This article was updated on June 18, 2018.
At first glance, it's not easy to recognize how compliance can yield business results. Business leaders sometimes assume that no news is good news on the employment-related compliance front — that avoiding large regulatory penalties and massive damage to corporate reputation is victory enough. Most senior finance executives rank compliance as a priority, but one in three of them say their organization's approach to employment-related compliance is more reactive than proactive.
When it comes to employment-related tax and payment compliance companies can be divided into three distinct categories:
- Paralyzed — the organization prefers to ignore it
- Organized — the organization's only goal is to avoid penalties and fees
- Optimized — the organization views compliance as a business opportunity
A strong compliance program boosts employee productivity, aids in operational efficiency, helps with corporate reputation and increases overall profitability.
Here are three employment-related compliance "business opportunities" to keep on your radar:
Long-Term Business Profitability
Business leaders know how regulatory changes can impact the bottom line. In a survey from consultant PwC, 78 percent of global CEOs viewed increased regulation as a top threat to business growth. And yet only 35 percent engage with their Chief Compliance Officer to proactively manage the regulatory risks that can derail strategic growth.
A proactive relationship between CEOs and CCOs cements best-in-class employment-related compliance practices throughout the enterprise. Those, in turn, add value to your business over the long haul by boosting employees' confidence, productivity and retention rates saving money in fines and legal fees.
How compliance can yield business results is by enhancing confidence throughout the business. Effective employment-related compliance practices allow people to operate on safer territory, and act as an insurance policy by supporting initiative and risk-taking of employees and departments. Minimizing distractions related to employment-related compliance activities helps the organization remain nimble, not just in the area of employment-related compliance but in areas like product development as well. Effective employment-related compliance processes positively affect the internal dynamics of the business by providing employees the time and space needed to focus on specific roles and tasks.
These practices also allow the business to speak with one voice that it is aligned with its values and the mission of the organization. When an organization treats employment-related compliance as a business strategy, it sends positive signals to employees, customers and other stakeholders. Thus, these practices help enhance reputation and benefit shareholder value.
Reduced Risk to Brand, Reputation and Bottom Line
Employment-related compliance may not always get the appreciation it deserves, but when done well, the efforts save the organization from legal trouble, fines and lost reputation in the marketplace. The cost of failures in compliance is seen only when regulators move in with enforcement actions and fines — and the risks can be devastating.
With effective organization-wide employment-related compliance practices, the millions of dollars potentially saved can be reinvested into the business, leading to further innovation, better service and/or returned to shareholders. Employment-related compliance is not just about keeping the organization out of the regulatory crosshairs and media scrutiny, but rather, it's an integral part of long-term business success.