Sustainable compliance is more than just meeting regulatory requirements. It is the ability to elevate compliance beyond execution to achieve strategic advantage. It's insight-based solutions facilitate quick and appropriate response to rapidly changing conditions.
The last few years have presented extraordinary regulatory and compliance challenges for companies resulting in consolidation, restructuring, and economic uncertainty. Without the right attention, these challenges can permit systems and processes to weaken, domain and critical thinking expertise to erode, and core company principles to be neglected, leaving companies vulnerable to compliance lapses and enforcement action.
Companies can no longer afford to take a traditional compliance approach in this heightened regulatory environment. In the traditional compliance approach, compliance are backroom cost centers, the internal police or “sales prevention” departments perceived as piling on non-value added requirements that detract from the company’s ability to innovate and be profitable.
Traditional compliance approach is to rely on reactive, point solutions to address problems that surface. Point solutions typically flow in the following manner: find a problem, add a procedure and fix only that problem.
However, good leaders realize that compliance are the “tickets to play”. Enlightened leaders know that best-in-class compliance is an opportunity for market differentiation, growth and financial health. By applying systems-based thinking and aligning compliant systems with key business processes, even greater rewards are possible. Such strategies facilitate sustainable compliance as well as systematic, data-driven product development and manufacturing.
Management input and oversight to address key organizational strategies and objectives are critical to ensure success. To achieve sustainable compliance, manufacturers must practice a three-step approach involving Assessment, Solution Design, and Implementation
- Begin with an objective, rigorous assessment of the current situation. Enlist the best critical thinkers and problem solvers in organization. If this skill set is unavailable, get experts to help. The assessment should include identification and prioritizations of gaps.
- These may require short-term remediation and validation before tackling the longer-term, more proactive objectives.
- Check whether all key processes are adequately defined and staffed. Does management make compliance a priority – in words and actions?
- Examine Systems and root causes by undertaking a critical analysis of the root causes of past problems.
- Assess what matters most for the customer and stakeholders. How does work currently get done? What are the detailed activities, drivers and owners? Which activities/persons provide no added value and could be removed
- Check whether metrics are established that are both meaningful and attainable to drive performance and assess effectiveness.
- Solutions Design
Develop the future-state operating model and optimized compliance system taking into account the company’s strategic, priorities, goals, and objectives and typically encompassing the following steps:
- Establish a multifunctional steering committee chaired by a high-level process leader.
- Facilitate strategic design workshops to get insight and buy-in from key stakeholders about the current state and proposed solutions.
- Systematically develop proposed solutions.
- Drive internal control ownership and accountability. Tie updated processes to individual job responsibilities.
No worthwhile strategy can be planned without taking into account the organization’s ability to execute it. In its most fundamental sense, execution is a systematic way of exposing reality and acting on it. Effective execution is possible only when these changes are appropriately managed.
Key areas of focus for implementation include:
- Change management: Involve key stakeholders during the process to ensure engagement.
- Communicate throughout the organization at appropriate intervals to keep staff informed and in step with the transition. Continued engagement and regular communication by senior leadership.
- Personnel impact may be multifactorial, including changes to job responsibilities, day-to-day work processes, performance expectations, and metrics.
- Judicious use of technology: Provide the tools, knowledge repositories, and management support, infrastructure to transition from tribal knowledge to fully integrated quality systems and business processes.
- Utilize scorecards, and other analytical tools to provide staff the ability to see at a glance, which procedures and processes apply to them, and to access the same performance, and effectiveness metrics that will be used by leadership.
- Allow time for staged transition from the current to future state.
- Evaluate effectiveness: Participation in key review boards to keep compliance issues visible to business leaders. Even routine corrective actions must be evaluated to ensure a correction is effective.
Sarobindo Malhotra is a co-founder of Advisory for Sustainable and Responsible Business (ASRB). Based in India, ASRB team has more than 70 years of collective work experience. They apply thought leadership and global networks across the areas of sustainability to develop solutions for businesses. ASRB’s work explores how to scale solutions to social, environmental and governance challenges.