I believe in the old saying that an ounce of prevention will prevent a pound of cure. A little precaution before a crisis occurs is preferable to a lot of fixing after afterwards. To put it another way, I believe a lawyer can either serve a corporation as being a doctor or fireman. If a corporation looks at a lawyer as a doctor, then they will seek effective legal counsel before there is a problem for the specific purpose of preventing a problem before it occurs. This is akin to yearly checkup at your internist’s office. On the other hand, some corporations treat a lawyer as a fireman. In other words, some corporations only seek out legal counsel when there is a problem (a.k.a. fire) and then the lawyers placed in the difficult position of having to act like a fireman, triage the problem, act quickly and effectively and hopefully put out the fire. Of course, is much more expensive to have the fire department responded fire than it is to go to your doctor's office for periodic checkup. There is no difference in the corporate world. If you want to prevent the problem, then the leaders of the corporation must decide whether they want to ensure compliance with the law by hiring the proper professionals or if they want TO take the risk of noncompliance and deal with the prospect of costly lawsuits. While the cost of compliance with the law is never cheap, the cost of noncompliance is often greater than the cost of compliance
Companies Should Consider Outsourcing Their Organizations HR Compliance Functions
For both small and midsized companies, effective human resource management is critical to success — especially in today’s competitive business climate. HR management is a complex, ever-changing discipline burdened with trials that impact employee productivity, HR compliance, and ultimately, the bottom line. Company HR managers and those who deal with HR corporate compliance must look at six key areas: hiring, payroll, benefits, employee relations, risk & safety and employee relations. Since HR compliance lies at the heart of effective human resource management, it is alarming to discover that most HR managers either express concern about their ability to comply with HR laws and employment laws or know that they are not in compliance with the law, but do not know what to do about it.
Companies Often Lack Confidence in their Organizations’ HR Compliance Capabilities
Locating and hiring qualified HR Managers should be a top business concern for many corporations. Most companies have a moderate or slight level of confidence — or even no confidence at all — in their ability to comply with important HR and employment laws, rules and regulations. This is very troubling, especially considering the fact that most legal problems can be avoided with an ounce of prevention.
HR Compliance Challenges Are Expected to Increase Moving Forward
HR managers should expect the compliance legal landscape to become even more challenging over the next one to three years. Given their compliance concerns — both today and looking forward — it’s not surprising that the vast majority of companies seeks professional legal advice to address compliance issue and would even consider outsourcing their HR function entirely.
Where HR Managers See Room for HR Compliance Improvements
In my experience, many HR managers are less than confident with regard to compliance in noteworthy aspects of hiring, employee relations, and risk & safety. Non-compliance in these areas could put small and midsized businesses in jeopardy of FLSA and OSHA violations, as well as employee grievances.
Taking Steps to Minimize HR Compliance Risks
Given the risks associated with non-compliance, companies should consider taking steps to address any HR compliance issues sooner rather than later. With employee litigation — and compensatory awards — on the rise, companies face major potential legal liabilities if they fail to comply with HR and employment laws, rules and regulations. Statistics compiled by Jury Verdict Research show that employment lawsuits have risen 400 percent in the last 20 years, with the average compensatory reward in federal employment cases now exceeding $490,000. For small to midsized businesses, these statistics highlight the need to address any compliance concerns, even if that means seeking guidance from third-party professionals or outsourcing the HR function entirely.
Addressing HR Compliance Issues is Key to Effective Human Resource Management
In order to achieve a competitive edge, today’s business are striving to operate as efficiently and cost-effectively as possible while maintaining HR compliance and attracting and retaining top talent. However, HR managers are recognizing the challenges of complying with complex, dynamic HR laws and employment laws. Since shortcomings in key areas of HR compliance can put businesses at a competitive and financial disadvantage, it only makes sense that small and midsized companies use the many effective tools and services available to become — and stay — compliant.
A little precaution before a crisis occurs is preferable to a lot of fixing after afterwards.