Compliance agility: How HR can keep pace with regulatory change
Ask HR professionals what keeps them up at night and more often than not you’ll hear “compliance.” The exponential pace of technological innovation creates a regulatory nightmare, with ever-changing laws that attempt to keep up. From data privacy to pay equity to paid leave, the number of new compliance laws introduced each year has been steadily rising for decades. And non-compliance is costly: employer fines and penalties increased 92 percent from 2018 to 2020.
The pandemic added fuel to this fire, and three quarters of HR professionals in one December 2020 study said they were concerned about increasing lawsuits alleging labor and employment violations related to COVID-19. Meanwhile, President Biden remains committed to his campaign promise to increase the number of OSHA investigators — by up to 100 percent. His budget proposal would allow OSHA to hire hundreds of new employees to investigate whistleblower claims and enforce citations.
Add to this the many different aspects of compliance — vaccine mandates, pay transparency, minimum wage, and many others — and the fact that so much of it varies on a global, national, statewide, local, organizational, and departmental scale, and it’s no wonder HR professionals are overwhelmed.
The good news, though, is there's a path forward that has the potential to help cut down on compliance complexity.
What does compliance agility mean?
While we were discussing the compliance challenges the industry was seeing with colleagues and in think tanks, the concept of “reframing” compliance kept coming up. Rather than viewing compliance as a set, stagnant force that we react to when necessary, we realized organizations need to treat compliance as a valuable indication of where the industry is headed and areas we need to focus on. Part of this is recognizing that this can change suddenly due to fluctuations in administration, economic stability, or public sentiment.
True compliance agility means going beyond simply meeting regulatory requirements; it’s paying attention to where the trends are headed and leveraging these insights to adjust your business and shape the trends themselves. As a happy side effect, it often comes coupled with positive PR and increased employee loyalty.
Major companies like Tyson Foods and Ford Motors have recognized the business case for adapting before the market and regulations demand it (plant-based meat and electric vehicles, respectively). These companies aren’t simply attempting to remain compliant with food quality standards or emissions regulations — they’ve recognized that the industry is demanding more than the bare minimum requirements and that eventually more regulation will be on the way anyway.
Environmental, social, and corporate governance
One of the many ways we see compliance agility manifesting is when it comes to environmental, social, and corporate governance issues. Topics like social justice, climate change, and mental health have never been more top-of-mind for employers, yet leaders are unsure how to approach these areas and, in many cases, have adopted a “wait-and-see” approach. Others have made statements, given generous donations, or developed side projects, but failed to really move the needle on key problems within their own organizations.
Much like financial reporting was a bit of a wild west situation until regulations came around in the 1900s, we predict future legislation will require organizations to publicly share their social and environmental impact with clear, standardized, easy-to-understand metrics. This is likely to include things like DEI&B metrics, carbon emissions, AI and automation ethics, and employees' physical, mental, and financial wellbeing.
Conclusion: Compliance agility requires that we lean on technology
When supported by solutions and technology partners that make compliance updates seamless, often with little to no IT involvement, HR leaders are able to focus on more strategic initiatives and less on manual work. Other critical areas technology can support include workforce continuity solutions, which can help leaders understand workforce changes in real time, and analytics and reporting capabilities that can set up proactive alerts of compliance violations or potential business issues.
Of course, to get the support you need for agile compliance practices you need to convince your leaders it's worth the investment. If you need help knowing where to start, check out this webinar from HR expert Julie Develin to build a convincing case for change.