5 Reasons Why Compliance Is Important in Business Today

Business compliance refers to the essential laws and regulations set by the government that an organization must follow. It is an essential part of your business operations, regardless of industry.

Taking preventative measures can feel like a hassle upfront, but it can save your organization untold costs in the long run. Violation of compliance in business can result in fines, penalties, lawsuits, loss of reputation and legal regulations. 

HR compliance is adhering to the working standards set by state, federal or governmental agencies. Labour law compliance is also a crucial factor that influences employees. 

Corporate compliance in a company covers both internal policies and procedures, as well as federal and state laws. The compliance process should be ongoing. Many organizations establish a program to consistently and accurately govern their compliance policies and avoid any legal troubles.

How Does Compliance in a Company Impact the Workplace and Employees?

Compliance laws associated with workplace and labour are aimed at ensuring the safety and welfare of all employees. Failure to adhere to such legal guidelines and laws will negatively impact the business’s reputation and hamper recruitment and employee retention. 

Regardless of the size of a business or the industry, standards must be followed. The way a company’s information is handled and how an organization’s employees behave on a regular basis have a strong impact on achieving excellent compliance. This is where the need for understanding and adhering to a set of statutory compliance arises.

Why Is Compliance Important in Business?

The core purpose of compliance is simple to identify and avoid possible red flags in your business. Corporate compliance also helps your employees act responsibly.

The best business compliance program teaches the employees to treat each other well at work, promote a high level of professionalism and uphold corporate values inside and outside their workplace. It’s important to never take compliance lightly especially when it can have a great impact on your organization internally and externally.

Below are Some Reasons Why Compliance Is Important in Business:

1. To avoid legal liabilities 

No business would be willing to get into any major legal disputes or face criminal charges due to non-compliance with the law. Not only are legal liabilities a big blow to your company’s reputation, but they can also be a cause of instant financial loss. Court hearings and appearances can be operational trouble for your business operations. 

To be legally compliant involves not only learning essential legislation applicable to your business but also applying them effectively. As a rule of thumb, building a reputable public image is one successful way of promoting your business. If your company gets into trouble due to non-compliance, customers and shareholders might doubt your credibility. The key point here is not to forget that your client’s trust and loyalty are everything to your business.  

2. To boost business growth 

Understanding how compliance can create strong business standards, it is important to implement them as a factor to boost the growth of the company. It’s the organization’s way of creating a positive working environment and a healthy work culture. This can only be achieved if the organization has a clear model. This model can be a set of guidelines or policies that ensure employees’ and clients’ fairness and safety. 

A company’s reputation and its exposure to legal liability risks. A poor track record of compliance can easily have a negative impact on growth. Most of the legal regulations have been designed to promote best practices in key areas such as employee welfare, customer safety, and quality of service or product. Thus, meeting the labour law compliance and sticking to other norms will naturally drive business growth.

3. To enhance public relations 

When you meet your legal obligations, one of the benefits of business compliance is the ability to showcase these on the organization’s marketing materials. Be it websites, social media or other channels. For example, when you post about job advertisements, include the fact that you are an equal opportunity employer. If you post the mission of your company on the website, state that you do not discriminate based on race, sex, creed or sexual orientation. 

When you recruit new employees, highlight your company’s commitment to both physical safety at the workplace along with mental health awareness. This can be done by referencing key policies and benefits dedicated to proactive healthcare and wellbeing, such as extended maternity and paternity leave or free gym memberships or wellness leaves. 

4. To improve operations and safety 

Having legal guidelines set in place for an organization can be one of the major benefits of compliance in a company. Regulations regarding discrimination and harassment help the organization create a better working environment for the employees, which can lead to more safety, and security and in return more worker productivity. The importance of compliance in business also plays a major role in physical safety. Following the rules helps prevent injuries, fires or building evacuations that hurt the company’s profitability. 

In addition to learning the bare minimum you need to do to meet your legal obligations, organizations also run mandatory courses that help new and existing employees to keep them reminded of these regulations the company follows. Attending and completing these is also a way to strengthen and safeguard your company’s operations and safety. 

5. To boost employee retention

Many business compliance troubles deal with protecting employees in case of an unfortunate event. Hence, it’s important for employees to feel that they work in a fair, professional and safe environment. Evoking this feeling will make them build loyalty and in turn, they will tend to stay with the company for a longer period. It is the core responsibility of the company to ensure none of the employees are victims of harassment of any sort and not just from anyone involved in the management but also from fellow co-workers. This might cost loyalty and the loss of valuable employees. Any extreme situations might also lead to the shutting down of business. Including policies and procedures in your employee handbook that mirror your legal compliance obligations, is always a good step. 

Point to note: a policy is only strong if it is enforced. Your policy should not only present the rules but also specify what is to be done if any regulations or rules are broken. Procedures and steps explained in simple, understandable language are important. Check in with managers or supervisors regularly to ensure complaints are handled properly and fairly. 

Conclusion

Compliance in business is a core element that can make or break your company. These guidelines help the company steer clear of legal troubles and unexpected events. They are also effective to achieve and gain the trust and confidence of customers. A healthy compliance atmosphere helps in maintaining the decorum of the organization, by keeping the employees and the firm in a safe and secure environment. 

Alp Consulting is here to take care of your compliance needs. Our team of experienced and passionate HR professionals will ensure your organization is safe and secure while helping you predict and plan for future legal troubles. Our vision is to understand the growth and financial history of each unique organization to provide the most accurate and efficient solution.

Frequently Asked Questions

1. What are some examples of compliance in business?

• Ensuring dues are cleared and tax paying dates aren’t missed
• The right business licence in accordance with your state or country
• Complying with wage and hour laws 
• Protecting consumer data 
• Renewing licence and reviewing franchise contract 
• Determining and analysing where the risk lies 
• Adhering to country-specific labour laws 

2. What are the advantages & disadvantages of ethical compliance in business?

The use of ethical standards can both reduce the chances of a workplace lawsuit and help in creating a positive work environment. However, corporate ethical policies, have both advantages and disadvantages for ethical compliance in an organization. Advantages being, improved workplace culture and adherence to laws and regulations.

Disadvantages are that an ethical compliance program requires the comprehensive support of management to be effective. Implementing these compliance programs can be expensive and time-consuming. 

3. How can you effectively implement compliance in business?  

An organization, big or small, need to create policies, procedures and processes to address compliance requirements. The management must also ensure that all the employees are aware of them and are on the same page. There are a number of ways to stay on top of effective compliance procedures. Some of them are: 

• Stay on track with changing laws and regulations
• Involve specialists, make sure professionals are hired to monitor them 
• Ensure employees follow procedures
• Schedule regular internal audits
• Provide staff training and education
• Take corrective action
• Establish two-way communication at all levels
• Enforce consistent discipline

4. Why the business compliance is essential for smaller organizations?

Often overlooked by the lack of business knowledge, time and focus on other core operations, small organisations tend to miss out on forming an efficient compliance program and implementing them effectively. However, it’s crucial for them to set it up for smaller firms to function smoothly in the market. So, it is essential for companies, especially smaller ones to be compliant with the rules, laws, and regulations set forth by the government.

 

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