This article was updated on July 23, 2018.

The evolution of compliance standards has been driven by massive, complex transformations in technology and regulatory requirements, changes that have made the effective management of risk a competitive advantage in all markets. In an age where communication happens across the globe in real time, where everyone is hyper-connected, a flat-footed approach to compliance is no longer possible.

The duties of compliance leaders go beyond ensuring their firms and employees follow the rules of the road, they're also responsible for protecting the reputation of the organization and monitoring bottom lines. With that in mind, it's really no surprise that, for an increasing number of organizations, compliance leaders are becoming key strategic C-suite partners.

As E&Y explains, "No longer is defensive activity sufficient; increasingly compliance teams are called on to look ahead, anticipate risks and support operating businesses to help them perform better."

Here's a look at how the evolution of compliance standards has unfolded in three HR-related areas:

1. Health Care/The Affordable Care Act

Health care and its related costs have long been a top priority of HR leaders. Since the Affordable Care Act (ACA) was passed in 2010, health care has increasingly become a top compliance concern, as well. The ACA is so detailed that many organizations have found themselves scrambling to keep up with their ongoing ACA compliance efforts. According to the ADP Research Institute® (ADP RI) 2015 Midsized Business Owners Study, "41% of the survey participants ranked the volume of government regulations as their top concern, and only one quarter were extremely confident that their organizations understand all of the new ACA regulations."

As the ADP RI points out, managing exchange notices, for example, has introduced "a complex web of paperwork, regulations, and processes...How you respond to Exchange Notices makes all the difference between remaining compliant with Affordable Care Act (ACA) regulations, and facing significant penalties."

The ACA and its reporting requirements have forced compliance leaders and their organizations to make greater investments in technological capability to aggregate relevant, compliance-related data and organize it for ACA reporting. The unprecedented level of involvement necessary to manage the ACA, and its multi-year rollout, has been a major driver of investments in compliance.

2. Employee Classification

The workforce has been evolving over time, as well. Millennials are now the top-represented generation, according to Pew Research, and they have been at the forefront of a push for new ways of working that have directly impacted compliance. While today's workforce has become more flexible, with the growth of the gig economy and the 1099 workforce of independent contractors, the correct classification of workers has become a major HR and compliance challenge.

As the DOL highlights, the growing volume of worker misclassification "presents one of the most serious problems facing affected workers, employers and the entire economy," and the DOL has moved aggressively against organizations that don't have their compliance practices in order.

As the National Law Review indicates, "The distinction between independent contractors and employees carries more burdens, consequences, and decisions than ever before. In addition to the tax consequences, there are health care compliance consequences, workers' compensation consequences, and even intellectual property consequences."

3. Technological Advances/Big Data

With so many data-driven demands placed upon the compliance function, investments in compliance-related systems should remain a major strategic priority, including the integration of those systems across the organization in order to support information-sharing, analysis and data-based decision-making. E&Y interviewed chief compliance officers (CCOs) at 20 global organizations. Of them, 77 percent described their compliance systems as "basic," and most of them reported not having integrated systems in place to support their compliance function. The use of Excel spreadsheets remains far too prevalent in an age where big data is more accessible, affordable and scalable than ever.

Because the evolution of compliance standards has placed even more strenuous demands on organizations to remain compliant, the need for technical vigilance has never been more apparent. By incorporating a more strategic focus and making the necessary technology investments, you should be able to get ahead and stay ahead of the growing regulatory requirements.

Tags: aca big data FLSA Healthcare