Leadership in Steering Compliance: Unintended Consequences and Judgement
Bioss South Africa
Do we consider the ability of leaders to deal with compliance matters when we appoint them?
A core requirement for the appointment of leaders is their ability to consider and make decisions based on the context. Context here is the embeddedness of the organisation within a broader society and environment, as well as in specific locations where the organisation may be based. The context increasingly includes different form of regulation across a vast number of industries from an increasing number of regulatory bodies.
We suggest that leaders need to consider the balance of regulatory requirements, compliance and necessary innovation from the perspectives of foresight and oversight.
Foresight requires leaders to make sense of regulation or compliance within a context and over time. This is judgment about the impact of the regulation in the long term; both for society and the organisation. It is about the intention or the spirt of the legislation, not necessarily how it is formulated, nor how it is implemented.
On the one hand, the leader may decide that the regulation needs to be opposed since it is not good for society. In such instances, the leader needs to select the appropriate way or forum. In other cases, it may well be that the regulation is crucial in the longer term, but not necessarily in the interest of the organisation. It will then be incumbent on the leader to develop the groundwork for such insight to be shared, as may be required, with the stakeholders, shareholders and staff of the organisation.
At times, regulation may be more operational in nature. The leader’s involvement then would be that of oversight; of ensuring that the right people, structures and review mechanisms are in place. In this way, the demands of compliance can be met to manage the potential risks intended to be addressed by the compliance.
This is the compliance that can be delegated, although the leaders should ensure feedback mechanisms to alert them to changes to existing compliance requirements.
The unintended consequences may not be immediately apparent to all, and may take time to become visible. Thus, leaders also need to exercise judgment in terms of the patience required. Such patience may take the form of knowing that it will take time before the message can be heard. This is a preparedness of not being too early with a message for audiences not yet ready to receive it. This is the patience following from laying the groundwork for a message that will only be heard later in time.
Judgment as patience may also be its own opposite as impatience in terms of what needs to be fixed now. This is the identification of areas that must be addressed with urgency.
As organisations and technology innovate, it will not mean that compliance will go away. Rather, regulation may spread and become more complex and time consuming. This is an inevitable consequence of societies and political systems coming to grips with, and responding to, what organisations are doing.
For leaders, the management of compliance will remain part of the job. Perhaps compliance will become an even more substantial part of their time, energy and attention in future. Leaders will have to ensure that they have the right mental models, strategy, structure and people in place to facilitate their own foresight, oversight and patience.
The original version of this post can be found here.
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