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The compliance gap: don’t be left standing in Midair

Posted by: ADP on 18 November 2015 in Compliance

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Are disparate Human Capital Management (HCM) systems and processes impacting productivity and leaving your business vulnerable to risk? Here are some tips for catching up.

Most companies have a number of separate systems in place to handle a range of HCM processes, such as paying employees, managing their time, and administering their benefits.

Yet, according to a new study of 161 senior finance and HR executives conducted by ADP and CFO Research, HCM-related compliance requirements are increasingly a major challenge. And once organisations realise they’ve fallen into a compliance gap, they may already be well on their way to incurring costly fines and penalties.

Respondents cite new regulatory requirements (53%) and increased regulatory oversight and enforcement (45%) as two of the main factors that make HCM-related compliance management so difficult.

The impact on productivity and effectiveness stemming from these challenges is far-reaching, with 35% of respondents saying they spend more time on HCM-related compliance now than they did two years ago, citing lack of real-time data and ease of use of current systems as opportunities for improvement.

HCM-related compliance by the numbers

  • 42% of HR and finance leaders at companies surveyed do not have access to real-time, consolidated HCM-related compliance data through a dashboard or other technology platform.
  • 50% rely on multiple, separate information systems or manual processes to manage their HCM-related compliance.
  • 58% graded the ease of use of software systems and applications that their company uses to manage HCM-related compliance a “C or lower”.
  • Nearly 1/3 disagree with the statement, “The system(s) my company employs for HCM-related compliance activities are easy to understand and use”.

Reliance on multiple, disparate systems or manual processes to manage HCM-related compliance can lead to a compliance gap – one that comes with a price tag: 78% of respondents say that they are forced to spend more money on HCM-related compliance due to the lack of integration between their existing HCM systems. But that’s just the start. The research also revealed the following:

  • 24% of survey respondents say their company’s management rarely or never use HCM-related compliance data to support their business decisions.
  • 57% feel it takes more effort than it should to enter or update data in their company’s HCM-related systems.
  • 62% say the time and attention required for HCM-related compliance activities are a drain on company resources.
  • 1/3 of survey respondents say their company’s staff will need to spend more time on HCM-related compliance activities over the next two years, primarily due to new regulatory  requirements, increased  regulatory oversight and enforcement, and lack of integration between systems.

The future of HCM-related compliance management

For many companies, the first step toward creating value from their HCM-related compliance data is making that data more accessible. In fact, 80% of survey respondents say making their company’s HCM-related compliance systems easier to use is important. Integrating systems, moving the needle toward self-service, and installing robust reporting capabilities are all steps that can help a business generate closer alignment of their structural capital with their human capital.

If that takes place, companies can spend less effort trying to understand their HCM-related compliance data, and more time using that data to serve the business.

HCM compliance improvements: what will pay the highest dividends?

  • 38% of survey respondents say improving the existing technology and systems they use to manage HCM-related compliance would provide the most benefits to their company.
  • 26% of survey respondents say the greatest benefit would come from investing in new technology.
  • 24% of survey respondents say consolidating or centralizing compliance activities will provide the most benefits.

Source:

CFO Research & ADP, Intelligent Compliance for Human Capital Management, Getting Better at Getting Work Done, December 2014.

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TAGS: Compliance HCM

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