Study: The Mittelstand Views Compliance as an Opportunity

Ma­nage­ment of­ten has ne­ga­tive as­so­cia­ti­ons with the term "com­pli­ance." At the same time – most re­cently since the se­rious com­pli­ance vio­la­ti­ons at such com­pa­nies as Sie­mens, Te­le­kom, ADAC and Volks­wa­gen – the an­xiety over sub­stan­tial in­ci­dents in the area of com­pli­ance runs deep among busi­ness lea­ders: there is a th­reat of ma­jor con­se­quen­ces for both the com­pany and the in­di­vi­dual. Com­pli­ance is thus an is­sue not only for ma­jor (DAX in­dex) cor­po­ra­ti­ons, but also for the Mit­tel­stand. Ac­cor­ding to a study done by Eb­ner Stolz in con­junc­tion with the F.A.Z. In­sti­tute and Forsa, a pu­blic opi­nion pol­ling cen­ter, for the Mit­tel­stand, the hig­hest prio­ri­ties con­nec­ted with com­pli­ance are con­for­mity with the law and the avo­idance of lia­bi­lity. In­cre­asin­gly, the Mit­tel­stand is also aware that com­pli­ance can of­fer ad­di­tio­nal ad­van­ta­ges. At the top of that list are aug­men­ted se­cu­rity at 90%, in­crea­sed trans­pa­rency at 88%, and im­pro­ved re­pu­ta­tion at 78%. As Dr. Uta-Ma­ria Ohn­dorf, Ma­na­ging Di­rec­tor at Ro­che Dia­gnostics in Bel­gium, a par­ti­ci­pant in our study, re­por­ted, her own ex­pe­ri­ence is that good com­pli­ance pro­du­ces con­fi­dence, and not just in a fi­nan­ci­ally tan­gi­ble way; it also af­fords a clear com­pe­ti­tive ad­van­tage in the mar­ket­place.

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In which areas is the in­tro­duc­tion of com­pli­ance struc­tures most im­port­ant for the Mit­tel­stand? Most fre­quently men­tio­ned in this re­gard were data pro­tec­tion at 98% and IT se­cu­rity at 92%, clo­sely fol­lo­wed by em­ploy­ment law and tax law (at 86% and 82%). This is no sur­prise: ac­cor­ding to our as­sess­ment, the tax aut­ho­ri­ties are well equip­ped for au­dits and use au­diting soft­ware to sys­te­ma­ti­cally ana­lyze the data in the ope­ra­tio­nal ac­coun­ting sys­tem. Stef­fen Demuß, Di­rec­tor of Ta­xa­tion and Com­pli­ance for co­pier ma­nu­fac­turer König & Bauer AG, con­firms our own ob­ser­va­ti­ons and, as part of our study, ex­plains how a Tax Com­pli­ance Ma­nage­ment Sys­tem at König & Bauer looks. Sönke Gooß, CFO of ed­ding AG, adds that au­di­tors pay par­ti­cu­lar at­ten­tion to vo­lume ta­xes, sa­les ta­xes, wage ta­xes and trans­fer pri­cing.

How does the Mit­tel­stand put com­pli­ance re­qui­re­ments into ac­tion in­ter­nally? These com­pa­nies take a far more ca­sual at­ti­tude than ma­jor cor­po­ra­ti­ons. Thus, com­pre­hen­sive com­pli­ance ma­nage­ment sys­tems are pre­sent in less than one-half of such com­pa­nies. In­stead, in­di­vi­dual mea­su­res in­sti­tu­ted by ma­nage­ment or di­vi­sion di­rec­tors are most com­mon. This is ju­sti­fied by the struc­ture of the Mit­tel­stand, with its flat hier­ar­chies and di­rect chan­nels of com­mu­ni­ca­tion: com­pli­ance mea­su­res can be pha­sed in gra­dually in in­di­vi­dual mo­du­les, ac­cor­ding to the de­gree of risk. Smal­ler Mit­tel­stand com­pa­nies in par­ti­cu­lar have re­co­gnized that they are lag­ging be­hind. Fifty-eight per­cent of such com­pa­nies have in­di­ca­ted that in­vest­ments in com­pli­ance will rise in the fu­ture.

With re­spect to in­tro­du­cing com­pli­ance struc­tures, those com­pa­nies that have cle­arly de­fi­ned pro­ce­du­res have the ad­van­tage. Ac­cor­ding to Dr. Ul­rich Schulz, Exe­cu­tive Di­rec­tor for Com­pli­ance at COR­PUS SI­REO, a par­ti­ci­pant in our study, in such ca­ses, these pro­ce­du­res can sim­ply be ex­pan­ded to show where image is­sues, va­lue streams and lia­bi­lity risks exist.

Com­pli­ance struc­tures can be im­ple­men­ted bet­ter when the cor­rect re­sour­ces are used. De­pen­ding on the size of the com­pany, these may in­clude Ex­cel spre­adsheets, do­cu­ment ma­nage­ment sys­tems, or com­pre­hen­sive com­pli­ance ma­nage­ment sys­tems. As Det­lef Bräuer, Di­rec­tor of Ope­ra­ti­ons for SER So­lu­ti­ons Deutsch­land GmbH, ex­plai­ned to Pe­ter Ring­beck, Di­rec­tor of IT and Or­ga­niza­tion for DG HYP in Ham­burg, in a talk about im­ple­men­ting a do­cu­ment ma­nage­ment sys­tem, using ap­pro­priate re­sour­ces ma­kes pro­ce­du­res sim­pler and more ef­fi­ci­ent for em­ployees and ea­sier for au­di­tors to re­con­struct.

The Mit­tel­stand can­not avoid cen­sure for ne­gli­gent or even in­ten­tio­nally im­pro­per tran­sac­tions (the lat­ter can exist even in the case of “ta­cit ac­cep­tance”) sim­ply by in­tro­du­cing com­pli­ance struc­tures. As the Fe­deral Mi­nis­try of Fi­nance an­noun­ced in a re­cent let­ter, an in­ter­nal tax con­trol sys­tem can be one in­di­ca­tor ne­ga­ting the pre­sence of in­tent or ne­gli­gence. But com­pli­ance struc­tures and gui­de­lines must not be re­du­ced to a “pa­per ti­ger.” Ra­ther, the tone for com­pli­ance must be set “from the top.” Ul­rich Ro­th­fuchs, a com­pli­ance of­fi­cer at DE­KRA, re­gards com­pli­ance as a ma­nage­ment func­tion, since com­mu­ni­ca­tion, au­then­ti­city and cre­di­bi­lity are cri­ti­cal to de­ter­mi­ning whe­ther peo­ple will get the mes­sage. Once the mes­sage is re­cei­ved, con­trol mea­su­res can re­turn to the back­ground.