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How To Align Leadership And Compliance For Success

It is certainly true that compliance is costly. Identifying, analysing and mitigating compliance risks takes time, effort and resources to carry out successfully. However, non-compliance comes with an even greater price tag. 

Experts estimate that non-compliance with data protection regulations alone costs 2.71 times more than compliance. This is just one example of why you need a strong connection between leadership and compliance within your organisation. This stark statistic shows that compliance should not just be a box-ticking exercise to please regulators. Instead, it needs to be ingrained within the culture of the business, guiding the way the company works in order to be able to guide the organisation towards a compliant path at the same time as making a profit. And this requires buy-in from leadership.

1. Why is leadership important in compliance?

Leadership sets the tone for the organisation and drives the prevailing culture. Gopakumar Pillai, CEO of SBL, says that “visible support from the management motivates employees to adhere to the compliance programme.” When leaders are seen to adhere to and value the compliance strategy, it validates its worthiness for other employees. This makes it more likely that they will take it seriously and use the strategy to inform their actions. 

Leadership is also in charge of strategy, and this is another area in which taking ownership of compliance is important. The company must consider the implications of non-compliance and anticipate future compliance risks when developing its strategic direction. If leadership does not buy into compliance matters, then this can expose the company to regulatory risks in the future. 


2. How to align leadership and compliance

2.1 Understand business challenges

Aligning leadership with compliance is not about enforcing a way of working on your leaders. Instead, you need to collaborate with them and empathise with their position. This requires balancing risk with growth and convincing them that a culture of compliance is in the interests of the business. 

This means discussing the most pertinent compliance risks for your individual organisation and agreeing on an appropriate risk appetite. You should also inform them of compliance matters on the horizon and give them a warning about what it will take to mitigate those risks, allowing them the chance to factor any potential disruption into their decision-making. 

An example of this would be working together to meet the requirements of the EU Whistleblowing Directive. Aligning compliance and leadership would allow you to combine the introduction of IntegrityLog, the online reporting tool, with a push to develop a speak-up culture. 

With leadership fostering an environment that values whistleblowing and the compliance function installing a channel that makes it easy for employees to report in a confidential and secure manner, it shows how both parties can bring their skills together to create a holistic approach to compliance.    

2.2 Use legal metrics to drive decisions

In order to back up your assertions about the effect of regulatory challenges on the business, use legal metrics. This gives your leadership a solid platform on which to base their decisions. You prevent compliance from being seen as an abstract concept and ground it in reality. 

Being able to prove the consequences of your compliance programme with hard figures makes it more tangible for busy leaders who want proof before they buy into your strategy. 

These metrics also allow you to track your progress towards achieving your compliance goals. This adds additional evidence of the value of your efforts to leaders, enabling them to be satisfied that the strategic approach to compliance is moving in the right direction and benefiting the business. 

2.3 Promote a speak-up culture

Another benefit of a cohesive approach to compliance is that it enables you to develop a speak-up culture that can insulate the organisation from misconduct and other unethical behaviour. 

When a business values compliance and is shown to encourage reporting of wrongdoing, it means that it is difficult for non-compliance to fester without being discovered. As a result, there is less chance of a company facing punitive sanctions and reputational damage for failing to prevent illegal activity. This is a robust reason for leadership to align with compliance. 

Furthermore, developing a speak-up culture as part of compliance helps companies project a message to employees that they are valued, protected and heard. This reduces staff retention and aids the recruitment of talent, both of which are in the interests of leaders as well as the business in general. 

2.4 Create an effective ethics and compliance programme

Implementing an effective ethics and compliance programme helps to create a robust approach to ensuring compliance within the business. Rather than relying on ad-hoc compliance efforts, your programme spans the full process of dealing with misconduct and illegal activity by playing out how you will detect, correct and prevent unethical behaviour

This systematic approach makes it easy for leadership to maintain oversight and ensure that all efforts are functioning as they should. 

You should back up your programme with a code of conduct that lays out your expectations, requirements and the objectives of your compliance function. This should be the cornerstone of the compliance efforts within the business. 

2.5 Monitor and update compliance policies and procedures

Compliance is a shifting landscape that you must continue to monitor. Researching the websites of the governing bodies of jurisdictions in which you operate, reading the industry press and networking with other compliance professionals in your sector are all good ways to preempt regulatory changes that will affect your organisation. 

This way, you can provide leadership with the notice they need to envelop changes into their work. It also helps you adjust compliance policies to reflect best practice within the industry, ensuring your procedures are as robust as possible for the future of your organisation. 

2.6 Resolve compliance issues in good time

Another important aspect of compliance that leaders want to see the company adhere to is the swift resolution of problems. When compliance issues persist without action, it can lead to increased damage to the reputation of the company and more regulatory sanctions.

Companies should have processes in place to identify, investigate and resolve compliance problems in good time. Under the EU Whistleblowing Directive, for example, companies must acknowledge receipt of reports of misconduct within seven days and investigate and follow up within three months. 

In this case, using an online reporting channel such as IntegrityLog allows for straightforward reporting for whistleblowers and easy case handling on the company’s side. The platform’s dashboard displays forthcoming deadlines and ensures you deal with all reports in a timely manner. 

3. Key qualities of a compliance leader

These leadership qualities lend themselves to creating a culture that values and promotes compliance within a business: 

Quality How it helps
Great listener In order to understand the importance of the various compliance measures, being able to really listen and understand the benefits of creating the right culture is essential. 
Strong motivator The culture usually comes from the top, so your
compliance efforts require the cheerleading
capabilities of a strong motivator who will spread the word about your programme.
Emotionally intelligent The leader should be able to harness emotions when dealing with compliance challenges. They should also be able to use critical thinking to create solutions that benefit all parties. 
Value-driven Although a large element of compliance is driven by the legal aspect of the work, creating an ethical
 is monumental. This should be done by value-driven leaders who are able to create the right environment. 
Lifelong learner The nature of compliance is that it is always
developing and thus requires a leadership approach that is open to learning new information and skills and thriving on new challenges. 

4. FAQs

4.1 What is a compliance culture?

A compliance culture encourages all stakeholders to work to help the business meet its regulatory and ethical requirements. It involves everyone understanding that they should do the right thing at all times.

4.2 Why should leaders work to implement a culture of ethics?

A culture of ethics is important because it reduces the work required by the company to ensure compliance. When the prevailing culture is to work in an ethical manner, there is less chance of serious misconduct. The majority of workers are doing so in an ethical manner and are more likely to report any wrongdoing immediately if leaders foster this approach.

How can organisations measure the success of their efforts to align leadership and compliance?

Organisations can measure the success of their efforts to align leadership and compliance by tracking metrics such as compliance violations, employee satisfaction, stakeholder trust and overall business performance. They can also conduct regular audits and assessments to identify areas for improvement.

What are some challenges in aligning leadership and compliance?

Some challenges in aligning leadership and compliance include resistance from leadership, lack of understanding or buy-in from employees, competing priorities and inadequate resources or support.

5. Conclusion

Leadership and compliance should be aligned in order for organisations to effectively create the sort of culture that will dissuade stakeholders from carrying out misconduct. By showing leadership the case for compliance in terms of finances, reputation and staff retention, you can create the buy-in you need to gain the momentum for your compliance strategies. 

ComplyLog offers a suite of tools to help you do that:  

  • IntegrityLog enables you to fulfil the regulatory requirements relating to whistleblowing reports in EU member states.
  • InsiderLog helps you automate your insider list management as per MAR.  
  • TradeLog makes managing employee personal trading easier and faster. 

To find out more about how ComplyLog aids your business, request a free demo today.  

6. References and further reading


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