Strong compliance programs don’t just happen. They require planning — and budgeting. Being thoughtful and proactive will help drive appropriate budgeting that supports and promotes program effectiveness, while reducing your stress both now and throughout the next fiscal year.
’Tis the season of budget management. Every year, around the time fall beverages show up at your local barista, budgeting blues hit. So, what can you do to take the sting out of the season and keep the spring in your step?
Safeguard your bare necessities
When you are starting down the path of establishing your budget, you need to determine the minimal requirements for your program to exist. This means calculating your monthly recurring fixed expenses as well as any variable costs you can anticipate so you’ll know the exact costs you’ll need to cover each month. A few examples are your compensation and benefits expense for you and your team, any recurring services like sanction screening or third-party risk tools, information services, outside consultants and other project-based items.
Plan holistically and with agility for the entire year
Truly effective budgeting means planning for the expected and the unexpected. Your program may have some elements of seasonality, so you need to take those shifts into account to ensure that you have the funds needed at the right time. In other words, don’t average expenses over a 12-month period without looking back to a comparable month. Also, take into account additional needs due to new regulations or other program improvements.
The best budgets for any program have built-in scenarios. This can be especially helpful when planning for a recession or changes in the job market. A flexible budget is composed of three distinct budgets. One budget is your baseline (the must-haves that you outlined first); then you look at the best- and worst-case scenarios your program might experience.
This way you can plan while leaving yourself room to react to what actually happens. You’ll make one for the best possible outcome that allows for spending to meet increasing demand and take on new exciting things. The other will be for the doomsday scenario when you run into significant regulatory or business issues that require dramatic change or when there is a significant downturn in the business. This way you always have a reliable plan to guide you.
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Read moreBudget for stress
Don’t underestimate the power of engagement on your program effectiveness. Many studies have shown that companies with engaged employees see higher growth in stock valuation than organizations with lower engagement. Low engagement typically leads to turnover and other expenses. The degree to which your team feels attached to their jobs, feeling a sense of purpose, meaning and inclusion, will determine better service and higher impact of your program. So, plan for activities to drive connectedness and engagement as well as downtime for every team member to avoid burnout and stress.
Involve cross-functional teams and don’t delay communicating bad news
Involve your leaders (functional and cross-functional) in budget discussions and be upfront and direct. Note that you should always have a solution-based approach, but it truly is a business challenge that speaks to risk tolerance and the level of investment that may be available for the program you run. Leaders generally prefer to understand options and potential consequences so they can make risk-based decisions and help to build a solution to any challenges.
Lisa Beth Lentini Walker, who began contributing to CCI in 2022 as Well-Being Editor, is the CEO of Lumen Worldwide Endeavors, a firm specializing in compliance, governance and ethics consulting. She is a National Board Certified Health & Wellness Coach (NBC-HWC) and a certified meditation and mindfulness specialist. She also is an adjunct professor of law in the U.S. and EU. Lisa Beth has led award-winning legal and compliance departments within large public corporations and privately held enterprises. She does this by strategically aligning resources to create efficiencies and advising the board of directors to further strategic initiatives while mitigating risks in all aspects of the domestic and global operations. She has held corporate secretarial, legal, compliance, ethics, governance and risk positions as an attorney at a Fortune 50 corporation, as the compliance leader of a global travel company operating in 150 countries and as the corporate secretary, chief compliance officer and co-chair of the risk council at a NYSE-listed corporation. Lisa Beth also served with U.S. Securities and Exchange Commission in Washington, D.C., in the Divisions of Corporation Finance and Enforcement. Lisa Beth is a member of the Minnesota, New Jersey, New York and District of Columbia bars. She delights in the art of possibility. In her free time, she is an advisory board member to a women’s fashion startup, Alice Riot, she serves on the board of Stages Theatre (a children’s theatre) in Hopkins, Minnesota, and is a member of the Board of Directors of the Society of Corporate Compliance and Ethics and the Healthcare Compliance Association (SCCE/HCCA). Lisa Beth co-authored the book, 
