The Real Cost of Non-Compliance in Businesses  

All organizations are aware that they must conduct compliance training courses for employees to follow all rules and regulations mandated by the company. If a company is non-compliant or runs the risk of it, there are substantial costs to pay.

Unfortunately, some companies still feel tempted to continue operating as they always have instead of changing to engage employees and meet ever-changing compliance requirements. As a result, there’s a chance that such actions (or lack of it) can negatively impact the company. That’s why it’s crucial to begin utilizing platforms like True Office Learning to inform and encourage employees to follow crucial rules and regulations.

Read on to find out the hefty costs of non-compliance.

The Cost of Non-Compliance

There are financial and reputational costs to non-compliance, which include the following:

• Fine settlements
• Business disruption
• Productivity loss
• Revenue loss

Unfortunately, this becomes more and more expensive each year. Today, the average cost for organizations experiencing non-compliance is almost $15 million, which is a whopping 45% increase from 2011! While we can ascribe this to high-profile fines and penalties, the real cost is even more severe.

Business Disruption

According to studies, the most significant financial cost of non-compliance is business disruption, going over fines and penalties. That’s because when found non-compliant, businesses would be forced to implement appropriate compliance changes before going back to business.

That would result in a knock-on effect in business areas that aren’t subject to the breached regulations, paralyzing the entire business. If compliance needs to come by introducing new processes, this would further disrupt business operations due to the time spent training staff and the implementation itself.

Business Reputation

Another thing business owners don’t consider is how non-compliance can ruin their reputation. This is actually one of the worst consequences a business can experience from non-compliance, as it’s very difficult to bounce back from reputational damage.

If companies are found to be non-compliant with legislations or industry-specific regulations, stakeholders will begin to doubt the business. Furthermore, employees can feel that their personal information, while clients and customers would question the company’s competence. Even investors might feel unsatisfied and unwilling to continue investing in the company.

And we know that once businesses lose the support of stakeholders, it can lead to the company’s closure.

In-Country Compliance Costs

Another mistake business owners commit is underestimating how complex international payroll compliance is. The global expansion would present new challenges that can threaten how a company can operate overseas, even if you believe your company is extremely skilled in hiring and managing payroll.

If you gamble with employment law, whether missing a step in the hiring process or delaying certain payments, your expansion may cost you more money in the long run. That’s why it’s crucial to consult experts before beginning a global expansion. Always remember that maintaining in-country compliance is much cheaper compared to getting hit from fines and other setbacks.

Wrapping It Up

Now that you’re more familiar with what non-compliance can cost the company, it’s time to follow the proper strategies.