Need and Importance Of Statutory Compliance
At the cusp of industry 4.0, businesses are often at the crossroads of digitization, change management and automation initiatives. Enterprises of all sizes are expanding their business territory thereby creating challenging supply chain networks. Along with this growth, statutory compliance and regulations are increasing exponentially. These days, enterprises hold collective responsibility for their vendors, suppliers, customers and partners. Therefore, there is an impending need for monitoring the statutory compliance services.
What is Statutory Compliance? Statutory compliance simply means the adherence to prescribed rules and regulations. These include audit and accounts management, supply chain management, internal compliance and risk assessment, wage management, employee welfare regulations, environmental risk mitigation and management to name a few.
Benefits of following the compliance:
Awareness about compliance procedures help organisations mitigate risks, be prepared for adverse situations, if anything rises
When Small and Medium scale enterprises plan to expand their business, compliance procedures help them work efficiently in large setup
Due to multi-party involvement in compliance management, having a detailed record of procedures and plans in place will help in assessing what exactly went wrong and how to prevent it the next time
The business will have competitive advantage as they have a proven track of being compliant and results in reputation and goodwill
A procedure will help in containing a mistake within one component and prevent a domino-effect in risk damage.
Compliance plans helps onboarding and exit of employees, contractors, suppliers, vendors and customers very easy.
Companies who function across geographies, involving long supply chains find it easy to transcend borders when compliance procedures are in place. These procedures help achieve uniformity across the entire organisation.
The onus on Big Data, analytics and behavioural analysis form the critical nodal point in any enterprise these days. Although classification & categorising data is important, presenting consumable data from these large volumes is the need of the hour. Having compliance procedures in place help in efficient data asset management
Risk of non-compliance:
Non-compliance leads to chaos. Along with this, enterprises tend to face penal actions and financial losses when compliance procedures are out of place.
Kinds of penal actions: Large corporates may invite class-suit action or can get sued for several thousand/million dollars for failure to comply with norms. For instance – International brand Uber faced over 215 complaints that included 47 sexual harassment cases. In India, an internal compliance committee (ICC) will soon have to be in place across organisations said the Ministry of Women and Child Development.
As per a report by weforum, a typical Fortune 500 company with 23,750 employees lost $6.7 million a year because of absenteeism, low productivity, and staff turnover as a result of sexual harassment. It’s not just non-compliance penalty, but also settlement costs at a later point in time.
Distortion of public image: Apart from financial loss and lawsuits, a company stands to lose its goodwill and reputation. Cases against Johnson and Johnson, Sathyam Computer Concern, Tehelka, Saravana Bhavan are classic examples of image tarnish.
Effect on production and employment: Non-compliance can render organisations out of business. This results in mass unemployment and non-utilization of resources. Due a companies’ tarnished image, employees find it difficult to be re-employed.
Compliance is not a one-time procedure. It is a continuous and on-going process where both internal and external stakeholders together constitute to its upkeep. They further enable organisations to function effectively and in an organised manner.
TalentPro India provides the best of the Compliance Services for your organization. Get in touch with us today for more about our services.
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