Entrepreneurship Development: Regulatory compliance (II)

Last week, we introduced what regulations are, who Regulators are, what regulatory compliance is as well as its benefits. Today, we will introduce how you can make your company regulatory-compliant and remain so.

Regulatory compliance is a union of processes, human actions, and technology. For instance, processes of obtaining licenses, approvals, etc. must be known and understood; Individuals and functional units should be identified, trained and charged with the responsibility doing what needs to be done timely in order for the organisation to be and remain regulatory-compliant. Similarly, technology should be deployed, as much as is possible, to help remain on the right side of the law. Our computers, phones and their applications can remind us when certain actions should be initiated to ensure that approvals and renewals are obtained timely whilst certain processes can be automated. The schematic below shows a possible regulatory compliance dynamics.

Some of the specific measures an entrepreneur can take to ensure regulatory compliance are:

Start with the right mindset and develop the right culture: In everything that is important, we always must start with the right mindset. In this case, the entrepreneur is required to completely and without any ‘ifs and buts’ resolve to always comply with legally enforceable regulations. Beyond this personal resolve, the entrepreneur should develop and entrench a culture of compliance with the laws in their business. There shouldn’t be any alternative discussions on it. It must be clear to everyone that as a matter of policy, all regulations have to always be complied with. Simple.

Educate your staff on regulatory compliance: Several years ago, I had the privilege of driving a very successful, senior and elderly person in my official car to attend a function in the evening. On the way, we were stopped by a team of police officers on traffic beat. They asked for the vehicle documents which I promptly made available. Unbeknownst to me, one of the documents had expired. It was a little embarrassing as I extricated myself from the situation whilst my passenger said nothing. After leaving the scene, the passenger sternly said to me, ‘Musbahu, don’t ever allow yourself to get into such situations!’  By the bye, it is probably twenty years now and no such documents have, again, ever expired on my hands before they are renewed. Partly, I resolved to renew all vehicle documents at the same time thereby eliminating the need to monitor each individually.

Teach your staff to ensure full compliance with all regulations. Make it very clear that where staff individually break rules or laws, they will be made to bear any financial consequence that comes with it.

Conduct a regulatory mapping/audit: Once it is adopted as a policy of the organisation to always comply with regulations, the next thing is to conduct a mapping exercise in which all applicable laws are identified. As mentioned in the first part of this series, the good starting point for this are with your Lawyers and Accountants. Working with these professionals will help you establish which regulations apply to your business, how to meet each, how often you must meet up with the regulatory requirement and any costs associated with that. This exercise should be conducted regularly to ensure that you and your business remain compliant.

Establish a compliance process: After establishing which regulations are applicable to your business, the next challenge is to establish policies and procedures about complying with each requirement. For instance, knowing when a particular permit will expire and the lead time of processing its renewal, you can establish when the renewal process must be initiated to ensure that it is obtained before the current one expires. This might include a user or responsible department initiating the process two months before the current permit expires. Wherever possible, technology should be used to alert and prompt the renewal process. This exercise also involves understanding what the renewal process involves. Is a formal application required? Is there any payment to be made? If a payment is involved, what determines the amount due? How and when will the payment be effected? Etc. Leverage on technology as much as is possible and document the compliance policies and processes. Equally importantly, all documents, soft and hard copies, should be protected.

Designate a compliance champion(s): Depending on what you do and the size of your business, you may need a compliance champion or champions. These may be the CEO or any staff for that matter. Whoever this champion might be, they must be aware of all the regulatory requirements; They should have a system and process of ensuring compliance; And equally importantly, they must be given all the support they need to keep the business-compliant of all requirements.

Monitor any changes: Often, Regulators do change the laws. It could be at annual budgets of the federation or a state. It could be at any point by an Agency responsible for granting some permit. To keep abreast of changes, you should be monitoring developments in the economy and society, as well as have a relationship with the regulators.

Complying with regulations is very important and we should do whatever is required to be on the right side of the law. If you cannot ‘afford’ to be regulatory-compliant, you probably shouldn’t be in that business. Next week we will take up a very important issue for all businesses: Contract Negotiations.