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Creating Workplace Compliance

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Article: Creating Workplace Compliance

Article Date: Wednesday, January 15, 2003

Article Source: Cascade Business News

CascaseBusNews.1.15.03.pdf

Creating Workplace Compliance

by KEN THRASHER, CEO, Complí
Cascade Business Journal - January 15, 2003

The state of U.S. business seems to be in chaos. The economy is limping along. Corporate wrongdoing runs rampant with the resulting shareholder lawsuits citing the lack of effective corporate governance. Regulations mount while insurance prices skyrocket. And, companies in all industries are downsizing, belt-tightening and even worse, shutting their doors.

Adding insult to injury, employment practices liability claims are on the rise. In fact, employee lawsuits have risen 400 percent in the past 20 years to the current level of up to 6.5 claims per 1,000 employees annually. Moreover,

• In a survey conducted by the Society for Human Resource Management, 53 percent of companies have been named as defendants in employment-related lawsuits — 90 percent of the lawsuits brought were by former employees. Such claims typically allege discrimination based on sex, disability, age, race or religion; wrongful termination; invasion of privacy; and wrongful demotion or failure to promote.
• The cost of such a lawsuit can be a staggering $50,000 in litigation fees, with the average jury award exceeding $250,000.
• Companies also suffer intangible losses in reduced productivity and employee moral, not to mention loss of investor confidence and a tarnished public image.

Setting the Stage for Compliance

Employers, however, can take heart. Renewed attention to employment practices compliance has given rise to strategies employers can employ to reduce their vulnerability to lawsuits. In the process, attention given to employment practices will also further compliance with new and existing corporate governance regulations, such as the Sarbanes-Oxley Act. Implementing employment practices compliance structure and processes in the work environment can go a long way toward establishing indisputable transparency and accountability.

Companies that demonstrate a strong commitment to corporate values and good business practices to benefit their shareholders and employees can improve corporate culture, not only reducing the frequency of lawsuits but the severity of jury awards. Moreover, the potential is greater for renewed investor confidence.

Weighing In On EPCS Benefits

Developing a sound governance process, as well as reducing risk exposure, can be accomplished with successful implementation of an employment practices compliance system (EPCS). While some companies have adopted such programs as a corrective action, many companies are taking a proactive approach to improve their workplaces before they are scrutinized under new regulations.

Establishing a flexible and comprehensive EPCS provides a solid framework for managing any regulatory environment. Furthermore, it can demonstrate a "standard of care" in terms of informing and educating managers, supervisors and employees about company policies and procedures such as workplace discrimination, corporate code of conduct, hiring and firing regulations and sexual harassment. Companies that merge strategic employment practices compliance processes into the way they conduct business realize numerous bottom-line benefits, including:

• Demonstration of ethical operations, accountability and transparency that fosters an environment of mutual trust between the company and its stakeholders.
• Reduced insurance costs — Increasingly, insurers are reducing rates for companies who have instituted an exemplary compliance process.
• Reduced potential of frivolous lawsuits — Through education, training, and real-time monitoring, a compliance process acts as a risk management system, reducing the likelihood that a lawsuit will be filed. However, if there is litigation, the compliance process provides organized, substantiated documentation to refute the claim.
• Reduced labor costs — Human Resources spends less time pushing paper and tracking compliance with regulations and keeping up with ever-changing laws. It results in less time spent reacting to problems and protects the company’s assets.
• Improved employee morale and productivity — Companies help their individual employees gain a clearer picture of how their efforts make a difference and contribute to organizational goals, allowing each person to have a hand in corporate compliance.

Today’s tough business environment makes the numerous benefits outlined above attractive competitive advantages that companies can gain when they choose to implement a comprehensive employment practices compliance process.

Ken Thrasher is the CEO of Complí. Prior to joining Compli, Ken served 18 years in executive positions with Fred Meyer Stores including CFO and executive vice president with oversight of Human Resources.
Information: www.compli.com or 503/295-1820