How Can You Measure a Compliance Program’s Effectiveness?

April 25, 2023

An organization with a well-rounded compliance program keeps reputational damages at bay, prevents catastrophic enforcement actions, dodges exorbitant fines, and keeps its bottom line safe. 

The best way to gauge your company’s compliance effectiveness in a highly regulated and evolving business landscape takes more than just simple compliance training sessions. 

You must conduct regular annual surveys, analyze how well your training program performs, have compliance discussions with your managers, deploy a heavy use of KPIs, and even seek help from outside your organization. 

How to Evaluate a Compliance Program’s Effectiveness?

Sculpting a perfect compliance program can take some trial and error. Regardless of the strategies you deploy for its improvement, it is critical to stay consistent with each one. Here are the best ways to evaluate your existing compliance program:

Conduct Annual Surveys 

While they don’t provide a quantitative data set, regular surveys gather crucial qualitative data about the state of your work culture. Ask questions related to ethics and company policy and determine your employees’ attitudes towards them. Anonymous surveys provide an essential litmus test on your organization’s existing compliance culture. 

Don’t forget to maintain a record of employee responses related to any observed wrongdoings and compare them with reporting histories. If the volume of current misconduct seems to be higher than what your reports show, your compliance program is going to need more work. 

Examine Training 

Your employees determine how well your organization’s compliance culture is. Training is typically the best way to ensure they always put their best ethical foot forward. 

But how can you make sure your compliance training is, in fact, an efficient one? This is where the need for analyzing your training program comes in. Make sure you test employees on their ethics-related knowledge to see if they’ve retained all the important information. 

If your employees don’t perform so well in their test, it’s probably time to restructure your training to make it more fun, engaging, and interactive. 

Make sure you also run a misconduct reporting analysis after each training campaign. Have the reported incidents decreased after the training? Any fluctuations in misconduct reports will determine the effectiveness of your training program. 

Have Discussions with Managers 

According to Gartner, about 68% of employees reach out to their direct managers each time they want to report misconduct. 

This means managers have a goldmine of insights to offer when it comes to your company culture. Train supervisors on how to respond to wrongdoings. Have them actively record any issues that fall on their desks. 

When trained properly, managers can not only help fill some of the cracks in your compliance program, but they can also promote a better compliance culture. 

Gather Detailed Information 

As with everything, data is king when it comes to gauging how well your company performs on the compliance front. Try sourcing information from outside the doors of your ethics and compliance department. For instance, talk to your HR team and ask questions revolving around ethics and compliance during performance evaluations, exit interviews, and hiring processes. 

In addition, keep track of any incidents of theft, sick leaves taken, worker compensation complaints, and more to hunt for insights related to your current company culture.  

Go Beyond the Organization’s Walls

Local, state, and federal regulations are constantly changing. Enforcement agencies never cease to issue procedural and policy updates. With so much going on in the world of compliance, adhering to all compliance regulations is nothing short of hitting a moving target. 

To stay in line with these changes, you can always reach out to experts who can help draw up a flexible compliance program to help you accommodate these fluctuating expectations. 

Put the Spotlight on KPIs

Key performance indicators or KPIs are metrics that can help reveal your team’s performance when it comes to key compliance initiatives. They help gauge an employee’s awareness and engagement with your compliance program, determine if your workforce focuses on ethical decision-making, and tell you how well your organization adheres to global, national, and local regulations. 

Use your compliance tech elements including the compliance portal, policy manager, and anonymous ethics hotline. These platforms typically function well within a single holistic dashboard. A great compliance platform will also include data from HR to offer a comprehensive picture of risk across the company. 

What Makes a Compliance Program Truly Effective? 

Resolving issues related to your compliance program is not a one-day task. While there are countless metrics to run efficient evaluations, the overall efficiency of your compliance program comes down to three true measurements:

  • Consistent, periodic audits. These audits check how well the conduct of your employees aligns with your company policies, procedures, and practices that exist within high-risk areas. 
  • Thorough testing of internal controls. This ensures your organization can detect any regulatory or legal violation before they become a threat. 
  • Immediate remediation. This helps put the band-aid on your company’s program the moment any deficiencies or gaps are detected. The “Evaluation of Corporate Compliance Programs” crafted by the U.S. Department of Justice (DOJ) details the guidelines that help organizations analyze the effectiveness of their compliance program. 

A lack of immediate remediation can often translate a minor issue of misconduct into a full-blown corporate scandal. Regardless of how efficiently you “fix” the issues within your existing compliance program, a lack of remedial action can continue to hinder your company’s efforts at maintaining a strong culture of compliance. 

What’s Next? 

Maintaining an efficient compliance program demands a powerful combination of art and science. From offering innovative compliance training to sourcing data with compliance KPIs, crafting a high-performing compliance program requires a heavy dose of both data and human understanding. By deploying a holistic compliance platform and consistently assessing your workforce’s attitudes and knowledge, your organization can detect and heal any compliance cracks that may be hindering its growth.