Is Your “Good Enough” Compliance Program Costing You Time and Money?
What are the consequences of keeping the status quo?
In our previous post, we examined all the potential frustrations and inefficiencies that are draining the life out of your Compliance Program. For most who walk through that exercise, it’s quite eye-opening. It’s great to have that list of known problems that are lurking within your program, but knowing the scope and exposure that these problems set you up for is equally important. Knowledge is power, and we want to arm you with the smarts to stay cool, calm and compliant.
Policy Drains: Out of Date, Out of Sync, and Out of Touch
Policies trapped in three ring binders are notoriously out of date, out of sync and out of touch. You’re a step closer if you’re storing policies electronically. But any repository is just that…a place to store stuff. If you don’t have smart ways of reaching out to your workforce your policies will sit and gather dust.
Using the three main categories we outlined last week, let’s start looking at costs.
Workforce Drains: The Cost of Apathy
Compliance is a people problem, and workforce apathy is the biggest Compliance Program killer. So, what actually happens when your workforce is apathetic? If you’re not getting through to your workforce about the actions you need them to take or the policies they need to uphold, odds are they’re not going to do it. This often turns organizations into the Wild West, with individuals, teams, or locations operating as they see fit, opening you up to a host of compliance risks. There’s no way to ensure the right things are happening to protect the business or find out when things aren’t going as expected.
Workforce apathy can seep into other aspects of the business as well – impacting morale, productivity, the bottom line. And an apathetic workforce isn’t going to attract the best and brightest to join the fold. It counteracts many of your organization’s efforts to attract top talent.
Harassment lawsuits that went before magistrate judges settled for an average of $53,000.
When taken to trial, the average cost ballooned to $217,000.
And when looking at the contents of your policies, there are two areas of exposure. If you’re guessing on what your policies should contain, you’re gambling on whether you’re adhering to ever-changing regulations. And policies written with too much jargon and legalese just about guarantee that people will NOT take the action you’re expecting them to.
There are huge costs looming for organizations with policy drains. Exposure to litigation can cost an organization thousands in legal fees and fines. One study found that harassment lawsuits that went before magistrate judges settled for an average of $53,000. When taken to trial, the average cost ballooned to $217,000.
And what about damage to your reputation? It takes years to build a solid reputation. But an ethical lapse can cause a brand collapse in a heartbeat. 41% of companies that experienced a negative reputation event reported a loss of revenue and brand value. Recent headlines from the banking industry detail how a single trader violated rules and regulations, losing the bank lost billions of dollars. Weak risk management was to blame.
Infrastructure Drains: What’s Falling Through the Cracks?
When you’re working with cobbled-together systems to run your Corporate Compliance Program (manually communicating with your workforce through email, tracking attestations through spreadsheets, storing policies on SharePoint…or even worse in binders) you open yourself up to a host of problems. There’s no guarantee that something won’t fall through the cracks. And there’s no way to speak to your workforce with a consistent voice about the actions they need to take to keep your company in compliance.
Organizations who use paper based methods spent 30% more time than ones that had transitioned to automation.
Time is money when it comes to infrastructure drains. When you count up the time you spend chasing attestations, preparing reports…or even worse…prepping for audits, the results are staggering. These inefficiencies impact your workforce too. Spending time on manual compliance activities distracts employees away from focusing on the core business. Any amount of inefficiency is taking time away from working on the meatier problems involved in building a culture of compliance.
A study conducted by Blue Hill Research showed that organizations who use paper based methods for their ethics, compliance, and GRC related activities spent an average of 30% more time than organizations that had transitioned to automation. Most companies just don’t have that time to spare.
It’s like a 12 step program…
acknowledging you have a problem is the first step towards recovery.
The status quo hurts. And many are numb to the pain because it’s grown slowly over time. But imagine if these could go away? Imagine life with an engaged workforce and an efficient system. What would you do with the time you currently spend nagging people to turn in forms and read through policies?
In the next post, we’ll talk through what a healthy compliance culture looks like and the steps you can take to bring your Workforce Compliance Programs to life.