How to Build an Effective Compliance Program (Step-by-Step)

Compliance might not always feel like a top priority but it’s important on many fronts. Having a solid program doesn’t just keep regulators at bay. It gives you a clearer view of how your business runs, helps catch inefficiencies early, and builds the kind of operational discipline that pays off over time.

And when you look at the numbers, the case is pretty clear: organizations spend around $5.47 million to stay compliant, but face nearly $14.82 million in costs when they’re not.

So if compliance has been on the back burner, it might be time to bring it forward. It’s not just about avoiding penalties, it’s about running a better business.

We’ve created this detailed guide to support you in your compliance journey. It covers what a compliance program is, its key elements, the steps to build one, and more.

Tl;DR A compliance program sets internal guidelines to meet laws, regulations, and standards, preventing costly fines and legal issues.It promotes an ethical culture, identifies risks, enforces rules, and protects brand reputation through structured policies and training.Key elements include policy documentation, leadership roles, communication channels, ongoing training, monitoring, and corrective actions for violations. Starting early builds compliance into company culture, reduces non-compliance costs, and shows reliability to stakeholders.

What is a compliance program?

A compliance program is a company’s set of internal guidelines, policies, and procedures implemented to comply with applicable laws, regulations, and industry standards. 

Depending on the nature of your business and geographical areas of operations, your company must comply with specific government rules and regulations. 

Your compliance team understands the requirements to meet those applicable rules and regulations. Then, it creates a compliance program so that your company can comply with them.  

For example, if your company is working in the healthcare industry in the US, you must comply with the Health Insurance Portability and Accountability Act (HIPAA). Your compliance team will formulate a compliance program to ensure your company complies with HIPAA.  

The role of a compliance program includes, but is not limited to: 

• Promote a responsible and ethical organizational culture
• Identify compliance risks and implement corrective measures
• Comply with applicable rules, regulations, and standards
• Prevent legal violations and misconduct by the company’s staff

Implementing a compliance program offers numerous benefits. It helps you let your customers, vendors, partners, and other stakeholders know you’re invested in governance, risk, and compliance.  

A compliance program helps employees follow the code of conduct and avoid misconduct. It also establishes a system to resolve issues and prevent scandals, protecting your brand’s reputation.

What is the best time to start a compliance program?

The best time to start a compliance program is when you’re setting up your company structure.

Companies in highly regulated sectors, like healthcare, insurance, or government contracting, must follow strict rules from the start. While the law may not always require a formal compliance program by name, having one is often essential to meet legal, regulatory, or contractual obligations.

Even if your company is active in a less regulated sector, early adoption of  a compliance program offers multiple advantages, such as: 

• Building compliance into your company’s culture and daily operations
• Helping avoid the high costs of fixing long-standing non-compliance
• Reducing disruptions caused by compliance violation issues
• Showing reliability to customers and partners

That said, don’t wait until you enter new markets, launch new products, hire more employees, or handle sensitive data to implement a compliance program. 

The sooner, the better. 

But what are the key elements of an effective compliance program? We’ll discuss them in the next section.

Key elements that play a crucial role in your compliance program

Not all compliance programs are created equal, but all the successful ones have the following elements. 

1. Policy and standard documentation

Written policies, procedures, and standards of conduct play critical roles in the success of a compliance program. These documents enforce an organization’s commitment to compliance and serve as a roadmap for employee behavior. 

An effective compliance program has a comprehensive policy and standard documentation that focuses on crucial areas, such as: 

• Industry-specific requirements 
• Conflict of interest 
• Ethics
• Data privacy 
• Anti-corruption 

All the policies and procedures should be stored in a centralized hub so everyone can easily access them. 

As rules, regulations, and laws keep changing, organizations regularly update their policy and standard documentation to reflect the changes. 

They also follow a standardized review process to ensure the policies and regulations are consistent and relevant to current compliance requirements. 

2. Role and responsibility assignment

Can a ship navigate troubled waters without a designated captain and crew? No, it cannot. The same is true for a compliance program. 

So, it’s no surprise that all effective compliance programs have a clear governance structure with designated leadership and well-defined roles.

Organizations with successful compliance programs appoint compliance officers with adequate authority, resources, and budget allocation to make necessary decisions.

Compliance officers can also hire people to build compliance teams, or they can work alone, depending on the size of their organizations. 

Ideally, the compliance officers directly report to senior management or the board of directors to ensure transparency and independence.  

3. Communication channel establishment

Any compliance program will fall flat if there is no clarity on effective lines of communication. There will be chaos. For instance, employees won’t know how to report misconduct/violations.

So, all successful compliance programs have multiple communication channels for employees to report potential compliance issues. Employees report the violations to their immediate supervisors, but alternative mechanisms are often in place. 

These programs ensure that all communication hotlines offer anonymity and confidentiality. 

Organizations also promote non-retaliation policies to make employees feel safe when reporting compliance issues.   

4. Ongoing training provision

Training is required to ensure employees and all relevant stakeholders understand their compliance obligations and non-compliance consequences. 

That said, all robust compliance programs provide ongoing training and education programs.

A compliance program training often focuses on the following:

• Company policies and code of conduct 
• Applicable laws and regulations 
• Reporting procedures
• Employees’ rights and responsibilities 
• Consequences of non-compliance 

Ongoing training includes communicating new policies or changes in applicable rules and regulations. 

All successful training programs include assignment tracking to enforce 100% completion rates within specified timeframes. 

5. Rule enforcement consistency

Any compliance program wouldn’t be effective without well-publicized, consistent enforcement standards. 

All effective compliance programs communicate disciplinary guidelines to all relevant stakeholders. This ensures that everyone knows how violations will be tackled. 

Also, compliance programs can offer incentives that promote a transparent, ethical, and compliant culture. 

And there will be consequences for violation, regardless of someone’s position within the organization.

6. Compliance activity monitoring

Internal monitoring and auditing are necessary to ensure the effectiveness of a compliance program. 

The best practice is to implement both concurrent and retrospective monitoring systems. This helps you detect potential compliance issues before they are full-blown.

Compliance activity monitoring often includes:

• Checking if stakeholders have followed prescribed policies, procedures, and standards
• Focusing more on areas with a higher chance of non-compliance 
• Monitoring reports, training completion, and incident trends 
• Logging and reviewing complaints, violations, or suspicious activities 
• Evaluating how well compliance policies work in practice  

All effective compliance programs use risk analysis to monitor and focus resources on the highest-risk areas. They include a process to report below-target results to the compliance committee, allowing timely corrective action.

7. Violation handling and corrective action

The final element of effective compliance programs ensures that organizations promptly respond to detected violations and take corrective measures. 

It involves investigating, documenting, and resolving compliance issues with the help of subject matter experts. 

Compliance teams conduct root-cause analysis to drive corrective action plans to reduce or eliminate compliance violations.  

These elements of compliance programs work synergistically. And they transform compliance from a mere checkbox exercise into a fundamental aspect of organizational decision-making and behavior.

Now that you know the key elements of compliance programs, the following section explains a checklist to build your company’s compliance program.

Checklist to build an effective compliance program

Building an effective compliance program is not as difficult as you think. We have broken down the process into the following eight simple steps. 

1. Assess your risks 

Risk assessment is the first step to building a successful compliance program. It helps you understand your organization’s risk profile. 

Your risk profile represents unique risks your organization may face, depending on your industry, geographical areas of operations, and the number of employees.

The risk assessment process often includes:

• Identifying laws, policies, and areas where violations might happen
• Analyzing how identified risks (each one) can affect your business
• Estimating how likely each risk is to occur
• Ranking risks based on their impact and likelihood 
• Recording all risks clearly 

Your risk profile can change as government rules, regulations, and laws change. 

So, you should regularly update your risk assessment to reflect those changes.  

2. Set up leadership and oversight

Your compliance program needs strong leadership and clear ownership to succeed. Without them, it loses direction and fails to make an impact.

Typically, your board of directors is supposed to oversee the implementation and effectiveness of the compliance program. 

You will also have a compliance manager to develop compliance policies, monitor activities, and respond to violations. 

Senior leadership in your organization must understand and exercise its responsibilities to create and maintain a compliance-driven culture. 

With the proper oversight, your program gains the focus, authority, and support it needs to succeed across the organization.

3. Create policies and procedures

Policies and procedures are a cornerstone of a good compliance program. They serve as a roadmap for employee behavior and organizational compliance expectations. 

Your compliance officer will study applicable rules, regulations, and laws. Then, draft policies and procedures to comply with them. 

Here are some pointers to get started: 

• Create a code of conduct that clearly states your organizational values and ethical expectations
• Build a comprehensive, centralized hub of policies and procedures that cover all relevant compliance areas and regulations
• Create standard operating procedures (SOPs) for common compliance scenarios and decision-making processes
• Implement employee acknowledgment processes with a tracking mechanism for policy acceptance

You should also make a provision for regularly updating your policies and procedures to ensure they align with current regulations and business practices.

4. Have alignment with HR practices   

Successful compliance programs always align with HR practices. Can you imagine the fate of a compliance program in an organization that doesn’t evaluate its employees on whether they follow ethical or compliance responsibilities?

Therefore, your HR team should take input from the compliance team on hiring, promotions, and performance review policies. 

Here are some tips for aligning your compliance program with HR practices: 

• Use background checks during hiring, promotion, and third-party onboarding to catch past misconduct or ethical red flags
• Identify positions of high authority or risk and ensure that those candidates meet higher ethical and legal standards
• Make sure integrity and past conduct are core criteria for internal promotions, especially in leadership roles

A positive relationship between compliance teams and human resources builds a strong compliance culture in your organization. 

5. Focus on clear communication and training 

You should build a communication plan and training program to explain the compliance program to employees and test them on the policies they are responsible for knowing.

Your employees should know where to find compliance policies or how to report a violation or misconduct. 

Working with various departments across the organization can help determine the best communication plan for all employees, leadership, and other relevant stakeholders.

You should also ensure that your stakeholders are trained on relevant compliance risks. And the training programs should include multiple formats, such as live sessions, newsletters, online courses, etc. 

Successful compliance plans have a multi-year education plan. They focus on offering training relative to stakeholders’ roles. 

6. Reporting and response

Your compliance program will fail if employees fear punishment for reporting violations.

So, you should implement a robust reporting mechanism that ensures employees can report violations or misconduct quickly and safely without fearing retaliation.

Effective compliance programs often include multiple reporting options, such as a whistleblower hotline, email, and a web-based system.

You must implement non-retaliation policies to encourage employees to report violations.

To build even more trust, offer anonymous reporting options with strong confidentiality protections.

7. Ongoing monitoring and measuring 

You cannot improve your compliance program without monitoring and measuring it. This is the only way to assess its effectiveness.

Your compliance monitoring activities should include:

• Risk-based monitoring focusing on high-risk areas more
• Policy violations to track breaches of rules, procedures, or the code of conduct
• Reporting activities to evaluate how often issues are reported and how they are handled 
• Corrective actions to check if issues are fixed and follow-ups are completed
• Training completion to ensure all stakeholders have finished training 

If your compliance program covers third parties, you should monitor vendors and partners to ensure they follow your standards.

To evaluate the effectiveness of your program, you can get data from places like policy management, training program management, incident management, and third-party risk management. These sources can offer you metrics to assess the effectiveness of your compliance program. 

How to implement a compliance program across your organization

You’ve built a strong compliance program with all the key elements. Now, it’s time to put it into action.

Here are a few quick steps to help you roll it out.

1. Get leadership buy-in and support 

Leadership commitment to your compliance program sets the tone for the entire organization. 

When the senior leaders visibly support and prioritize compliance, employees will understand that adhering to compliance policies and procedures is non-negotiable. 

The first step in implementing a compliance program is getting leadership support. Your compliance office must work with executives to ensure that they understand their roles in championing compliance programs and modeling ethical behavior.

2. Make policies and procedures accessible 

Regardless of how good your compliance policies and procedures are, they will not yield the desired results if they are not easily accessible. 

So, the next step in implementing a compliance program is to ensure that policies and procedures are easily accessible to employees. 

Check for overlaps between requirements if your organization needs to meet multiple compliance standards.

Instead of creating separate policies for each, build one set of guidelines that covers all relevant compliance needs.

3. Implement training and education 

Now that you have policies and procedures in place, plan to train and educate employees and relevant stakeholders on compliance requirements, policies, and procedures. 

Here are some pointers for compliance training:

• Set clear deadlines for employees to read and acknowledge each policy and procedure
• Make sure all new hires complete compliance training within their first few months
• Hold annual or quarterly meetings to share updates and address concerns about the compliance program
• Use interactive workshops, online courses, and case studies to boost training impact.

You should keep training regular and engaging to ensure employees understand and follow compliance rules.

Also, you should tailor your training programs based on roles and levels. Employees in high-risk positions should receive extensive training. 

4. Set up a monitoring, auditing, and reporting system

You have trained your employees and stakeholders on compliance policies and procedures. So, your compliance plan is now in motion. 

The next step is to set up a monitoring, auditing, and reporting system so that you can evaluate the effectiveness of your compliance program.

Here are some pointers to help you out: 

• Set up a system to regularly check if your compliance program is working
• Use both internal reviews and outside audits to find gaps or risks
• Collect and store proof of compliance activities and issues
• Create safe, anonymous ways for employees to report problems
• Make sure staff can speak up without fear of punishment

5. Enforce standards 

Now that your organization has a fully deployed compliance program, it’s time to enforce the standards to ensure everyone acts ethically and follows compliance rules.

Make a plan to enforce standards in a timely manner. A compliance program is only effective if there are disciplinary actions for non-compliance. 

So, you must establish disciplinary measures and explain them to all stakeholders. 

Also, make sure you enforce standards consistently and fairly to show that all violations will be addressed, no matter the employee’s position.

When you detect violations, take timely, consistent action to correct the issue. You should use these incidents as learning opportunities to strengthen your compliance program and prevent similar issues in the future.

Transform your compliance journey with Sprinto

Sprinto is a powerful compliance monitoring tool that helps businesses meet various compliances. It has frameworks for leading regulators, such as SOC2, ISO, NIST, GDPR, HIPAA, and more. 

With these frameworks, you can map risks to various compliance controls. The fully automated platform continuously monitors your controls and alerts you if there is any risk.  

For example, your organization has to comply with HIPAA. Sprinto, once integrated, will help you:

• Conduct a security and privacy assessment
• Create HIPAA-aligned policies and procedures
• Launch training for relevant employee groups
• Implement the right privacy and security controls
• Automatically monitor for violations
• Capture compliance evidence for the certification audit

Its continuous compliance monitoring helps you track your compliance, collect evidence, and trigger remediation workflow throughout the year. By automating 90% of compliance tasks, you save time and resources. 

Schedule a free demo to learn how Sprinto can save you time and resources in your compliance journey.

FAQs: 

How does a compliance program reduce risk?

When you implement a compliance program, you conduct risk assessments to understand your organization’s risks concerning the compliance in question. Then, you create policies and procedures to address those risks. 

Compliance tools like Sprinto offer continuous compliance monitoring so that you always have this crucial visibility.

What industries require formal compliance programs?

Industries that handle sensitive data, money, or public safety require formal compliance programs. These include but are not limited to healthcare, finance and banking, pharmaceuticals, energy and utilities, and technology. 

What are the best practices for compliance training?

The best practices for compliance training include using simple, clear language with real-world examples, tailoring training material according to the employee’s job function and risk level, updating training material regularly to reflect recent changes, and tracking participation and understanding through quizzes.

How do you monitor a compliance program?

Your organization must conduct regular audits to monitor its compliance program. You should also set up a system to check whether the program is working. 

Today, you can easily monitor your compliance program with a compliance tool like Sprinto that tracks compliance, collects evidence, and triggers remediation workflows 24/7, year-round.