What Compliance Is 

It means to comply with laws and regulations.

This concept covers all the policies, rules, internal and external controls to which an organization must conform. When in compliance, an organization’s activities will be in full accordance with the rules and laws applied to its processes.

Both the company and all its people, including suppliers of interest, need to behave in accordance with the rules of regulatory bodies. Good compliance represents an opportunity to enhance the value of a business. The benefits of this are not only in making the business a more attractive trading partner or investment, but also in more localized and immediate benefits.

In addition, they must ensure faithful compliance with the various internal normative instruments. Only in this way will the company comply with regulations for environment, labor, finance, work safety, operations, accounting, etc.

Why Compliances Are Important In Business 

  • To define and regulate an organization’s – compliance also helps an organization define and monitor its “how.” Compliance focuses on what behaviors will and won’t be permitted in execution of the “why.” When compliance is done well, it increases efficiency and effectiveness because employees have been trained to know, intuitively, how do their jobs and how to reason through ambiguous situations. Thus, compliance is not designed to generate “no.” It aims for intuitive “yeses.”


  • Compliance Demands Grow with Your Business – The importance of compliance is more evident as issues become more complex when your business grows. You will have expanded responsibilities regarding your workers, covering hiring, firing, discrimination, harassment, safety, wages, payroll and benefits. The way you make and sell your product and service might fall under the auspices of a government agency, such as a restaurant needing to meet health department guidelines.


  • Compliances helps to maintain trust – Trust is fostered through three elements: (1) repeated interactions with another person; (2) honest communication with that person; and (3) following through on commitments. Organizations cannot ensure that they are meeting element (2) or (3) unless they have adopted rules about proper communications and proper follow through. The head of the organization can’t be confident that others are being honest in their interactions unless the organization has adopted rules about honesty and trained people about the importance of honesty and candor. The leader cannot be confident that people are following through on commitments unless there are rules and norms that have been adopted and emphasized throughout the organization.


  • Higher Productivity in the Company – Many business compliance issues deal with protecting employees. The more employees feel they work in a fair, professional and safe environment, the more likely they will be to stay with you. Internal compliance to safety, wages, employee benefits, compensations, and employee protection will create a positive environment in the work area. Employees are more fervent to work when they feel that that they are well compensated for their efforts and that they are safe within the business’ reach. It is important that internal compliance is adhered to, since it will ensure that employees are satisfied and that all complains or issues are monitored and addressed properly before they grow and affect the entire corporation.


  • To reduce unforced errors – Unforced errors are the most common risks to organizational performance, and compliance helps prevent unforced errors.


  • Compliance enhances consistency – Without a compliance function, decisions are ad hoc and made in a vacuum. Articulated values, ethics policies, and codes of conduct provide reference points for making decisions a matter of routine. As Peter Drucker explained, “All events but the truly unique require a generic solution. They require a rule, a policy, a principle. Once the right principle has been developed all manifestations of the same generic situation can be handled pragmatically.


  • Better Public Relations – When you meet your legal obligations, one of the benefits of compliance is the ability to tout these on your website and in your marketing materials. For example, when you place job advertisements, include the fact that you are an equal opportunity employer. When you recruit new workers, highlight your company’s commitment to both physical safety and mental health by referencing key policies and benefits dedicated to proactive healthcare and wellbeing, such as extended maternity and paternity leave or free gym memberships.


  • Change and innovation – Compliance can serve as a powerful tool of long-term change. If every day behavior stems from training and codes of conduct, and codes of conduct stem from values, articulation and modification of values over time can profoundly influence organizational behavior. In the words of system theorists, values can be a leverage point, and compliance ultimately focuses on the driving values of an organization.

With the compliance of laws, the transparency of processes becomes a more consolidated reality, which brings greater confidence in the market, the company reduces costs and expenses, increases its operating income and productivity hence avoids losses.