One of the most important departments in an organization is the HR department. While it is generally believed that HR duties involve only recruiting and payroll management, HR duties have evolved over the years. HR compliance maintains its reputation as the most important requirement of human resource professionals. It is imperative for an HR professional to understand how important HR compliance is and to ensure the daily operation of the organization is not disrupted as a result of non-compliance to regulations.
What is HR compliance?
To understand the importance of HR Compliance, we first need to explain what it means. Statutory compliance – another aspect of HR compliance – is the adherence to the body of rules set by regulators to guide an organization’s treatment of its employees. These bodies of laws are designed to regulate relations between organizations and their employees. As such, they’re legally binding and sacristan. Companies that run afoul of these regulations are often subjected to court litigations or fines. To avoid this, companies spend heavily on employment law compliance.
HR experts institute a compliance management system to ensure regulatory compliance. A compliance management system refers to the process planning, organizing, controlling, and directing the activities that ensure HR legal compliance. Some companies, in an attempt to reduce the risk of falling victims of compliance audits, establish a dedicated compliance department. By detecting violations and ensuring they are addressed, this department effectively ensures that organizations enhance their HR legal compliance.
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How HR compliance boosts workplace productivity
Regulations are to companies as laws are to citizens of a country. As such, regulatory compliance is expected of every company. To ensure HR compliance by companies, regulators carry out frequent and scheduled compliance audits. Although, companies should have good HR compliance scores as it not only prevents avoidable costs, it improves company productivity.
According to a study carried out by Kronos India and SHRM India, 90 percent of the respondents confirmed that workforce management can enhance productivity and compliance and reduce costs by at least 5-15 percent. 37 percent of these respondents admitted that accurate workforce management will help improve both productivity and reduce labor costs by 5-15 percent, while another 37 percent felt it would be impacted by a good 15-25 percent.
HR compliance is very essential, if not similar, to workforce management. Below are the four strategies to adopt to improve productivity through HR compliance.
1. Harassment and discrimination
Discrimination and harassment are two words that mean the same thing. The only difference between the two is that harassment means discrimination based on sex. For this article, we will use the word “discriminate” to mean both harassment and discrimination. Whichever way we look at it, women are the most discriminated in society.
Women are believed to be weak in comparison to their male counterparts, making them vulnerable to discrimination. Since the organization is a part of the society, such mentality finds its way into the workplace.
Fortunately, laws have been enacted to tackle such discriminatory practices women face in the workplace. HR has to see to it that these laws are adapted into an organization’s policy. This doesn’t only help an organization avoid a loss of money, it also boosts morale and improves productivity among employees.
Money is a strong motivator for getting anything done. And if you want to get it done efficiently, more money must be spent. But such is not the case as found from early times, and even till now.
If capitalism was left unchecked, like the pre-Great Depression period, many CEOs wouldn’t mind paying employees paltry sums so far their pockets keep getting fat. Such as the greed that brought economies of countries to a standstill, during the Great Recession of 1929.
As a result, economic reforms that supported Government intervention through the regulation of business practices were adopted. Laws stating minimum wages, among other laws that protected the interest of employees, were enacted.
Since an organization cannot survive without its employees, it is in the organization’s best interest to comply. Apart from the fact that the company will increase productivity in the workplace, it will have a host of dedicated and committed employees.
3. Alcohol and drug abuse
Alcohol and drug abuse by employees cause many expensive problems for business ranging from lost productivity to an increase in health insurance claims. According to statistics, alcohol and drug users are far less productive, use up many sick days, are more likely to injure themselves or someone else, and are five times more likely to file a worker’s compensation claim.
Although there are laws that describe how substance abuse cases should be handled, it always presents some difficulty when enforcing in the workplace. While it is generally acceptable to maintain a drug-free policy in the workplace, HR managers have to be careful with the issue of people with disabilities.
Most laws protecting disabled people apply to businesses with over 15 workers. It mandates such organizations to provide reasonable accommodations for employees with qualifying disabilities. Irrespective of this, fair accommodation should be provided for people with disabilities. It makes an organization more appealing to the public, who are, or, potential customers/clients.
You might also be interested to read: Startups Need a More Conducive Compliance Landscape: Avantis View
4. Employee handbook
While this might not be a necessity for a company with a small group of employees, it is necessary for a big firm. Anywhere there is a gathering of many individuals, there is bound to be every kind of situation possible.
An employee handbook serves as a go-to for clarifying issues that might arise in the workplace in the absence of the HR manager. It is expected that the handbook contains company policies that guide and define the responsibilities of employees by compliance laws.
Human resource managers, for the sake of efficiency, should always be on the lookout for new laws put out by regulatory agencies. This is to ensure the employee handbook is always updated with new laws. Ideally, it takes 3-6 months for new laws to take effect. While it saves the company from unnecessary litigation costs, it also makes employees feel cared for.
- Workforce Management Can Improve Productivity Reducing Labour Costs: Report- Bypeople. Published by BW Online Bureau on July 08, 2019
- A Guide to Statutory Compliance in HR & Payroll- QUIKCHEX, 2019
- The evolving role of HR in Corporate India. Bypeople, written by Anirban Das, September 21st 2018