In the wake of numerous scandals like Enron where companies have exploited the public and committed fraud, the government now requires publicly traded companies to have a robust ethics and compliance program in place. The requirements have been changed or added by regulators over the years as they enact detailed laws and step up enforcement in a number of areas. Today, it has become the norm for Fortune 500 companies to have rigorous compliance training programs, have compliance professionals on staff as well as detailed policy manuals. But, what about non-Fortune 500 companies? Should they have a compliance program in place?
Here are the top five reasons for every business to adopt a compliance program:
Reason 1: Stay out of trouble
One of the most important reasons for adopting and enforcing a good ethics and compliance program is to prevent a violation of the law. When you have implemented a good corporate compliance program, you will be able to identify the problem areas early and prevent costly mistakes. There is no need for a good compliance program to be expensive and it should be tailored as per the company’s operations and business. In this way, it will be able to focus more on areas of higher risk, whether it is employment, environmental, government procurement, ethics, antitrust, employment or any area where federal, state or local laws provide for corporate civil or criminal liability. Here’s an interesting page with more information in this regard: https://www.minutesdepot.com/press
Reason 2: Stay out of court
With a robust compliance policy, a business can be protected from adverse legal action, depending on the kind of offense. When subcontractors, employees or business partners make bad decisions, a knowledgeable corporate counsel and a solid compliance program can convince prosecutors or regulators not to press charges.
Reason 3: Create business advantage
Government entities, large companies and foreign concerns are looking for business partners who have effective corporate policies. A good compliance program and a reputation of being an ethical business can lure in top talent and also make your business an attractive option for potential partnerships, acquisition or merger considerations and for contract opportunities.
Reason 4: Protect your reputation
As far as compliance mistakes and ethical violations is concerned, the adage ‘any press is good press’ doesn’t really apply. Even rumored or suspected violations can damage the reputation of your business and provide competitors with a solid advantage. When a compliance program is implemented, it sensitizes employees to key issues and also strengthens your reputation as an ethical and diligent business.
Reason 5: Mitigate your damages
If a problem does arise, courts and enforcement officials generally look favorably on businesses that had solid corporate policies in place for preventing problems. As a matter of fact, a business that cooperates with investigation can actually get a 95% reduction in fines as per the U.S. Federal Sentencing Guidelines, as long as they maintained an effective ethics and compliance at the time of violation.
These are some excellent reasons for adopting an effective ethics and compliance program for your business in the long run.