What does it mean by a culture of compliance? Creating a culture of compliance means that the organization understands that compliance is critical; it makes compliance the focus for all employees and an integral part of the organization's operations. Building and fostering a compliance culture takes a long time – and it is again fragile without the proper engagement of employees.
Implementing a robust compliance culture requires companies to go beyond a list of written rules. As culture refers to the characteristics of the people, compliance should be embedded in the behavior of the employees and should be upheld by the senior management.
The board of directors and compliance committee needs to understand the factors influencing employees to behave ethically or unethically. Incentivizing compliance will help prevent unethical behaviors from employees, endangering a company to a great extent. Compliance and risk management should be included in the training and communication programs to reinforce compliance messages. Having an engaged workforce helps create a
Major elements of compliance culture
Employee engagement hinges on several core elements: employees should understand their obligations – these obligations should be attainable, and they should be willing to abide by their responsibilities. In addition to complying with obligations, collaboration and information sharing among teams can streamline governance and minimize governance risk. The model for employee engagement varies across sectors and industries, but its generic interpretation works to achieve the intended goals.
Create employee-friendly policies
Policies are the foundation of a company's culture. They set the rules and procedures for an organization to achieve its compliance goals. Policies define the "tone at the top" towards employees and compliance. Policies decide what is permitted and not permitted under the organization's laws and regulations and standards of conduct. They outline the organization’s expectations from employees, and third-party vendors, what employees and customers can expect from the organization, and guidance for day-to-day operations.
Policies work as the base for compliance and governance. The very relevance of policies is the existence of risks; policies address risks. Flexible and employee-friendly policies make employees more productive and help them focus on their compliance obligations. To build and maintain a culture of compliance easily, organizations need to make expectations more transparent and put policies clearly in writing.
Create a training methodology for your employees
In a complex and nuanced corporate world, organizations need to extend adequate training to employees to become more effective in the workspace and perform their work diligently. Training programs help prepare employees to know their compliance obligations and handle risks. Employees need guidance to act accordingly in each situation; the training programs teach them skills and abilities and provide them with their morale.
In a rapidly changing regulatory environment, organizations should implement training programs routinely to reach a state of compliance maturity.
Eliminate barriers to compliance
Just building policies are not enough; the policies should also be accessible to employees. Circulate policies among employees, reinforce them to read them, make them attest to policies, and test their understanding of policies. Ensure that your employees can access policies easily. Update policies to reflect the latest changes.
Communication
Communication is one of the most critical aspects of building a compliance culture. Organizations need to encourage employees to have effective communication. Employee engagement cannot exist if stakeholders do not share information and knowledge. In a robust compliance culture, employees ask questions, clarify doubts regarding implementing policies and address concerns. Communication prevents employees from making their interpretations of policies and procedures. It boosts productivity, employee engagement, cooperation, and better compliance.
Build trust in the workplace (H3)
Lack of trust is a barrier to an excellent corporate environment. Try organizing team-building and trust-building activities and create an environment where employees can trust each other.
To build trust at the workplace, do the following:
- Encourage strong working relationships among employees
- Recognize employees who are committed and keep their word
- Support employees who promote a compliance culture
When employees see that the management genuinely promotes a culture of trust by doing what they say, they automatically start believing the system and trust the management and fellow employees.
Conduct compliance audits
Schedule compliance audits periodically to test whether the processes and procedures are working. Internal auditors can verify evidence and reports to see whether employees are following compliance diligently. Audits also identify gaps in the compliance plan. It is recommended that the organizations conduct both scheduled and surprise audits to identify issues and suggest improvements in the system.
Integrate compliance and values in everything that you do
One misconception about compliance is that compliance is independent and is to be done as a separate program. However, this is not true. Employees should be aware of what is expected of them as part of their compliance obligations. Compliance should be brought into operational responsibilities, and employees should be taught to do the right thing. When employees diligently do what's expected of them, they ensure that they comply.
Incentivize compliance program
Organizations can look at incentivizing compliance programs and tie them to promotions or any other form of monetary reward. It is human nature to learn about something and follow if they can gain something from it. Acknowledging and incentivizing compliance programs is the management's responsibility. Some companies are gamifying compliance management initiatives. It brings in the fun element to compliance programs and rewards them with benefits.
Compliance friendly leadership
The saying is that compliance should start from the top. Leading by example is the best way to establish that compliance is at the heart of the organization. Guide your senior management to engage and do things upright genuinely. Please encourage them to speak about compliance successes and gaps by conveying that the organization values compliance.
Take violations seriously
Ensure that compliance violations are not tolerated. Bring oversight into compliance management processes so that the right decisions can be taken immediately. Usually, many of the compliance requirements are recurring, its essential to assign these compliance obligations to stakeholders who are accountable for them and monitor the progress periodically. Compliance violations demands stick actions. Encourage employees to report misconduct and violations. The code of conduct document should clearly outline the process when someone is accused of violating the code of conduct. Outline what are the actions to be followed. Look for evidence, proof, or witnesses, and punish the employee only by verifying that the violation happened. Keep details confidential to protect employees and the organization. You can start with a warning for violations of lesser integrity, but infractions like meddling and selling customer data might warrant legal actions and dismissals.
Technology
Technology is another critical element in creating a culture of compliance effectively. You can use compliance technology platforms to create and host policies and distribute them to stakeholders. It helps create controls mapped to the requirements and assign them automatically to stakeholders. It lets compliance committees and stakeholders collaborate and fully control compliance efforts. Teams can design controls that keep the organization compliant and agile, even with the most advanced regulatory frameworks.
Technology is the key to efficiently and effectively creating a culture of compliance efficiently and effectively. Compliance technology provides the platform for communicating policies and procedures and demonstrating adherence to regulators.
Building a culture of compliance is a tedious and lengthy process but worth the effort. Making employees maintain a positive attitude towards compliance requires a new outlook. Design programs in such a way that it creates change in the mindset of the stakeholders from the top down and translates into behavior changes. It creates a sense of purpose, making compliance integral to the employee experience.