NOTES FROM THE V.P. OF COMPLIANCE & GENERAL COUNSEL

April 2nd, 2021
NOTES FROM THE V.P. OF COMPLIANCE & GENERAL COUNSEL

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The 3 R’s of Compliance

To a small business owner, compliance is often a secondary matter not given much priority. Often times, one thinks that the resources necessary for an effective compliance program is relegated only to large corporations with executives, shareholders, and cubicles. It is clear what the benefits of a compliance program are, from staying out of legal trouble to operating efficiently, and why corporations dedicate enormous resources in implementing such a program. However, businesses of all sizes can operate in compliance if they focus on one thing: creating a culture of compliance.

Having a culture of compliance states that everyone in the organization, not just those tasked with it, should be vigilant and know the consequences of a lack of compliance. Unlike investments in dedicated professional staff and compliance technology, this particular (free) solution requires only an adjustment in mindset and a commitment by team members across the organization to exemplify that mindset in their daily work.

It sounds simple enough, right?

We all know it’s not that simple, especially at a family-owned business that has been doing things a certain way for 30 years.
That is why it is important to have a system. The cornerstones of this system, the 3 R’s, are as follows:

1. Review

People at the top of an organization set the tone for the rest. Everything from sales, to customer service, to compliance, to janitorial will be affected by the tone to which management takes toward it. Therefore, the pillars of the culture must be created from the top.
For most organizations, an attitude of compliance likely already exists. It is important to review these existing attitudes and policies, evaluate them, and adjust them accordingly. As Kevin Costner said in Draft Day, “We live in a different world than we did just 30 seconds ago.” Running your business in a compliant manner is no different. Things change. It is imperative that organizational leaders revisit and review the framework within which they approach compliance. That includes everything from official policy to internal and external messaging, informal behaviors and, most critically, assessing risks in their environment. Only a consistent conversation at the top can help set the tone for the rest of the organization in terms of expectations and urgency on compliance.

2. Reinforce

Tone is not set by simply circulating a new policy in an e-mail and never revisiting it. It is one thing to see, read or hear something; it is another thing to do it. Therefore, reinforcement is critical to ensuring that the tone from the top becomes everyday behavior. Without reinforcement, you have a system where some team members are acting in accordance with the program and others are not. No one wants to feel as if they’re the only individual doing something, and motivation comes much more easily from being part of a bigger movement than being alone.

The best way to demonstrate how this works is through the eyes of a new team member: Not only should they see prioritization of compliance from the top, they should also immediately feel this prioritization through proper training, interactions with their colleagues, and consistency. Their takeaway should be that when it comes to compliance, there is an implicit understanding of its importance and an explicit acceptance of the clear series of steps to take if there is an issue – and no question at all that those steps should be taken.

3. Reward

Finally, a culture of compliance should be rewarding to those who are part of it. Many schools of thought exist as to whether punishment or reward is the more effective tool in promoting compliance. I believe there must be a balance of both. It should be understood that punishment will occur for violation of policies, and rewards will be given for compliance.

Rewarding a team member is often much less complicated than punishing an team member, and it only increases the positive reputation of an organization. Team members don’t want to work in fear. If we can ensure that rewards are visible, valuable and relevant for the team member, we increase the chances that a culture of compliance is welcomed and supported by everyone in the organization. We switch the cultural mindset from fear of reprimand to fear of letting your coworkers down. By way of example, here at TGI we have what’s called our Happiness Campaign, a reward-based system where team members are recognized and rewarded “pins” for various accomplishments including customer service, going above and beyond, and adherence to company policy. Team Members who are rewarded with a pin are acknowledged company-wide and a picture of them with a big smile is placed on our bulletin board picture collage. Team Members can then exchange these pins for certain prizes, such as time off, cash prizes, and even a cruise! Since implementation of the Happiness Campaign, TGI has seen a noticeable decrease in compliance related violations, increased team member retention, and improvement in morale.

The point is, by ensuring that team members across the organization are rewarded for their positive work toward a culture of compliance, cultivating and maintaining this culture will only become easier over time and ingrained in the very fabric of the organization.

A culture of compliance is equivalent to “preventive medicine.” Once you get sick, it takes a long time to recover; similarly, without the right culture of compliance, your business will take a long time to recover from the resulting reputational, legal and financial risks.

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