Corporate Compliance
The biggest challenge with corporate compliance is the potential operational drag on the organization. In the bigger picture, management needs to ensure any proposed control either maintains or improves operational efficiencies. Subject matter experts (SME) don’t always think from the perspective of executive management. The executive management team is concerned with profit, growth, assets, cash on hand, and people. For an SME this disconnect can lead to overlooking an opportunity to demonstrate value added benefits in the form of risk mitigation, efficient execution, and process improvement. When thinking about corporate compliance, I recommend rephrasing the term to “operational integrity” and using a triple bottom line approach of people, planet profit. In order for the decisions to be sustainable, they can’t be either profit or planet. In order to be sustainable, shouldn’t the decision be able to say yes to the triple bottom line?
Why Operational Integrity
The question is why? Operational integrity at its core is really about discipline in execution. And discipline in execution translates into performance consistency. And performance consistency translates into operational predictability. And operational predictability translates into financial sustainability. In practice, the discipline in task execution, should reduce either the probability or the potential consequence when something goes wrong. The goal is to reduce the opportunity of occurrence to a level that is deemed safe by reasonable people.
An example is driving a car at 60 mph on a two lane highway. We place a line in the middle of the road and everyone knows which side of the road to drive on. Imagine that same highway with no lines or signs with cars driving in both directions. Is the likelihood for injury increased? The signs and lines add costs to maintaining the highway. Compliance is the operational science of mitigating unforeseen risks. It’s like following a recipe book to make sure the cake turns out the same or better than when grandma baked it.
Operational Integrity is Really About Continuous Improvement
So what happens when we have a failure in execution? From a compliance perspective, we make 8 inquiries.
- Have we performed a Risk Assessment and if so, was this risk identified?
- Based upon the outcome of the risk assessment, have we determined a need for any new or revised set of standards, code of conduct, policies or procedures?
- Have we adequately identified the organizational governing authority to provide appropriate oversight and staffing resourced?
- Did we exercise due care in delegating the responsibility, was there a failure here?
- Did we properly educate and communicate expectations to the team?
- Have we failed to monitor, audit,report, preventing and detecting misconduct?
- Have we investigated the failure and apply the requisite enforcement or incentives properly?
- Did we adequately assess and respond to remediate the situation?
The above inquiry allows an organization to identify potential sources of failure. In other words, if we have properly identified the root cause of the issue, we can make a minor correction to keep a program on track.
Keep Operational Obligations Lean
Simply put, we need to keep our operational obligations lean and efficient. Too many rules creates an operational drag. We need program administration and day to day operations that are easy to manage and makes sense for the business. Checklists are good tools. As an organization, I need embrace the bare minimum of rules to operate under in order to execute efficiently.
If you need help or assistance finding a solution to compliance need; call me at (918) 216-0825. I look forward to your call!
