To maintain fair, ethical and safe business operations, companies of all sizes in every industry must follow certain laws and regulations as part of business operations.
Regulatory compliance is challenging and complex. The number of directives and their ever-changing nature makes it difficult to keep up. However, failing to comply can prove costly in terms of legal and financial penalties, as well as the consequences of eroding customer trust and tarnishing your reputation.
One of the best ways to stay ahead is to know, and follow, regulatory compliance best practices.
1. Determine Your End Goals
One of the first steps towards compliance is starting with where you want to be and work your way back. In some cases, this could be a specific law or regulation you must comply with to operate as a business, or it might be a specific compliance area that is costing your company money, such as a fine or violation you want to reduce.
Start by analyzing the end result you want to achieve and identify the specific areas you want to see improved. Look at your goals and objects and identify key results that matter to your stakeholders. Establish clear metrics to measure how well you are meeting those goals and objectives.
Taking an end-game-first approach tops the list of compliance best practices. Doing so helps you to determine your plan and strategy.
2. Know Your Industry’s Regulatory Environment
You should know the regulatory environment of your industry. Not every organization has the personnel or expertise to stay up to date with every piece of legislation and its requirements, and that is why a consultant can be helpful.
This legal counsel can help you understand what you need to do to make sure you do not put your company at risk. You need to ensure that either someone in your company or your consultant understands the regulations that affect your industry and that your internal compliance requirements meet with the standards.
3. Create Effective Policies and Procedures
Your policies and procedures reflect your organizational values, provide the framework for your business operations, and offer guidance to employees. Use these written policies and procedures as a tool to help reduce your regulatory risk.
The compliance key lies in your ability to manage, distribute, and track all those policies and procedures to ensure employees know and understand them. Policies are more than just words in small print and unintelligible legal jargon, they are the backbone of your operations and show employees and shareholders how committed you are to the integrity of the business.
4. Hold Employees Accountable
Not every company requires employees to sign specific policies, however, if your employees are your first line of defence against non-compliance, being able to track that they received and acknowledged those policies can help reduce your risk.
You need a robust system that can quickly and easily track who has signed which version of which policy. This allows you to prove what your company has communicated to employees as well as what employees have acknowledged that they have received, reviewed, and understood. By creating an electronic system that records this you can check it for updates and easily distribute the leger anytime you need to.
5. Conduct a Compliance Audit
An audit will inform you of what you need, what is missing and what needs updating.
Once you have a CCO, a consultant, or even a compliance team on board to handle risk management and compliance, they need to conduct a comprehensive review of all the regulatory compliance areas your company needs to address.
Besides assessing whether your business is meeting all regulations, you need to establish the level of your current compliance efforts. For example, determine how many violations your company has had, how much these violations have cost you, and if you have at-risk areas that could potentially be fined.
This baseline can also serve as a rationale for additional funding or personnel. For example, it makes sense to purchase a new piece of software or hire a CCO if it costs less than the fines would be for non-compliance.
6. Build a Comprehensive Document Repository
Everyone in the company should know where to find any compliance information they need to do their jobs. Employees need an easy-to-use resource that allows them to search for and find the information they need quickly and accurately.
7. Track Violations and Costs
The ongoing monitoring and tracking of violations serve as another compliance best practice. To get control of regulatory compliance, you need to keep tabs on recurring and one-off violations to reduce and eliminate future violations of the same type.
You also need to monitor the costs associated with these violations to see the effect that non-compliance is having on your company’s bottom line, productivity, level of customer trust, and reputation. Tracking violations and costs offer a good way to prove out the ROI of additional risk mitigation measures. It can also help with holding employees accountable.
8. Compliance Training
You need to train your staff in compliance. Some staff require special training and certificates of completion to be qualified to perform in their position. As a business, it is your responsibility to ensure that those people who need to be trained, are trained and certified.
Ongoing training rather than one all-day workshop or marathon classroom course can help people to better retain information, or even better understand the applications of compliance. This can be very important when dealing with international transactions or financial trade as changes and updates happen fast and there is no grey area for mistakes.
9. Communicate Clearly and Regularly
Written policies are a powerful tool for regulatory compliance, but your employees need to have read them. You as the company leader and those responsible for compliance need to communicate that information clearly, frequently, and consistently throughout the company.
10. Regularly Review Your Compliance Program
Reviewing your efforts on a regular basis helps spot weaknesses you can improve upon and strengths you can capitalize on. At a minimum, you should perform a review of your compliance program annually.
Looking over your plans, your documents, your training, and your violations, and evaluating if everything is still current and effective, is the best way to ensure that your business is working with industry standards.
By conducting a regular review, you can see what’s working, what’s not, and implement any chances your company needs to stay in compliance.
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