Compliance. We’ve been hearing a lot about compliance lately.
How much attention do you pay to compliance in your business?
How careful are you with record keeping? With paying your GST on time? With paying super for your team members religiously? With OH& S regulations?
How important is it, anyway?
Well, some people have been finding out that it is very important.
– George Columbaris was caught not paying his staff correctly.
– Westpac was caught allowing 23m (yes, that’s 23 million!) breaches of money laundering regulations through its payment systems, including payments for child pornography.
– Grill’d has been found to be in breach of health regulations, not paying its staff properly, mistreating its franchisees
– Woolworths has been underpaying its team members to the tune of millions of dollars
All these breaches of compliance are bad for business. George Columbaris closed his Helenic Republic restaurant because of the issue. The Westpac CEO was pushed out, and the chairman followed pretty quickly thereafter. No heads have rolled at Grill’d yet (it’s privately owned, so heads probably won’t roll), but its reputation is being trashed (I wouldn’t go to a Grill’d restaurant now), and franchisees and employees may still launch some kind of legal action. Woolworths are copping it on TV, and having dirty washing aired in public.
The message that comes through loud and clear is that compliance is important. To be found out to be non-compliant in your business can be very damaging – both personally and for your business.
So how does this affect the SME? You don’t have a board of directors, or shareholders, to hold you accountable. You probably don’t (but may) have franchisees who could launch legal action against you.
But there are always government regulations that affect business. OH&S is an obvious one. Failure to keep you employees safe could land you in serious trouble. Grill’d is in trouble, for among other reasons, because one employee burnt herself with hot oil she was straining because she wasn’t properly trained. Printing establishments have been in trouble when guillotines injured employees because they were inadequately trained, or because insufficient safety equipment was installed.
In cases of the breach of OH&S regulations, penalties can be severe, apart from the guilt felt when an employee is seriously injured, or worse.
Health regulations apply to any business dealing with food. Cafes and coffee shops need to ensure that their places of business are spotless, and that no-one – not an inspector nor a customer, can ever point a finger at them for lack of cleanliness. Businesses can be closed down if the authority in charge has evidence of bad hygiene. A company in Dandenong, Cook Catering, was closed down by the Department of Health because they were suspected of having provided food with listeria, leading to the death of a woman. While the owners of the business say that they were scapegoats, and that the Department of Health had no real evidence of bad processes, they were not allowed to do business for an extended period of time – leading to the loss of product, loss of contracts, and job losses. They have now been given the green light to re-open, but it is possibly too late.
The correct and fair payment of team members is an obvious area of compliance. The Fair Work Commission is available to any team member who feels hard done by. Its pretty easy for them to go to the commission, and, even if the claim is ill-founded, the cost and inconvenience to the business can be extensive. It is imperative that proper records are kept, that team members’ hours are meticulously recorded, and that the fact that they have been fairly and correctly paid is transparent.
An area affecting every business is finance. It is imperative to be compliant in the business of paying GST, paying your team correctly, deducting the necessary tax, and paying super correctly. Too many businesses have been ruined because of the failure to keep their books correctly, leaving that job to an unqualified person with the objective of saving money. This is an area where the old saying – penny wise, pound foolish – really applies.
Compliance is important. And to be compliant, you need to know the regulations that impact on your business. Remember – ignorance of the law is no excuse.