What you haven’t heard about compliance (and what you can gain from it)

Published Date: 14 April 2020

You can’t win the game if you don’t know the rules

Compliance describes the state of being in accordance with relevant laws and standards (and the process of becoming so). An organization can’t flourish unless by keeping pace with regulatory changes and leveraging on what they offer: in the modern market, compliance opt-outs are not in the picture. Only if you understand the rules and respect them, you can aspire to play better than anyone else.

 

As challenging as compliance may be – when done well, compliance becomes a strategic advantage

Across industries, general frustration arises whenever there is a new compliance requirement or update, which tend to be seen as a restraint on entrepreneurial activity. Not because people are against doing business the right way, but because of the burden, time, cost and distraction that these things bring. What is most often not taken into consideration is that investing in compliance programs not only protect from risks but also can be the start of an entirely new outlook on success.

 

Compliance can keep a company on the right side of the law, but this is only the beginning

Nothing drives an organization to review and improve its practices like an upcoming audit or the possibility of a hefty fine; the costly consequences of business disruption can be very motivating as well. The most obvious compliance benefit is, of course, decreasing the risk of adverse legal action and financial penalties. While being undeniably attention-getting, such a singular focus can be a poor incentive for influencing organizational behaviour. Although the legal driver is certainly critical, this should not be the only emphasis point when estimating the advantages of compliance-oriented changes. An equally compelling message that translates powerfully management needs is, indeed, that good compliance is good business.

  1. Build customers trust and establish brand loyalty

The success of a business pretty much depends on its public image. Failing to meet compliance obligations can jeopardize a company’s efforts to retain customers. It’s therefore no surprise that leaders consistently rank reputational risk as their number one worry. Given the strong correlation between high perceived transparency and positive consumer sentiment, corporate compliance can improve a company’s ethical posture and uphold a trustworthy image that earns customers thorough and lasting loyalty.

  1. Improve Public Relations

Media scandals have shown how Warren Buffett was right while saying that it takes 20 years to build a reputation and about five minutes to lose one. Misconduct can cause companies to suffer brutal consequences, starting from negative press attention and adverse public perception. On the contrary, a safe and reliable name is a great source for positive PR. Beyond making good business sense, this trust-building exercise demonstrates goodwill, corporate citizenship, and improved brand equity.

  1. Optimize business processes and strategic decision-making

Compliance can serve as a powerful tool of long-term change to move faster and more confidently while also reducing bureaucratic costs. An organization that spends less time dealing with regulatory infractions has more resources to focus on initiatives that improve competitive positioning and help gain market share. Moreover, when a company is forced to the complete, accurate and timely documentation of activities, information assets are consolidated, categorized, and analysed. This visibility and transparency uncover better data for better decisions, which is critical for planning informed investment and identify emerging risks earlier.

  1. Seize upon business opportunities starting with a level playing field

One benefit that industry-wide rules bring is a more level-playing field where everyone has equal chances. What stands out and makes the difference are the quality of the products, the technology and the value of the people behind them. Proper compliance programs make a business more attractive to potential partnerships and contract opportunities. We are all someone else’s third party: the more effective our ethics and compliance are, the lower the risk we pose to others. A good compliance record is an indicator of a well-run business and may influence its desirability as an investment.

  1. Increase operational efficiency

Compliance has a deep impact on the business culture: to improve overall security, the workforce must be involved in the process and sensitized to key issues. Employees play a big role in organization compliance and data protection, so they should follow policies and procedures that mirror the company’s legal obligations. When people have rules and know them, they can be less hesitant and more confident about doing their jobs. Having access to the right information at the right time also increases business efficiency.

  1. Attract top talent and enhance employee retention

Job seekers look for companies that take ethics and compliance seriously. An effective compliance program helps to attract and retain higher quality employees, with lower cost of recruitment and churn rate and, of course, the incalculable value of strong employee engagement. The same is true for current employees: the more people feel they work in a fair, professional and safe environment, the more likely they will be to stay with the company. Improved employee morale, retention rates and job satisfaction definitely generate enhanced productivity.

 

From a legal burden to a competitive differentiator: compliance as an opportunity

There is no one-size-fits-all management plan; a good program should be tailored to the individual company and identify the optimal marriage of compliance and business goals to produce successful results. If you are interested in creating a healthy compliance atmosphere for your organization, Penneo has meticulously developed processes to ensure its services conformity to security standards and help you make the entire compliance process much more efficient for your company. Our customers can rely on Penneo for processing their documents in compliance with AML, GDPR, eIDAS and other relevant regulations. It is our recommendation to be transparent with your clients and clearly communicate the procedures implemented for compliance.

Look at the positives of compliance to strengthen your business and ensure its longevity. Protecting your company means no surprises and greatly simplifies your daily business.