Is Compliance Management Worth the Cost for Entrepreneurs?
On the Nov. 30 episode of my Lykken on Lending podcast, I had the opportunity to discuss the idea of corporate governance with my colleague Andy Schell. One of the questions that often comes up in terms of corporate governance is, is it worth the cost for entrepreneurs in the mortgage industry to implement a system of corporate governance? Of course, it's required for publicly traded organizations, but should entrepreneurs bother with it if they don't have to?
In the early days of entrepreneurship in America, we must remember that they didn't have the strenuous legislative factors action upon them that we have today. In the days of early tycoons like Rockefeller and JP Morgan, entrepreneurs did not have to deal with protections for consumers, investors, and the general public. Today, we have a wide array of laws and organizations working against us to keep us to prevent us from engaging in any activity that they may deem harmful to society.
Corporate governance can undoubtedly be more costly in the short term but, in today's day of excessive compliance, it can become absolutely essential in the long term. Having a board of advisors and a fundamental set of guidelines that you can go to before you make decisions can provide protection against the CFPB and other organizations down the road when the inevitable audit comes your way.
Or, think of it this way. As regulators gain more power, there are changes you'll eventually have to make in order to comply. Having a system of corporate governance will force you to make those changes early—getting you one step ahead of the competition when the time comes that other companies are rushing to get their houses in order. Corporate governance can be costly and obtrusive for entrepreneurs, but it will most certainly pay off in the long run.
David Lykken, a 43-year veteran of the mortgage industry, is president of Transformational Mortgage Solutions (TMS), a management consulting firm that provides transformative business strategies to owners and “C-Level” executives via consulting, executive coaching and various communications strategies. He is a frequent guest on FOX Business News and hosts his own weekly podcast called “Lykken On Lending” heard Monday’s at 1:00 p.m. ET at LykkenOnLending.com. David’s phone number is (512) 759-0999 and his e-mail is [email protected].