A Strong Compliance Program is Key to Securing Investors. Here's How to Build one

It’s time to be real with your compliance and controls. While often seen as a tedious process for accounting and finance professionals (and, in some cases, just done out of necessity), compliance and controls management serves as the bedrock for investor confidence. 

In today’s tumultuous economy, investors are keenly aware of the potential consequences of non-compliance and, as a result, keep a watchful eye to ensure companies are prioritizing transparency, risk mitigation, and adhering to legal standards. This is particularly true as the SEC introduces more regulations, and we see more and more companies fall victim to non-compliance. 

Building a well-established and effective compliance program is a linchpin, offering investors the assurance that the organizations in which they entrust their capital are dedicated to upholding the highest standards of integrity and regulatory compliance. Unfortunately, most organizations are only scratching the surface of what their compliance and controls programs could be and the value they can provide. Here’s how to change that.

The Recipe for Success

A strong compliance program not only safeguards against potential legal and reputational issues but also signals a commitment to ethical business practices. Despite its importance, nearly a third of finance and accounting professionals stated their organization’s compliance and controls program constituted a burden (versus a benefit). Further, only a quarter (26%) feel their existing compliance and controls management processes add significant value to their organization (FloQast).

Fortunately, there are three simple changes leadership can make to develop a more strategic compliance and controls program: improving activities, staffing intentionally, and enhancing technology.

Improving Activities

The first thing organizations can do to improve their compliance procedures is to establish a strategic blueprint. Without a clear strategic North Star, organizations may be running their programs inefficiently, leading to higher costs at a time when budgets are tight and blind spots that can expose the organization to poor legal outcomes. 

When a strategic plan is in place, employees are better able to prioritize activities and provide value. The most successful strategic blueprints outline the process for optimizing organization agility and illustrate how compliance and controls support the broader mission and goals of the organization, rather than simple execution and tactics. It is also a useful resource to show to investors to exhibit transparency and intent.

Staff Intentionally 

Second, it’s imperative that teams think more critically about their staffing. A recent survey from FloQast found that only 37% of compliance and controls professionals reported having sufficient headcount in place. Without appropriate and effective manpower, employees can struggle to maintain strong compliance and financial control processes. This can lead to burnout and also points to a lack of efficiency from both a cost and productivity standpoint — all red flags for investors.

Even further, when leaders think critically about staffing and put in time and effort to improve employees’ workload and work/life balance, it can prevent turnover and burnout and help draw in new workers. 

Enhanced Technology

Lastly, once your strategic plan and team are in place, leveraging technology and automation is a surefire way to develop the best compliance and controls processes. Automation solutions can support compliance teams by centralizing processes, improving efficiency, and generating more cross-team visibility and transparency on compliance and controls-related initiatives. Right now, only 2% of professionals have fully automated their compliance processes, however, it’s clear that, when automation is utilized, teams are much better off. 

You Catch More Investors with Compliance

Now, more than ever, it’s critical for companies to have top-of-the-line compliance and controls management programs if they want to catch the attention of investors. It’s no longer just a “check the box” initiative — it’s a key way to showcase thoughtfulness, preparedness, and a commitment to ethical business practices. Leadership must look to enhance these programs by rethinking strategy, staffing, and technology. With strong processes in place, organizations will not only see piqued investor interest, but amplified strategic success.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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