Written by Bruce Nixon, CEO
What does non-compliance cost?
Fix it or pay the price.
If you think being compliant is expensive, then you need to compare that to the cost of non-compliance. According to the School of Governance, the costs can range anywhere from $2.2 million to $39.2 million. Just ask Volkswagen, Boeing, Tiger Airways and those under review of the Royal Commissions.
The damage is to your reputation, lost customer trust and business disruption. The threat of fines and penalties for not meeting your compliance obligations is an extra cost.
There are standards and regulations for safety, privacy, finance, dealing with employees and customers or patients. It can feel that we are over regulated. But it can mean saving lives, making products safer and improving customer experience.
Industries that are regulated and audited, have checks and balances in place. They may have a tick-box approach to compliance. Yet, are they measuring their effectiveness and customer experience?
It is a noble goal for companies to aim for the trifecta of compliance, cost savings and customer experience. But typically what happens is:
They double down on costs
Give scant thought to the customer experience
Make few improvements in their conformance.
We don’t need to look far to see an example of cost savings vs customer experience. The Banking Royal Commission criticized many companies. They now have a tarnished brand and heavy fines for non-compliance.
Government sets the standards in many industries.
An example is the Quality and Safeguards Commission for the National Disability Insurance Scheme (NDIS). It has the statutory powers to ban providers and to levy fines of up to $150,000 for transgressions against the NDIS Code of Conduct. These measures are besides to any criminal penalties applicable under law.
Corporations have their own governance structures and ways of working. They’re culture and behaviours are reflected in their standings in the business world, with customer retention and profit. ASIC is the watchdog for corporate governance and reporting.
Technology is an enabler of meeting compliance obligations and working in a conforming manner.
Digitization is the process of applying digital technology to a process that had before been analogue. Connecting regulation, corporate rules and policies with workflows can find opportunities to drive behaviour change. Embedding compliance into workflows and data processes will enhance conformance and competitiveness.
Track what people actually do
Collect systems data
Measure what is collected and is actually happening
Compare to what they ought to do.
How well are your processes working? Can you find inconsistencies, duplicated effort and bottlenecks? Are your people doing the right thing?
Businesses today are concerned with customer experience as well as the cost of compliance. They want to simulate change before affecting their operations. By using technology such as process mining, you can create customer journeys and map processes and workflows. You can “experiment” and simulate what will happen in the real world using a Digital Twin.
Having a single source of truth for all your people, processes and policies allows new digital initiatives, alignment of strategy, improved business models and higher conformance.
By aligning what you say you do, with what you actually do, you can save time and the cost of non-compliance.