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Compliance Management System
Published 24/10/2021
What is a Compliance Management System and what do you include in one?
Regardless of the industry, the success of an industry largely depends on compliance with government laws. Companies that stay on top of their compliance requirements implement a compliance management system. A compliance management system adheres to legal requirements that differentiate right from wrong and ethical from unethical acts within a particular industry.
The system comprises records, processes, tools, and functions for incorporating the legal requirements. Since the world is rapidly changing, and so compliance requirements do so. Compliance management system incorporates the changes in the company whenever the government changes its laws.
Components of compliance Management System
A robust compliance management system has four necessary components;
- Compliance program
Compliance with all rules set by the government demands a program that incorporates processes, training, remedies, and monitoring.
- Policies
The policies are designed by the management and presented to the employees to implement. The management is responsible for ensuring every department has a copy of the policies and employees follow them.
- Processes
The processes are step-by-step guidelines that govern how a particular product or service is made. The process ensures that every step is done as per the law.
- Training
Employee awareness through training and mentorship programs is critical in compliance management. Training is effective when new talents are hired, the new machine is installed, a new product or service is launched, during employee reshuffles, and when new rules and regulations are introduced.
- Monitoring
Laying the policies does not necessarily translate to effective implementation. The management must make a follow-up to ensure the policies are adhered to by the employees.
- Remedies
Man is to error, and they cannot be avoided. Mistakes happen in the workplace but do not mean the policies must be abandoned or the party which made a mistake be punished. The management must come up with friendly means of mitigating mistakes when they happen and solve them once and for all.
- Board of directors
Company oversight lies under the control of the board of directors. They are the topmost employees in the company, and their work is governed by commitment and integrity that the company abides by the legal requirements.
The board is responsible for designing the policies, integrating them into the system, developing a code of conduct, creating awareness about the policies, and enforcing them. On top of that, the board provides the required resources for implementing the policies.
- Consumer complaint program
Delivering information or service without feedback shows unsatisfactory. Feedback informs of complaints or recommendations give the company a common stand; either the policies were favorable or otherwise.
The feedback is received through a consumer complaint program. The feedback helps identify strengths and weaknesses in their products, opportunities, and threats within and outside the company. Also, the company can decide on an alternative product or service when customers are not satisfied with the current one.
- Compliance audit from the independent body
An audit is a review of a company's compliance with the legal requirements. An independent body is tasked with auditing the company's compliance to avoid biased information. The audit is conducted quarterly, and the management must give the independent body every piece of information relevant for the audit.
Unbiased results from the audit give a clear picture of how the employees implement and adhere to the compliance regulations. Conducting auditing helps in identifying weaknesses and deciding the corrective actions.
Once the audit is completed, the results are documented and handed over to the board of directors.
Importance of Compliance Management System
- Automation of workplace
Processes are done in real-time because every action is recorded in a program. Gone are days when documents were misplaced and nowhere to be found. The system digitizes auditing and facilitates efficiency.
- Awareness
Employees become aware of changes in the policies through the compliance management system. It is a reference tool for training employees.
- Future prediction
A compliance management system can help predict future market trends; and consumer tests and preferences. The prediction can be made by utilizing artificial intelligence and neural networks or automated alerts.
Compliance management systems can be used in IT Compliance, financial services compliance, legal compliance, and education compliance.
Compliance adherence is as vital as any other department in the company. Though hiring an independent body to conduct an audit may seem costly, the outcome is worth the cost. Therefore, it is a requirement for every company to implement and enforce compliance in the workplace.
