What Is Compliance Management and Why It Matters to You

What is compliance management? Simply put, compliance is ensuring your company and employees follow the rules.

December 28, 2020

If you think compliance only matters for highly regulated industries like financial services and telecommunications, think again.

No matter your industry (or your size), every organization needs to make compliance an essential part of business operations.

But what does compliance mean? Simply put, compliance is ensuring your company and employees follow the rules. And these rules could include a mix of pertinent legislation, internal company criteria, and external industry requirements.

These rules provide the target you need to hit, as they denote the compliance benchmark or compliance standard your company must meet.

Taking this a step further, then, what is compliance management? In light of all these requirements, compliance management focuses on the process of ensuring your company and employees follow these rules.

The methods and tools used for compliance management can include policies and procedures; internal audits; third-party audits; technology applications; reports and documentation; and security controls.

Three Approaches to Compliance Management

When determining how to handle your compliance management, look first to the compliance standards you need to meet. Whatever the law mandates will dictate the specific compliance benchmarks you need to aim for.

Beyond legal requirements, though, you can let corporate culture and industry norms guide your efforts, as there is no one-size-fits-all approach.

Ultimately, you need to decide an approach that meets your organization’s specific needs when planning, implementing, monitoring, and enforcing your compliance efforts.

That being said, three general approaches can provide guidance on the compliance management path that works best for you.

Strict, top-down approach

With this compliance management approach, a strong authority figure strictly enforces the rules throughout the company.

Here, compromise and flexibility do not exist. A situation is either black or white, right or wrong, end of story.

The authority figure ensures compliance with those very strict standards with little recourse for any lapses.

For certain fields, like the high-risk manufacturing and healthcare industries, this is not only appropriate, it is necessary.

If your company manufactures products, you want to ensure that you meet those predefined specs every time to consistently produce safe, quality, uniform

products. And if human lives are on the line, you need to strictly adhere to the rules to provide a safe working environment for employees and a positive outcome for patients.

This authoritative compliance management approach could even make sense in less-regulated industries.

For instance, any time an employee engages in risky behavior (such as operating heavy equipment while intoxicated), he puts his own safety, as well as the safety of others, at risk. Clearly, there is no room from compromise in this type of dangerous situation.

Hands-off approach

Another take on compliance management adopts a more flexible stance.

Here, the authority figure sets high-level guidelines but leaves the specific procedures and processes up to employees to figure out.

Of course, you can’t bypass anything the law mandates; but for other benchmarks, some flexibility could come into play.

The hands-off approach works for results-oriented industries where you set your own high standards, but you aren’t necessarily suffering legal or regulatory consequences if you fail to meet them.

That doesn’t mean that your standards lack importance, but it does mean you have the ability to give employees more room to maneuver within those standards.

For instance, if you promise to deliver an online order within three business days, you won’t be fined if you deliver it in five days. You might lose that customer because you didn’t deliver on your promise, but the government will not slap a fine on you for the delay.


Shared or distributed model

This approach involves everyone working together to make compliance their priority.

This distributed model means everyone understands the compliance problems, how they impact their daily responsibilities, and what they need to do in order to achieve and prove compliance. Compliance is not dictated from the top down, nor is it a case-by-case judgment call based on high-level guidelines. Instead, it takes a “we’re-in-this-together” approach.

This idyllic scenario still requires leadership in order to communicate, track, and set those compliance standards. However, it is done in a way that pushes the responsibility for maintaining and tracking that compliance to all levels of the company.

For example, this approach can work in a financial institution where every employee understands the laws and regulations and knows what they can and cannot do to stay in compliance.

Further, every employee actively tracks their processes in order to prove out they are in compliance.

How do you achieve this? Only with strong compliance leadership, very good communication, ongoing training, and organized systems in place to make all of it distributed throughout the company.

Why Compliance Management Is Important

Regardless of which approach works best for your company, you need to put a compliance management plan in place to make it happen. The risks and costs of not doing so are too high.

In fact, if you look at the fines, legal costs, security costs, and even loss of reputation for non-compliance, you will quickly see that you can’t afford not to have a solid compliance management plan guiding your operations.

One stiff penalty could wipe out your financial coffers. One corruption scandal could decimate corporate integrity. One security breach could destroy customer trust.

The bottom line: When it comes to risk mitigation and compliance management, you need to not be OK with the status quo.


How to Get Started Without Getting Overwhelmed

You understand how compliance management focuses on the process of ensuring everyone follows the rules.

You know you can opt for any of the above three approaches to handle the process. And you realize compliance management is critical to the success of your business. But where do you start?

It can feel daunting to tackle the complex process of compliance management. It involves getting everyone on board, mapping out a cohesive plan, creating policies and procedures, communicating to employees, training to your policies, and then monitoring, enforcing, evaluating, and adjusting.

Compliance takes a lot of effort and a huge commitment.

Compounding the problem? If you rely on more traditional methods or antiquated solutions (like emails, spreadsheets, or paper files), then managing the compliance process can indeed be overwhelming.

From never-ending paper trails to accidentally deleted spreadsheets to time-wasting group email threads, inefficient manual methods can exhaust resources, eat up hours of work time, and frustrate everyone.

But there is a better way.

With the help of compliance management software, like PowerDMS, you can automate many of those compliance management, distribution, training, and tracking problems that previously took so much time and effort.

Compliance software takes the guesswork out of who has received what information and who has completed each required training. Best of all, you can handle everything from a single, cloud-based platform that gives you powerful tools to manage it all.

Related Article

Footer CTA Image

Download your copy of the report

Download The Future of Policy & Compliance Management report.

How does your organization compare? Get your copy today.

Download the Report