Following a set of rules, known as compliance, is part of doing business whether you’re an executive, manager, sales representative, or a business owner.
Generally, compliance means adhering to a rule, such as a policy, standard, specification, or law. Regulatory compliance defines the goals companies want to achieve to ensure that they understand and take the necessary steps to comply with policies, relevant laws, and regulations.
These include data security requirements, PCI-DSS (Payment Card Industry Data Security Standard), and HIPAA (Health Insurance Portability and Accountability Act of 1996), regulation for the health care industry. Companies must also comply with OSHA (Occupational Safety and Health Act) regulations requiring them to enact policies and procedures to protect their workers.
Compliance in business means a company must have a well-thought-out plan that includes the right policies and procedures to ensure they meet compliance requirements in a timely manner. An organization must also have an accurate record-keeping system to document those procedures.
In business, compliance is linked to corporate governance, which is the framework of rules, regulations, and practices under which a company operates. The main focus of corporate governance is to ensure compliance with the law, accountability, fairness, and transparency in an organization’s relationship with its major stakeholders.
Simply put, corporate governance refers to how the business makes decisions.
It’s not just executives at large enterprises who have to be concerned about compliance issues. A small business owner is also required to comply with all applicable external and internal business requirements.
To keep track of the different compliance requirements, a business should have a chief compliance officer managing a compliance department. This department will monitor all of a company’s compliance guidelines, issues, cases, and projects.
In addition, best practices suggest that a company should implement software and databases to automatically keep track of all the data and help audit performance management, compliance risk management factors, and more.