Solving a problem before it grows to becoming a bigger problem is a very reasonable action to take in avoiding huge difficulty and issues – just as Thomas Fuller’s adage says “A stitch in time saves nine.”
Companies should make every effort in identifying policies guiding their industries as well as putting in place Compliance Management system to ensure they fully obey or fulfill these policies – this is more beneficial to a company than having to face the unpredictable damage that comes with noncompliance.
Importance of Compliance Management
It is important to comply with the legislators’ rules, laws, bye-laws, standards and other regulations set up as well as the internal standards, policies, and Solutions set up by a company.
To make sure companies diligent follow up with these policies, putting in place a compliance management system is of paramount importance. Some of the importance of the system is as stated below:
1. Reduction of Legal Problems
One and the most likely ultimate importance of compliance is the fact that it reduces/prevent legal issues such as risk of getting fines, penalties, work stoppages, lawsuits or a shutdown of a business.
2. Building a Positive Reputation
Excellent compliance management for a company helps the business build on real trust with its customers while maintaining the organization’s positive image. A company is nothing without its reputation. A business is its reputation because consumers feed off what they get from the public domain.
Gaining a reputation as an organization that fails to meet its compliance obligations can jeopardize customer trust and brand loyalty, and will have a cascading effect across all business functions and profitability.
3. Identification of Standard Rules and Regulations.
A proper compliance management system helps in identifying the different rules and regulations available concerning how business should manage its staff, and how it should handle advertisements with the rules of engagement that play a part in both buying and selling.
4. Improvement of Operational Processes
Compliance management encourages best practice in areas where the inclination may be to cut costs and corners, such as security, privacy protection, good record keeping, and IT processes. An upcoming audit or the possibility of a huge fine will motivate an organization to review and improve their practices.
5. Improves Retention of Employee
Many compliance issues have to do with protecting employees. The more employees feel comfortable and come to understand that they work in a fair, professional and safe environment- the more likely they will be to stay with you.
Dangers of Noncompliance
Noncompliance can have a damaging effect on businesses and individuals including:
- Financial penalties
- Closing or suspension of the business
- Imprisonment and legal actions
- Damaged business reputation
- Loss of customers
Non-compliance can make a person land up in jail and be made to pay for the damages suffered and compensation be provided to the affected party.
The importance of compliance is more evident as your business grows. You will have expanded responsibilities regarding your workers, covering hiring, firing, discrimination, harassment, safety, wages, payroll etc.