Risks of Relying on the Wrong Compliance Tools

115033318RPO end-users and service providers might be exposing themselves to risk through an excessive reliance on spreadsheets.

The problem is around compliance, and how organizations deal with increasing complexity, accelerating change and greater volumes — driven by the trend toward use of freelance talent.

It’s getting much easier to get compliance wrong, which can lead to punitive fines, severe reputational damage and sometimes catastrophic loss of business.

Yet, in my experience from dealing with even larger organizations, people often still depend on the familiarity and comfort of an old and trusted friend: the humble spreadsheet.

The growing risk of compliance breach
How great is the risk? Using Europe for illustration, there’s been heightened sensitivity around migrant working in recent years, fuelled by socio-economic stresses in home markets as well as geo-political pressures on the peripheries of the region. This has fed through into increasingly stringent compliance constraints and evidencing requirements, and volatility in rules that apply to outsourced recruitment.

As well as tighter regulation, there’s a trend toward non-regulatory frameworks that go above and beyond statutes. Since 2012, the UK alone has seen major shifts in migrant worker compliance, education recruitment and safeguarding, data protection disclosure, railway contractor safety, pensions compliance and more.

Failing to keep up with the scale and pace of change can be damagingly expensive and garner unwelcome media coverage.

Now is not the time for a risk-tolerant approach to compliance, which makes reliance on inadequate systems your Achilles’ Heel.

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How spreadsheets fail to meet the challenge
We’ve all carefully constructed an XLS so we can see and control what’s going on – and it’s reassuring to have it at your fingertips.Why? Because it’s immediate and flexible: we can easily go in and make changes if a rule or framework is modified.

But spreadsheets are just a ‘point in time’. They can’t track and record compliance as they change. So, you can’t prove that that you were compliant for a candidate 6 weeks, 3 months or a year ago, even if you can prove it today.

The ease with which spreadsheets can be changed becomes their undoing, because they lack mechanisms for recording changes over time, binding evidence to a robust audit trail.

They are also hopeless for handling volume, aren’t scalable and are virtually useless for collaboration.

Most seriously, this same accessibility has huge potential to expose the organisation to a data protection failure. It simply makes spreadsheets unfit for the purpose of guaranteeing to segregate personal data, restrict access, and monitor use of it to required compliance standards.

Dangers to the organization

Using universal business tools like spreadsheets offers dangerously low support for compliance in recruitment, placing businesses at unnecessary risk.

1. Magnified exposure to potentially catastrophic business risk. Breaching staffing compliance rules at any level could significantly damage end-user organizations, or even result in criminal proceedings against the organization or the individuals who run it, depending on local legislature.

2. Risk of damaging efficiency and profitability. For RPO providers, poor operational practices hinder competitiveness. Scalability is at the heart of volume growth for service businesses, so industrialisation of processes should be foremost in every operations manager’s mind (if it’s not already). This is also good for clients, of course, because it accelerates response-times and amplifies trust.

3. Reputational damage. This has become much more serious off the back of social media’s viral capabilities. Once a negative story makes its way into word-of-mouth media, it can rapidly spin out of control and cause long-term, un-erasable damage to corporate standing.

Mundane as it may seem, the degree of risk around using spreadsheets is so great that RPO providers and end-users should seriously consider not only whether your systems meet your needs, but also whether they really match your risk appetite.

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Ben Stoneham

Ben Stoneham
Ben Stoneham is founder and CEO of NowWeComply and specializes in compliance process automation and other cloud-based services for HR, staffing and recruitment industries.

Ben Stoneham

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