Reliance on data in conducting modern business can create a significant amount of legal and compliance risk for companies that don’t have a good handle on it. Two experts in the space shared how they are successfully integrating data intelligence into their organization’s operations at Diligent’s virtual “Modern Governance Summit” on Sept. 15.
Each company must decide for itself what key performance indicators (KPIs) are most helpful in terms of data capture. One KPI for compliance officers to consider is “takt time,” said Daniel Garen, chief ethics and compliance officer at smart home company Vivint. Takt time, derived from the German word “Taktzeit” (meaning “cycle time” in English), traditionally has been used as a manufacturing principle but has since made its way into the compliance space, Garen said.
In the manufacturing context, takt time describes the required time needed to make a product to match customer demand, with the overall intent of creating lean manufacturing lines. In the compliance context, CCOs often will hear in the course of their job it’s taking too long to achieve a certain task. Takt time can help compliance successfully meet a wide variety of obligations, supported by data visualization that can then be presented to leadership.
“Data visualization doesn’t give [the management team] the answer; it gives them permission to ask the questions: ‘What caused that to occur? Is that a problem?’” Garen said. In other words, takt time guides the business to understand signals, what those signals are telling them, and why they are important.
Garen used the example of a go-to-market strategy, in which each step along the way takes different amounts of time. Let’s say a distributor has 21 days to fill out a due diligence questionnaire, and compliance has four days to turn it in, but it ended up taking compliance only one day out of the four and took the distributor the rest of the time.
The way to visually display that data or data report to the business is to present a bar graph showing the desired goals of compliance relative to the demands placed upon the distributor alongside a bar graph showing the actual time it took each group. “The end goal is to get engagement from the management team and for them to understand the issues,” Garen said.
Cooperation is key for this process. “What I try to do is have an iterative and cooperative process with the management team to decide on six visuals to go on,” Garen said. For example, one might be a bar graph on the number of open, closed, and substantiated investigations, while another could be a numbers table showing both the forecasted and actual budget for the quarter. “So, you’re building all these pieces out,” he said.
“Data visualization doesn’t give [the management team] the answer; it gives them permission to ask the questions: ‘What caused that to occur? Is that a problem?’”
Daniel Garen, Chief Ethics and Compliance Officer, Vivint
The end benefit of having thorough, quality data is it leaves little room for pushback. “When you get the data and create the picture, you’re going to win every time,” Garen said.
Like Vivint, Agilent Technologies, a U.S. analytical instrumentation development and manufacturing company, also tracks compliance turnaround time versus partner turnaround time, said Jennifer Dresser, Agilent’s global channel partner compliance business consultant. Other KPIs Agilent looks at include third-party monitoring and match remediation reports.
“As a quality check on our work, we look at case reviewer reports to make sure our team is addressing any red flags that come up,” Dresser said. This might include partners working in a sanctioned country or politically exposed individuals, for example.
“Our due diligence is cyclical,” Dresser said. “We do it once a year, and we have an internal questionnaire that our sales managers fill out.” The scorecards from the internal questionnaire help formulate the due diligence questionnaire, data that then gets presented annually to leadership, she said.
To prevent any mistrust in the data being presented, it helps to make the process synergetic among the different business organizations. This, in turn, fosters even greater collaboration, particularly among organizations where traditionally there is natural tension, like between sales and compliance.
At Agilent, for example, business organizations work closely with one another, “and we’re open with them and transparent in terms of where we are getting the data,” Dresser said. If compliance uncovers any red flags, sales is seeing the advantage of perhaps not working with a particular partner because of the risks it poses. “They do seem to see the value in what we’re doing and work with us as partners to help guide their strategy in many cases,” she said.
Vivint takes a similar collaborative approach to data production. Garen said he will not start producing data until agreeing ahead of time with the business what parameters make sense.
Make no mistake: Building data models to create the data visualization piece of it is a complex process. “You have so many different legacy systems, and you have to normalize the data and clean it,” Garen said. “What I hope to see in the future is making the merger of all this data easier.”
Data collection done right, however, has endless opportunities for compliance. As Garen put it, “It is a long journey, but a very worthwhile journey. When you can get it to work, the management team is very happy.”