Don’t begrudge compliance

Small businesses can avoid falling foul of compliance policies.

Large multinational companies have been dominating the news for all the wrong reasons lately. Anne-Marie Pretorius, managing director at consulting firm Bizmod, says many of these issues can be attributed to weak processes as well as inadequate corporate governance and compliance policies.

“If large companies, who can afford whole departments focusing on compliance, risk and governance, can fail, how vulnerable are smaller entities?” she asks.

The advantage for smaller companies is that usually there is closer monitoring and greater visibility on day-to-day activities. However, many small, medium and micro-sized enterprises (SMMEs) neglect to implement a practice to analyse, plan and manage compliance.

At a basic level compliance is to meet the legal obligations of the company and this can seem daunting. Pretorius says it is important that compliance does not become a hindrance to the agility of a smaller company.

“Imposing too many checks and balances may unnecessarily encumber a business and its ability to apply compliance.”

So the question is, how do SMMEs approach compliance in a pragmatic way which achieves the requirements while not stifling operations? Pretorius provides the following guidelines:

Be clear on why compliance is important. Instead of framing it as a ‘grudge’ activity, approach it as a mechanism that can:

Reduce risk. Enhance processes and help minimise errors or inefficiencies. Add value through transparency of practices and a strong governance protocol.

Mature the business and drive growth.

Reliably build and maintain trust.

Force you to consider all your stakeholders.

Decrease the risk of inadvertently damaging the company’s reputation.

Understand the legislative landscape that applies to the industry the company operates in. Standard pieces of legislation apply to all businesses in South Africa.

Processes that will assist in meeting legislative requirements:

Understand the basic requirements of all applicable legislation. Understand to which business operations these apply. Understand what changes are required. Setup an annual review and refresh cycle. Get a broad representation of employees involved. Join associations in your industry and subscribe to industry press and newsletters.. If possible budget for expertise, like a labour lawyer Understand what SARS requires from your business. Stay informed. Ignorance is not an excuse.