Basically all humans procrastinate to some extent. We’ve all faced difficulty while dealing with matters that require thoughtful decisions, either on a personal level on filing tax returns, paying bills, saving for retirement, quitting addictive behaviors, or at work on budget, hiring, firing, marketing, or customers and many others. People, including corporate leadership and businesses’ owners, tend to postpone significant tasks despite knowing about potential adverse consequences. Procrastination is often associated with something painful, dull, or challenging, and this is true in our personal lives as well as our professional lives.
In business (unfortunately) there’s still a high tendency of procrastinating compliance programs or internal controls implementation; it doesn’t matter the company’s industry or size.
The Whys and Wherefores
When people procrastinate, they receive momentary relief by avoiding a task or situation. Yet this is a brief feeling. The genuine relief comes at the time a task is completed.
In business, when it comes to corporate compliance people buy into procrastination because:
- They assume they can make the necessary adjustments themselves—but always in a future that never comes.
- Those who say they have a lot of experience in their industry may be overconfident in their ability to address compliance risks.
- They underestimate the importance and peace of mind of being one step ahead of the problems, which the activities’ inherent risks can bring.
- They are over perfectionists (or maybe misers) and wrongly think they will need to spend lots of time and money to build a compliance culture.
- They are sluggish while dealing with difficulties.
- If the law is new there is the assumption that enforcing it will be delayed so they believe that failing to make a course correction due to new legislation won’t have any immediate or tangible results.
- And, another trap people fall victim to is waiting to see what other competitors in the space will do.
Notwithstanding, on a personal level, after a fleeting relief it’s time to face the negative effects, which are gradual and slowly they might affect mental health as it brings lack of self-esteem, lack of belief in one’s own abilities to accomplish tasks, fear of failure, etc.
As for the business perspective, procrastination may result in financial loss, damaged reputation, and legal issues.
A Real-World Examples
There have been several high-profile cases where procrastination or delay in dealing with corporate compliance matters has led to serious consequences for companies and their stakeholders.
In 2016, it was revealed that Wells Fargo had opened millions of unauthorized accounts for its customers, leading to a major scandal and significant financial penalties. An investigation found that the bank had ignored warnings about these practices for years, and had failed to take sufficient action to address the issue.
In the wake of two fatal crashes involving its 737 Max planes, it was discovered that Boeing had failed to disclose important information about the safety features of the aircraft to regulators and customers. An investigation found that the company had known about potential issues with the planes for years, but had delayed taking action to address them.
In 2015, it was revealed that Volkswagen had installed software in millions of its diesel cars to cheat on emissions tests. The scandal led to significant financial penalties and damaged the company’s reputation. An investigation found that Volkswagen had been aware of the issue for years but had failed to take action to address it.
In each of these cases, lack of attention to corporate compliance matters and failure to address issues in a timely manner led to significant negative consequences for the companies involved. These cases highlight the importance of taking corporate compliance seriously and ensuring that issues are addressed promptly and effectively.
Good Intentions Are Not The Same As Achieving Compliance
The more we put something off, the greater its hold over us is. If one is worried about implementing a program and building compliance culture, avoiding it only increases the risks of damage and bad exposure.
Failure to adequately address the risks associated to the company’s industry, to its operation and presented by laws and regulations have serious consequences to a business, it doesn’t matter the organization’s size, country of origin or where it does business.
The damage caused by lack of internal controls can be particularly devastating to small and mid-sized businesses compared to global companies. They are more vulnerable to the damage caused by irregularities compared to larger companies. It is essential for any business to take proactive steps to prevent, detect and correct violations, such as conducting risk assessments and implementing robust compliance programs.
Your Chance to Take Action
Challenge your belief that you understand and have effectively managed your compliance risks, complete a corporate compliance risk assessment. Prae Venire supports U.S. companies that operate in foreign markets, as well as foreign companies that have affiliates here. We can apply effective corporate compliance and risk mitigation solutions tailored to your company and its needs. Don’t procrastinate. Take the first step and ask for help. We’re here to support you.