Corporate compliance is the process that organizations and businesses use to ensure that employees and the company itself abide by internal and external rules and regulations. This can include a company’s ethics policy, the employee handbook, and other legal policies such as taxes and corporate reporting.
As a small business owner, taking steps toward meeting legal obligations might seem simple, but only fulfilling the minimum requirements could result in missing beneficial opportunities. Understanding the purposes for the various laws, rules, and regulations that guide your business will help you take advantage of any benefits available while also staying in compliance at all times.
Staying out of trouble, and out of court
The prevention of violation is perhaps the leading reason to establish and enforce an ethics and compliance strategy for your business.
Depending on the type and severity of the offense, having a solid compliance plan can save your business from damaging legal action by helping you recognize problem areas ahead of time and prevent costly mistakes. When employees or business partners make a mistake, a strong compliance plan can typically convince a prosecutor not to press charges or at least take a less aggressive approach. This strategy will also focus on areas where your business is vulnerable to the most risk, whether that is around ethics, employment, health, environmental, or any other area where local, state or federal laws provide criminal or civil liability.
Protecting your company's resources and reputation
Minimize your damages
Should a problem arise, the courts and law enforcement typically look more favorably on businesses that actively aim to prevent problems with robust corporate policies than those that don’t. In fact, under the U.S. Federal Sentencing Guidelines, a company that cooperates with investigations can potentially earn up to a 95 percent reduction in fines if an effective ethics and compliance program was being enforced at the time of violation.
Drive long term change and innovation
Compliance not only serves in matters of ethics and conduct, but it can function as a powerful tool of long-term change and development. If daily operations and behavior come from training and codes of conduct, and conduct arises from values, shifts made in values over time can immensely impact organizational behavior. In other words, values can be a point of leverage, and compliance essentially focuses on the driving values of a company.
Create a business advantage and attract opportunities
Large businesses and government entities are progressively seeking business partnerships that maintain effective corporate policies.
Having a reputation as an ethical business with good compliance policies in order will help attract leading talent and will make your company more credible and appealing to potential partnerships, contract opportunities, or acquisition consideration.
Bottom line
The purpose of corporate compliance is to protect your business. It’s the benchmark against which ethics, policies, values, and codes of conducts are measured, making great business decisions easy. The payoffs of having corporate compliance in place can be significant, from protecting your business’s reputation to keeping you out of court, as well as other actions that disrupt performance and put your company at risk.
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