Data from the U.S. Chamber of Commerce suggest that the overwhelming majority of small business leaders (a hefty 89%) are confident in their compliance knowledge and fully understand what regulations require of their organization.
Even so, 42% of small business owners say it’s challenging to keep up with compliance requirements. Not only are these laws ever-changing, but they can be costly and complex to implement.
Unfortunately, growing businesses face a disproportionate degree of negative impact when it comes to compliance issues. Hefty fines, penalties, and lawsuits can bring financial burden and lead to serious reputational damage, leading to further loss of revenue both now and in the future.
Clearly, there’s a need for small and mid-sized businesses to gain better strategies and tools for managing their compliance risk. Here’s what you need to know about the most common compliance issues growing companies face and what you can do to protect your organization throughout all of its growth phases.
Why Small and Growing Businesses Face Increased Compliance Risk
Large multinational corporations often have the financial resources to hire large compliance teams that monitor and mitigate risks across the organization. Small businesses generally don’t possess the budget to do the same, which can create a significant HR challenge and leave them at risk from a lack of continuing oversight.
Additionally, many regulations have different requirements for businesses of various sizes.
For example, the Americans with Disabilities Act (ADA), which requires employers to provide reasonable accommodations to employees with disabilities, only applies once the business reaches 15 employees. Consequently, growing businesses are likely to face increased compliance requirements as they continue to expand.
Those businesses looking to set up shop in a different city or state will also face further complexities. Various jurisdictions have their own regulatory frameworks, including:
- Minimum wage requirements
- Workplace violence prevention and safety regulations
- Paid time off mandates
- Pay transparency laws
- Artificial intelligence governance
An expanded footprint means balancing regulations in each area, which can be a struggle for businesses without a dedicated team.
Unfortunately, informal practices often don’t cut it. Growing businesses need documented compliance policies and procedures, as they help to avoid operational inconsistencies and a lack of internal controls that lead to increased risk.
Strategies for Strengthening Compliance in Your Organization
If compliance is an issue in your organization, you’re not alone. Here’s how you can make moves to lower your risk exposure and keep your organization out of harm’s way.
Regularly Review Laws
Employment laws and regulations seem to change at the speed of light. It’s important to review employment laws at the federal, state, and local levels on an annual or semi-annual basis to ensure that you’re aware of what’s coming down the pipeline and how it may affect your business.
Making this a regular practice will keep you from missing critical compliance deadlines and give you ample time to budget and prepare for any shifts.
Update Policies and Handbooks
It’s not enough for just the leadership or HR team to be aware of legal changes. You’ll also need to inform your workforce about how it may affect the way you do things in your organization.
In addition to reviewing new laws, you should update your policies and employee handbooks to reflect any required changes. Don’t forget to have employees acknowledge that they’ve read and understood each new policy.
Train Your Managers and Employees
Although HR professionals may write the policies, most of the responsibility for implementation will remain with managers and supervisors. As such, they should be trained on legal requirements so they can avoid any behavior that might violate the law and support employees in building a culture of compliance.
Create Two-Way Communication Channels
When compliance issues arise, managers and employees need a way to communicate them with your team. Make sure they’re aware of what issues they may need to report and what formal procedures you have in place for doing so.
Build a Culture of Compliance in Your Small Business
Compliance is particularly important for small and growing businesses. However, going it alone can be risky. If you’re running a growing organization, consider seeking expert support to help you assess potential blind spots and reduce your overall risk exposure.
AssetHR is an authority in this area. When you become an AssetHR client, you’ll gain access to The Compliance Center, a team of HR experts that focuses on local, state, and federal compliance.
Contact us today to learn how to stop guessing about your compliance protocols and increase your confidence in your legal strategy.