e-Learning Blog

<What Is Compliance>

Compliance originally means "to abide by laws and regulations." However, in the context of companies, the use of "compliance" is broader, referring to "not only obeying laws but also following social rules and conducting business fairly and impartially."

〈Compliance Adherence in Companies〉

Companies have the responsibility to pay their employees and protect their livelihoods, so they must ensure the continued existence of the company itself. One of the essentials for this is "social trust."

To gain social trust, simply complying with laws and regulations is not enough. It is necessary to consider adherence to social rules and norms, corporate ethics, and work regulations, as well as fulfilling social responsibilities. The accumulation of these efforts supports the company's trust and ultimately leads to sustainable growth. That is why compliance adherence is indispensable for companies.

Background of the Importance of Compliance Training

In recent years, the importance of compliance training has increased and it has attracted more and more attention. The following backgrounds can be cited as reasons for this.

●Advancement of digitalization and increased risk of information leakage
Digitalization has progressed, increasing the amount of digital data handled by companies, such as customer information, transaction data, and confidential information, and proportionally raising the risk of information leakage.

● Possibility of "Flaming" Due to the Spread of SNS
SNS and similar platforms have become widespread, making it easy for anyone to share information freely in modern times, which increases the possibility that problematic behavior or misconduct by companies or employees may be widely disseminated.

●Public Perception of Scandals Has Become More Severe
Public perception of scandals has grown increasingly severe in recent years, to the point where excessive criticism and complaints have become problematic. As a result, when issues arise, they are expected to lead to significant damages such as stock price declines and sales decreases.

To avoid such risks, it is required that each employee acquires correct knowledge about compliance. In other words, compliance training can be said to be a very important issue for companies.

It has become clear that compliance in corporate activities is a crucial foundation directly linked to the survival of a company. In this chapter, let's specifically summarize the reasons why compliance adherence is indispensable for companies.

● Protection of Corporate Reputation, Image, and Brand

Social trust, once lost, is extremely difficult to regain. If legal violations or scandals come to light, the brand image will be severely damaged, leading to customer attrition and decreased sales. Compliance adherence is a crucial point for protecting a company's long-term trust.

● Avoidance of Legal Troubles

Violations of laws and regulations expose a company to risks such as administrative sanctions, penalties, and lawsuits. These not only cause financial losses but can also lead to a loss of social trust and difficulties in continuing business operations. To prevent these issues, it is essential to foster a daily awareness of compliance.

● Maintaining Good Relationships with Stakeholders

Customers, business partners, shareholders, local communities, and all other stakeholders place great importance on a company's reliability. By thoroughly enforcing compliance, companies can build healthy business relationships and maintain sustainable cooperation frameworks.

● Ensuring Employee Peace of Mind and a Comfortable Working Environment

By thoroughly enforcing compliance, companies can prevent misconduct and harassment, creating a workplace environment where employees can work with peace of mind. A secure working environment directly contributes to higher employee retention rates and improved productivity.

● Sustainable Business Development

If compliance is neglected in favor of short-term profits, it will pose significant risks in the long term. A corporate stance that fulfills legal compliance and social responsibility leads to sustainable growth and new business opportunities.

Compliance is not just a "minimum obligation that must be followed," but rather a strategic effort to protect and enhance corporate value.

Compliance violations are serious issues that undermine corporate trust and lead to legal risks and a decline in social credibility. When such violations occur, prompt and appropriate responses are required. Here, we explain the basic response procedures when an employee commits a compliance violation and the key points to keep in mind during the process.

〈Procedure for Responding to Compliance Violations〉

(1) Investigation of the Facts
An objective and thorough investigation is conducted to accurately grasp the presence, scope, and background of the violation.

(2) Consult with experts such as legal advisors as needed
It is also important to seek expert advice to assess legal risks and the appropriateness of the response.

(3) Sharing the Response Status with Key Stakeholders
By sincerely sharing information with affected parties such as shareholders and business partners, trust can be maintained.

(4) Reporting to Supervisory Authorities
There are cases where reporting to administrative agencies is required. Failure to follow proper procedures may result in further penalties.

(5) Appropriate Response to Victims as Needed
It is essential to respond sincerely to those affected, including offering apologies and compensation.

(6) Disciplinary Action Against Violators as Needed
Disciplinary measures based on work regulations will be considered and implemented according to the severity of the violation.

(7) Press Releases as Needed
When the social impact is significant, prompt and transparent disclosure of information is required.

(8) Consideration and Implementation of Recurrence Prevention Measures
Review the entire organizational system and take improvement measures to prevent the same situation from happening again.

〈Key Points for Response〉

● Pre-established Response Procedures and Assignment of Responsible Personnel
Develop a crisis management manual to clearly define who will take what actions in an emergency.

● Establishment of Internal Consultation and Reporting Channels
Employees can report violations or risks early through this system, preventing the escalation of problems.

● Preemptive Compliance Education
Thoroughly educating employees before violations occur is the best preventive measure.

When a compliance violation occurs, a swift and transparent response is key to restoring trust. By thoroughly implementing prior education and system preparation, it is important to establish a framework that allows for calm and accurate handling even in the event of an emergency.

>Related Blog: How to Avoid Compliance Violations Due to Copyright Infringement

It has been understood that compliance violations can lead to serious and significant risks. Helping employees understand this is a major purpose of compliance education, but it is not the only one. Here, let’s look at the various purposes of compliance education.

〈Purpose 1〉Understanding the Risks of Compliance Violations

To prevent compliance violations, it is effective to understand what kinds of sanctions or impacts the company and the employee themselves may face if a violation occurs. Presenting concrete cases such as past examples from other companies makes it easier for individuals to relate to the issue personally.

〈Purpose.2〉Risk Management for Compliance Violations

In the unlikely event that a compliance violation occurs, incorrect initial responses may lead to increased risks. Therefore, it is also important to learn the appropriate actions to take at the time the issue arises. Conduct exercises simulating real scenarios to raise awareness among employees.

〈Purpose.3〉Acquire Rules as a Working Adult

Compliance education is a theme adopted in many new employee training programs. For new employees who lack experience and knowledge as working adults, compliance education provides a valuable opportunity to learn the basic rules of society and appropriate behavior as members of a company.

〈Purpose.4〉Acquisition of Ethical Awareness

We cultivate ethical thinking skills so that individuals can make socially and morally correct judgments even in situations not regulated by law. In business settings, it is not uncommon to face decisions in so-called gray areas where actions are "not illegal but inappropriate." It is precisely in such times that a proper sense of ethics is required.

〈Objective.5〉Sharing the Company's Philosophy, Vision, and Social Positioning

Each employee understands the company's philosophy and social role, enabling them to make appropriate judgments and take actions independently. By not only complying with laws and regulations but also sharing the values the company cherishes and the direction it aims for, employees' behavior naturally aligns with the philosophy, which helps maintain and enhance trust from society.

To achieve the "Objectives of Compliance Education" explained in the previous chapter, the first step is to acquire diverse knowledge related to compliance. So, what specific learning content can be considered? Here is an example of the contents of compliance education.

〈Educational Content.1〉Revised Personal Information Protection Law and Methods of Personal Information Protection

With the full enforcement of the "Revised Personal Information Protection Law" in April 2022, all businesses handling personal information became subject to this law. Additionally, new provisions focusing on adapting to the digital society and stricter penalties were introduced. Based on this law, knowledge about how to protect customers' personal information and what precautions to take will be acquired.

〈Education Content.2〉Information Security

In recent times, with the increase in companies adopting remote work due to the COVID-19 pandemic, the risks of cyberattacks and data leaks have also risen. Therefore, it is essential to learn about proper understanding of internet environments and the actions to take in places like coworking spaces, as part of information security measures outside the company.

〈Education Content.3〉Harassment

It is also important that all employees have accurate knowledge and a shared understanding of harassment, including prevention methods, how to respond, and differences in values and perceptions. As a result, the overall literacy of the workplace is strengthened, preventing individuals from becoming either perpetrators or victims of harassment.

〈Education Content.4〉Infringement of Copyrights and Patent Rights

Caution is required when quoting text or data from other media. In many cases, each medium has established rules for quoting. Quoting without adhering to these rules constitutes "infringement of intellectual property rights," violating copyright law and patent rights, which may lead to legal issues. To prevent such risks, it is important to understand the basic principles related to copyrights and patent rights.

〈Training Content.5〉Issues of Long Working Hours

Long working hours not only harm employees' physical and mental health but also carry risks of violating the Labor Standards Act, workers' compensation recognition, and karoshi (death from overwork) issues. If excessive overtime becomes routine, the company will face social criticism, leading to a decline in recruitment power and brand strength. Compliance training requires emphasizing the importance of managing working hours and fostering awareness to maintain a healthy workplace environment.

〈Training Content.6〉Product Mislabeling Risks

Acts such as falsifying the raw materials or origin of food and products, or distributing items that do not meet quality standards as genuine products, constitute serious violations of laws such as the Consumer Protection Act and the Act against Unjustifiable Premiums and Misleading Representations. If discovered, these actions can lead to legal penalties, loss of social trust, decline in brand value, and may even threaten the survival of the company. By learning about these risks, one can understand the importance of providing accurate information and conducting business with integrity.

〈Educational Content.7〉Issues of Fraudulent Receipt of Subsidies, etc.

Fraudulently applying for or receiving subsidies or grants from the national or local governments is a serious compliance violation punishable by criminal penalties such as fraud charges. In addition to orders for repayment and fines, public disclosure of the company name can lead to a significant loss of social trust and severely impact business continuity. In educational settings, it is essential to clearly communicate the risks that ignorance is not an excuse and to ensure thorough understanding of the system and proper procedures.

〈Training Content.8〉Handling of SNS

There has been an increase in cases where employees' SNS posts lead to backlash or information leaks, damaging the overall trust in the company. In training, it is important to clearly communicate the handling of corporate secrets and customer information, the prohibition of disclosing information learned through work, the risks of discriminatory or offensive posts, and to thoroughly enforce responsible information dissemination.

〈Educational Content.9〉Act on the Proper Operation of Small and Medium-sized Enterprise Subcontract Transactions (commonly known as the Subcontract Act, formerly the Subcontract Law)

The Act on the Proper Operation of Small and Medium-sized Enterprise Subcontract Transactions (commonly known as the Subcontract Act, formerly the Subcontract Law) is a law established to prevent unfair transaction conditions imposed by parent businesses and non-payment of fees. If violations are discovered, there is a risk of losing significant trust from business partners and society, in addition to receiving recommendations and penalties. In education, the goal is to foster awareness of maintaining fair business relationships by ensuring a concrete understanding of prohibited acts and the correct way to proceed with contracts.

What methods are available for training to learn about compliance adherence? We explain each method along with their characteristics.

● Group Training
Group training is conducted by gathering employees at the same time and place. The instructor may be an internal staff member or an external expert invited for the session. The advantage is that it can be conducted for many employees at once. However, it requires considerable preparation effort, including scheduling and securing a training venue. Additionally, follow-up is necessary for those who are absent.

● Training with Group Work and Role-Playing
This training combines group work, discussions, and role-playing with primarily lecture-based group training. Employees can learn practically through actual scenarios and cases, which deepens their understanding. Additionally, participants exchange opinions and share others’ perspectives and experiences, broadening their horizons. However, this method may require even more effort than standard group training.

● Online Training
Online training using web conferencing tools such as Zoom or Teams allows learning regardless of location, making it especially efficient for companies with many branches or offices. However, since the time is fixed, there is some effort required for scheduling adjustments.

● e-Learning
Even though it is also online, e-learning training has the advantage of being accessible regardless of time or place. Since each person can study at their preferred timing, it also leads to improved participation rates. On the other hand, because it is not possible to ask questions or consult with instructors, it is necessary to establish a support system for follow-up.

As shown, each implementation method has its own advantages and disadvantages. Consider the characteristics of each and choose the most suitable approach for your company. Additionally, when conducting compliance training, there are cases where it is done in-house and cases where it is outsourced. The main external contractors include training companies, law firms, and e-learning vendors (sales companies).

>Related Blog: How to Prepare e-Learning Materials? Explanation of Acquisition Methods, Advantages and Disadvantages of In-House Production, and Tips for Creating Excellent Materials!

Case Studies Conducted In-House

It is possible to provide highly flexible training tailored to your company's unique needs and policies, which can reduce costs compared to outsourcing. On the other hand, the time and effort required for training will increase. Additionally, since creating instructors and materials requires a certain level of specialized knowledge and experience, companies without such experts may face challenges in ensuring the "quality of the materials."

Outsourcing Cases

● Training Companies
Training companies that specialize in various types of training generally have well-structured lecture curricula. In the field of compliance, they are characterized by offering a wide range of basic lectures covering the significance of education, harassment, information security, and more.

● Law Firm
This is a case where legal experts well-versed in the field of compliance are commissioned. By having lawyers who are knowledgeable, experienced, and up-to-date supervise the materials, more accurate educational content can be created. Additionally, when invited as instructors, they can provide precise advice in response to employees' questions, which is also an attractive feature.

● e-Learning Vendors
If you are considering training via e-learning, consulting with a vendor is effective. In addition to gaining access to various compliance-related materials, you can easily get started by using a system bundled for conducting e-learning. Furthermore, it is also possible to create original materials. Implementing compliance education involves various steps such as preparing materials and setting up training sessions. Of course, covering everything in-house is fine, but even if you utilize external resources for only some of the steps or materials, you can efficiently conduct higher-quality education.

This chapter introduces the "key points to keep in mind" when implementing compliance education. By being aware of and practicing these points, you can expect enhanced understanding and higher learning effectiveness.

〈Point 1〉Creating Materials That Foster a Sense of Ownership

Compliance education is an important issue for companies, but many employees often perceive it as unrelated to their own work or skills, leading to a lack of awareness. Therefore, try incorporating case studies and scenarios into the materials to help them truly grasp the seriousness of the risks and develop a sense of ownership. Additionally, providing "output opportunities" such as discussions, where employees can raise each other's awareness, is also effective.

〈Point.2〉Providing Regular Learning Opportunities

In the fields of laws and regulations, amendments are made and new laws are enacted almost every year, resulting in frequent changes. To respond promptly to such changes, compliance education needs to be conducted regularly and continuously. Additionally, by providing learning opportunities on a regular basis, knowledge retention is enhanced, and awareness of compliance is maintained at a high level.

〈Point.3〉Choose training methods that employees can easily attend

Compliance education covers laws and regulations applicable to the entire organization, so all employees need to participate in the learning. Therefore, select training methods that make it easy for every employee to attend. In companies with many employees, it is common to introduce e-learning that allows individuals to study during their spare time.

〈Point 4〉Change Training Content According to Position

In the previous section, we explained that all employees should receive compliance training; however, depending on the content of the training, it is necessary to conduct it according to hierarchical levels such as positions or ranks. Below is a summary of the content to be learned by position.

〈Management Level〉
Those at the management level need to understand the importance of compliance from a strategic perspective. Furthermore, knowledge related to formulating basic policies and rules on compliance, as well as building systems to ensure smooth operation, is also essential.

〈Managers and Mid-level Employees〉
Education is required not only on the basics of compliance but also on acquiring the knowledge and behaviors to serve as role models for subordinates. Additionally, necessary knowledge includes how to respond when subordinates commit compliance violations.

〈Employees and New Employees〉
In addition to basic knowledge about compliance, it is necessary to raise awareness about being careful with personal behavior and handling of social media. Furthermore, younger employees and new hires, who are more likely to become victims of harassment, can deepen their understanding to protect themselves by taking harassment training.

Thorough compliance training is an essential element in establishing a sustainable business environment. Additionally, through compliance training, both the company and employees can develop a shared understanding of compliance, which enhances mutual trust and fosters a healthy corporate culture.

In this way, compliance training, which holds the key to the survival of the company, as mentioned earlier, is necessary for all employees to undergo training. Therefore, we recommend learning through e-learning. E-learning, which does not restrict location or time, allows each employee to learn flexibly according to their own schedule.

At Human Science, which has extensive experience in producing e-learning materials, we offer compliance training materials that cover basic knowledge and concepts such as the "Basic Knowledge Edition", as well as materials that promote understanding through specific case studies like "Case Study Edition 1" and "Case Study Edition 2", suitable for all industries. Furthermore, we provide comprehensive support not only by supplying materials but also by creating original content and building and managing e-learning systems.

If your company is considering starting compliance training or reviewing existing compliance training, please feel free to contact us.

Please also refer to the e-learning site of Human Science Co., Ltd.

＞Human Science's e-Learning Services