Compliance

The subject of ‘compliance’ has been on my mind recently.

Compliance: Noun 1. the act of conforming, acquiescing, or yielding.

While I am not advocating a revolt against regulation and compliance, I am encouraging a revolt against the lethargy that is associated with the burdens of regulation.

In an article published by Thomas Reuters Accelus the following appears:

  • “Over a third of firms globally spend at least a whole working day every week tracking and analyzing regulatory change. • The number of compliance teams spending more than 10 hours a week tracking and analyzing regulatory developments has nearly doubled in both the U.S. (13 percent in 2013 and 25 percent in 2014) and the Middle East (8 percent in 2013 and 18 percent in 2014).”
  • “2013 was a year of record fines, continuing swathes of global regulatory change and a further increase in the focus on the individual actions, or inactions, of senior managers. Compliance officers had to cope with all of this while also finding themselves subject to more intrusive and intensive oversight from regulators around the world, as they have sought to develop the recommended outcomes-based supervisory approach. While 2013 continued the trend from previous years, 2014 is likely to be even more challenging. The focus will now no longer simply be on compliance with a set of rules or guidelines, but will increasingly look to explore a firm’s culture — the “how” of the business as well as the “what”. The regulatory attention on culture brings its own set of challenges for firms and their already stretched compliance officers. The management of regulatory relations will need to become a core competency for both compliance officers and senior managers in the coming year.”

 

The article goes on to break down budgeted percentages spent on compliance. What is perhaps most alarming is that, although most companies increase their compliance budget with great care and discipline, the average leadership development budget has increased at below 3% over the past three years. This statistic should be alarming to owners and stake holders. If innovation and leadership do not out-pace compliance then there will no longer be a dog for the tail to wag.

“The act of conforming, acquiescing, or yielding” does not generate income. Heck, it doesn’t even sound fun or motivating!! Fines and litigation for non-compliance are uncomfortable realities. Extinction, however, though more subtle and gradual is the most unpleasant alternative!

So, continue to fight the good fight of illusive compliance. But do not neglect to invest where it will keep you in the fight! Invest in the people who will lead your business to do great things!

We can help.
Berkshire Group Inc.