Why is compliance important ?

«If you think compliance is expensive, try non compliance»

com·pli·ance

kəmˈplīəns/

noun

the action or fact of complying with a wish or command.

Why is mastering retail compliance important? Put simply, mastering retail compliance is important due to the financial impact that it makes to the business. Non-compliance can be significantly disruptive to a company’s bottom-line performance, given the unbudgeted cost offsets that are incurred for nonperformance. Even if a company budgets for these seemingly inevitable charges, the margins of the business will be negatively impacted

The very definition of "compliance" is to behave according to the rules that have been previously laid out for you. The act of compliance is important for everyone in the industry (and therefore everyone within your company) to uphold -- from the company's manager or CEO to the salespeople and field teams who bring in the company's profits and execute the programs. No one is too powerful or too good at their job to be granted the ability not to follow the rules.

Although the presentation has changed, compliance remains at the heart and soul of what drives a profitable retail industry, and driving and proving compliance remains at the heart and soul of what we do. Whether it be Merchandising or Safety Compliance.

1. What is the Maximum Failure Rate that I am Willing to Accept with Regard to In-Store Compliance?

For one, stores that are inadequately merchandised can be disastrous, particularly when one store turns into ten, which then turns into fifty, and the list of non-compliant stores just keeps growing. As on a smaller scale... lets break it down to Store level. Departments that are inadequately merchandised can be disastrous, particularly when one department turns into two, then three, etc. That is one sure-fire way to fail at your execution program. Poor merchandising results in customers who just aren't really excited by your products and who, as a result, do not buy them. Those that do shop here Just dont want to drive any further because either they are too busy, too lazy, or too cheap to spend the extra time and money on driving another 30 miles to a competitor.

Let's face it: you can't increase sales if you refuse to comply with the directive that merchandising materials are to be properly displayed. You can't increase sales if you refuse to comply with a safety directive that merchandising materials are to be properly stored. In the end, this is kind of a trick question because you should not be willing to accept any rate of failure. Even one percent is too much when you could be otherwise turning that one percent into profit.

2. How Will My Execution Failure Rate Transfer to Projected Sales?

Here is where that point I made where even one percent of failure is too much really rings true, because you fall short of your goals no matter what when your sales lift does not reach the level you had originally anticipated.

To put this into scarier terms, and this can be in terms of stores or on a smaller scale......departments. if, arbitrarily, 26 stores out of 35 do not properly execute their compliance directive, and if that's a loss of, say, $20,000 per store, then running those numbers gives us a grand total of $650,000.00 in lost potential sales, or spent in potential fines all because a directive was either followed poorly, or worse, not at all.

3. What is the Number-One Culprit for Why I am Even Experiencing a Rate of Execution Failure in the First Place?

While some causes of execution failure are more obvious, like incorrect placement or installment, missing signage, or delays in the delivery of the requisite materials, , poor planing on warehousing shipping orders, other reasons are murkier to figure out. Less clear catalysts include issues with program design, delays in construction, and improperly interpreted instructions due to confusion on the part of the person who was supposed to be following them.

The most egregious of the list in the paragraph above is the 'improperly interpreted instructions.' I speak with executives from different companies every week, and the one thing we all agree on is that business succeeds when leadership teams get crystal clear about what they want, and then over-communicate that clarity downstream. The problem with field teams, however, is without a perfect conduit for communicating clarity, people misunderstand.

If you want to reduce retail execution failure rates to zero, find a way to gain clarity over what you want, then over-communicate it to those who are expected to do it. In addition, find a way to gain crystal clarity over what your team has done, where, how, for how long, and what the end results were such that you can monitor and adjust to fine tune your results.

Whatever one believes about the cost of regulation, it is without a doubt top-of-mind for executives, managers and department heads... compliance costs are increasing in merchandising and fines are doubling in safety compliance.

Now that employees can blow the whistle on company misconduct or non-compliance and benefit from it, companies “have to be prepared that something might go to a regulator sooner, then later. Companies are now having to build controls that can help them to prevent potential misconduct or non-compliance beforehand.

More companies are appointing compliance officers, and when the new compliance officers start work, “they may come in and say I need x, y, and z, because those were areas that may not have been considered before.

The operating model is extremely important,”

“You want to drive the clarity and accountability for

compliance down to the lowest level.”

Controls do matter, probably more than they ever have in the eyes of the government. Companies do have to spend on controls to meet the growing demands of compliance.

You can get in touch with me in case you want to be part of the solution or want to know about the solution.