Voltaire once wrote: “Common sense is not so common”.
In business, a common and dangerous piece of advice one can give or receive regarding corporate compliance is something you’ve likely heard before: “Just use your common sense”. That statement gives the false impression that if one uses basic judgment, the individual and the business can’t go wrong. This is a gross understatement and doesn’t convey how much effort it takes to stay abreast of current laws, rules, and regulations. In business common sense alone is not adequate.
…without establishing proper best practices, policies and procedures;
…with no leadership commitment;
…with no education and communication;
…witthout buy-in from employees;…
…is just not that common!
Accountability Vs Common Sense
Another reason why the “common sense” approach fails to capture the complexities of corporate compliance is that it implies that the business’s leaders (and employees) take a passive stance, which means that your internal moral compass is all you need.
Those who build their decisions and actions just on common sense instead of putting into practice compliance programs principles are passive thinkers. Passive thinking is a result of lack of self-accountability.
Smart leaders and their teams are active thinkers, they recognize their ability to respond to circumstances and to identify, detect, and correct issues before they escalate to the level of litigation and fines.
Informed Decisions Vs Common Sense
Informed business decisions are not made based on common sense only. A reliable organization makes decisions with the best possible information it has at its disposal, while also taking into consideration the potential and possible results that could come with the decisions that are made.
As a first step a seasoned leader has to take when starting new businesses or partnership, or hiring employees and third parties, or acquiring a company, is to accept that problems exist. The challenge is to be aware of the obstacles and to remove or to know how to deal with them.
Common sense alone doesn’t take companies to understand which areas of the business expose them to the most risk and it doesn’t let employees see problems when there is still time to correct them.
Don’t expect a junior or new employee to recognize a compliance risk based on his/her common sense judgment. It requires policies, procedures and training at regular intervals to enable someone’s eyes to see red flags.
The Need To Go Beyond Common Sense
The way one applies common sense will vary depending on knowledge, experience, exposure and foreseeability. A company cannot solely rely on what its employees personally know or have experienced in their lives. An organization has to build an environment that provides to its employees education and the ability of perceiving risks.
A responsible leader does not count on people’s foreseeability, which is the ability to anticipate potential damages of an action.
Risk assessments, audits, and industry trends systematically identify risks and serve as the impetus to create a compliance culture. This is a prerequisite for protecting the business and its employees from end results that may be negative outcomes.
Financial And Long-Term Business Growth With Prae Venire
We want everyone in your business to embrace the corporate compliance culture. At Prae Venire, we design programs that fit your industry and the risks your business faces. Contact us to schedule a consultation, and let’s get started.