Risks of Non-Compliance and How it Affects Your Business

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Risks of non compliance how it affects your business

No one likes rules, and being the parent of teenagers has only accentuated that fact for me. Just when teenagers are feeling empowered, when they are catching their stride, when they are developing into something great …rules! Ugh – Buzz Kill. From their perspective, rules just get in the way of something way more appealing and socially critical.  And let’s face it, they do sometimes. But they also keep teens protected from their own naivety, and they are there for a reason.

Emerging businesses are not unlike teens in some ways.  They are finally established and independent, yet are growing so fast that infrastructure and formal policy projects are often put on the back burner (=corporate “buzz kill”).  From an entrepreneur’s seat, it can be much more compelling to be creative, focus on new deals and expand the business (kind of like staying out past curfew).  As any teen will tell you, “It’s sooooo worth it” at the moment, but if caught, boy it can come back to bite you!

What is Noncompliance in Business?

What is non compliance in business

In the business world, compliance is a catch-all phrase associated with “following the rules” and translates to, “defining and implementing the policies, procedures, and training to ensure employees understand, acknowledge and comply with all applicable laws and regulations”. That can be a lot to unpack for an emerging business or any business for that matter.

Is It Legal? Is It HR? Is It the Government?

The answer is – a bit of each.

What Are the Risks for Non-Compliance?

Risks of non compliance

There are plenty of federal laws and regulations that affect businesses, particularly when it comes to employees. These laws are written to protect the workforce physically (OSHA/health/safety) as well as from discrimination (American with Disabilities Act, Title VII, Age Discrimination in Employment Act), ensure fair labor practices (Fair Labor Standards Act).  Keeping up with the federal and local changes to these laws can make one dizzy, particularly a small business, which may be leanly staffed or worried about the balance sheet.

However, the risks of non-compliance…?  That will really make your head spin.  According to several reliable sources, HR mistakes and non-compliance can cost you and here are a few examples:

Financial penalties are obvious and tangible, but there are often intangible risks to consider as well.  Bad publicity or brand damage can be a real and non-quantifiable consequence that ultimately affects the bottom line.  According to Deloitte “87% of executives consider the reputational risk to be the biggest strategic risk facing their companies.” That’s no small matter.

Dot Not Underestimate the Importance of Compliance Online Training

Human resources training

Beyond image and money, non-compliance can actually cost you your job or even land you in jail. The legal risks are not to be underestimated and the buck stops with the most senior leaders.    Besides the exorbitant cost of legal fees, lawsuits waste an obscene about of time, time that could be much better spent on growing your business

So now that we are older and (arguably) wiser, we must learn from our teenage transgressions and resist the temptation to only follow the bright and shiny. Rules, like curfew, are there to protect us, teens, and companies alike.  Make the decision to abide by your “corporate curfew”.  Corporate penalties hurt way more than losing your phone for 2 weeks. Just sayin….!

At EnformHR we can help you implement best practice policies and procedures that are HR compliant. Reach out to our team of educated and contemporary HR Business Partners for an audit.  


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