The easiest pathway to business failure is to forget the little things, especially the little legal things. Staying on the right side of your business’ legal requirements and ensuring company compliance is crucial to maintaining a successful enterprise. The potential harm that external reviews, possible legal battles you may face, or media exposure in an area where your company is not quite following the rules is massive. Being found to be on the wrong side of company compliance and of the law in general could affect your business’ reputation, its share price, its profits, and in some cases even its very existence. Here are five of the most commonly made and most easily missed compliance errors which cold have significant long-term impacts on your business if not rectified.
1. Error in Pay & Grouping
Pay is a contentious topic as it is, but it is extremely easy to mis-group, mislabel, and thus assign the wrong pay levels and attributes to different workers. It is misguided and incorrect to assume that all workers who are technically at the same level can be paid the same. If your business pays its employees in ‘clumps’, it may be high time you re-examine your pay groupings. One of the easiest mistakes to make around pay grouping is to do with age. Keep a watch on the age of your employees, especially if they are moving up wage brackets swiftly. It is also important to consistently examine labour laws and updated Department of Labour principles; just to make sure that your company is keeping up with its necessary compliance. One key area to watch is ‘overtime’; this applies to both salaried and hourly-paid employees and must be kept a close eye on.
2. Documentation Mistakes
This one should be easy, right? However, documentation slip-ups are one of the most common ways that businesses fail in their compliance. When employing any new worker, their right-to-work documentation must b correct, they must have the correct visas or documents needed if they are not resident in the country that your business operates in, and all necessary hiring documents must be presented. As well as ensuring this is correct when initially making a hire or conducting an acquisition; these legal requirements must be kept up to date. For example, a worker’s visa may expire while your company employs someone; and if found, this will fall directly on you and your businesses as a lack of compliance. Failure to conduct these processes efficiently can be considered criminal negligence and carry heavy fines and penalties.
3. Disregarding Security Regulations
The ‘Occupational Safety and Health Administration’ is responsible for the employee health and safety regulations which apply and relate to individual industries and the workers that operate in them. This is an especially easy one to miss if your business is smaller and less in the public eye as many small companies are not aware that these regulations apply to them as well. This health and safety board decides what is considered a perceived risk and what actions the company needs to take in order to protect their employees from the risks and dangers that they may encounter when working. For example, this could take the form of hard hats being worn by building crews to protect them from potential falling debris.
4. Neglecting Consistency & Process During Rapid Development
This point connects to all of the other points which I have referenced, as it pinpoints the times in which the little things can be forgotten. Often in times of rapid growth and development, compliance can be left in the rear-view mirror. And this is a huge mistake. Consistency and compliance should become even more important to a business as it grows, but often it is what gets left behind as a business expands; and this can be the downfall of companies with huge potential.
5. Falling Behind
Human resource laws, health and safety regulations, pay adjustments; these key compliance areas are some of the things that actually change the most. Regulatory bodies and human rights lobbyists are consistently looking to change and amend business compliance laws that companies must adhere to. Because compliance is one of the most rapidly changing areas in business, it must constantly be at the forefront of your mind.
About the Author: Lauren Groff is a finance and business focused article writer at State Of Writing. She mostly focuses on the legal and compliance side of business maintenance and development in her writing, and she enjoys reading and travelling in her spare time.