Introduction to Business Compliance
All businesses have legal obligations and internal regulations that they must abide by. For example, restaurants have to follow the Food and Drug Administration's Food Safety Modernization Act. This is to ensure all food products are properly handled and safe to consume.
Most organizations also have codes of conduct that outline acceptable behaviors for employers and employees. By managing business compliance and guaranteeing that personnel adheres to these standards, the company can protect its reputation and mitigate risks.
What is Business Compliance?
Business compliance refers to the practice of ensuring a company and its employees follow all federal laws and industry regulations. Compliance requirements also encompass ethical standards and internal policies that the organization established. Many of these regulations typically entail workplace safety, accounting, environment, and labor. By enforcing business compliance, the company can protect itself from lawsuits, fines, and damage to reputation.
Importance of Business Compliance
A business's main responsibility is to comply with the various rules that govern its organization and industry. Doing so ensures a brand's longevity and growth, and prevents costly penalties in the future. The following are key factors that management teams and senior leaders should understand about company compliance.
Compliance Grows with the Business
When a business starts out, its compliance standards may appear simple. For example, a start-up company may begin by getting a business license and filing taxes. However, as the brand continues to grow with more staff and locations, more guidelines will be added. The owner must now monitor different standards related to recruitment, discrimination, safety, payroll, and employee benefits. Regulations may also vary in different counties, cities, and states, as well.
Lower Chance of Legal Issues
When a business complies with federal standards, it will lessen its chance of getting fines, penalties, and lawsuits. They will also have a better chance of keeping their operations open and running. To make sure business teams understand their legal obligations, the organization should employ a compliance specialist. These experts can educate the brand on specific laws that preside over the business.
Enhance Workplace Environment and Safety
Many regulations are established to protect the safety, health, and welfare of employees and employers. Laws created by the Equal Employment Opportunity Commission for harassment, for example, helps ensure the workplace culture is fair. Additionally, it creates a safe and productive environment for employees. Guidelines, such as for fire safety and security, are also important for businesses to prevent accidents and injuries at work.
Following legal regulations will allow organizations to cultivate good public relations. Modern companies like to publicize that they are compliant. This is apparent when brands indicate that they are an equal opportunity employer on job advertisements. And when they post their mission statements on their website, outlining their commitment to non-discrimination and workplace safety. This helps the company build a positive reputation, which will draw people to want to work for or shop from the brand.
Increased Employee Retention
Employees are more likely to stay with a company that works towards building a safe, fair, and professional environment. Employees from all levels in the organizational hierarchy must follow workplace regulations. Otherwise, staff will feel unvalued and dissatisfied with the company. Employers can create an employee handbook that details all guidelines, as well as procedures to rectify infractions.
How to Create a Successful Corporate Compliance Program
Business compliance is a time-sensitive matter. In which, an organization and its employees should be protected as soon as the business begins to operate. To start creating a compliance program, management teams must carefully strategize guidelines and implementation. The following are key steps that should be considered.
1. Assemble a Compliance Team
The size of a compliance team will depend on how big a company is. However, the team should have one person to lead the committee. This person will have the authority to enforce the guidelines and will report to senior management leaders.
2. Assess Risks to the Organization
Once a compliance team is created, they need to identify compliance areas that affect the organization. For example, if a small business handles perishable goods, then food safety would be a compliance area they must focus on. Since governmental regulations often evolve, the team should regularly assess their risks to ensure they are compliant. According to the Association of Corporate Counsel (AAC), assessments should be performed annually.
When reviewing compliance within the company, the ACC recommends examining the following.
- Trends in industry enforcement
- Policies in each risk area
3. Create and Manage Policies and Standards
The team should then outline codes of conduct to address specific compliance regulations. This will also help define the company's expectations and the program's intentions. The code of conduct must include information on the following.
- Who is leading the program
- How personnel can report misconduct
- What the disciplinary actions are for violating guidelines
Depending on the organization and its industry, guidelines and corporate policies will vary. The following are the most common compliance infractions that are often addressed in codes of conduct.
Additionally, the team should indicate processes that will help personnel carry out and follow regulations. For example, an eatery can create a step-by-step process on how to handle perishable foods in the kitchen to uphold food safety standards. There should also be instructions on what employees can do when they notice their colleagues on non-compliant.
4. Establish a Comprehensive Training Program
For the compliance program to be effective, all employees need to follow the guidelines. The organization should have a comprehensive training program and walk staff through all the different protocols. All employers, employees, and third-party entities associated with the company should also read and sign a compliance agreement. This will guarantee personnel are educated and will help the company adhere to regulations.