Generally, compliance means conforming to a rule, such as a specification, policy, standard, or law. Compliance in business is adhering to government laws, health and safety standards, or data and security requirements.
Compliance is divided into internal or external based on whether it is concerned with company policies or adherence to government laws.
Internal compliance, as the name implies, are policy and procedure that a company adopts internally. Having a compliance policy and a compliance officer to enforce these policies help a business avoid internal conflicts and maintain high operating standards.
External compliance, also known as regulatory compliance, refers to following the rules, regulations and industry standards set by law. They are usually mandatory, and negligence or refusal to adhere to them provokes consequences, which may include fines and reputation damage. Filing your annual report (For Delaware companies) for example, is an act of practicing external compliance.
As mentioned earlier, non-compliance to regulatory laws can mean staggering regulatory fines and reputation damage for a business. How can companies avoid these legal liabilities? By having a comprehensive and effective regulatory compliance strategy.
Five ways to Ensure Compliance in your business
- Stay on track with changing laws and regulations
Because regulations are constantly changing or amended, compliance is a continuous process. Organizations can be proactive by staying on track with changing laws and regulations. Corporate compliance officers must understand the current federal and state regulations that apply to their business. They must also understand international rules and regulations for those involved in, or collecting data from, a global market.
2. Hire Compliance Specialists
There have been cases where some organizations unintentionally break laws. Unfortunately, ignorance is not a sufficient excuse. Therefore, to ensure that your organization remains compliant, hire a compliance specialist or involve consultants to be sure everything is in order.
3. Ensure employees follow Policies and procedures
Training employees on policies and procedures is a good start. Also, document policies and make sure they are readily available. It is critical that everyone understands the workplace policies and acceptable codes of conduct; they should know why they are in place; and the consequences of not following them.
4. Plan for internal audits and track violations
Regular internal audits allow you to know where you are doing well and where you need to improve your compliance strategy. Internal audits is a proactive measure to discover loopholes and avoid being hit with regulatory fines.
5. Keep data and documents organized
For organizations that rely heavily on data, it is crucial to map your data and keep it organized; this includes looking at how data is collected, where it is from, who it is from, how it is stored, and how it is used or shared. Businesses should also assess their documents and policies surrounding data collection and retention.
Disclaimer: Please note that nothing in this article constitutes legal advice to the readers. This is merely an informational post and as such is not legally binding advice. Kindly consult with your lawyer for legal advice.
