On top of making sure all their day-to-day operations are running smoothly, business owners need to ensure that they're keeping up with all the latest local and federal business laws. This isn't cheap – a recent survey from The Workforce Institute at Kronos indicates it may cost as much as $100,000 for small businesses to maintain compliance every time labor-related governmental regulations are created or changed.
Based on the survey, here are the top compliance challenges small businesses face, and what you can do to make them easier on yourself.
Time is one of the biggest challenges cited by survey respondents. Changes can become law in as little as 60 days, but those surveyed said they need more time to review and implement internal policy changes effectively.
More than a third of those surveyed said they needed between 120 and 150 days to sufficiently prepare for implementation of new regulations, and some even cited 150 days as the minimum time required.
There is very little small businesses can do from a reactive position to increase the narrow window of time provided for compliance to government regulations. However, proactively, they can reach out to their local, state and federal representatives on a regular basis to ask that longer windows of time become the standard going forward.
More than half of those surveyed said outdated HR and payroll systems make compliance nearly impossible, regardless of the intent of those charged with implementing the changes. With too little help and inadequate technological support, nearly 60 percent reported compliance corners being cut by colleagues.
"Equipping these professionals with modern technology and updated processes will simplify daily compliance duties so that they can focus on attracting, retaining, and developing the most engaged workforce possible," said Malysa O'Connor, senior director of SMB market development at Kronos.
Making significant upgrades to software or hardware has been prohibitively expensive for small businesses in the past. However, with the increased prevalence of cloud-based software solutions, it has become far more affordable. Small businesses should consider broadening their research for technological solutions beyond what they have used in the past and begin to investigate cloud-based services that are updated more regularly and require a less substantial initial investment.
Finally, small businesses find it difficult to create an effective procedure to receive and review compliance changes in real time. More than half of respondents said they rely on their HR and payroll software or a vendor to learn about changes. Others receive the updates through industry associations, internal legal counsel, regional associations and legal publications.
"Organizations should take a step back to review how they approach tracking, implementing, and communicating compliance-related changes and attempt to identify areas of improvement in their processes," said Joyce Maroney, director of The Workforce Institute at Kronos. "[This way], HR and payroll professionals can spend more time focused on strategies that will improve employee engagement and deliver a more positive employee experience."
One approach could be to have one employee who is dedicated to staying informed on the latest changes and researching cost-effective solutions to new compliance regulations as part of their daily or weekly responsibilities.
"As the government becomes more regulated, the costs to businesses will increase and the workforce will suffer as a result," said Dan Schawbel, partner and research director at Future Workplace. "Businesses must adopt new technology and internal procedures to increase responsiveness and mitigate costs going forward."