Compliance Transformation Stakeholders: Managing the Human Side of Change

Emotions make us human 🧩 Why most transformations fail 🧩 Understanding different perspectives of Compliance Transformation stakeholders 🧩 Using Prosci ADKAR to drive the human side of change

Dec 09, 2024

person touching and pointing MacBook Pro — Photo by Mimi Thian on Unsplash

Every change has two sides - technical and human.

Both are essential for implementing a successful transformation, but one may be slightly more than the other. Think it’s the technical one? Think again 😉

In the previous post, I shared my methodology for the technical aspects of Compliance Transformation; in this post, I’ll focus on the human side.

Read on 👇

🔮 Emotions Make Us Human

Dr. Antonio Damasio is a neuroscientist and professor whose research explores the connections between the brain, emotions, and decision-making. One of his most famous cases is the story of Elliot, a patient he met while studying individuals with brain injuries. Through Elliot’s story, Dr. Damasio learned how much we rely on emotions, even for logical decisions, which became the main theme of his book Descartes' Error: Emotion, Reason, and the Human Brain.

Elliot was a sharp, smart man with a great career and a family. One day, he was diagnosed with a brain tumor and he needed surgery to remove it. The surgery went well, and Elliot survived, but something unexpected happened afterward. Although he could still think, remember things, and talk like before, he couldn’t make even simple decisions. If someone asked him what he wanted for lunch, he couldn’t decide. If he needed to pick between two job offers, he’d freeze. It wasn’t because he wasn’t smart - he was still very intelligent - but something was missing.

The surgery had damaged his ventromedial prefrontal cortex, the part of his brain that helps process emotions. Turns out, emotions act like guides, helping us feel what’s important and pushing us toward choices. Without emotions, Elliot couldn’t figure out what mattered most in a situation, no matter how logical or smart he was. For example, most of us feel a tug of preference - like hunger or craving - that helps us pick food without much thought. Elliot didn’t have that anymore, so every choice became impossible.

Elliot’s story shows us something incredible: Emotions aren’t just some extra feelings we have - they’re essential for guiding our thinking, making decisions, and navigating life. Therefore, emotions aren’t a weakness - they’re what makes us human.

“Although many of us may think of ourselves as thinking creatures that feel, biologically we are feeling creatures that think.” — Jill Bolte Taylor

⚠️ Why Most Transformations Fail

In today’s VUCA world, transformation is inevitable. Compliance Transformation, however, is a long-term investment. It requires thoughtful planning, careful execution, and a commitment to change. Above all, there are plenty of risks involved.

In 1995, John Kotter found that 70% of organizational transformations fail. In 2023, Harvard Business Review (HBR) redid the research and found that in three decades not much has changed: 67% of the surveyed leaders have experienced at least one unsuccessful transformation in the past five years.

So, how do we ensure the success of our transformation? One thing emerged as a key differentiator: embracing people’s emotional journeys. Transformation is very stressful for everyone involved. That’s why leaders must provide emotional support, turning stress into a positive force that drives change instead of stopping it.

To set up and run a successful Compliance Transformation program, we start by understanding the mindset and feelings of the parties involved. There are three main players in any Compliance Transformation that form a triangle of relationships:

the CEO (or COO, etc.) of a company in need of compliance, who acts as the Program Sponsor,
the Compliance Manager (or Business Process Manager, etc.), who leads the transformation program and acts as the Program Manager, and
the Organization (or Teams), whose processes are subject to change and who act as the users/consumers/customers of the program deliverable.

There’s one more unique type of role: the People Managers, who are also Process Owners. As People Managers, they act like the CEO, and as Process Owners, they act like the Organization. That’s why I haven’t taken them out as a distinct role, but do keep them in mind as you read further.

Now, let’s look at each of the three main roles separately:

💭 Understanding Individual Perspectives

🟠 CEO

🟠 Aspirations

The CEO’s main goal is to build a reputation as a reliable provider so they can win and keep high-value contracts. The CEO achieves this by following external standards and regulations. That makes the company a trustworthy partner, especially in Highly Regulated Environments (HREs). Also, early compliance helps avoid costly retrofits and disruptions as the business grows. The CEO fears client rejections, brand damage, and fines for non-compliance. These risks directly impact revenue, reputation, and legal standing.

🟠 Challenges

The CEO faces certain challenges in achieving their aspirations:

Navigating applicable standards and merging them with other best practices, frameworks, and methodologies.
Understanding client expectations beyond standard compliance that risk high-value contracts.
Lack of in-house compliance expertise to address all compliance requirements.
High compliance costs, especially for a startup/scale-up operating under budget constraints.
Too much time spent on meeting external requirements, which slows down growth and product/service development.
Balancing resource allocation between product development, scaling operations, and compliance transformation.
Unstructured compliance roadmap, which results in reactive and disjointed efforts.
Process integration issues that disrupt the pace of development or create silos.
Compliance culture mismatch, especially among growth-oriented teams that focus on speed and agility.
Change resistance from internal teams, which creates friction and slows down adoption.
Lack of standardization across projects, which makes compliance labor-intensive.
Strict documentation requirements that create an administrative burden and slow down production.
Compliance not being flexible or scalable, which makes it harder to grow and accommodate larger, more complex projects.
Maintaining compliance in agile environments, where iteration and speed conflict with traditional methodologies.
Balancing compliance with innovation, making it difficult to remain competitive.
Achieving compliance certification, which is often seen as a barrier to entry into an industry.
Client audits that might uncover compliance gaps or process deficiencies, resulting in lost business opportunities.
Ensuring compliance of third-party vendors and suppliers to avoid supply chain disruptions.
Non-compliance penalties that can damage the company’s reputation.
Maintaining compliance, which requires keeping up with evolving standards, conducting regular audits, and ensuring continued adherence to regulations to avoid lapses or setbacks.

To address these challenges, the CEO appoints a Compliance Manager to lead the transformation and ensure further compliance. The CEO, however, offers proactive support and remains accountable for the results. Read more about delegation here.

🟠 Expectations for the Compliance Manager

Alignment with Business Goals: The CEO wants the compliance initiatives to support the company’s business goals, especially around growth, reputation, and market expansion. They expect the Compliance Manager to focus on initiatives that help win key clients and ensure scalability.
Clear Communication and Transparency: The CEO wants regular updates on the compliance program's status, challenges, and immediate risks. They expect the Compliance Manager to simplify complex compliance issues, highlighting their business and financial impacts.
Proactive Risk Management: The CEO expects the Compliance Manager to run the program and also to foresee and handle compliance risks that might disrupt the business. This includes being aware of possible regulatory changes or internal weaknesses.
Efficient Use of Resources: The CEO expects the Compliance Manager to be cost-effective and not to drain resources from core operations. The Compliance Manager should also show good judgment in allocating the budget and resources without overspending.
Fostering a Compliance Culture: The CEO relies on the Compliance Manager to create a compliance-aware culture where all employees understand and respect the requirements. Furthermore, they expect the Compliance Manager to lead by example, gaining team support and promoting ongoing compliance.

🟠 Expectations for the Organization

The CEO expects the teams to embrace compliance initiatives and actively participate in implementing the necessary changes. They want team members to follow new processes, provide feedback on challenges, and suggest improvements. Ultimately, the CEO seeks a culture of compliance where everyone understands their role in achieving the organization's goals.

🟢 Compliance Manager

🟢 Aspirations

The person responsible for implementing the external standards - a Compliance Manager, Transformation Director, Business Process Manager, Program/Project Manager, or an external consultant - has a different but complementary view to that of the CEO. They are focused on the hands-on aspects of making compliance a reality within the organization, balancing the CEO’s high-level vision with practical execution.

Their main goal is to build a streamlined, effective compliance program that integrates well with existing operations. They want to implement all required standards, frameworks, and processes successfully and create a sustainable, scalable, low-maintenance operational framework. The successful solution will:

Balance compliance with operational efficiency: Meet all required standards and regulations without adding unnecessary complexity or overloading staff.
Minimize business disruption: Complete the transformation with as little disruption to day-to-day operations as possible, allowing the teams to focus on core operations.
Build a self-sustaining compliance culture: Foster a continuous improvement mindset across the organization that values quality and compliance and understands their impact, reducing the need for constant oversight.

🟢 Challenges

Complexity of compliance requirements: The Compliance Manager must fully understand each standard, identify which requirements apply, and tailor them to the company's operations without over-complicating the processes. They have to interpret ambiguous or overlapping rules successfully and balance thoroughness with simplicity.
Internal buy-in and resistance to change: Compliance requires altering processes, documenting workflows, and shifting perceptions. This can often lead to pushback, especially from teams who feel compliance is bureaucratic or disruptive to productivity.
Time and resource constraints: Compliance implementation requires a lot of time, manpower, and budget, which can be difficult to secure in a fast-pace organization. Teams are juggling this project alongside other priorities, which can make it hard to focus and ensure quality.
Clear, measurable success criteria: The Compliance Manager wants to show clear, quantifiable evidence of their progress to the CEO, teams, and other stakeholders. If the criteria for success aren’t well-defined, stakeholders will feel frustrated by the ambiguity and will find it harder to justify ongoing support for the program.
Maintaining compliance over time: Compliance isn’t a one-time project, so the Compliance Manager must also ensure that standards are upheld over time. They know they need to set up ongoing monitoring, conduct regular audits, and keep up with any regulatory changes, but they want this maintenance process to be as automated as possible.

The Compliance Manager addresses the above challenges by creating a clear, step-by-step plan that provides guidance on tasks and priorities, roles and responsibilities, timelines, milestones, metrics, communication, tracking risks and issues, auditing, reporting, etc. The Compliance Manager also looks for tools and technologies to automate compliance tasks as much as possible. Finally, the Compliance Manager needs hands-on support from colleagues or consultants with deep expertise in regulatory, program, or process management and automation.

🟢 Expectations for the CEO

Leadership support is crucial for ensuring the Compliance Transformation is a success. Without it, no transformation will be effective, no matter how skilled the Compliance Manager is, how determined the teams are, or how much pressure the clients and partners apply.

The Compliance Manager needs the following from the CEO:

Clear vision and strategic prioritization: The CEO must clearly state the company's compliance goals and priorities. They should also constantly update the organization on any compliance changes in relation to other strategic goals. This guidance helps the Compliance Manager and the teams align and focus.
Executive buy-in and endorsement: The CEO must openly support compliance and ensure it is seen as a company-wide transformation, not an isolated initiative. They steer the organization by being a vocal advocate for compliance in both internal and external messaging. This endorsement from the top empowers the Compliance Manager to drive change effectively. It also helps the Compliance Manager gain cooperation from the teams.
Resource allocation and budget approval: No strategic priority can be achieved without resources and budget. The CEO must be available for timely coordination of the compliance budget and resources, providing flexibility as needs evolve. That will allow the Compliance Manager to proceed confidently.
Empowerment to drive change: The CEO must give the Compliance Manager the authority to make changes, such as restructuring processes or introducing new systems. They expect the CEO to back their initiatives, even if they introduce some short-term disruptions. This alignment between the CEO and the Compliance Manager reduces pushback and enhances collaboration across the organization.
Ongoing access and feedback: The CEO must be available to guide the Compliance Manager, especially when unexpected issues arise or when strategic pivots are needed. Regular check-ins and feedback loops help the CEO and the Compliance Manager stay aligned with the CEO’s vision and respond flexibly to changing priorities.

🟢 Expectations for the Organization

The Compliance Program Manager wants the teams to engage openly with the transformation program, explaining their workflows and any obstacles they encounter. They need team members to collaborate in refining their processes based on real-world experience and be proactive in adopting new procedures. The teams' input, adoption, and ongoing feedback are crucial for ensuring that the implemented compliance measures are practical and effective.

🔵 Organization

🔵 Aspirations

The teams aim for clear, efficient, and effective workflows that enable them to perform their tasks with minimal confusion and maximum productivity. They want streamlined processes that embed compliance into their daily work, allowing them to meet requirements while focusing on their main tasks. The teams fear the increased workload and complexity that often comes with compliance changes. They want to avoid unnecessary bureaucracy that can lead to burnout, hinder their ability to deliver results, and complicate their already busy schedules.

🔵 Challenges

Lack of clarity: Teams often feel frustrated by vague or poorly communicated compliance requirements, making it difficult to understand what is expected of them. This can lead to confusion, mistakes, and inefficiencies.
Integration challenges: Installing new compliance methods in existing workflows can be problematic. Teams may feel that compliance is an additional burden rather than a supportive framework.
Resistance to change: Many team members may be resistant to new processes or reluctant to adopt changes, especially if they feel these changes complicate their existing workflows.

When teams get engaged and receive clear guidance, they can meet compliance needs better and work more effectively. Early involvement makes teams feel valued. Incorporating their feedback and showing how it shapes the final processes increases buy-in and acceptance. Implementing processes and tools that simplify tasks helps teams see how compliance increases their efficiency rather than hinders it.

🔵 Expectations for the CEO

The teams expect clear communication and support from the CEO regarding the importance of compliance and its impact on the organization’s success. They seek reassurance that leadership recognizes their challenges during the transition and values their contributions. Additionally, they hope for adequate resources and training to help them adapt to new compliance requirements without overwhelming their existing workloads.

🔵 Expectations for the Compliance Manager

The teams expect the Compliance Manager to give clear, actionable guidance and training on new processes and standards. They seek a collaborative approach where their feedback shapes the compliance framework to ensure alignment with their daily operations. They also expect ongoing support to help them navigate evolving compliance challenges.

💝 Managing the Human Side of Change

Change happens one person at a time. For a group or an organization to change, each person in it must change. That’s why if we want our Compliance Transformation to be successful, we must address it on an individual level.

The Prosci ADKAR Model is a great tool for managing individual change. ADKAR stands for Awareness, Desire, Knowledge, Ability, and Reinforcement. These steps are sequential and they build on each other - one must start with Awareness and move through each step in that order.