Corporate compliance is when a company ensures its operations and employees abide by the rules, regulations, ethical practices and industry standards that apply to their business. Government and industry guidelines exist to provide a standard by which corporations must comply. It protects consumers, employees and the public. Corporations that fail to comply face potential financial losses and legal repercussions.
The problem is that corporations are sometimes so big and diverse that it can be challenging to catch violations as they happen. One disgruntled employee can easily file a complaint with the U.S. Equal Employment Opportunity Commission if they feel bias within the department or team. A defective product or service that does not meet company standards can ruin your company’s reputation. News of corruption within the company can also be bad for business. You must make sure the people in your company know what to do and how to do it right.
How can a corporation ensure compliance?
Corporate compliance requires the collaborative efforts of a company and its people. It starts from within. A company can use the following instruments to establish internal standards and maintain a significant amount of control over the action of its people:
- Code of Conduct
- Compliance Standards and Policies
- Compliance procedures
Corporate compliance requires a company to design, implement and monitor their company policies. The company can do this by:
- Training their people on relevant procedures, regulations and laws
- Implementing the compliance procedures
- Monitoring violations and disciplining them accordingly
Monitoring the activities within a company allows it to identify gaps in compliance and address them immediately and consistently.
What is the significance of corporate compliance?
Ensuring your corporation is compliant protects your business and allows you to avoid fraud, abuse, discrimination, waste and infringement. Every person in your business should know and agree with the company’s compliance efforts. Successful compliance efforts improve communication between supervisors and employees and foster a conducive working community for all.