Accenture’s 2016 Compliance Risk Study has uncovered good news and bad news for the compliance risk function.

On the plus side, demand on compliance is growing, both in scale and in complexity. But the increased need has been met with slowed growth in the compliance function’s stature.

To keep pace with demand, the compliance function will need to change. But how?

The Accenture 2016 Compliance Risk Study results point to several trends—as well as a need for the function to offer more tangible, sustainable outcomes.

The Trends. Compliance function at a crossroads.

• Demands on compliance have been rising. As business functions have become more complex, so, too, has the need for compliance support.
• The compliance function’s growth in stature is slowing. Two years ago, more compliance officers were winning seats at the executive table. That trend appears to have stalled.
• When improving operations, compliance organizations should focus on delivering meaningful results in response to more complex expectations … with fewer resources.

Compliance leaders will need to keep making the difficult choices that support delivering excellent risk management services, and keep asserting a leadership role within the business.

Download the Accenture 2016 Compliance Risk Study.

“80% of employee turnover is due to bad hiring decisions.” – The Harvard Business Review.
When it comes to deciding on your recruiting methods and selecting the right candidates, the amount of choices available to you is nothing short of daunting. Unfortunately, making the wrong hiring decision can cost you time and money.

There is a wide disparity about what a wrong hire can cost a company because there are so many variables. But the cost of selecting the wrong person can run into the hundreds of thousands or even millions of dollars, not to mention the potential negative impact to a company’s reputation, morale, and productivity.

Specifically, recruiters have been known to say that a poor hiring decision for a candidate earning $150,000 per year could cost, on average, $375,000, and that expense comes right off the bottom line.

Why Are These Costs So High?
Expenses associated with hiring include interview expenses such as travel, hotel and meals, training and orientation, employment testing, termination costs such as Cobra, unemployment and potential litigation expenses should the candidate decide to sue you for wrongful dismissal, plus relocation costs, and outplacement or career transition costs. But mostly it’s because you need to repeat the entire hiring process to replace the wrong hire, which includes time and expenses.

Why Companies Hire The Wrong Person
Recent surveys show that the top factor leading to a failed hire, aside from performance issues, is a poor skills match. The second most common reason was unclear performance objectives.

“Wrong hiring” often occurs because hiring managers and human resources people confuse the job description with the job criteria. That’s why it’s important to involve those who are actually doing the job in writing the description. Finding the right match requires time and attention to avoid any miscommunication about what’s required to do a successful job.

Making the wrong hiring decision is an expensive choice and may cost you more than you realize, but it is possible to get it done right.

Companies that don’t take steps to plan for future talent needs at all levels will face certain disruptions when key employees leave.

Succession management used to refer to the process of replacing a CEO when the position became vacant. These days organizations understand the importance of implementing a succession plan for more and more roles across the company. Succession planning is also an important way to identify, develop, retain and allocate key members of your workforce long before any talent gap occurs. Where do you start?

Identify Leadership Qualities
Most managers believe certain skills and attributes that can be recognized in a non-managerial role are predictors of managerial success. To develop targeted leadership programs and identify employees with leadership qualities, organizations must determine the competencies required for success at key positions.

Designate Top Candidates
Another important aspect of succession planning is identifying whether or not you have a pool of qualified candidates ready to assume critical leadership positions.

Difficulty may arise in identifying top candidates for succession to a specific job because the role often changes when a new person is selected to fill it. Once a job becomes available, many view this as a good time to revise the job as it has been filled previously and revise the job description.

Develop Candidates for Leadership Roles
Retention research indicates that individuals tend to stay longer where they are experiencing personal and professional growth. However, it may take time to develop even one viable candidate for top level positions. There are a few ways to develop your employees with an eye for succession planning.

• Training: Encourage employees to attend on- and off-site classes with targeted training that enables them to acquire the knowledge necessary to move to positions with increased responsibility.
• Increase responsibilities: Assign work goals that are related to the increase in responsibility necessary for advancement within the company in a somewhat controlled environment.
• Retain Key Employees and Attract High-Potentials

Identifying your employees as “high potentials” in the succession planning process can be a motivating factor in their retention. The two-way information flow allows employer and employee awareness of what is wanted and needed from one another. Expectations are clear. Companies know where they need leaders, and employees are realistically aware of how they fit into the corporations’ bench strength requirements and succession plans.

In Summary
All organizations should incorporate a robust development program to be a part of the succession planning process. This will ensure that the right people with the right skills are available at the right time to meet current and future business needs.

What do we do? For whom do we do it ? How do we excel?”

Strategic planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy.

In many organizations, this is viewed as a process for determining where an organization is going over the next year or—more typically—3 to 5 years (long term), although some extend their vision to 20 years.

The key components of strategic planning include an understanding of the firm’s vision, mission, values and strategies … often captured in a Vision or Mission Statement.

Vision: outlines what the organization wants to be, or how it wants the world in which it operates to be. It is a long-term view and concentrates on the future.

Mission: Defines the fundamental purpose of an organization or an enterprise, describing why it exists and what it does to achieve its vision.

Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization’s culture and priorities and provide a framework in which decisions are made.

Strategy: A combination of the ends or goals for which the firm is striving and the means or policies by which it is seeking to get there. The most important part of implementing the strategy is ensuring the company is going in the right direction which is towards the end vision.

For a company’s vision and mission to be effective, they must become assimilated into the organization’s culture. They need to be assessed internally and externally. The internal assessment should focus on how members inside the organization interpret their mission statement.

The external assessment offers a different perspective. These discrepancies between these two assessments can provide insight into their effectiveness.

A study by the Harvard Business Review released today stated that two in three business executives report their company’s focus on risk management has increased since the 2008 financial crisis. But only one in 10 said that their executive management is successful in creating a strong risk management culture.

1,419 executives worldwide were surveyed. Almost half of the companies with 10,000 or more employees have a chief risk officer vs. 11% three years ago.

Respondents were asked to identify the risk management capabilities they consider most critical to the performance of their organization and their company’s success in achieving them. Thirty-four percent of respondents said their company performed well at linking risk information to strategic decision-making, while the same percentage said they consider their companies successful at embedding a risk-aware culture at all levels.

Thirty percent said their companies performed well at embedding risk management practices and responsibilities within strategy and operations. Twenty-eight percent of respondents said their organizations performed well at ensuring that all decisions remain within the organization’s risk tolerance, while the same percentage said their companies were successful at driving risk-mitigation activities and proactively indentifying current and emerging risks.

Risks rising in importance
Participants in the survey were asked to identify the top ten risks of the most important in the past three years. The majority cited natural disasters, next in popularity was the continued slow recovery, and lastly, human resources issues, such as talent retention and acquisition. Half of the respondents said brand reputation had grown in significance over the past three years, while 49% cited business continuity planning, 48% legal risks and 46% new regulations/more enforcement. Almost 50% of respondents also cited capital scarcity as a risk that had grown in importance. Electronic/data communications/information security risks were cited by 42%.

Conclusions

• The past three years have seen more companies recognizing the importance of enterprise-wide risk management and, often for the first time, adopting practices to implement it.
• 41% of companies say they are deepening and extending the ties between risk management and strategic planning.
• A good risk management group should operate like a boutique firm, with everyone an expert in a particular area who can be asked to do deep-level work.
• A truly successful risk management culture is focused on driving sustainable and profitable growth rather than simply protecting against downside losses and operational risks.