Can you easily communicate the value of your compliance program to stakeholders like your board of directors? Whether you’re an old pro or a novice, your “sales pitch” for compliance may need a refresher as we approach the new year, with new opportunities to ask for bigger budgets and better resources. Here are the top seven ways we’ve identified that an effective compliance program saves money and protects the bottom line. And if you’d like to dive even deeper into strategies for greater impact and ROI in 2021, join our webinar next week with compliance experts from across industries.
Let’s start with the obvious: a robust compliance program surfaces issues internally, before they spark federal investigations and eventually, multimillion (or even multibillion) dollar fines. And if you do end up in an investigation, having a robust compliance program in place can help steer regulators toward lesser punishments, as established in 1991’s U.S. Sentencing Commission’s guidelines.
But that was 30 years ago, and fine avoidance been touted as the number one value-driver for compliance programs ever since. Your board of directors may be ready for a new message—so let’s explore some value drivers that will resonate in the highly-charged, pressurized business environment that’s sure to continue into 2021.
Brand protection and empowerment
“Today the risk of brand damage from social media or employee activism is far more likely than regulatory prosecution, and in many cases can be far more damaging,” points out Philip Winterburn, Convercent’s Chief Strategy Officer. “To mitigate this risk, organizations have to pervade their culture with their vision, mission and values. By engaging employees in the ethics and compliance program, we can maximize alignment and promptly detect deviation.”
Companies with strong compliance and ethics programs attract the best employees who will ultimately make the company more successful, says Germaine Huka, Global Ethics and Compliance Business Partner at Galapagos, a biotech company in Europe. With every new generation, people are more concerned with a company’s track record when it comes to ethics and corporate social responsibility, and people will choose to work for a company (or not) based on this. If you want to attract the best, a strong ethical culture is a must. Germaine’s sharing more insights like these in our upcoming webinar, Maximize Your 2021 Compliance Budget, Your Impact, and Your ROI, next week. Sign up here>
Rhibetnan Yaktal, Global Head of Compliance at Puma Energy, pointed out during her CONVERGE20 panel that the psychological safety that a healthy compliance program can provide leads to more fully engaged employees. When you consider that a disengaged employee can be up to 34% less productive, it’s clear that a culture of compliance and the stability it provides can directly contribute to the output of each employee. And engaged employees are more likely to stay, driving further stability and saving money—after all, it can cost anywhere from 50 percent to 200 percent of an employee’s salary to replace them.
Customer attraction and retention
In the same way that an ethical company attracts and retains the best employees, it will also draw in more customers and help build loyal relationships with them. “Companies that exhibit highly ethical behavior that is aligned with their values and brand promise attract customers who identify with these values and promise,” says Philip. “These relationships are far more resilient and sustained than a relationship formed at a transactional level. Ethics and Compliance is uniquely placed to drive this alignment.”
Consumers increasingly view each purchase as “voting with their wallet” and want to spend money on products that align with their values. If your customers are businesses rather than consumers, the point stands—companies want their vendors, suppliers, and third-party partners to be not just compliant with regulations but also aligned with their own corporate values—and they may ask for proof in the form of your policies.
Gathering data that matters
“Which metrics actually tell you if your ethics & compliance program is reducing company exposure to risk and empowering employees to speak up…and how do you determine if that data is tracking proactive or reactive metrics?” asks Asha Palmer, Convercent’s Chief Ethics and Compliance Officer. “It’s hard. But it’s arguably the only thing that matters, and it makes the rest of the business realize the value compliance brings to the business case and business outcomes.”
In a recent blog post, Tom Fox broke down a real-world example of one company’s gifts and entertainment disclosure data, and how it reduced sales cycle time while improving performance and profitability.
Driving better business outcomes
“Compliance enables companies to achieve business outcomes in a way that is ethical and legal,” Asha points out. “The often-untold value of doing business the right way is the buy-in, support, pride, and loyalty of the employees who witness companies achieve business outcomes without compromising ethics or compliance.”
Next week’s webinar panelist Benjamin Halpert, Head of Ethics and Compliance at Anheuser Busch, agrees. “A robust data analytics program can help drive employee behavioral change and transparency, thereby enabling an organization to direct resources where they can more effectively achieve the organization’s strategic objectives.”
And if your board believes that ethics is just about creating feel-good stories and driving good PR, tell them that ethics and financial performance are closely tied. The stock prices of the World’s Most Ethical Companies, as recognized by Ethisphere each year, outperform the Large Cap Index by 13.5 percent. As far as proving value, it doesn’t get much clearer than this so-called “Ethics Premium.”
Next steps for proving your value in 2021
Now you’ve got a handle on the many ways your compliance program provides value. Don’t miss out on the next part of this conversation—including how you can use data to prove exactly how much value you’re providing—at our webinar next week with experts from Anheuser Busch and Galapagos.