The Importance of Compliance in an Organisation
Compliance is to an organisation what oil is to a car; it keeps the entity running smoothly and performing to the peak of its potential. As the global business climate grows more stringent with standards and regulations increasing their sway over how organisations manage their operations, the importance of compliance in an organisation has never been greater.
Setting out a blueprint of expectations for everything from internal policies to employee behaviour, the compliance function should be something organisations in every industry are approaching proactively. With the EU GDPR directive mere months away from coming into full effect, meaning anyone, employees and third parties alike, handling critical government, public and private data will be subject to tougher measures and larger fines; compliance is essential to corporate survival.
Infiltrating every area of business, compliance is the key to maintaining stakeholder and investor trust, as it shows the parties whose resources your organisation relies upon that both your company framework and the people you have working for you are properly trained and following the approved rules and regulations. One of the key facets of compliance is covering an organisation’s bases when it comes to reputational risk, which of course further enforces public and stakeholder trust in terms of which organisations they choose to engage with.
The compliance function clarifies the ‘whys’ and the ‘hows’ of an organisation, defining values and ethics in a way that employees can relate to, informing proper training to hold individuals accountable and increasing efficiency and effectiveness in job execution by creating a system of intuitive compliance.
While some may view compliance as the strict parent always saying ‘no’, in actuality, compliance can act as a powerful tool for innovation and long-term change, taking an organisation’s values as a jumping off point to drive the entity forward. Of course, in contrast to this pioneering trait of compliance is its staid peer, consistency. Equally important in creating a healthy compliance function is the need for a common reference point against which to mark values, ethics policies and codes of conduct. Without consistency, there would likely be a constant tornado of corporate anarchy in the battle to make decisions without a clear and consistent point of precedent.
Another misconception surrounding compliance accounts for how people assume the majority of risks affect an organisation, in that they are all but exclusively being fired from the outside in. The truth is that while there is undoubtedly external risk in the shape of hackers, stakeholder and customer demands, natural disasters and general economic trends and fluctuations, most threats are generated internally. Basic human error and internal disputes are both classified as activity that is harmful to an organisation. Compliance sheds light on the patterns and predictability of this activity, analysing core metrics to highlight areas of underperformance and unrest, in order to prevent errors from occurring and thus managing the organisation’s risk effectively.
Compliance is what makes an organisation the well-oiled machine it needs to be to succeed in today’s business landscape, without it the rust will start setting in and could tarnish more than just reputation.