Businesses overlook benefits of compliance

Organisations must implement corporate governance more effectively if they are to gain competitive advantage, warns Cartesis

February 08, 2005. Over a quarter of FTSE 350 directors surveyed believe that the requirement to comply with new regulations has a negative impact on their business.

The finding is from a survey commissioned by Cartesis, the business performance specialist. Many respondents claim that precious time spent completing regulatory compliance is a distraction to managers and is perceived as a non value-add activity. This in turn is driving up costs, tying up capital and hence reducing profitability.

In addition 33 per cent of those surveyed felt compliance has little or no impact on the organisation. These respondents claim they are neutral on the subject of regulation or, when pressed further, said that at worse it is a nuisance.

"These results demonstrate that many companies, rightly concerned about costs, are missing the potential upside of recent compliance changes," said John Taylor, MD, Cartesis UK. "Yes, the corporate governance environment is a challenge but true benefits to performance can be derived from greater insight."

"It’s no secret that, for effective governance and business decisions, management needs a clear, accurate and timely view of corporate performance a view that it can trust."

"Therefore, those people who responded negatively to the idea of regulation may have overlooked an opportunity. Our experience is that, with the right processes and systems the cost of compliance can be controlled. In addition, good practices imposed by external regulation are converging with good practices initiated within leading businesses themselves. The result should support sound business decisions and confidence in reporting to stakeholders, based on an insightful, controlled and trustworthy view of performance."

"The challenge is to overcome negative perceptions and implement compliance in such a way that the supposed burden is turned into a competitive advantage," John Taylor concluded.

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