The regulatory landscape is ever-changing, as any compliance team will tell you. Keeping up to date with government regulations and laws can feel like a Herculean task, especially for small and medium-sized companies. But it is crucial to pay attention to the regulatory landscape, even anticipate changes, if you want your business to thrive.
The importance of keeping apace with new and changing regulations
After the financial crisis of 2008, governments have played a larger regulatory role in businesses with the hope of preventing an economic crash like that again. Compliance rules are now stricter and enforced more thoroughly – banks have been fined a total of $243 billion since the financial crisis, with the Bank of America and JP Morgan leading the list.
Moreover, government regulation is also now seen less as interference in the free market and more as a way of keeping businesses in line with an ethical, honest and environmentally friendly future. BP was charged more than $65 billion for their role in the 2010 Deepwater Horizon oil spill that resulted in the largest environmental disaster in US history, and there are more examples of companies being fined or executives being jailed for violating environmental and anti-pollution acts. Thus, complying with regulation has now taken on a moral aspect – businesses that are fully compliant with policy are seen as responsible, conscientious and careful.
The regulatory landscape is also reflective of the political landscape, and keeping abreast of regulatory changes can ensure your business is not caught out in a political upheaval. This is especially relevant in the case of Brexit, where the UK’s regulations may drastically change as the UK separates from the EU.
The challenges of keeping abreast of regulatory changes
Many companies find themselves lost in the sea of regulatory changes, with no mechanism in place to effectively track these changes and ensure they implement them. Several companies only find out about new regulations once they are in violation of them. Here are some common challenges that companies face when trying to keep up to date with the regulatory landscape:
- Learning about new regulations in an effective manner – Many companies do not learn about regulatory changes in a timely manner, making it difficult to implement the policy across the business according to the timelines stipulated by the government. Small and medium-sized companies find it especially difficult to dedicate manpower to tracking regulations and ensuring the business is compliant with all of them.
- Aligning the change across all levels of the organisation – Once the regulatory change has been identified, the company faces the challenge of implementing it across all levels of the organisation. Changing processes and methodologies can take some time, and it is challenging to make the switch without affecting business flow and efficiency.
- Training – Once the regulatory change has been identified and implemented, it is important to train the staff on what the change is, how it will (or has) affected the company, and how employees can tweak their work behaviour to ensure they are not in violation of the regulation. Detailed training is important, as an organisation can still violate a regulation if its employees do not fully understand what is required of them.
- Budget and a centralised department for policy management – In a report by NAVEX Global, it was found that more than 50% of the companies surveyed had seven or more departments with some ownership in policy management and that there was no specific budget for managing policy. This makes policy alignment across the organisation a tedious and problematic process: it can lead to redundancies, extra work, and inefficiency.
These are only a few of the challenges that companies face when trying to keep abreast of new and changing regulations. Other concerns include documenting the changes in detail, up-to-date records, and customising policies across languages and regions. Being compliant is hard work!
How can a procurement strategy help?
A well implemented Business Focused Procurement strategy can essentially do two things for you in the compliance area:
- Access and manage the most appropriate compliance advisory and support services in the supply market.
- Ensure your internal procurement processes are compliant, robust and transparent.
Compliance services are typically provided by management consulting companies, such as the Big Four, but also by a long list of perhaps lesser known firms. According to data released by the MCA, a UK body for the management consulting industry, Risk & Compliance services account for 5% of the UK’s £9 billion consulting industry. Buying professional services, such as consulting, comes with its own challenges – ensuring services truly meet stakeholder needs, ensuring the right quality over time, encouraging innovation to meet evolving needs, appropriately tracking value, etc. A Business Focused Procurement approach can help navigate all of that and more.
Your own procurement processes need to be compliant too, and should form an integral part of a Business Focused Procurement strategy. Some key areas of focus are separation of duties, transparency and accountability. If you want to see what can happen when none of these are in place, have a look at this article about how an Age UK Branch Head ended up in jail and severely damaged the charity’s reputation. Because no procurement processes were in place the Branch Head got away with fraud to the tune of £700,000.
The largest regulatory upheaval on the horizon is Brexit. Procurement Cube can help you navigate the changing UK landscape and maximise your competitiveness in a post-Brexit world. Get in touch with our Managing Director, Armand Brevig, using the form below to see how he can help.
