Understanding 5 Benefits of Statutory Compliance

Definition of Statutory Compliance

The term Statutory Compliance means the definitive need to strictly comply with or adhere to the many labour and taxation laws in India. A company has to be structured and streamlined with proper rules and regulations in place for it to operate well. Statutory Compliance also relates to all the laws that govern the company’s relationship with its employees and all its financial dealings.

Statutory Compliance is a mandatory requirement for every organization, irrespective of its size, number of employees or the industry they belong to. There are a series of such laws across many sectors like the Income Tax Act, Companies Act, PF and ESIC, Service Tax, Partnership Act and Value Added Tax (VAT) among others. It is crucial to have an in-depth understanding of all these regulations, especially because they keep changing from time to time.

The company will be caught up in a web of penalties, fines or other legal implications if there is any incidence of non-compliance with the regulations.

The key role played by Statutory Compliance as part of the HR function is something that cannot be taken lightly. Having a robust Statutory Compliance framework can also help your company in doing a number of tasks more quickly and efficiently than ever. Take a look at some of the benefits;

Benefits of the Statutory Compliance

1. Build Trust and Better Perform Duties to The Community and Stakeholders

As a business owner, you owe it to your stakeholders and to the community to be fully compliant with all applicable laws and regulations. When you make use of the resources of your investors or creditors, there needs to be assurance on your part with regard to compliance.

The conduct of your employees should also be regulated, so all parties involved feel that every function is dealt with in the most responsible and law-abiding manner. To be successful every business must be able to build and maintain trust consistently. Even the smallest instance of non-compliance can affect the company’s credibility.

Honest communication and following through on the commitments made to clients cannot be properly done without a compliance function being in place in the organization.

2. Improved Reputation & Business Opportunities as a Compliant Company

It goes without saying that the reputation of your company is any day more important than the tons of money that you may make. A company that adheres to Statutory Compliance shows the company’s stability, the standard of public relations and exceptional work ethics. People only want to do business with companies that have a good reputation in general and where communication follows utmost transparency.

Compliance with the laws of the land also gives them the assurance that the data they entrust you with will remain confidential and safe. Compromising on Statutory Compliance is a sure-shot path towards disaster as far as the company’s brand image is concerned. Once the reputation of your company is tarnished, there is no way to repair it. Statutory Compliance these days is a mandated requirement for every corporate entity when it comes to bagging new business opportunities.

3. Enhanced Consistency & Reduced Errors

A common factor among the most successful companies is no doubt consistency. Consistency in functions, in results, in performances or in their communication.

A compliance function will improve consistency in a company, especially as this is something that should be evident on a day-to-day basis in company dealings. If certain ethics, codes of conduct or policies are followed while making business decisions, the results will be favourable to all the parties involved.

Statutory Compliance is the key thing that can ensure consistency in an organization. The same is the case with the unforeseen errors that can crop up affecting the performance, efficiency or overall functioning of an organization. A compliant company can reduce the incidence of such errors.

4. Improved Employee Morale

Companies that follow Statutory Compliance are prompt at performing labour or taxation related tasks and this just proves that the company cares about its employees. When the intent is right, your employees will automatically feel connected to the company and put in their best performances.

Better employee morale will mean reduced attrition rates and this can directly impact your company’s productivity and reputation as well. The operational benefits aside, companies that are particular about Statutory Compliance will always attract high quality and principled employees.

5. Better Definition of the Organization’s ‘WHY’ and ‘HOW’

The truly inspired companies understand exactly, that it is the ‘why’ of an organization that is the most important part of its existence. It is the ‘why’ that can actually drive your company’s efforts or functions. When you maintain Statutory Compliance, everything that you do will follow a set of values or ethics and the ‘why’ of your business then becomes governed and better defined by these.

A well-established compliance function within your organization also ensures that your team members are on the same page with regard to following the set rules and regulations. There is always a right and wrong way of doing things. Compliance can also play a role in defining and monitoring the ‘how’ of your business or how you can effectively perform your business functions.

Following a healthy Statutory Compliance system within an organization can pave the way for long-term change and also fuel innovation across business functions or organizational behaviours.

Compliance focuses on powering the organization’s values and making them resonate in every big or small thing the company does. It is understandable to think that every risk an organization faces are often contributed by outside forces. But the actual fact is that a majority of this could also be due to inefficiencies prevalent within the organization.

A robust compliance function can easily make all the underperforming areas visible, helping the organization to get better over time. Partnering with an outside agency for Statutory Compliance gives you a bird’s eye view of areas that need to be compliant for better overall productivity. Companies that offer Statutory Compliance services will have a clear knowledge of the myriad labour and taxation laws in India and they are always current regarding any reforms.