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Compliance management is crucial for organizations. It ensures adherence to legal and regulatory requirements, minimizes risks, and supports operational integrity, maintaining an organization's reputation and avoiding costly penalties. Compliance responsibilities should be upheld by the entire company.
Policies and procedures form the foundation of compliance by establishing the essential framework that guides an organization’s operations in alignment with legal, regulatory, and ethical standards.
Your employees are smart, hardworking, and well-intentioned but you can’t expect them to know or remember everything. They need guidance and clear direction. A quote we’ve heard, shared by a frustrated manager at a commercial bank, drives this point home: “You didn’t tell me I couldn’t do it.”
Industry experts, auditors, and risk managers agree that poor documentation is a root cause of non-compliance. If done right, policies and procedures not only support compliance but can also drive profitability.
Unfortunately, many peoples’ eyes glaze over at the mention of policies and procedures. Often policies and procedures are viewed only as a necessary evil for passing audits or a bureaucratic obstacle to getting work done. Organizations entrenched in that belief never realize the benefits.
How do you overcome this?
Keep reading to learn more about compliance management, the role of policies and procedures, and how an audit-ready, user-focused policy and procedure management system can take your compliance management to the next level.
What is Compliance Management?
Compliance management is the approach organizations take to ensure that their operations, employees, and processes adhere to relevant laws, regulations, and internal and external standards. Effective compliance management involves not only understanding and implementing regulatory requirements but having them engrained in the company culture.
Types of Compliance Management
Regulations, laws, and industry-specific requirements serve as the foundation for compliance management. These regulations are established by governmental bodies and industry organizations to maintain safety, ensure fair competition, and uphold the integrity and ethical conduct of markets. For businesses, adhering to these standards is not optional — it’s a legal obligation. The importance of compliance management cannot be stressed enough.
Industry-specific requirements often provide more detailed instructions tailored to the unique needs and risks of particular sectors. For example, in credit unions, the Consumer Financial Protection Bureau audits for adherence to different regulations like the Bank Secrecy Act which is a U.S law that requires financial institutions to assist in detecting and preventing money laundering.
Standards and guidelines must also be considered in compliance management. While there may be no legal obligation to uphold, it’s still beneficial. Adhering to standards and regulations helps ensure consistency, quality, and safety across operations. Additionally, it demonstrates a commitment to best practices, reducing risks and enhancing the organization's reputation in the industry.
An example of an industry standard is ISO 9001. This is an internationally recognized standard for quality management systems (QMS). Businesses can choose to implement ISO 9001 to improve their quality management processes, but it is not a legal requirement. In this case a company may create a Quality Policy that outlines their commitment to quality, stressing customer satisfaction and continuous improvement. A related procedure could apply to internal audit to ensure compliance with the ISO 9001 requirements.
Risks of Non-Compliance
Financially, compliance violations can result in hefty fines, legal fees, and costly lawsuits.
The cost of non-compliance varies by industry, but globally, businesses spend billions annually on regulatory compliance. One of our customers was facing two multi-million-dollar lawsuits. They avoided legal action because they could prove they had policies and procedures in place and employees were actively using them.
Legally, businesses may face sanctions, loss of licenses, or restrictions on their operations when compliance risks are found, which can impact their ability to compete in the market. And when it comes to public relations (PR), a large violation can come with unwelcome media reports.
Trust is a critical asset, and companies that are found with compliance issues also risk losing the confidence of customers, investors, and partners.
The Role of Policies in Compliance Management
A policy is a set of general guidelines or statements of position regarding a given topic.
Policies communicate the guidelines that employees must follow to ensure that the organization meets its legal, regulatory, and ethical obligations. These external and internal policies serve as the foundation for a compliant culture, providing clarity on guidelines for complying with applicable laws and standards and responsibilities.
For example, data protection policies outline how to securely manage and store sensitive information, ensuring compliance with regulations like HIPAA in the healthcare industry or GDPR for organizations keeping in mind EU privacy law. Similarly, health and safety policies are designed to protect employees and customers by setting standards for workplace conditions, aligning with OSHA regulations and other industry-specific safety requirements.
The Role of Procedures in Compliance Management
A procedure is a detailed and structured series of steps or actions that outlines how a specific task or business processes should be executed within an organization.
Procedures operationalize policies by translating the broader guidelines into specific, actionable steps that employees must follow, ensuring consistent implementation across the organization. These procedures are essential because they provide the detailed instructions needed for employees to effectively adhere to the policies, minimizing ambiguity and reducing the risk of errors.
Clear and well-defined procedures are crucial for employee adherence, as they guide daily tasks and reinforce the organization’s commitment to compliance, quality, and safety. By having comprehensive procedures in place, organizations can ensure that policies are consistently applied, leading to uniform practices that align with regulatory requirements and organizational goals.
Interconnection Between Policies and Procedures
Policies and procedures are both needed to ensure compliance. Think of your policies and procedures as a cohesive system that employees use. Policies and procedures work together to establish standards and facilitate consistent application across the organization, reducing the risk of non-compliance.
The relationship between policies and procedures is reinforced through a continuous feedback loop. Compliance audits and changes in regulations often reveal areas where existing policies and procedures may need to be updated or refined. By regularly reviewing and updating these documents in response to audit findings and regulatory shifts, organizations can maintain compliance and address emerging risks.
Common Compliance Management Challenges
There are many compliance management challenges we see every day, ranging from outdated policies and procedures to having a hard time finding important documents during audits.
To overcome these challenges and improve compliance efforts, we first thing we recommend is investing in a policy and procedure management solution – like Zavanta. This tool helps ensure that not only does your organization have policies and procedures, but that your employees access and use the documents to build a culture of compliance.
10 Benefits of a Policy and Procedure Management System for Compliance Management
Over the years, organizations across all industries have contacted us because their general-purpose approach and tools weren’t working. If you’re committed to optimizing compliance and compliance costs, take a look at a specialized policy and procedure management system like Zavanta. Below are just a few of the benefits you’ll find.
- Improved Policy and Procedure Usability: Compliance is just a pipe dream unless employees are following and using your organization’s policies and procedures. Unlike general purpose tools, a specialized system that has built-in content quality controls ensures that policies and procedures are findable and usable. Many provide real-time usability monitoring and analytics.
- Centralized Documentation: It provides a single repository where all policies and procedures are stored, making it easier to access, manage, and update documents. This centralization ensures that all employees are referring to the same, most current versions of documents.
- Improved Compliance Tracking: The system can track who has read and acknowledged policies through employee attestation methods, ensuring that employees are aware of compliance requirements. This tracking can also be used for audit purposes, providing legally accepted evidence that the organization is actively managing compliance.
- Automated Workflows: Workflows automate the process of reviewing, approving, and distributing policies and procedures, taking away the need for cumbersome and error-prone manual processes. This reduces the administrative burden and ensures that updates are implemented efficiently and consistently.
- Risk Mitigation: By ensuring that policies are up-to-date and compliant with current regulations, the system helps mitigate potential risks of non-compliance, which can lead to fines, legal action, or reputational damage. Plus, if a significant risk were to occur, policies and procedures help employees by outlining any corrective actions they need to take.
- Audit Readiness: Zavanta includes features for tracking changes, approvals, and acknowledgments, making it easier to prepare for and pass audits. Detailed audit trails ensure that all policy changes and updates are well-documented. Since Covenant Pathology Services implemented Zavanta as their policy and procedure compliance management solution, regular audits now take half the time as planned.
- Enhanced Accountability: By assigning ownership of policies and procedures to specific individuals or departments, the system enhances accountability and continuous improvement. This ensures that policies are regularly reviewed and remain relevant.
- Streamlined Training and Communication: It can be integrated with external training and HR systems, ensuring that employees are not only informed of policies but also understand them. The system can also notify employees of new or updated policies, ensuring timely communication.
- Increased Efficiency: By reducing manual processes and streamlining policy management, the system increases operational efficiency. This allows compliance teams to focus on more strategic tasks rather than being bogged down by administrative duties.
- Customizable Access Controls: The system allows for customizable access controls, ensuring that only authorized personnel can create, edit, or approve policies. This enhances data security and ensures that sensitive data is protected.
Zavanta’s Policy and Procedure Management Solution Helps Improve Compliance Management
Zavanta is an end-to-end system that simplifies the creation, management, and distribution of policies and procedures. It helps organizations ensure that their guidelines are up-to-date, easily accessible, and understandable for all employees and stakeholders.
Zavanta's intuitive interface allows users to create clear, detailed, and standardized procedures that provide employee clear direction and reduce the risk of non-compliance. Additionally, Zavanta’s built-in tools for tracking, reporting, and analytics provide real-time insights into compliance adherence, enabling organizations to quickly identify and address potential issues.
Auditors find Zavanta’s organizational features incredibly useful. It’s easy to filter and sort policies and procedures that are related to specific regulations, processes, responsibilities, jurisdictions, and more. Compliance Managers tell us that because their policies and procedures were clear and organized, their auditor had confidence in the soundness of their controls and commitment to compliance.
By streamlining policy management and enhancing employee engagement, Zavanta supports a more robust and consistent approach to compliance across the organization. Contact our team to learn more.
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