What you don’t measure could cost you everything. As boards and investors demand proof of effective compliance programs, savvy organizations are turning to key metrics to gauge their success. But in a sea of data, which numbers really matter? From root cause analysis to whistleblower reports, Ethico’s Gio Gallo dives into the essential metrics that separate the compliant from the complacent.
Measuring the effectiveness of your compliance program has perhaps never been more important, as boards, investors and key stakeholders all want to know how well your program is working. That means finding the metrics that matter, tracking them effectively and using them to guide your program implementation.
Some numbers matter more than others, of course, and your industry will guide that conversation, but there’s no substitute for determining the health and robustness of your compliance program and culture.
Good compliance metrics have several common qualities:
- Simple and easy to track without making mistakes
- Quantitative
- Qualitative
- Relevant within the context of the organization or department
- Specific
- Directional
Key compliance metrics to track
Having a good idea about your compliance goals and knowing what you’re attempting to accomplish will both be important to help you determine which compliance metrics you’re going to be tracking from that point on. Still, certain measurements provide almost universal information about how good a compliance program is.
Root cause analysis
Root cause analysis is a process by which institutions identify the underlying causes of compliance problems. Through root cause analysis, you can pinpoint areas for improvement and current compliance measures that aren’t performing in the way you anticipate them to. Root cause analysis is a regulatory expectation in many fields. The severity, duration and pervasiveness of the root cause will also have to be tracked as a part of this comprehensive analysis.
Regulatory compliance rate
The regulatory compliance rate measures the overall adherence to regulatory requirements within an organization. This metric provides a quantitative assessment of compliance effectiveness and helps identify areas for improvement.
To calculate: (Number of compliant areas / Total number of regulatory areas assessed) x 100%
Track the frequency and severity of compliance violations, as well as the effectiveness of internal controls, then monitor how quickly compliance gaps are addressed and closed. Break down compliance rates by department or business unit to identify specific areas needing improvement and regularly report trends and significant changes to management.
Incident reporting volume
How often do employees report violations, whether via a hotline or through another means of communication? What types of incidents do you receive the biggest number of reports for?
A reputation can become vulnerable when violations occur but nobody is willing to report them. Misconduct and other types of violations that take place on an ongoing basis can demotivate employees, harm relationships with third parties and even damage the overall reputation of the establishment.
If people aren’t filing reports about the violations that take place, you’ll need to identify the issues that keep them from speaking up.
Resolution time
Once incident reporting occurs, you’ll have to track both the response and the resolution time needed to completely deal with the issue.
Effective and timely responses to incident reports show employees that compliance is something the organization takes seriously. The amount of time needed to resolve the issue is even more crucial. Taking too long to deal with the situation can be perceived in a negative light, not to mention the fact that such delays can cost the organization a lot of money.
Try comparing your metrics to benchmark averages. For example, according to Ethico’s “2024 Hotline and Investigation Management Benchmark” report, the average resolution time for an incident (across all industries) is 23 days, with 83% of all incidents being closed in 30 days or less and only 4% taking longer than 90 days.
Onboarding and employee training rates
Start tracking training completion rates right now, especially if you want to create a culture dedicated to accountability and compliance. Compliance training programs are important for all enterprises, but they’re especially crucial in highly regulated fields like medicine and finance.
You have to make sure that workers are aware of regulatory frameworks and the steps they have to follow for work to be fully compliant. If your training completion rates are high, you can rest assured that procedural awareness is prioritized throughout your organization’s compliance training system. Whenever employees have access to all the important information, they’ll feel empowered to make strategic decisions and move the company forward.
Whistleblower reports and responses
Studies suggest that the effectiveness of whistleblowers is very high — such reports contribute to as much as 43% of all successful fraud detection.
Having whistleblower reporting mechanisms in place gives employees the opportunity to take on violations and misconduct in a safe, confidential way. By measuring the number of whistleblower reports, you will once again understand the effectiveness of the measure and you’ll also find out if the communication channel you’ve selected yields the best results.
Giovanni Gallo is co-CEO of 
