When it comes to the topic of compliance, companies are right to focus on the question of which department is responsible. An effective compliance management system can help overcome existing communication hurdles in the company and make processes simpler and more efficient.
The sudden shift to remote work due to COVID put compliance programmes under significant stress. This made many companies realize the great importance of the topic of compliance. Even now working from home is no longer mandatory in many places and business trips are possible again, the challenge for companies remains the same: How can a high level of compliance be ensured when work and company location are decoupled from one another? In view of this complexity, the focus should be on an efficient compliance management system. While large corporations often have their own compliance department, smaller companies are often faced with the question of which department should be given responsibility for this and how the administrative burden can be kept as low as possible. The finance, legal, and HR departments already take on tasks in this field.
Rules and regulations are the responsibility of the finance or legal department
Why should the finance or legal department have responsibility for compliance, and what are the benefits? Senior finance and legal executives would say that compliance is a natural part of their daily work. Much of the finance team’s work already revolves around systems and processes; so, it would be a sensible step to review and ensure compliance as well. Consequently, there are compelling reasons why corporate compliance should sit firmly within the finance or legal department.
... or should HR be responsible after all?
Any HR manager will tell you, however, that numbers are only one side of the coin. It’s true that HR employees are often portrayed as “people managers” who have strong interpersonal skills. But in fact, HR will tell you that the bulk of their job is compliance. In most countries, this compliance begins before a person is actually hired, as there are strict regulations about what can and cannot be included in a job advertisement. In addition, HR is usually the department that can communicate most effectively with all employees and is responsible for company-wide employee engagement. So, HR is also quite well disposed to ensuring compliance.
Finance, Legal or HR: how to solve the issue
Clearly, all three functions have a legitimate claim to be responsible for the company’s compliance. One solution is to view compliance less as a matter of rules and regulations and more as a matter of ethics and culture. In that regard, we see the legal department as best suited to take over the role and actively involve all employees and other departments. In this way, a culture of dialogue can be created in which people follow rules as a matter of course.
Authors of the article:
Dr. Oliver Werner, Managing Partner (Bratislava), oliver.werner@cms-rrh.com (source: red.)
Soňa Hanková, CMS Slovakia law firm (source: red)
This article has been brought to you by CMS Slovakia.
