As I contemplated my first blog post, a colleague suggested, “Start with some of the common questions you hear about what you do.” Great advice.
Among the many questions about risk and compliance, the most common probably is, “Why is a compliance program important to my company?” It’s almost paradoxical, because businesspeople, by and large, want to operate legally, but they often think that happens naturally by hiring qualified people and expecting them to do the right thing. They question the need for an intentional compliance program.
So, why have one?
Simply stated, as the saying goes, “an ounce of prevention is worth a pound of cure.” A good compliance program can help a company:
- Legally. It goes without saying but following laws and regulations applicable to your business keeps you in business, and even if a legal violation doesn’t put you out of business, it can result in fines, penalties, lawsuits, etc. that cost both time and money and disrupt your focus on your customers. The effort to make sure your employees know the rules that govern your business is small compared to the cost of legal and regulatory violations.
- Reputationally. Your business reputation is part of your brand. It influences your stakeholders when they think about doing business with you, from customers, to business partners, to your local community, and even to potential employees. With the speed of information flow, even the hint of a compliance failure can spread both inside and outside the company and damage your business and morale, even if it turns out not to be true. A good compliance program enhances your business reputation, internally and externally.
- Operationally. What are some things that can slow businesses down? Time searching for information needed to do your job (or worse yet, the risk that comes with not finding the information needed and just guessing), unnecessarily pushing decisions that could be made at lower levels up to senior management or doing something over because it didn’t meet requirements the first time can slow down processes and decision-making. Thoughtful company values, clear standards, and understandable and easily-accessible policies and procedures empower employees to know not only what they can do, but what they should do, how to do it, and how to spot issues before they occur.
So why have a compliance program? Because fostering a system and culture of self-governance via a compliance program will help your business avoid issues, build your brands, engage your employees, and operate more efficiently.