The regulatory environment in the UK today is such that companies are required to invest in regulatory issues to minimise legal, reputational and monetary losses. Given that compliance continues to become more and more intricate, organisations must have some efficient means of tracking the progress and success of their compliance programs that are in place. Compliance Key Performance Indicators (KPIs) enable corporations to measure their levels of compliance and areas that require attention.
Training Completion Rates and Employee Awareness
One of the first measures including compliance employee engagement used when trying to determine compliance is engagement in any compliance training programs. Monitoring completion rates and quiz results from compliance training programs help organisations ensure that staff understand and are aware of relevant policies. These high rates of completion and positive comments on feedback indicate a robust culture of compliance while training gaps indicate the need to conduct more focused sessions.
Incident Reporting and Case Management
One important aspect of any compliance program is tracking how many breaches occur and how quickly and effectively they are dealt with. Assessing employees’ willingness to report incidents and resolve such incidents highlights the unhealthy state of the company’s ethical climate. In addition, monitoring return incidents or repetitions of behaviours may reduce the incidence of other related organisational practices.
Third-Party Due Diligence
Third-party contractors or vendors who an organisation contracts for providing services or procuring goods pose considerable compliance risks to an organisation, especially in the sectors of finance, healthcare, or supply chains. The approval and screening of third parties for compliance risks is an example of due diligence metrics which assist in assessing the effectiveness of management of external relations. This also reduces the likelihood of non-compliance and other related risks stemming from vendors or suppliers.
What Are KPI Metrics for Compliance?
Compliance Key Performance Indicators (KPIs) are attained benchmarks that provide a straightforward description of how an organisation is able to perform relative to statutory obligations. These include:
Policy Violations: This is the number and observations of every violation which are made in terms of the policy. It provides information on the degree of risk in relation to non-compliance.
Audit Finding: This is the process of recording and tracking the types of deficiencies noted during the audits conducted internally as well as externally which may be pertinent to compliance requirements.
Compliance Training Completion: The compliance rate with regard to these trainings is a very important aspect that ascertains the extent to which the employees are aware of these legal obligations.
How to Measure the Effectiveness of Compliance?
Following suitable performance metrics is not enough to evaluate the effect of the compliance program. One has to measure how that metric integrates into operations and how these operations comply with legal requirements as well. There are three ways that can be put into practice to measure this level of effectiveness:
Conducting Employee Surveys
Employee input is critical in determining whether compliance programs are adequately embraced and practised. Awareness assessments can evaluate compliance preparedness, and training effectiveness, and advise on areas of possible misunderstanding or knowledge gaps. Compliance issues should also address resistance from employees, especially if they have the right information to implement the compliance requirements.
Regulatory Fines and Penalties
The organisation’s history with the regulators provides a clear measure of the effectiveness of compliance. Consequently, when there is an improvement in all three categories of fines, penalties, and regulatory action, this is an indication that the company has managed to comply with legal requirements. However, an increase in regulatory actions, more often than not, is a sign of programmatic weaknesses in the compliance program and shows areas that need to be addressed immediately.
Instant Monitoring
Real-time monitoring instruments such as transaction surveillance systems, and automated tools for Regulatory Compliance Management are very important in the continuous evaluation of compliance. With these instruments, it is possible to instantly identify any suspicious activity, fraud and violation of policies and procedures, thereby correcting them in real-time rather than after the fact. In some industries such as finance or health, prompt data supervising is very important in case there are targeted transactions or activities that can result in non-compliance.