In today's fast-paced business world, the term "compliance" has gained undeniable prominence. While it may sound like a buzzword to many, its significance is profound, and its proper implementation can make the difference between success and failure for a company.
What is "Compliance" and why is it important?
The term compliance comes from English, and its closest Spanish translation is "cumplimiento". However, limiting it to this simple definition would underestimate its true scope. Compliance refers not only to adherence to the law but to a wide range of norms, internal policies, and ethical standards. It encompasses everything related to respecting and adhering to fiscal, civil, criminal, and administrative regulations that govern the environment in which a company operates.
According to specialist Adriana Peralta, compliance is a management system that identifies risks to mitigate and prevent non-compliance with labor, financial, and moral regulations. (For more information on the subject, please visit the following link).
In other words, it's not just about following the law but doing so correctly, effectively, and ethically. This approach not only protects the company from legal sanctions but also strengthens its reputation and ensures its long-term sustainability.
Who is Responsible for Compliance in a Company?
A common question is: "Who should be responsible for compliance in a company?" The answer is not simple, as compliance is not the sole responsibility of a single department. It is often assumed that the finance, human resources, or legal departments should take the lead. However, compliance is a transversal process that involves the entire organization. Regulatory compliance spans multiple areas: hiring, finance, fiscal and tax matters, production, and more. Therefore, it requires a collaborative approach.
Each department plays a role in ensuring regulatory compliance. For example, the legal department will ensure that hiring policies are aligned with current legislation, while the finance department will ensure that accounting and tax practices comply with the relevant regulations.
Risk Identification and Management: The Heart of Compliance
Companies operate in complex and diverse environments where risks can arise from multiple sources. For instance, a human resources policy that discriminates based on age could conflict with labor laws. Consider a company that sets a policy stating that no employee over 65 will receive a contract renewal unless they can access a specific insurance plan. This policy could be seen as discriminatory and may violate Costa Rican law.
Additionally, risks can arise in less obvious areas. For example, some companies may have employees who, due to their beliefs or culture, don't recognize certain behaviors as workplace harassment, even if socially they are considered inappropriate. Disparaging comments, lewd looks, or distasteful jokes can not only damage team morale but also expose the company to legal claims.
Compliance acts as a tool to identify these risks, avoid them, and, if they occur, correct them promptly. It's not just about complying with current regulations but about anticipating problems and acting proactively to avoid them.
The first step in an effective compliance program is to conduct a thorough assessment of the company, creating a risk map that identifies the most vulnerable areas. However, this analysis cannot be generic; it must be as specific as a tailor-made suit. Each company has unique characteristics, and its risk map must be perfectly adapted to its size, industry, and regulatory specifics. Just like a well-tailored suit, this personalized approach ensures that compliance is truly effective, addressing the company's specific risks with precision and efficiency.
The Compliance White Paper: An Essential Guide
In 2017, the "Compliance White Paper" was published as a guide offering a framework for companies to develop their compliance programs. In this work, it is highlighted that international regulations should be considered, not just national ones. For example, companies should be aware of human rights and international labor regulations, such as those established by the International Labour Organization (ILO). (For more information about the white paper, please visit the following link).
Adapting to Change: A Dynamic Process
The world is constantly changing, and so are regulations and social expectations. This means companies must continually adapt. Staff training is key to ensuring everyone is aware of the latest regulations and knows how to apply them in their day-to-day work. Additionally, it is crucial to regularly review and adjust internal policies to keep up with legal and social changes. In a world where social media can amplify a corporate mistake in minutes, companies must be especially careful, which underscores the importance of having clear and updated policies.
More Than an Obligation, a Strategic Necessity
While compliance is not a legal obligation in all jurisdictions, it is essential for a company's competitiveness and sustainability. Companies that adopt effective compliance programs not only protect their reputation and avoid legal sanctions but can also access better market opportunities, such as the possibility of going public or forming strategic partnerships.
In Costa Rica, the topic of compliance is gaining ground, although there is still much to be done. Countries like Mexico and Colombia have made significant progress in this area, and it is crucial for Costa Rican companies to follow their example to remain competitive at the regional and international levels.
Compliance is much more than a set of rules; it is a philosophy that helps companies operate ethically, efficiently, and sustainably. By adopting a culture of compliance, companies can avoid rework, reduce waste, and protect themselves from risks that, if not managed properly, could undermine their competitiveness and long-term success.
At Bufete Godínez y Asociados, we have ventured into this field, offering specialized advice to help organizations effectively implement and manage their compliance programs. Compliance is not just a tool to avoid problems; it is an investment in the company's future.
At Bufete Godínez y Asociados, we specialize in counseling and advising employers in labor and employment law. If you need any additional information, do not hesitate to contact us by clicking here.
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