliance issues whenever it occurs.?

These measures from the side of the leadership help companies to develop a compliance culture and protect themselves from transgressing the rules and regulations in the different geographical regions they operate.

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