The human factor of Compliance

The human factor of Compliance

Tuesday, 5 december 2017 | Redacción CEU

It is the new booming concept of the business world. Both large and small firm agendas begin to bet on Compliance. No company is exempt from any of their employees to try exceeding the limits of legality, but it can be prepared to minimize the risk of a potential crime occurring. Companies have found in this new discipline the formula to combat corruption and bad business practices from inside. Is Compliance a temporal trend or a vital system in companies? Why does it seem so important? What is the relationship between Compliance and Human Resources?


Compliance has begun to concern both SMEs and large companies. Companies also have responsibilities in matters of corruption and bad practices that occur "under their roofs". The direct offenders, if they are also their employees, are not the only responsible ones for these transgressions. That is, at least, the idea that seems to push the reforms that were introduced in the Criminal Code in 2010 and 2015 about the criminal liability of legal persons. Companies must supervise workers and have a prevention program to reduce the risk of crimes happening. Otherwise, they are exposed to serious risks as some of the Spanish sentences already show.

What is Compliance?

This discipline was born in the financial world. A complicated scenario that requires an extensive and complex regulatory development. Financial entities needed to protect their organizations from possible breaches of the law. Therefore, they had to count on specialized legal assistance. If they wanted to comply with the regulatory framework, they needed to get to know it in-depth. It was necessary to create a safety net dedicated exclusively to the development and supervision of a system of identification, prevention, control, adoption of solutions and advice within companies. Although at first the companies with subsidiaries abroad were the only ones integrating these new systems, more and more national companies of all kind, large and small, are beginning to adopt measures that push the regulatory compliance of their companies.

It is evident that Compliance is a trend, it even has been chosen as the legal topic of the year, not for that reason it has to be a passing issue. Keeping up with the legislative requirements in the workplace is a challenge for companies. They need help to verify that they definitely comply the law –which is becoming increasingly complicated due to globalization–, minimize risks, establish effective prevention and control models, and so, in case of having to stand in front of a judge, the company can show that the system that they used was effective and sufficient. The good compliance exercise intends that nobody is able to question that everything that was possible has been done to comply with the current regulatory framework.

The human factor of Compliance

Compliance with a human factor

Although Compliance is a legal matter, it has a great weight in the field of Human Resources. Last week the CEU Institute for Advanced Management opened its doors to host the event How to know if your Compliance system works. The speakers established a close relationship between the compliance of companies and their human capital. For the Associate with experience in Compliance, Carla Leggett Carillo,  Compliance is a way of understanding where the company is in terms of the human factor: <<Compliance can definitely be an opportunity for companies, an opportunity to understand their internal factor; who is the human factor, what kind of ethical alignment and culture does it have, and towards what changes. If we understand the human capital of our company, will we be able to take advantage of it? Will we be able to improve as a company? Will we be able to improve in terms of production? Will we be able to improve in terms of market opportunities?>>.

The company reputation is also closely linked to Compliance. The Fraud Control Manager (LFCO) in AXA Seguros Generales, Álvaro José Ibáñez Díez, argues that an investor will always be more willing to bet on an "integrated and ethical" company that gives him confidence: <<deontology is related to that added value to the market>> For example, clients who have an opportunity to invest in a company that is facing a litigation for bribing a public servant, they will be more reluctant to do it than before, because its image is now damaged. Companies are at risk of losing credibility in the market if they do not take care of Compliance.

One of the great challenges of Compliance is the appropriate transition from a system based on written rules to a model of tangible values. Companies are concerned about recruiting talent, but it is also key that the workers that they select are aligned with the corporate culture of the company, because according to their values, so will be their behavior. In the case of employees who already work in it, this alignment can be achieved with training, monitoring, evolution and supervision. The Compliance Trainer of Impact on Integrity, Enrique de Madrid-Dávila, explains the relationship between the compliance concept and the values culture through a simile with a racing car, you cannot have a great engine, without brakes –Compliance–, because the car can run, if it can stop: <<in the same way, you cannot have a human factor aimed at very strong objectives, that do not have integrity or ethics, because you will fall in some (bad practices)…>>. The fewer problems companies have, the better their efficiency is.

Integrating and contemplating the different profiles of workers is essential to achieve a full adaptation of the value culture of any company. In the current working world there are four different generations: traditionalists –reluctant to change–, "baby boomers" –focused on work, opposed to changes–, Generation X –balanced, a bridge between generations– and millennials –adapted to technological changes–. The ethical code of the companies has to take into account all of them. Otherwise, it will not be efficient. The regulations should contemplate, for example, the use of social networks, without leaving behind the conventional habits.

Something that distinguishes one successful company from another is the quality of its human capital. Companies are a reliable reflection of the people who work in them. As the Japanese quality expert, Kaoru Ishikawa, once said:

<<no company can be better or worse than the people that make it up>>.


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