Multi-process HRSourcing

Reliance on Compliance

When internal resources are stretched, are you sure you’re doing enough to shore up your compliance efforts?


by Andy Teng


America is indeed a land of opportunities. Just ask Bernie Madoff, who, as his name appropriately states, allegedly “made off” with billions of other people’s money. While he is accused of rigging the largest ponzi scheme ever to defraud investors, he’s not unique. In fact, it seems like numerous others have carried out similar thefts recently; Bernie was just more ambitious.

You may have opinions on what regulators were doing during the past, oh, couple of decades, but what’s more important is what they will be doing in the near future. And I don’t just mean SEC regulators. This new administration, you can be sure, will aggressively address all that lapse in oversight that occurred during the Bush years. The typically pro-labor Democrats, now fully in charge in Washington, will probably make sure compliance with all labor regulations is a high priority. (An early indicator of the party’s direction is the passage of the Lilly Ledbetter Fair Pay Act of 2009.)
Compliance is not something employers should trifle with. That’s why I’d like to stress the value of outsourcing. Whether you’re a Fortune 500 company or a 50-employee shop, staying on top of all employment regulations across the 50 states, not to mention 50 other countries if you’re a global player, takes tremendous resources. At a time when resource rationalization (that’s layoffs, in corporate speak) is revving up, HRO is one way in which employers don’t have to shoulder all of their compliance burdens alone.

Outsourcing has always touted myriad benefits, but the compliance piece is often underreported even though many buyers cite it as a reason for why they have adopted HRO. Established providers understand that of all the elements of outsourcing that they absolutely have to get right, adhering to regulations and corporate rules is not negotiable. Errant problems with pay codes, time and attendance postings, or time to hire can be rectified with minimal repercussions, but failure to comply with applicable local, state, and federal regulations can have dire consequences on an employer and conversely the provider. So reliable vendors have invested heavily in keeping on top of all those various rules.

More importantly, outsourcing adds a layer of third-party accountability; it’s akin to spellcheck on your desktop. Providers will let you know when your policies have crossed the line in terms of good behavior. Similarly, buyers’ own internal governance act to check the checkers, but with less heavy lifting than if they were to do it on their own. So, you see, there’s some pretty robust crosschecks when you outsource.

In this environment, compliance may not be foremost on the minds of CEOs and COOs; in some instances, corporate survival takes precedence. However, outsourcing enables buyers to address cost cutting and their ability to remain vigilant when internal resources are thinly stretched.

Compliance is an issue worth addressing again (I have touted HRO’s benefits in this area in the past), and employers should always remember that providers can help bolster their efforts to meet regulatory mandates. The problem is that compliance support, unlike cost reductions, is a soft benefit that’s hard to measure, so when you’re building a business case for outsourcing, you can’t exactly include it as a line item. But don’t underestimate its contribution. Being that we live in a land of opportunities, the opportunity to shore up your compliance program through outsourcing shouldn’t go unnoticed.  

Tags: Multi-Processed HR, Sourcing

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