Compliance leaders are facing increased pressure to make the most of existing resources due to economic challenges and increased workload and complexity, according to a new report. The study, conducted by research and consulting firm Gartner, identifies three crucial compliance function trends playing out this year: tighter budgets, changing labor and organizational dynamics, and increased investments in technology.
“Confronted with economic volatility, a tight labor market, and rising geopolitical tensions, compliance departments are adapting their workflows to an increasingly complex landscape,” said Chris Audet, Chief of Research at Gartner’s Legal, Risk, and Compliance Leaders practice. “To successfully manage these challenges, compliance leaders should focus on optimizing their spending and staffing decisions, adjusting existing budgets, optimizing department productivity, and making technology investments where necessary.”
Tighter Compliance Budgets
High inflation rates and ongoing fears of an impending recession have put some companies under a strain in resources, and some compliance departments are being asked to do more with less. “Compliance leaders are now tasked to operate in a more cost-conscious environment,” said Gartner in a statement announcing the study. “At the same time, workloads have increased due to the effects of the pandemic and there is greater regulatory scrutiny and complexity.”
“The majority of a typical compliance budget is spent on personnel,” said Audet. “Given that budgets are flat and wage demands are increasing with inflation, retention becomes doubly important.”
Recent years have also driven an accelerating interest in technology solutions that is now getting tailwinds from organization wide pushes towards automation to boost business productivity during an economic downturn.
Smaller or Frozen Compliance Headcounts
Compliance departments have seen a decrease in full-time employee headcounts since 2020, says Gartner, and for 2023 most compliance departments did not forecast a change to the full-time employee headcounts.
“Increased regulatory scrutiny and rising geopolitical tensions have burdened compliance staff in recent years. Coupled with a more competitive talent market, it has been difficult for many compliance leaders to hold on to their existing staff, let alone increase the size of their departments,” said Audet.
Increased Investments in Compliance Technology
Even while compliance budgets are decreasing and compliance headcounts are remaining constant or going down, there is one place companies are willing to spend more: technology. Compliance leaders anticipate technology will be one of the areas of highest spend increases this year with systems to manage hotlines, compliance and ethics training, and risk management systems high on the list.
“This projected increase is likely a response to growing inflation rates and a highly competitive labor market,” said Audet. “Rather than rely solely on capital to execute on these increased workloads, many compliance leaders are turning to technology tools to support their work.” 