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Regulatory compliance doesn't need to be an exercise in enforcement. Instead, it can be an opportunity to differentiate your business, create an environment in which team members can shine, and contribute to the business' long-term success
There has rarely been more of a need for businesses to foster and maintain a culture of compliance. In these fast-moving and uncertain times, employees are under considerable personal and professional stress. Decisions are sometimes made that are out of character. By introducing individual accountability across a firm, regulation becomes much more than a necessary evil; instead, it can be a vehicle through which team members can excel.
Compliance doesn’t need to be a dirty word. In fact, it can be a tool for shaping a company’s culture—for creating shining stars within an organization. To achieve this, executives need to rethink their position on rulemaking and see regulation as a catalyst for self-improvement: an incentive to change the way everyone thinks about their roles and responsibilities. Instilling a culture of compliance goes beyond the occasional email from headquarters or one-off training sessions. Rather, employees need to realize the role they play—individually and collectively—not just in meeting their compliance responsibilities but in upholding the reputation of the company.
The brand and reputation of any business is at the core of long-term success. It is, of course, the responsibility of companies to remain vigilant. Putting in place the right tools for individuals to own compliance is a great start. The more ethics is embedded in an organization, the less the likelihood of an unforeseen lapse or accident.
TAKING THE FIRST STEPS
What does this mean in practice? For most firms, establishing a culture of compliance is inextricably linked to building a culture of trust. Staff need to be empowered to own their roles as responsible corporate citizens, but to do this they need the tools for success. These include the software and technology to understand, monitor, and guide their behavior, but a strong culture also requires consistent training. Beyond training, there is also a requirement for recognition. A rewards-based approach that recognizes good behavior is far more likely to instill long-lasting change than a fear-based culture of discipline and oversight.
But while putting in place the framework to build a strong corporate culture is a great idea by itself, it is of course also important that employees understand and embrace the rules set out by regulators. This way they will be able to take appropriate action to prevent instances of unethical behaviour from occurring. As an example, the FCA laid out a multitude of Conduct Rules for its Senior Managers and Certification Regime that employees at regulated financial firms must abide by. If an individual does not know the remit of their accountability, they may struggle to see how they should react and behave to various situations.
Software tools like Star’s Individual Accountability Regime (IAR) can help in this effort. A single source of truth for both compliance and senior managers, IAR provides a systematic way of dealing with and keeping track of constant change by streamlining business processes and providing a clear understanding of what’s required to meet regulation like the SMCR. This type of technology enables employees to recognise, record, and manage breaches. It allows employees to certify to their role, complete competency tests, and even tracks their personal development and continuing education. In the case of IAR, it also supports FCA Directory reporting and makes it easy to maintain directory data and persons. Without these kinds of capabilities, it’s impossible for firms to feel confident they have a true pulse on the health of the firm and its employees.
Technology can act as more than an early-warning signal. It can ensure employees know what do to if and when an issue does arise: facilitating better communication and education. A natural segue would be to leverage these capabilities and identify the underperformers or bad actors in the firm. But IAR also helps firms surface and reward those employees who have performed well: identifying and acknowledging those who have acted with honesty and integrity when carrying out their responsibilities. This sets an example for others about how they should behave. In this way, a culture of compliance is created in an almost organic way.
Regulatory compliance does not need to be an exercise in enforcement. Instead, it can be an opportunity to differentiate your business and to create an environment in which team members can shine. It’s also an opportunity to create a culture that will ensure the long-term success and longevity of your business.
