Corporate Governance vs. Compliance: Understanding the Differences

The main difference between Corporate Governance and Compliance is that while the former relates to aligning the managers’ vision regarding management processes, the latter ensures that all rules are followed within this scope.

Within the scope of managing an organization, it is necessary for all areas to communicate with each other in pursuit of a common goal: developing the institution through good practices and policies that promote the company safely and strategically in the media and organizational environment.

In this sense, there are two primordial segments in this process. They are Corporate Governance and Compliance, both focused on ensuring quality management with the intention of making the organization a benchmark. Still, these areas are not the same and work to achieve these goals in different ways. Check out the content below and better understand these differences!

The Role of Compliance Within an Organization

The Compliance Program, structured by 10 effective pillars and formed by selected people trained in the area, has the main job of ensuring that the current norms and rules in the organization are being followed properly so that the Institution is not a target of scams and fraud. 

In this sense, it is up to the Compliance team to analyze and take care of the adequacy of standards inside and outside the organization. That is, they must ensure that internal and external collaborators (employees and partners) are in agreement with the guidelines established by the institution. 

For this to occur successfully, the compliance area must be based on some indispensable principles for structuring the program, also known as the 10 pillars for a Compliance Program. 

Among the main ones, we can highlight the training of internal members, through guidelines and practical activities, which enable the member to comply with the rules and identify unusual actions in their daily lives, and also to be in contact with customers and suppliers with the aim of presenting the Program to them and signaling the importance of performing these conducts. 

Furthermore, after completing the training of employees and external collaborators, it is up to the Compliance members to supervise the practices of the other segments of the company to identify and ensure that – already trained – these audiences, besides complying with the norms, find them effective or not.

If the answer is negative, it is also up to the Compliance area to review the regulation, updating or restructuring it. Either way, they need to be responsible for establishing truly effective protocols. 

Corporate Governance and Its Role Within the Organization 

In contrast to the Compliance Program, the Corporate Governance area takes care of the institution’s relationship with the company’s different and multiple audiences, also known as stakeholders.

When we refer to this vast difference of audiences, we are talking beyond internal employees, customers, and suppliers. This means we are also dealing with shareholders, partners, boards, and bodies responsible for supervising the company’s operations. 

Given this, we know that this team is responsible for ensuring that these groups know and value the company’s practices, being – consequently – aligned with them. Thus, once convenient to these strategies, stakeholders become practitioners of these practices, promoting security and transparency within the institution.

Corporate Governance and Compliance: What Are the Main Differences Between These Areas

The main differences between the areas of corporate governance and compliance are due to the practices of their actions regarding the company’s values. In this way, while Corporate Governance seeks the alignment of managers to management processes, Compliance is in charge of internally promoting the institution’s security and data protection, guaranteeing and putting into practice the theory of governance members. 

From this perspective, it is possible to affirm that the work of Corporate Governance relates much more to taking care of the company’s reputation with the public and media, showing the Institution’s commitment to laws and legal obligations. These are responsible for transmitting the company’s values and making it a positive reference in the market, attracting investment and developing excellent brand positioning. 

Meanwhile, the role of the Compliance team is to manage the Compliance program, ensuring that members, customers, and suppliers are complying with guidelines and regulations, identifying possible fraud and scams within the organization. In other words, maintaining what was promised by Corporate Governance within organizational practices. 

What Do Corporate Governance and Compliance Have in Common?

Despite their differences, both areas share the goal of promoting security and transparency for the company. Since, currently, an institution is very vulnerable to fraud and other types of risks. 

Thus, Corporate Governance and Compliance are two complementary segments – which makes it very common for these teams to work together. In practice, while Corporate Governance takes care of the organization’s image, showing that it operates in accordance with laws and ethical guidelines, the Compliance Program guarantees that in the institution’s day-to-day, the norms are followed correctly, thus contributing to this image. 

Importance of Alignment Between Corporate Governance and Compliance

For the company, it is very important that these two areas are aligned, working together and truly complementing each other. This is because they are interdependent and therefore need each other.

This dependence occurs because Corporate Governance without a Compliance Program puts the Institution’s image at risk, as it has no guarantee that what it transmits to external audiences actually happens internally. Likewise, Compliance needs Corporate Governance to promote and transact its work.  

Thus, companies that present a collaboration between these two areas, consequently, present better and more positive results such as, for example, greater transparency, as well as a higher and more qualitative yield of the programs. 

How to Achieve Good Results for Corporate Governance and Compliance

As seen previously, achieving good results in these areas is essential, as this means not only maintaining and ensuring the company’s security and protection but also increasingly improving its reputation. 

Thus, it is necessary for both parties to use methodologies that enhance and improve the performance of their work, optimizing and generating better success. 

In this sense, our high-tech solutions and use of intelligent data are indispensable. Through Criminal Checks and Background Checks, for example, the compliance team can verify people and companies in an automated way and across more than 200 sources, ensuring that they do not present risks to the institution. 

Consequently, the risks of possible fraud are minimized by the Compliance Program, a fact essential for Corporate Governance to manage – practically and without obstacles – to create even more strategies for the profitable promotion of the company. 

To learn more about this and stay on top of the best actions and ways to take care of your Compliance Program, access our free material! 

In the infographic “The 10 Pillars for a Compliance Program” you have access to the main strategies and steps to consolidate a Program of excellence and, consequently, promote security and protection for your company. Thus, combating fraud and scams and also assisting in the work of Corporate Governance!