Fractional compliance services address a number of pain points for organizations. So, to prove our point, we are going to flip the conversation around. Instead of listing the advantages of outsourcing compliance roles, we want to look at it from the perspective of the other options which are available to engaging a fractional compliance expert. And, of course, we are going to outline why they are not great options.
We are all familiar with the challenges to finding, hiring, and retaining good, qualified compliance personnel. There is a limited number of these professionals in general, and even fewer who are currently looking for a job. In fact, there is a labor shortage in the compliance and security sector worldwide. The gap between supply and demand is partially to blame for the rising salary that these professionals expect. Salaries alone have made hiring a full-time compliance officer out of the range of possibilities for smaller organizations. Now, in the current economic recession, even large multinationals are looking to decrease compliance budgets by cutting down on the salary spend needed to retain these high-demand compliance experts.
So, what is a company to do when it can’t afford the best in-house compliance specialists? We recommend outsourcing, but if you don’t want to believe us that this is the most cost-effective solution. Here’s a peak at the not-so-great alternatives.
Paying Top Dollar to Hire Qualified Compliance Specialists
Hiring your own full-time compliance team is the most obvious alternative to outsourcing compliance duties. However, it is expensive to hire a full-time internal CCO. Approximately $200,000 to $250,000 in pay alone, based on data from Salary.com. Costs for hiring, onboarding, benefits, and all other administrative expenses are included, and the price quickly rises to $300,000 to $350,000!
That is simply not a viable option for the great majority of organizations today. Nevertheless, regardless of the size and income of your firm, the vital need for compliance leadership is very apparent.
Hiring an Inexperienced Compliance Specialist
In an effort to optimize compliance costs, and stay within budget, some companies may try to lower the bar. It’s true that compliance professionals with little or no real-world experience generally earn a lower starting salary. But this economically motivated decision may have some hidden costs. Here’s why…
Perhaps most importantly, compliance officers are supposed to be an experienced and knowledgeable figure who helps organizations navigate the complex landscape of regulatory compliance and cybersecurity. They should lead the company in developing and implementing comprehensive security and privacy strategies, policies, and procedures. They also provide guidance on compliance with various international, federal, and state regulations.
But, what if there are no compliance professionals available for hire with the experience and expertise that your company really needs? Or, what if your budget doesn’t allow for you to hire someone with the experience level needed?
Hiring a Chief Compliance Officer (COO) without enough experience means that he or she may not have the necessary skills and knowledge to effectively manage your organization’s compliance activities and engagements. They may only have a superficial understanding of the latest compliance tools, challenges, and best practices, which will enable them to develop and implement effective security strategies and policies. They will likely lack experience with managing compliance teams, working with other departments to policies and practices are integrated into all aspects of the organization, and familiarity with the multiple regulatory standards that apply. Without the assurance that the new hire is equipped to protect the organization’s assets, take a proactive approach to data security, and instruct the rest of the organization on ethics and adherence, what’s the point?
Adding Compliance to the IT Manager’s Responsibilities
Many businesses try to add compliance and cybersecurity to the IT manager’s already lengthy list of responsibilities. And while IT administrators are skilled at maintaining the functionality of your business, its network, and your devices, most of them struggle to stay up to date with the ever-changing compliance and cybersecurity environment.
Plus, adding more and more demands onto your in-house staff, which is already at capacity or beyond, is a recipe for disaster. The risk of employees requesting higher pay, burning out, quitting, or simply being too overburdened to do their jobs well goes up.
Patching the Compliance Gaps as Needed
Because you’re busy operating your business, cybersecurity and compliance may be a concern but perhaps not a top priority. As a result, many firms respond to compliance challenges as they appear, trying to find solutions using one-off services or software.
While “solutions” like this could put out fires for a while, they do not safeguard your firm over the long term. Your organization can only be protected in the short and long term by taking a proactive, strategic approach to risk assessment, mitigation, and compliance auditing by a seasoned, reliable partner.
Ignoring Compliance All Together
The most risky route of all. Yet it’s one that many companies travel. These business executives are aware that compliance and security risks are prevalent and the fines for violations are hefty, costing businesses billions of dollars annually. But, if they haven’t encountered any catastrophic events yet, it can be tempting to ignore the topic all-together and deal with it later.
What Roles Can Compliance Outsourcing Cover?
When you put all the options out on the table, it’s easy to see why outsourced compliance services are the best solution. Fractional compliance is not only cost-effective, and sure to get your organization the experience and expertise needed for success, but it’s also completely flexible. Take a look at all the tasks and responsibilities that our fractional compliance specialists can cover:
- developing and implementing policies
- designing internal controls
- developing crisis management and business continuity plans
- analyzing systems to monitor controls
- checking adherence of an organization to policies and procedures, especially regulatory and ethical standards
- reviewing audit processes, practices, and documents to identify vulnerabilities
- assessing and reducing compliance risk and operational risks
- collaborating with internal IT staff and external auditors
- performing regular internal reviews, gap assessments, and audits
- staying up to date on applicable regulatory standards and business goals
- leading risk management activities
- training employees on regulations and industry best practices
- addressing employee concerns or questions on compliance
- investigating compliance issues
- creating remediation plans
- communicating written policies and procedures across the organization
- documenting compliance activities
- filing compliance reports with regulatory agencies
- consulting with legal counsel
Ask the I.S. Partners’ team about the compliance responsibilities that your organization is struggling to cover.