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How to: Build a compliance function from scratch

How to: Build a compliance function from scratch

19 Sep 11:00 by Ferdiye Ozler

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How to: Build a compliance function from scratch

The buzz of making a placement is undeniable; the satisfaction of helping a candidate, solving a client's business needs and of course the commission cheque. What could possibly ruin this?

Compliance.  

Being non-compliant at any stage can completely undermine the whole recruitment process and is therefore detrimental to any recruitment business. Furthermore, with the recent introduction of GDPR (everybody’s favourite topic) and the accompanying fines of up to £20m or 4% of a company’s global revenue, ensuring your business is compliant is increasingly important.

This places Compliance at the heart of every (successful) recruitment company. Compliance should not be viewed as a business blocker but as a business enabler.

Setting up an effective compliance function is not an easy process, so I reached out to some of the industry’s leading compliance professionals for their advice on how to create a compliance function, from scratch!

Preparation

The first stage of creating a compliance function from scratch is having an understanding throughout the business of why it is needed and what you want to get out of it.

‘The easy approach is “Compliance by labels” which lacks the underlying substance to achieve what it intends to.

There is then the type of Compliance which is synonymous with a business which associates itself with quality outcomes. This type of Cultural Compliance requires a ‘top-down’ approach from Board Level buy-in through to Sales Managers selling a quality service and Compliance Officers executing the administrative requirements to manage risk.

Once the Board level buy-in is achieved a Compliance Manager can implement the necessary commercial, procedural and administrative requirements to mitigate risk through a mixture of contract reviews, organised administration and contingency processes in the event of any breaches causing commercial risk.

It doesn’t take much investment other than the consistent willingness of a business to have a function in place to ensure it is selling a quality and compliant service.’ – Russell Sanchez, Contracts and Compliance Manager @ VHR Global Technical Recruitment

Where do you start?

You’ve decided it is essential to have a compliance function, but what next?

‘Start with a SWOT analysis. Once you have worked out the strengths and weakness, you build your foundation. Build processes that reflect the needs of the business and are in-line with current legislation.’ - Nicola Holt, Compliance and Payments Manager @ Square One Resources

‘Look at your business and understand what your compliance obligations are. Consider everything from general legislation, industry regulations, best practice and customer contractual requirements, then develop policies and processes that support your obligations.’ - Claire Beasley, Compliance Manager @ Guidant Group

All recruitment businesses are unique and will have differing compliance needs. Ensuring you create a compliance function which reflects your business needs specifically, will allow the compliance function to be as effective as possible and truly fulfil the motivations behind creating the function.

Get your foundations right

Success is built on strong foundations. Would Mercedes have won the last four F1 world championships with a faulty engine? Would Shakespeare be a legendary writer if he had no idea of a metaphor or a simile? Would the late, great Stephen Hawking have been able to write and publish ‘A Brief History of Time’ had he never grasped the concept of gravity? It is essential when building a compliance function, the foundations are strong.

‘Create procedures so that information gathered is stored correctly and in line with legislation; it will be useful for training team members and makes it easy to update when the law changes (also useful as an audit trail).’ - Alex Marshall, Commercial Manager @ IDPP

‘Incorporating a compliance work stream in all new projects and business activities will naturally help to grow the scope of the compliance function and ensure standards are consistent across all business functions.

As legislation evolves with case law, compliance functions need to ensure they are responsive to these developments so that they can provide legislative updates to staff and where relevant, implement new compliance processes to mitigate newly identified risks.’ Claire Beasley

Use industry specialists

There is an abundance of industry-specific information available through some fantastic recruitment bodies, such as APSCO and REC (there are others available). Utilising the guidance available will set you in good stead going forwards.

'Use industry specialist for information, put APSCo and REC memberships to good work for this as they provide regular updates on what's happening and have a wealth of information on their websites. Membership to such organisations provide an accreditation for your business as well.'

Accreditation to membership bodies can make your services more appealing to clients as it demonstrates knowledge and practical application of legislation and industry standards. It also helps when you're looking for other suppliers to engage with - I always check what affiliations a business has before recommending them to any clients or contractors.’ - Alex Marshall

Communication, communication, communication

With compliance touching upon all areas of the business internally, and often being the face of the company to many externally, being able to effectively communicate is vital for any compliance function. Strong communication will also allow the compliance department to stay on top of all developments within the business and remain proactive in their work.

‘The best advice you can give someone building up a compliance function from scratch is communication. I sat with all consultants to get to know and understand the clients and the client needs.’ – John Madigan, Senior Compliance Officer @ CXC Global

‘Make sure your staff know what compliance requirements they need to adhere to, through training and awareness.’ – Claire Beasley

‘You always ask for input from colleagues that do not work in Compliance as this ensures you take into account both short-term, mid-term and long-term interest when protecting the business against undesired risks like regulatory enforcement, breach of contract and loss of business.’ – David Korthals, Head of Compliance & Contractor Management @ Salt

Don’t fear tech

Blockbuster and drive home, watch film and pay inevitable late fines doesn’t sound anywhere near appealing as Netflix and chill, does it?

You just need to look at the effect the e-commerce industry has had on the British high streets, to highlight the need to embrace technology. In recent years, the high street has seen Woolworths, BHS, and now Toys’R’Us close, while online, Amazon has a business who grossed $177.87bn in 2017 alone.  

How about an analogy closer to home? Recruitment. Recruitment businesses have tech solutions coming out of their ears, whether that is their CRM’s, their marketing teams, finance divisions or LinkedIn. It is an industry which over the last twenty years, in particular, has been revolutionised by technology, if you’re standing still, you’re moving backward.  

‘Use tech to your advantage. We found adding a few extra checkboxes and places to input date for receiving information within consultant records on our CRM really helpful. Not only can we see information per consultant but it's easily accessed and can be converted into reports.’ - Alex Marshall

‘Once there are proper policies and once the processes are better streamlined the business becomes more professional and more efficient and that, of course, would never any ambitious growth plans’. – David Korthals

‘Efficiency’, ‘streamlining’, and ‘accuracy’. These are three buzzwords within compliance as they make up some of the key components of a successful compliance function. Utilising all tools available to achieve the efficiency, streamlining and accuracy of your compliance function is a must. So, don’t fear technology.

Value experience

Creating a compliance function from scratch within the recruitment sector is not a straightforward assignment. Previous experience working in recruitment compliance is a necessity, as is having the ability to be adaptable to the business’s needs.

‘To build a compliance function from scratch you need to have some experience already, have worked ideally at other similar companies and come in with a wealth of experience and knowledge. This will help you take the best of what you've seen in similar functions at previous companies and implement it in your new company.’ - Franck Voreux, Group Head of Legal and Compliance Manager @ ERSG

Build the right team

Depending on the needs of your business and the scale of the compliance operation adding quickly to your team can be a prerequisite, but it is essential you hire the right people to aid the setting up of your compliance function.

‘There are difficulties are in finding individuals that care about best practice and working to the business strategy. Individuals who will help to create a strategy if one does not exist and live the values of the organisation. Ensuring the compliance function is considerate of the other department’s requirements and tasks, and any changes communicated carefully and clearly.’ - Nicola Holt, Compliance and Payments Manager @ Square One Resources

Conclusion

‘The most difficult aspect was the degree of pressure to hit the ground running in a short period of time to ensure efficiency and accuracy’ - John Madigan

Compliance is such an essential part of any recruitment business and starting your own compliance function from scratch can be the difference between a struggling and successful business. Getting the right people in to set up your compliance function is incredibly important, so if you are looking for a compliance professional, with recruitment sector experience to build your compliance function for you, or you are a compliance professional looking for a new challenge, get in touch today.