Jul 5, 2023

How to Have a Diligent Organization – The Diligence File Framework

Tools

Purpose of the image is to show the four elements of a diligent organization and thereby the four elements of the Diligence File Frame discussed in the post

A diligent organization needs a solid internal framework. A framework that allows the organization to grow and maintain diligence through changing cycles of business, compliance and technology.

Use the Diligence File Framework to build a resilient, flexible diligence structure.

To guide you, the Diligence File provides a diligence framework – the Diligence File Framework – that will help your organization transform into and maintain itself as a diligent organization.

The Advantages of the Diligence File Framework

The Diligence File Framework provides you with a structure that is specific enough to set expectations and at the same time flexible enough to adapt to change. This framework is:

  • Defined – the Diligence File Framework defines the elements needed to have a diligent organization. You don’t have to start from scratch. you take the elements of the Diligence File Framework and incorporate them into your existing organization to establish a strong internal frame of diligence.
  • Clear – the elements of the Diligence File Framework are easy to understand, easy to reference and easy to communicate.
  • Adaptable – Clear and defined do not mean inflexible. Organization have to adapt and adapt quickly and efficiently. The elements of the Diligence File Framework are adaptable to changing requirements, advancements and needs.
  • For All – The Diligence File Framework works for all sizes and types of organizations. Everyone benefits from diligence and organizations can be diligent.

The Four Elements of the Diligence File Framework

The Diligence File Framework is composed of four elements. You need all four of these elements to have a diligent organization.

Principles – You start with your principles. What do you stand for?

An organization needs to be clear on principles because principles guide diligence. Principles identify what is important to an organization, what shapes the culture and impacts the people working for the organization. Principles also define the allocation of resources within an organization. To set your principles you need to understand what matters to your organization, the industry, the customers, your employees and possibly even your country.

Culture and People – There is no diligence without people and people cannot make the right choices and take the right action without the support of the culture.

Your people drive diligence by identifying issues, performing tasks, fixing problems and designing and implementing technology. Without the diligent actions of your people you will not have a diligent organization. Your people may be on your payroll as employees, they may be contractors, freelancers, outside professionals even vendors. They all play a role in your diligence success. They all need guidance, encouragement and support.

PAR Diligence Strategy – You have to be practical.

The best principles, the most motivated people and supportive culture are not enough to successfully perform diligence. You must take action. To do that you need a strategy that provides guidance but is also fluid enough to encompass change. The strategy has to be easy to communicate and straightforward. You need provide a strategy that is a basis of common understanding throughout the organization and with external partners.

If you don’t want to develop your own “umbrella” strategy, the PAR Diligence Strategy is a series of practical steps for performing efficient and effective diligence. It works for all types of diligence because it is adapts to different topics including, specific due diligence requirements.

Resources – More practicalities. Good intentions are not enough for good diligence.

The organization has to provide the appropriate resources to the appropriate people. The type and level of resources that you need will depend on your organization, your industry and the compliance and legal structure that regulates it.

If you run a small business in a low risk industry you may be able to do all your diligence with a computer, access to the internet and a very small budget for unusual circumstances. But those resources won’t be sufficient if you are in a regulated industry such a the financial sector or pharmaceuticals. Those industries require significant investments to meet legal and industry requirements and benchmarks.

There is no “one size fits all” calculation for resources.

The Diligence File focuses on ideas relating to online sources and sites as well as “low tech” tools that help with the diligence that a smaller, less regulated firm may require. However, many of these sources and ideas can be used by any size organization and interestingly, can by “raised” to use in a highly technical and resourced environment. For example, a checklist may be a hardcopy print out that an employee manually fills in. The same checklist may be integrated into a software program that prompts the employee during a diligence project, saves information, records answers and notes and then takes all of the inputs and develops a follow up plan and tickler for future diligence updates.

The Diligence File Framework is for Everyone

As you can see from the descriptions above, The Diligence File Framework can be applied to an organization of 1 or 1000+.

You may be a for profit, or non profit organization, an academic organization or a government unit, the framework will still apply. This is because the Diligence File Framework addresses the fundamental issues that impact the ways in which you perform diligence.  The Diligence File Framework provides guidance, ideas and strategies that you adapt to meet an organization’s specific needs. Use the Diligence File Framework if your diligence needs are simple or if they are complicated. If you are not sure where you fall, you can also use it as a blueprint for assessing your organization and improving your current diligence.

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