Key Metrics for Effective Evaluation
Organizations often invest heavily in creating compliance programs but fail to gauge how well they perform. Each time something related to compliance goes south, the blame falls on the entirety of your program. But how do you determine which aspects of your program are failing (or succeeding)? The answer: by tapping into the power of compliance metrics and KPIs.
Compliance metrics and KPIs are the vital force that drives this program toward success. They help identify and resolve issues that may otherwise remain hidden, shield organizations from heavy financial, reputational, and legal losses, erase recurring issues and lower the costs of managing incidents, and boost the productivity of the overall workforce. Here, we’ll explore which compliance metrics and KPIs your organization must tap into to strengthen your compliance program.
Number of Times Policies are Reviewed
Your company’s policies are not just a set of dormant documents that are unchanging and inflexible. They are living and breathing elements that must be updated each time:
- Your industry implements new regulations
- Your company deploys new technology
- A threat is detected
- Your company grows
By reviewing your policies, you can:
- Spot potential threats
- Identify suspicious activities
- Minimize any risks of breaches
- Create a plan of action if something does go wrong
Number of Violations
Violations can emerge due to a variety of reasons such as expansive discovery time frames, improper training, and more. Determining the total number of violations during a quarter can not only help find their root cause but also ensure similar violations don’t occur in the future.
Additionally, diving into the types of violations that occur most frequently can provide insights into which elements of your program need improvement, as well as which are functioning properly.
Survey Results and Participation Rate
Aside from analyzing training, your company must conduct annual surveys to extract valuable insights about your compliance program and culture. During the survey, ask questions related to your organizational policies. Understand your employees’ attitudes toward these to get an honest picture of how they see your company’s culture.
You can also use surveys to determine the number of incidents your employees witnessed or reported. You can then compare these answers against your reporting histories. If you notice a significantly higher number of issues in the survey – it may be time to revamp your compliance program.
Training Program Participation and Frequency
The number of employees that participate in your training program is directly linked with your compliance program’s performance.
When employees don’t participate in training, they remain unaware of critical elements of a healthy culture of compliance such as: how to deal with ethical dilemmas, which workplace behaviors are unacceptable, updates on changing industry regulations, the consequences of noncompliance, and more. This can weaken your compliance program.
Measuring training participation helps determine why employees fail to participate in training and what your company can do to ensure maximum participation. But calculating training participation is not enough. To drive real change, it’s critical to gauge how well your employees retain what they learn, and how well they apply it in the workplace.
Training Program Cost
Your company may invest heavily in a well-rounded training program. But how can you determine if training is, in fact, bringing the results you expect? By measuring the cost of training, you can determine the financial and non-financial benefits it brings to your table. This could include how promptly the issues were reported, the volume of misconduct that was averted, the improvement in productivity levels, and more.
Number of Incidents
Tracking the number of incidents is critical to identify several things including:
- How often your employees report incidents
- What patterns of misconduct are the most common
- What percentage of incidents actually receive an investigation
- How you can detect and possibly prevent similar issues in the future
Time From Issue Discovery to Resolution
These metrics include Mean Time to Issue Discovery (MTTD) and Mean Time to Issue Resolution (MTTR).
The MTTD metric helps understand when an incident emerged and how fast your organization could detect it. This metric can determine the efficiency of your data monitoring system in identifying issues. It can also hint at how strong or weak your speak-up culture is.
The MTTR metric helps understand how long it takes to resolve an issue that your compliance team detects. This metric can uncover several issues that may be plaguing your compliance program such as a lack of automation, imprecise or faulty manual processes, a lack of a centralized database, and more.
Expense Per Incident
The expense per incident metric helps determine the cost of resolving each issue. It helps understand why certain incidents can be costlier than others and how you can resolve them better. For example, if mitigating workplace harassment issues drains your budget, you can take appropriate steps to strengthen your training and stop these misconducts from occurring in the first place.
Key Risk Indicators
KRIs act as early symptoms of a significant risk that may visit your organization. By anticipating the type of risks your organization might face, you can set certain mechanisms in place to ensure these risks don’t cause unexpected damage to your organization.
How to Align Compliance Metrics & KPIs with Organizational Objectives?
The compliance KPIs you set in place must align with your organization’s overall goals. To identify these goals, ask questions like:
- What are my organization-wide objectives?
- What risks may impact my compliance program?
- How can my organization stay prepared for these risks?
- What is the likelihood of new risks?
Once you assess the compliance risks your organization may face, you can set the right compliance KPIs in place. Some KPIs that can help measure your compliance program’s effectiveness include:
- How often you revise your codes and policies
- The number and nature of violations associated with codes and policies
- Performance of your training program
- Reports and trends related to retaliation
- Volume and nature of issues from those who have completed their training
A Final Word
Different organizations require a different set of compliance metrics and KPIs to track how well their compliance program performs. While the number of metrics can seem overwhelming, certain steps can always be implemented to make the process easier and more efficient. Outsourcing your compliance-related tasks to qualified a third party, deploying a centralized case management system, and investing in quality training processes are a few of the many things that can help organizations build (and maintain) a solid compliance program.
Recommended Resources:
- https://www.onetrust.com/blog/compliance-program-performance-metrics/
- https://www.indeed.com/career-advice/career-development/what-are-compliance-metrics
- https://reciprocity.com/resources/kpis-for-measuring-compliance-effectiveness/
- https://ganintegrity.com/blog/compliance-metrics-every-business-should-know/
- https://www.metricstream.com/insights/reporting-compliance-metrics.htm
- https://everfi.com/blog/workplace-training/5-tips-for-measuring-compliance-program-effectiveness/
- https://www.hr.com/en/magazines/all_articles/leveraging-the-right-hr-metrics-for-business-succe_kv0xvctz.html
