Building a Compliance Culture: Why It Matters and How to Achieve It

Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook

A strong compliance culture is essential for any business to operate ethically and efficiently while avoiding legal and regulatory issues. A compliance culture means that compliance with laws, regulations, policies, and ethical standards becomes ingrained in the way a business and its employees think and behave. It ensures that compliance is not just a matter of checking boxes for mandatory training but is fully integrated into the organisation’s DNA.

There are several key elements required to develop a robust compliance culture:

Leadership commitment: The tone from the top is critical. Senior leaders and managers must believe in the importance of compliance and convey that to the entire organisation through words and actions. They need to lead by example.

Communication: Compliance expectations and the rationale behind them must be clearly communicated across the organisation. This includes things like codes of conduct, policies and procedures, and regular reminders about compliance priorities.

Training: All employees must receive appropriate compliance training, not just when they join the organisation but on an ongoing basis. Training needs to be engaging and role-specific.

Embedded compliance: Compliance should be built into standard business processes and activities. It must not be treated as an afterthought or separate initiative. Compliance should be considered in decision making, performance management, and incentives.

Monitoring and review: There must be continuous monitoring of compliance and periodic reviews of effectiveness. This could include audits, risk assessments, and monitoring KPIs related to compliance. Reviews allow for identification of gaps and improvements.

Accountability: Failure to comply with obligations should have consequences. Disciplinary action may need to be taken to show that compliance violations are not tolerated. Accountability also means rewarding and recognising good compliance behavior.

Reporting mechanisms: There must be safe mechanisms for reporting compliance issues as well as open channels of communication. Employees should feel empowered to speak up without fear of retaliation.

Risk management: A good compliance program addresses key risks. Risks need to be identified, assessed, and mitigated. Risk management is not a static process but rather an ongoing one.

Developing a compliance culture yields significant benefits, including avoiding costly legal issues, maintaining a reputation for integrity, and building trust in the community. With leadership, communication, training, and a mindset of continuous improvement, organisations can shape a culture where compliance is not an obligation but a natural way of working. Following the practical tips outlined here will help in making compliance second nature across an organisation.

More to explorer

Technicians installing photovoltaic solar panels on roof of house.

Compliance Quarter’s Submission to the AER’s Review of the Compliance Procedures and Guidelines

On 11 April 2024, Compliance Quarter put forward its submission on proposed changes to the AER Compliance Procedures and Guidelines. The AER is reviewing its Compliance procedures and guidelines, which set out the manner and form in which energy businesses in jurisdictions that have adopted the National Energy Retail Law must submit compliance information and data to the AER. We argue that there should be consideration of measures to incentivise early reporting of potential breaches. These may, for example, take the

person wearing foo dog costume

Obligations of Energy Retailers Regarding Best Offer Information

Energy retailers in Victoria have specific obligations under the Energy Retail Code of Practice to provide clear information to customers about their ‘best offer’ – that is, the plan that would minimize the customer‘s energy costs based on their usage history. The objective is to ensure small customers can easily understand whether they are on the retailer‘s best plan for them and how to access the retailer‘s best offer if not. One of the significant challenges in the energy sector (as in banking and elsewhere) is that customers

low angle photo of sydney opera house australia

Guide to the National Energy Retail Rules

The National Energy Retail Rules (NERR) are a set of rules that govern the sale and supply of electricity and gas by retailers to consumers in Australia, alongside the related National Energy Retail Law (NERL). The NERR came into effect on 1 July 2012 in Tasmania, the Australian Capital Territory, and the Commonwealth. South Australia followed on 1 February 2013, New South Wales on 1 July 2013, and Queensland on 1 July 2015. The NERR do not yet apply in

Leave a Reply

Your email address will not be published. Required fields are marked *