“Compliance” in the business sense refers to a corporation following its legal commitments to preserve other people’s health, safety, and well-being.
Some examples of compliance are getting a business licence, registering your business with tax authorities, following employee health and safety regulations. Every company, regardless of its size, must mandatorily be compliant if it wants to remain in business.
As your organisation grows, the need for compliance, especially compliance in HR, becomes more apparent. You will also be responsible for hiring, safety, firing, wages, payroll, and benefits for all of your employees.
Importance Of Compliance In Business
Here are some of the reasons why compliance is crucial for businesses today.
1. Reduction in the likelihood of legal issues
Compliance reduces the likelihood of fines, penalties, work stoppages, lawsuits, or the closure of your business, which is the most evident benefit.
For example, if you were not following safety guidelines and someone got injured, you might be subjected to a hefty fine by the authorities. Engage the services of a compliance professional to ensure that you are fully aware of your legal responsibilities and are taking the necessary steps to meet them.
2. Compliance issues can destroy a company’s reputation
According to Warren Buffett, a reputation takes 20 years to develop and five minutes to lose. People like to do business with firms that are known for their integrity. The reputational danger is, thus, not surprising to those in positions of authority.
Customers are less willing to work with you if you aren’t well-known in the industry. On the other hand, customers are more likely to give you the benefit of the doubt if you have a good reputation.
A business, infamous for running into compliance issues with the authorities, will have trouble raising money from the public. These issues will also affect relationships with contractors, suppliers, and dealers.
3. Compliance helps in the retention of employees
A large number of business compliance challenges revolve around the protection of employees. It is more probable that your employees will remain loyal to you if they feel that they are working in a fair, professional and safe environment.
Ensure your employee handbook has policies and procedures that align with your legal responsibilities.
Keep in mind that only by enforcing a regulation will it be effective. It’s essential to spell out the consequences of breaking the rules, such as a reprimand, more training, or even suspension or termination, in your policy.
Routinely communicate your concerns to upper-level managers and supervisors to ensure they are being addressed appropriately.
4. Compliance improves company culture
Compliance is viewed as a conservative value by some as well. They see compliance as a means to control behaviour. That isn’t the case at all. Compliance, on the other hand, can be a potent force for long-term transformation.
A company’s values and codes of conduct are intertwined, which means that the articulation and adjustment of these throughout time can significantly impact how the company operates.
System theorists believe that values can be leverage points and that compliance ultimately relies on the driving values of an organisation.
5. Compliance increases productivity
A large number of business compliance challenges revolve around the protection of employees. It is more probable that your employees will remain loyal to you if they feel that they are working in an environment that is fair, professional and safe.
Compliance with the company’s policies on safety and wages will promote a favourable atmosphere in the workplace. Having a sense of security and being rewarded for one’s accomplishments encourages employees to put in the greater effort at work.
Strict adherence to internal compliance policies is essential to keep employees happy and prevent problems from spreading to other parts of the organisation.
Developing or modifying your company’s compliance policies is a time-consuming process. It’s an ongoing process that requires regular updates and monitoring. Take action now, rather than waiting until an unfortunate event occurs.
It can be difficult to be compliant with all the changes in the rules and regulations. If your compliance team is overworked, an automated compliance management software could be a gamechanger for your business.