Key Metrics for a Compliance Program to Monitor

Published: August 8, 2023 by Gordon Middleton

A compliance program is designed to ensure employees — and organizations as a whole — abide by internal rules of conduct and external laws, rules and regulations. For organizations, this is an incredibly valuable way to protect themselves from hefty fines and lawsuits that can be a considerable hindrance to both business operations and the bottom line.

However, despite the importance of proper adherence to applicable laws or regulations, the state of compliance and risk is ever evolving. And as complex regulations governing businesses today continuously change, organizations are finding it increasingly difficult to stay compliant.

We’re taking a closer look at the key compliance metrics that employers need to consider, along with advanced solutions to optimize the process — effectively mitigating the possibility of non-compliance.

The Top Compliance Metrics to Manage with a Program

Think of these metrics as essentially measurements indicating how well your compliance program is operating.

Cost metrics

When it comes to managing cost metrics, employers can measure the percentage of employees who register to receive electronic delivery for tax and ACA statements. As employees increasingly sign up to receive electronic copies of their W-2s and ACA statements, organizations save money on print and mail costs — not to mention the environmental benefits this transformation can offer as well.

Cost savings can also be generated by improving various operational aspects of your compliance programs.

Operational metrics

There are a few operational metrics companies should monitor, including:

  • The number of corrected W-2s & ACA statements: This helps employers measure quality and team efficiency—not to mention the cost of distributing new statements to employees.
  • The percentage of on-time submission of I-9s: By taking this into account, organizations can measure their compliance with the required I-9 guidelines and make process adjustments to help avoid potentially costly penalties.
  • The number of support calls to your HR & Payroll teams: This gives employers a closer look at the support that’s required with the current systems in place. Providing better decision support tools for employees to complete necessary compliance tasks should reduce the number of support inquiries into your administrative teams.
  • Administrative time: This includes the time required for HR and payroll teams to administer tax withholding forms, I-9s, prepare year-end ACA and tax statements and other related compliance forms. Keeping an eye on areas where efficiency could be improved should be a priority for operational oversight efforts. Automating steps within your compliance program can free your teams from the administrative burdens of managing your compliance programs.

Employee engagement and satisfaction

While not always immediately apparent, employers have a valuable opportunity to measure the level of workforce engagement and satisfaction in terms of compliance to recognize areas of improvement. For example, organizations might consider whether employees are completing necessary compliance tasks on time and the support they require to do so. Moreover, companies can ask for feedback to get a sense of their overall impressions of the compliance program in place.

Recognizing, overseeing and managing these metrics are inevitably a linchpin in determining how well your program is or isn’t working — giving your organization deeper insight into what’s needed for success moving forward.

Challenges and Penalties of Non-compliance to Keep in Mind

According to Globalscape, not only do organizations lose an average of $4 million in revenue due to a single non-compliance event, but there has also been a 45% increase in the cost of non-compliance since 2011. This highlights just how essential it is for companies to ensure they’re following required guidelines, yet this is often easier said than done.

Why do organizations struggle to remain compliant?

Companies of all sizes inevitably face compliance challenges, and there are a few that consistently cause issues for organizations. These include:

  • Pinpointing applicable laws and compliance requirements: It’s unfeasible for companies to be compliant if they’re unaware of the laws and regulations that apply to them. This can be especially challenging when looking to meet state-level compliance requirements.
  • Applying compliance rules correctly: When it comes to organizational compliance, there are multiple stakeholders involved, making it difficult to apply rules and regulations to the correct parties.
  • Reporting to the relevant agencies and entities: A critical aspect of compliance is reporting to the correct authorities, which can be a considerable challenge when companies have knowledge gaps or lack expertise in this area.

The penalties of non-compliance

Organizations that aren’t complying with the applicable employer requirements can face substantial fines and penalties that are likely to have wide-reaching consequences. Some examples of penalties a company can face include:

  • Form I-9: I-9 management involves large penalties for hiring unauthorized workers and committing paperwork violations even if all employees are authorized to work. These penalties are based on a tier system and can vary significantly, reaching as high as almost $20,000. (Poor audits inevitably lead to follow-up audits as well)
  • Tax withholding: The Tax Advisor reports that failing to meet employment tax obligations is a felony, punishable by a fine of not more than $10,000, up to five years in prison, or both. or both.
  • Labor law posters: While penalties can vary, government fines typically range from $100-$1,000 for poster violations and from $100-500 for handout violations. On a federal level, government posting fines are authorized by statute to exceed $38,000 for missing federal posters and up to $23,011 for missing handouts. Government fines aside, the real risk comes into play with civil litigation, as missing or outdated posters and handouts can cause an employer to forfeit important legal defenses.

Streamline Processes With a Dependable Partner and Comprehensive Compliance Program

Fortunately, the compliance industry is evolving, and the introduction of new technologies and tools is helping companies considerably streamline and improve these processes. With the help of a reliable partner, organizations can take a proactive approach and create a robust compliance strategy to rest assured they are conforming to the right laws and regulations. In fact, a report from Thomson Reuters found that 34% of companies outsource some or all of their compliance functionality — and this is expected to grow. In terms of compliance management, this ultimately helps organizations:

  • Reduce complexity.
  • Minimize disruption.
  • Avoid errors.
  • Simplify management.
  • Improve key metrics.

With a partner like Experian Employer Services, your organization has access to a comprehensive suite of employer services aimed at streamlining workforce management and improving the employee lifecycle within your organization. Our solutions help businesses with:

  • ACA reporting and Year-End Statements: Ensure timely delivery of reporting statements and streamline year-end payroll processes. This solution includes electronic consent to reduce costs and scalable form volume to meet the needs of growing businesses.
  • I-9 Administration: Employers can track the timeliness of completion, allowing adjustments to the process to avoid substantive errors.
  • Tax Withholding: Eliminate the guesswork involved in assigning employees the right forms, and leverage audit trails for receipt of forms — which alleviates compliance concerns regarding proof of presentment and “time of hire” requirements.
  • Tax Credits: Our tax credit services create value and increase efficiency in streamlined and effective ways. We also track abandonment rate as opposed to standard ‘screening’ and ‘eligibility’ for WOTC.
  • Unemployment Management: Our experts provide a seamless implementation of our unemployment cost management services, handling your claims and hearings administration, benefiting audit and reconciliation, tax rates, win rate and more.
  • Verification Fulfillment: With automated income and employment verification, high volume requests can be taken off your team.

A strong compliance program is a key factor in boosting employee productivity, aiding in operational efficiency, improving corporate reputation and increasing profitability long-term. To learn more about workforce management services from Experian Employer Services and how they can support your compliance management, schedule a demo today.

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