When companies become implicated in affairs such as white-collar crime, events are followed closely by the general public and courts are stricter than ever in meting out punishment. There have been growing calls to arrest managers, board members and compliance workers under civil and criminal law. Firms increasingly have to prove to courts, shareholders and business partners that they have effective and up-to-date compliance mechanisms in place. The School of Governance, Risk & Compliance at Steinbeis University Berlin has now developed a monitoring method that allows companies to measure and compare compliance procedures.
Professional compliance management systems span all areas of compliance management, from task formulation to managerial responsibility and compliance organization. The scale and nature of systems depends largely on the size of business and sector of industry. In German areas of jurisdiction, there are (still) few legal guidelines on organizing compliance, making the task of implementing compliance correctly and comprehensively all the more challenging.
The School of Governance, Risk & Compliance (School GRC) at Steinbeis University Berlin now offers medium-sized and larger companies a monitoring procedure to evaluate existing compliance processes without third-party input. This promotes interest within companies in developing compliance management systems and encourages people to assess how likely measures are to address the right compliance issues. The aim is to supply companies with madeto- measure instruments to fight corruption and knowledge loss – and demonstrate that management is doing a professional job. This monitoring technique also makes it possible to (re-)evaluate proprietary compliance systems in an objective manner. Simultaneously, firms can make industry comparisons and see the compliance level of competitors.
Steinbeis Compliance Monitoring focuses on the evaluation of existing compliance procedures, implementation, follow-up processes, the ability to react to non-compliance incidents, and sustainability. Following a stocktaking exercise looking at company procedures, evaluation criteria and suit ability testing, the findings are discussed with compliance managers. This ensures that the evaluation is based closely on business needs and takes into account the idiosyncrasies of the business. The evaluated firm receives weighted averages plotted on a diagram. These are expressed in terms of degree of completeness and quality.
The diagram tells the company how comprehensive and professional its compliance management procedures are. A suitable and satisfactory result would lie in the “Optimize” quadrant. If the result is in the “Analyze” quadrant, compliance processes are receiving above-average attention but not enough is being done to implement them convincingly or (especially) efficiently. If compliance monitoring results in a score in the “Develop” quadrant, then the compliance system needs to be reorganized, implemented properly within the company or rendered more sustainable as a compliance management system. A score in the “Complete” quadrant shows that the company is still busy setting up compliance processes, but what has been undertaken until now is already good, if not excellent.
If necessary, staff can be surveyed after compliance monitoring using the Steinbeis Integrity Monitoring questionnaire, which looks at commitment to compliance procedures and implementation. The emphasis here lies in assessing the attitudes of people at the company, indicating the nature of company culture and underlying company values. Both instruments were developed by the School GRC in cooperation with the scientific director of the Corporate Integrity Management Steinbeis Transfer Institute, Prof. Dr. Kai-D. Bussmann. The expertise at School GRC is rooted in skills of a forensic, economic, legal and mathematical nature, as well as empirical research. The Steinbeis Compliance and Integrity Monitor also undergoes continuous improvements and is updated in keeping with insights from scientific disciplines, as well as legal developments relating to prevailing laws and statutes. Organizing compliance procedures properly takes regular monitoring and assessment to minimize longer-term risk, protect companies preemptively from improprieties and eliminate lack of knowledge among employees.