In the creative industry, managing legal and regulatory compliance is essential to safeguarding your business from potential risks, fines, and reputational damage. While financial metrics can help you track the costs associated with compliance, they don’t provide a complete picture of how effectively your business is adhering to director’s responsibilities and other regulations. To gain a more comprehensive understanding, it’s crucial to track non-financial key performance indicators (KPIs) that reflect your business’s compliance health and risk management practices.
Non-financial KPIs offer valuable insights into your compliance processes, employee awareness, and the effectiveness of your risk mitigation strategies. By closely monitoring these indicators, you can identify areas where your business may be vulnerable to compliance issues, take corrective action, and ensure that you remain in good standing with regulators and clients alike. This proactive approach helps you avoid legal pitfalls, protect your business’s reputation, and maintain smooth operations.
Below, we outline the most critical non-financial KPIs that your creative business could track to better manage legal and regulatory compliance. By focusing on these key metrics, you can ensure that your business adheres to all necessary regulations, minimises risk, and operates with confidence and integrity.
Suggested Non-Financial KPIs for Managing Legal and Regulatory Compliance
What It Measures: The percentage of directors and other team members who have completed mandatory compliance training within a specified period.
Why It’s Important: A high completion rate ensures that your team is well-informed about legal requirements and company policies, reducing the risk of non-compliance.
What It Measures: The number of internal or external compliance audits that your business passes without major issues.
Why It’s Important: Successfully passing audits indicates your compliance processes are robust and effective, reducing the likelihood of regulatory penalties.
What It Measures: The time it takes to report and resolve any compliance-related incidents or breaches.
Why It’s Important: Quick resolution of compliance issues minimises potential damage and shows that your business takes legal responsibilities seriously.
What It Measures: How often your company policies are reviewed and updated to reflect changes in laws and regulations.
Why It’s Important: Regular policy updates ensure that your business stays aligned with current legal standards, helping you avoid compliance gaps.
What It Measures: The level of understanding employees have regarding the company’s legal obligations and compliance policies, often assessed through surveys or assessments.
Why It’s Important: High awareness among employees reduces the risk of accidental breaches and promotes a culture of compliance within your organisation.
What It Measures: The percentage of your vendors, partners, and contractors that meet your business’s compliance requirements.
Why It’s Important: Ensuring that third parties comply with legal standards protects your business from indirect risks and liabilities.
What It Measures: The number of legal disputes or regulatory actions brought against your business.
Why It’s Important: A low number of disputes indicates effective risk management and a strong compliance framework, protecting your business from costly legal battles.
What It Measures: The degree to which your business adheres to data protection regulations, particularly the General Data Protection Regulation (GDPR).
Why It’s Important: Ensuring full compliance with data protection laws is crucial for avoiding significant fines and maintaining client trust.
What It Measures: The accuracy and completeness of reports submitted to regulatory bodies.
Why It’s Important: Accurate reporting is essential for maintaining compliance and demonstrating your business’s commitment to transparency and accountability.
What It Measures: The frequency with which the same compliance issues or violations occur within your business.
Why It’s Important: A low recurrence rate suggests that your corrective actions are effective, and that similar issues are unlikely to reoccur, reducing ongoing compliance risks.
As with all KPIs and goals in general, ‘less is more’, so ideally you will select the handful of KPIs that are of greatest importance to the business to track and report on at top level management. The further down the organisation you go, some of the more granular KPIs are likely to be ideally for middle or junior level management and of course for team members.
The list below is not intended to be comprehensive; this is provided purely to help with the process of selecting those KPIs that are most relevant to your unique circumstances.
In summary: By regularly tracking these non-financial KPIs, your creative business can gain a comprehensive understanding of how effectively it is managing legal and regulatory compliance. These insights will enable you to make informed decisions that ensure your business adheres to all necessary regulations, minimises legal risks, and operates with confidence and integrity in a complex regulatory environment.
