It does not matter the industry or size of your business or organization, there will always be certain laws and regulations that must be followed as part of your operations, and this is often referred to as compliance.
What Is Compliance?
Compliance in business is often referred to as “compliance action” or “compliance standard.” To gain a clearer understanding of what is referred to as a compliance action and what is referred to as a compliance standard and why either of them matters in your industry, it is important for you to know the difference between the terms.
First, compliance is the set of processes an organization uses to ensure all employees within the organization (and the organization itself) are abiding by all internal rules of conduct and external rules and regulations. Compliance may include a business or organization’s written values, the employee handbook, or policies for complying with various legal obligations.
Compliance as an Action
Compliance is an “action” if there’s a deliberate recognition of the specific rules and policies. Compliance is an action if it is considered essential to a business or organization’s existence.
Compliance as a Standard
Compliance is referred to as a standard if there is a practical set of rules and policies to help maintain productivity and efficiency within a business or organization. These rules and standards should not only be relevant but should also be properly enforced properly and observed within the business or organization.
To consider compliance as a standard, your business or organization has to do more than abide by the rules and regulations. There needs to be a clear understanding of the rules and regulations and how they will address the current and future needs of the business or organization.
Good compliance represents an opportunity for every business or organization to improve the value of the business or organization. The benefits of compliance include more than making the business or organization more attractive to investors or stakeholders in the future, but also more immediate benefits.
Businesses and organizations that have a history of being compliant will indicate a fully functional and well-operated business. On the other hand, a less than stellar compliance record could indicate that your business operations are not being handled properly, which could be viewed by potential investors or potential job candidates as a risk they are not willing to take.
Regulatory compliance deals with various guidelines that the law requires businesses and organizations to follow. For example, it might involve observing rules set forth by the Cybersecurity Maturity Model Certification (CMMC), a cybersecurity framework manufacturers should consider to protect their business or organization. For those who are a part of the manufacturing industry or will soon be a part of this industry, the CMMC will be a requirement for all new and renewing contracts.
Also, accounting firms have a fiduciary responsibility to their clients and their employees and to ensure Protected PII is secured. There are covered entities that must follow HIPAA regulations, including the following: Health insurance companies, HMOs, company health plans, and government programs such as Medicare and Medicaid.
Why is Compliance Important?
One of the most important reasons that compliance is so important is that you owe the people who depend on your services to comply with the law. Regardless of the services or products you provide, you have to be able to assure your target audience that you are regulating the conduct of everyone in your workplace and that you are complying with all guidelines and regulations.
Unfortunately, many businesses and organizations do not give significant thought to compliance. Businesses and organizations that take a nonchalant approach to regulating the conduct of their employees and abiding by laws and regulations will find themselves at risk of violating a number of regulations. Businesses and organizations that believe everything is “fine” may not pay careful attention to their employees and how operations are handled, but this can be extremely risky.
Another reason why compliance is so important is that it will decrease your risk of fines, penalties, downtime, and lawsuits. There are numerous regulations and laws in regard to how your business or organization should manage its employees, manage its operations, negotiate, implement safety rules, and more.
When you fail to meet some compliance requirements, there is always the chance that you can face costly penalties. If you fail to meet one or more legal obligations, such as in the manufacturing, health, and accounting industry, you can severely damage your reputation. It is important to make sure you understand all the legal obligations that apply to your industry and how you should comply with them.
How to Implement a Compliance Plan
Due to the significance of compliance, your business or organization needs to take a proactive approach to creating an effective compliance plan. One of the first steps to achieving an effective compliance plan will start with conducting a compliance audit that will determine what problems exist and what you should do to address those problems. The compliance audit will require you to determine the strengths and weaknesses of all aspects of your business and organization.
By assessing the weaknesses and risks of your business or organization, you will not only know what they are, but you will also be able to determine how impactful the risks could be to your business. Once you identify the weaknesses and risks, you will be able to establish best practices and put each one into action. Once you are familiar with the laws and regulations that apply to your business or organization, you will be able to determine how costly and impactful one or more compliance violations will be for your business.
With an effective compliance plan, your business or organization can achieve a wealth of benefits and work towards higher efficiency, higher productivity, and better overall performance in the industry. If you are prepared to create a healthy compliance environment for your business or organization, contact Palindrome Consulting today to schedule your free quote.