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. 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.
Benefits of following the compliance:
1. Awareness about compliance procedures help organizations mitigate risks, be prepared for adverse situations, if anything rises.
2. When Small and Medium scale enterprises plan to expand their business, compliance procedures help them work efficiently in large setup.
3. 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.
4. The business will have competitive advantage as they have a proven track of being compliant and results in reputation and goodwill.
5. A procedure will help in containing a mistake within one component and prevent a domino-effect in risk damage.
6. Compliance plans help on-boarding and exit of employees, contractors, suppliers, vendors and customers very easy.
7. 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 organization.
Risk of non-compliance:
1. Non-compliance leads to chaos. Along with this, enterprises tend to face penal actions and financial losses when compliance procedures are out of place.
2. Kinds of penal actions: Large corporate may invite class-suit action or can get sued for several thousand/million rupees 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 organizations said the Ministry of Women and Child Development.
3. Distortion of public image: Apart from financial loss and lawsuits, a company stands to lose its goodwill and reputation. Cases against Johnson and Johnson, Satyam Computer Concern, Tehelka, Saravana Bhavan are classic examples of image tarnish.
4. Effect on production and employment: Non-compliance can render organizations 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.
