Compliance in business can mean two things: as an “action” and as a “standard.” To fully understand what it is and why it matters in your business, you need to know the difference between these two concepts.
What is compliance?
Compliance as an action
Generally, compliance in business or in a company means adhering to government laws, health and safety standards, or data and security requirements. It is an “action” if there’s a conscious recognition of the said rules and policies. Deemed essential to the existence of a business or company, compliance becomes a necessary action.
What does this mean?
Regulatory compliance accompanies certain requirements mandated by recognized governing bodies. In this context, to comply means to meet certain requirements so that your company may run legally and safely.
This also speaks of the different responsibilities of a company. Compliant businesses are aware that they are responsible both to their employees and clients. To be non-compliant can result in serious consequences.
When you clearly meet regulatory requirements, you create a positive business reputation. And when you identify and take the necessary steps to comply with policies, relevant laws, and regulations, you can define under which program or framework your company should operate.
Compliance as a standard
Compliance becomes a standard if you have a well-designed set of rules and policies to help maintain security and stability in your company. These standards are only relevant if they are enforced properly and observed religiously within the organization. To consider it as a standard, it’s not enough that you simply adhere to laws and policies. You also need to understand whether following these rules will address the true needs of your company.
Why does compliance matter?
The main purpose of compliance is simple—this is to identify and avoid possible red flags in your business. Again, failure to comply seriously could result in costly fines or penalties in the future.
Furthermore, corporate compliance also helps your employees act responsibly. It’s important to never take compliance for granted; for it can have a great impact on your business internally and externally.