By Neil Herbert, Director, HRComply (www.hrcomply.co.uk)
With regulation increasing (and the penalties for non-compliance stiffening), this should be the perfect opportunity to finally get that business case approved for recruiting additional experienced members to the compliance team. This is to be viewed as good news; however with a large number of firms all looking to increase their compliance teams, there is now a shortage of experienced people available on the market. Those that can be prised away from their existing firms come with financial package expectations that often exceed the approved budget, or have the potential to cause rifts amongst the existing team who will soon be aware of their true market value. How can a firm avoid the compliance recruitment merry-go-round?
One approach is to first look at how the existing team is utilised to ensure that the new recruit is ideally suited to the business need. Perhaps the requirement of a highly experienced and thereby highly marketable person is not as great as first thought. Perhaps there are other paths that should be pursued first: for example, can the existing team be better utilised, developed and motivated?
Before jumping on the recruitment merry-go-round, review and prioritise the main compliance services in terms of the level of risk they seek to mitigate, and just as importantly understand the value that these add to the firm. For each service, estimate the current amount of time and resource allocated to each one and question if the balance is right. Are there patterns to any imbalances and are those patterns driven by new regulations, lack of automation or both? Ask yourself what can be done to redress the balance and what new opportunities this could provide.
In the UK there are a number of regulatory changes that could be affecting the patterns you see; perhaps the Bribery Act has necessitated a more rigorous gifts and entertainment process which has been rolled out using those two key compliance technologies of email and spread-sheets; perhaps you are a hedge fund concerned about the increase in scope of SEC regulations and want to bolster your code of ethics policies and processes; or maybe it is the need to ensure that your registered persons are better informed and that their training and competency records are fully up to-date. If the above examples are typical of the imbalances, then one thing they all have in common is the need to manage and communicate with the firm’s employees.
Whether you are a large asset manager or a boutique player, the compliance services provided to employees are often manually intensive and resource consuming, especially when multiplied by the number of regulators the firm has and the different geographic locations in which its employees are based. How much resource does an annual attestation really consume if you want to have a creditable and fully audited process? How disruptive is it to approve, track, record and monitor an employee’s personal account deals?
Using some of your approved budget to automate the employee governance services, turning them into a ‘self-service’ model, will enable employees to submit requests and disclosures, track them through the approval process, and automatically build their own compliance history which can be monitored and reviewed on-line. This will not only help to improve the perception of compliance amongst employees, but reduce the manual time and effort your experienced team spend managing these administrative services; time that is typically viewed as unrewarding and certainly not career enhancing.
By freeing up existing resources to undertake the advisory, value added services will help motivate the team and reduce the need to compete with other firms on the recruitment merry-go-round.