By Sally Afonso – Compliance advisor within the financial services industry
The most visible and powerful support for corporate compliance training objectives comes from the boardroom. Executive boards should invest in and support compliance training as a priority.
In the complex and rapidly changing regulatory landscape of business today, the necessity for an informed approach to business strategy that complies with all applicable rules and regulations, to the letter and in spirit, is more important than ever. This approach takes a balanced view of both rules and values, from external forces and internal sources, in setting the tone at the top.
For this, compliance awareness is highly valuable, but alongside commercial objectives and the daily concerns that drive business, training for it does not always end up top of mind. Despite this, board members should view this training as critical to the success and sustainability of the business.
Employee awareness means employee engagement
Organisations of all types and sizes are in pursuit of a culture of active employee engagement and it is not hard to understand why. Engaged employees are focussed, on-message and productive. They are reliable performers as well as trustworthy stewards of corporate values. In order for employees to fulfil this role, though, they need incentive to engage. Compliance training can give them this by leveraging their content knowledge and understanding of good conduct expectations. Employees who are informed about compliance requirements and regulatory expectations will turn to their leaders as examples of accountability and integrity.
Management feels the ‘warm glow’
Managers whose employees are aware of their compliance obligations can derive satisfaction from the ‘warm glow effect’; that their employees look to them as role models and standard-setters. The positive boost of this appreciation reinforces the power of integrity to act as one’s legacy in the workplace.
“Compliance training can offer inspiring and demonstrable results for executive boards who wish to instil corporate values and promote social responsibility, sustainability and organisational and employee integrity in the companies they serve”
It is always a career positive to be seen as an example of someone who does the right thing at the right time for the right reason. All other things being equal, any manager would like to be remembered for his or her exemplary integrity, rather than thought of as someone lacking in a moral code. This serves as motivation to contribute affirmatively to the culture of compliance and to support a strong tone at the top.
The mitigation of reputational risk is key
Executive boards take the brunt of public scrutiny and criticism when events leading to reputational risk occur. If the organisation ends up on the front page of the newspaper in a critical light, board members will be held accountable by the public and looked to in order to restore trust and suggest the path forward.
Compliance training helps employees at all levels to understand the importance of noticing and reporting unethical or fraudulent behaviour when they see it. This is the first step in preventing and mitigating the risks to reputation that businesses face. For public companies, enabling whistleblowers and, for private companies, avoiding a culture of fear, are key for the transparency that’s required to avoid major exposure to reputational risk.
Effective governance relies on clarity and dialogue
Governance structures are only as good as the knowledge and compliance sensitivity of the employees working within them. Expectations must be clear and discussions about dilemmas, scenarios and strategic suggestions need to be the norm in the workplace.
Boards can decide upon the most rigorous and carefully designed architecture for governance within their organisations, but if individuals do not know what they should do in order to be in accord with policies and regulations, then they are not prepared to succeed in making the right choices. Adequate training supports positive behaviour, which in turn makes control frameworks more effective.
Relevance supports risk management
Executive boards have complicated agendas when it comes to risk management. In many industries, such as financial services, these can be very technical and structured, requiring specialist expertise and constant discipline and attention. Compliance risk management likewise includes keeping up to date on an increasingly complicated and constantly changing regulatory and legal environment. But it can be made a part of business as usual in all areas of the organisation for all employees to take on personal accountability. Fostering relevance at all levels of the business helps employees to grow a fluency with compliance risk management and use their raised awareness to support the company’s overall compliance programme objectives.
Compliance training can offer inspiring and demonstrable results for executive boards who wish to instil corporate values and promote social responsibility, sustainability and organisational and employee integrity in the companies they serve. Taking a practical, rules-based approach to risk management, which also pays close attention to corporate values creation will allow board members to steer their organisations to future longevity and success.
About the Author:
Sally Afonso is a compliance advisor experienced in the financial services industry, currently working in banking in Amsterdam, Netherlands.