HR Systems and Accountability Regimes
HR Systems vs. Regulatory Compliance
There has been a significant regulatory response to recent high profile corporate and financial scandals, as well as the global financial crisis. A number of these regulations have placed additional emphasis on ensuring that staff are properly trained, that they behave appropriately, and that senior managers are clearly accountable for their responsibilities.
HR systems are the incumbent solution for managing the individual’s employment life cycle, and these have often been the initial fall-back platform used by firms to meet these regulatory requirements. However, the need to generate the specific and often complex outputs and outcomes required by the regulators and to provide evidence and keep records should they come knocking have proved way beyond the simple performance and generic HR related functionality these systems contain.
In short, HR systems have been revealed to be not fit for purpose and thus found seriously wanting when it comes to the regulatory footprint of staff. Large firms that have implemented best of breed solutions have the added headache of dealing with multiple data sets from a range of systems. The additional integration work to deliver the single record of truth required to meet regulatory standards is difficult work and leads to an inflexible solution. Put simply, the number of integrations required for regulatory reporting out of multiple systems makes it difficult to evolve any system without having to re-write those integrations. These same firms also tend to have the most complex group structures, and HR systems struggle to deal with the challenge of allocating responsibilities and reporting out results at a legal entity level, which is a key requirement of accountability regulations.
In the UK, the Senior Managers and Certification Regime has also driven a cultural shift, with non-financial misconduct (such as sexual harassment, racism, homophobia, and sexism), now on an even footing with financial misconduct. Proving to the regulators that you are driving cultural change at your organisation is a thorny task requiring a specialist solution. Getting your staff to interact with their HR system has become a vital part of driving cultural change, but even something as simple as logging CPD hours in your HR or LMS system has proved to be an uphill task.
In order to fill this gap, what has emerged are several systems that start by solving the regulatory requirement and have then expanded into more traditional functions such as performance management, training and competence. The benefits of these regulatory focused systems are becoming clearer.
Key benefits of integrated solutions for Individual Accountability are:
- They save you time and money – The amount of work required to collate information, integrate data sources, produce regulatory filings, and monitor and report on engagement is proving to be immense. Purpose built Accountability solutions reduce this workload.
- Reduce points of failure – The lack of automation in Accountability processes when using HR systems, spreadsheets, and SharePoint introduces a greater deal of potential for error. The greater the automation, the fewer the mistakes.
- Showing your Regulator you are serious – Should the regulator come knocking, if it takes your organisation weeks or months to respond with the required information, this will not reflect well on your commitment to the regulation.
- Single Golden Source for people data – With a purpose built Individual Accountability solution, you can enter data once, and be sure that that data will flow into every dashboard, report, and regulatory filing, without the need for manual intervention.
- One click reporting – Imagine creating the Business Intelligence your company needs with a single click. Remove the need to spend time pulling together reports from a multitude of systems and create exactly the reports you need from a single solution.
A new way of managing accountability
Individual Accountability and People Risk has moved up the agenda at most firms, especially in all areas of the financial services sector. Recent regulatory requirements have moved beyond the capabilities of HR systems. In order to show a commitment to the regulator the time for a specialised one stop shop for Accountability and Conduct risk is now. For example, the FCA has recently written to the CEO’s of asset management firms informing them that they will carry out work in the first half of 2020 to evaluate the effectiveness of governance across the sector, focusing “particularly on firms’ efforts to implement SMCR”. Are you ready for the regulator?
At Trailight, we believe in transparency. Putting people and individual accountability at the heart of good governance is key to improving corporate culture around the world.
For companies that want to improve their controls and the entire process of people management, Trailight’s solutions are purpose built to create a framework that improves corporate culture and provides clarity.
Trailight’s IAR (Individual Accountability Regime) is the first solution to be built to meet the specific challenges associated with the individual accountability regimes around the world including the UK’s Senior Managers and Certification Regime (SM&CR), Ireland’s imminent Senior Executive Accountability Regime (SEAR), Australia’s Banking Executive Accountability Regime (BEAR), Hong Kong’s Manager in Charge (MIC) regime, and Singapore’s proposed Individual Accountability and Conduct (IAC) regime.