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Tracking Compliance: Key Performance Indicators for Success

As businesses strive to maintain a culture of compliance, it’s essential to track key performance indicators (KPIs) that demonstrate progress towards strategic goals. In this article, we’ll explore the most important KPIs to track and provide examples of how they can be used to improve compliance efforts.

Directional Metrics: Understanding Compliance Efforts

Directional metrics help identify whether a business is improving in specific areas of compliance. By monitoring these metrics, organizations can adjust their procedures accordingly.

Specific KPIs: Achieving Concrete Goals

Setting specific, concrete goals increases the likelihood of achieving them. For example, instead of aiming to “improve compliance,” a company might set a goal to:

  • Increase internal audits completed on time by 10%
  • Reduce mean time to issue discovery by 20%

Top Compliance KPIs to Track

Here are the top 10 compliance KPIs to track:

  1. Mean Time to Issue Discovery: The shorter this timeframe, the more effective your compliance efforts will be.
  2. Mean Time to Issue Resolution: This metric can be analyzed alone or in conjunction with mean time to issue discovery to identify bottlenecks in the process.
  3. Compliance Expense per Issue: This KPI helps organizations understand the average cost of a compliance issue and track progress over time.
  4. Total Regulatory Compliance Expense: A top-line figure that provides insight into the overall direction of compliance expenses.
  5. Risk Severity Gap: This metric highlights the difference between predicted and actual compliance risks, allowing businesses to adjust their strategies accordingly.
  6. Composite Risk Index: A score-based system that assesses the likelihood and impact of potential risks, informing priorities for the compliance program.
  7. HR Regulatory Compliance Expense: The total expense incurred by HR relating to regulatory compliance issues, divided by company revenue.
  8. Compliance Training Expense: The total amount spent on compliance training, divided by the number of employees.
  9. Compliance Training Headcount: A measure of the number of employees who participate in compliance training over a set period.
  10. Number of Misconduct Reports: Tracking this metric helps organizations understand their compliance processes and employee attitudes towards speaking up.

Frequently Asked Questions

Here are some frequently asked questions about compliance KPIs:

  • How do you measure compliance rate? Divide the number of compliant employees by the total number of employees, then multiply by 100.
  • What makes a good compliance function? A good compliance function implements effective KPIs, maintains oversight of the compliance landscape, and encourages speaking up.
  • How do compliance tools help? Automation saves time for the compliance department, freeing staff to focus on monitoring and analysis.

Conclusion

Effective tracking of compliance KPIs is crucial for businesses looking to maintain a culture of compliance and avoid costly consequences. By monitoring these metrics, organizations can continually improve their efforts and eliminate wrongdoing.

ComplyLog: Your Partner in Compliance

ComplyLog offers a suite of tools designed to help businesses streamline their compliance processes and stay up-to-date with key legislation. Request a free demo today and discover how our solutions can support your compliance journey.

References and Further Reading

For more information on creating a code of conduct, benefits of a code of ethics, measuring whistleblowing effectiveness, and writing a conflict of interest policy, refer to the provided resources.