So many organizations view compliance as a necessary evil rather than an opportunity. An overall corporate culture shift can easily turn compliance establishment into a major asset that will have a positive impact on everyone – from investors and directors to interns.

Enough research suggests companies complying with local and national regulations are more competitive than other comparable businesses. Trust in these enterprises is easier to establish and maintain, impacting relationships with customers.

Across industries, compliance sets standards and helps optimize performance. Having the right approach toward building compliance will give your business the opportunity to optimize safety and operational processes to create long-term growth opportunities.

The Impact of Compliance on Business Culture and Performance

A very strong link exists between compliance and corporate culture establishment.

There are different kinds of compliance a business has to meet within the environment and industry it operates in.

Regulatory compliance is the most widely recognized one. Internal policies and rules that govern the way that work is done within the enterprise, however, are equally important. These are the ones that shape corporate culture and ensure adherence to industry standards as far as performance is concerned.

The cost of non-compliance can be huge, including a massive impact on business culture. For example, a failure to meet a certain legal requirement can lead to business disruptions. When compliance goes unresolved internally, employees and stakeholders will see it as permission to behave in the same way. Before long, problems have snowballed until non-compliance is a standard part of the day-in-day-out workplace culture. Such issues will impact employee morale and have a more profound effect on the overall reputation of the organization.

Compliance Challenges Organizations Face in 2024

The 10 Global Compliance Concerns for 2024 report outlines some of the main challenges organizations will face over the course of the year. A few of the top difficulties that will have to be overcome include:

• The rapid advancement of artificial intelligence (AI) and the potential for over-reliance on such technology (as well as the lack of a clear regulatory framework at the time being)
• The more widespread adoption of cryptocurrency payments and transactions
• New challenges in scam and fraud prevention resulting from technological advancements
• Navigating compliance in a world of geopolitical instability (especially for the organizations that operate internationally)
• A more pronounced focus on sustainable business operations and the introduction of new environmentally-friendly regulatory frameworks

The Effect of Compliance on Regulations and Laws

Compliance creates uniformity in the marketplace.

It helps for the establishment of standards and ethical or legal norms that all companies have to take into account when operating.

Compliance improves competition in a healthy way and it also allows for the best standards to be enforced or modified for better results in the years.

Laws have limitations. Through an ongoing commitment to compliance and open dialogue, businesses can empower policymakers to move forward, pursue modernization and change in ways that will protect everyone and help for optimal processes, improved transparency, and elimination of unnecessary regulatory complications.

Popular Approaches to Compliance Building

Various methods can be employed to build compliance within your organization.

The Client-Centric Approach

A client-centric approach takes into account the human factor. Some stakeholders may fail to recognize the benefits that compliance programs bring to the table. This approach educates, enlightens, and presents opportunities in a way that gets everyone on board.

The client-centric approach increases the effectiveness of compliance programs. Some of the primary tools employed in this model include empathy, well-designed and simple steps towards maximizing compliance, the provision of compiance training opportunities, and trust establishment through adequate and honest communication.

If you adopt this model, you’ll need to do more work than simply introducing a legal or corporate framework. You’ll have to work with people, communicating, and educating. While doing compliance this way is more resource-intensive, the results can be better and the introduced compliance program will be stronger.

The Top-Down Approach

In some industries like healthcare and finance service provision, a top-down approach makes more sense.

The top-down compliance building approach emphasizes correct behavior and industry-enforced practices from the highest levels of management to every other department within the organization.

All decisions are made at a managerial or directorial level, after which they’re passed on down through the organizational structure. Decision-making doesn’t originate from the individual, which makes some experts consider this model more autocratic than the client-centric approach.

Whenever precision and impeccable operations are to be prioritized (because of hefty fines or risks stemming from non-compliance), the top-down approach is the one that can yield faster and more cohesive results.

Why Compliance Is Key to Your Organization’s Success

Focusing on compliance isn’t just about avoiding audits and subsequent fines. Making it a part of the corporate culture can deliver a range of strategic benefits that affect the bottom line and the overall stability of the business in the long run.

The key advantages to a meticulously crafted compliance program include:

• A better reputation and easier opportunities to build trust with clients and stakeholders
• Financial security because of the reduced risk of fines and lawsuits (the average cost of non-compliance is over 14 million dollars in the form of fines, penalties, business disruptions, productivity losses, and overall reputation damage)
• Streamlined internal procedures optimize productivity
• Reduced risk of security breaches and cybercrime
• Improved employee engagement and retention
• Improved scalability

As you can see, compliance isn’t just about prevention. It’s non-negotiable if you want a stable business that will grow in the years to come.

The key to making compliance establishment work for your organization is having the right program in place. The approach will depend on the industry specifics, the size of the organization, the types of customers you deal with, and the intricacies of operational processes.

A well-developed regulatory compliance program will outline all of the steps, suggest specific measures, and help employees adjust to these changes. It counteracts the possibility of costly mistakes and reduces the risk of issues occurring.

For best results when building a compliance program, you’ll need to do a couple of simple things. The first one is to align your corporate culture with the compliance measures that are essential. You’ll also have to be proactive in terms of identifying risks, ensure familiarity with the regulatory framework, and establish very explicit protocols that will educate people and outline the right course of action without any room for personal interpretation.

Author Bio:

Giovanni Gallo is the Co-CEO of Ethico, where his team strives to make the world a better workplace with compliance training services, sanction and license monitoring, and workforce eLearning software and services.

Growing up as the son of a Cuban refugee in an entrepreneurial family taught Gio how servanthood and deep care for employees can make a thriving business a platform for positive change in the world. He built on that through experience with startups and multinational organizations so Ethico’s solutions can empower caring leaders to build strong cultures for the betterment of every employee and their community.

When he’s not working, Gio’s wrangling his four young kids, riding his motorcycle, and supporting education, families, and the homeless in the Charlotte community.