Key Compliance Metrics to Report to Management and the Board

In the business world, “compliance” refers to a company’s ability to adhere to all laws, regulations, and ethical standards within its industry. Compliance is an essential part of business operations, as failure to comply with industry standards can result in lawsuits, fines, and a terrible reputation for the organization.

Because compliance plays such a significant role for a company, management and company board members often use compliance metrics to shape their business decisions. However, there’s one big problem: most board members don’t know which metrics truly matter.

If compliance managers, HR directors, or other professionals want to help upper management or the board better understand their company’s risk level, it’s best to present them with the most important and relevant data on corporate compliance. Make sure to include these compliance metrics in your next report.

Violations of Laws and Industry Regulations

Every industry is subject to its own laws and regulations designed to protect the consumer. When a company fails to follow those laws, they can be subject to all manner of repercussions, including lawsuits from customers and costly regulatory fines. Noncompliance can also color a company’s reputation with the public, ultimately hurting their bottom line.

Board members must be aware of any instances where the company has violated compliance regulations. They must understand the severity of the violation, the repercussions involved, and the steps needed to repair the company’s standing within the industry. Without this information, the board will not be able to make informed and intelligent decisions about the future of the organization.

Employee Complaints of Misconduct

Another aspect of compliance that can make or break a company’s reputation is employee misconduct. If an employee comes forward with a claim of misconduct – harassment, illegal activity, discrimination, or anything else – the fallout can be irrevocably damaging to the brand. Board members and management need to know if misconduct is occurring so they can stop the behavior and protect the organization.

Because the risks are so high with this metric, it’s important to give your managers as much information as possible: how many employee complaints have been lodged? What have the employees alleged? Did they complain directly to their boss or through an anonymous tip line? And finally (most importantly), what has HR discovered after investigating the claim? The answers to these questions can have a huge impact on a company’s future, so don’t leave anything out.

Compliance Investigations or Audits

Occasionally, an organization will be subject to a compliance or quality assurance (QA) investigation. During this audit, your company will be looked over with a fine-toothed comb, looking for any signs of noncompliance. The results of these investigations need to be recorded and saved for two reasons: so future auditors can consult them later, and so management and the board can study them NOW.

Your report should include as much detail as possible about your compliance investigations. How many audits were performed? What process did the QA investigator use to conduct the audit? What were the investigator’s findings and recommendations for the organization? Did the company implement these changes – and if so, how? A thorough account of the latest audits can help board members and managers make the best decisions for the company.

Increased Efficiency in Compliance Risk Assessments

Compliance risk assessments help keep businesses abreast of compliance issues they might face in the future, giving them the opportunity to adjust their policies and prevent the company from becoming non-compliant. While these assessments are critically important for business operations, they are also a great opportunity to see just how effective your compliance policies really are.

How long does it take your company to respond to a noncompliance incident? How much time do employees spend working on compliance-related tasks – and how much time could be saved if you used automated software or a third-party service? Assessing the efficiency of your system can help you make decisions that save both time and money.

Key Risk Indicators (KRIs)

Running a business always means taking on some level of risk. Successful businesses thrive because they know which risks are more likely to pay off – and because they’ve taken steps to protect themselves if something goes wrong. Your compliance reports should tell management and board members of any key risk indicators “KRIs” that could influence their decisions.

For example, let’s say you are working in banking. There are some customers who might be considered high-risk accounts – which is a major KRI. If the board is aware of the risks involved with working with these individuals, they may limit the number of high-risk accounts the company can open in a quarter. This limit can help prevent the company from taking on too much risk.

Risk Reductions

Your organization should always be looking to improve compliance policies. When your policies (and employee trainings) are up to date and effective, everyone benefits: employees can enjoy a safer and more pleasant work environment, while the company enjoys greater productivity, minimal repercussions (like lawsuits or noncompliance fees), and a better reputation.

As you adjust your compliance policies, it’s likely that certain risks will diminish for your office. Management and the board need to know about this change so they can appropriately adjust their own security measures. This knowledge can help make all aspects of the company more efficient.

Culture Surveys

Today’s consumers expect the brands they buy from to be ethical and transparent – and noncompliance can have a negative effect on a company’s image. A compliance report should include a culture survey, explaining how the public perceives the company and offering advice on how to improve that perception.

Employee Retention and Loyalty

Just as compliance can affect a company’s public reputation, it can affect how employees feel about their working environment. Studying employee retention and loyalty can tell you a lot about how well a business treats its workers. Management and board members can look at data from key compliance metrics, as well as data from exit interviews, to better understand the effect compliance is having on their business. 

Whether you’re a board member, an HR expert, or an intern, compliance plays a huge role in the way your business operates. To learn more about corporate compliance – and to get custom solutions to improve compliance in your organization – contact ComplianceLine today.