Human Resources professionals understand that maintaining compliance with employment laws and regulations is not only a legal requirement, but also a critical element to a company’s long-term success. Questions from management, executives, and even board members concerning HR compliance can be expected. Clear transparent communication emphasizing the importance of compliance and the potential costs of non-compliance are key in helping leadership make informed decisions that support the overall company direction while also ensuring compliance with existing workforce regulations
Let’s review the importance of HR compliance for Board members, key areas of focus, and how HR can proactively prepare for Board inquiries.
Why HR Compliance is Critical for the Board
A company’s board of directors is responsible for overseeing overall strategy, financial health, risk management, and maintaining legal and ethical standards. As regulatory requirements continue to increase and change, the concern about HR compliance issues among Board members has too.
Non-compliance can have a negative and costly impact on a business, such as expensive legal challenges, damage to the company’s reputation, and a decrease in employee morale and trust. The risk associated with non-compliance is a weight that no company should take on.
Regulatory changes tend to take place quickly, and often without warning. HR needs to be proactive and forthcoming with changes, challenges, and hinderances so the Board can more effectively help mitigate risks, align compliance needs into the company’s overall business strategy, better protect the company’s reputation, and cultivate a positive work culture where employees enjoy coming to work.
Preparing for Board Inquiries and Compliance Scenarios
Board members may ask HR about a compliance risk assessment during meetings or special sessions. Their expectation is that HR is operating in line with legal requirements and company values. To avoid any unpleasant surprises and being caught off guard, HR needs to be proactive in preparing for Board inquiries by staying on top of compliance trends, collecting data to support recommended changes, and syncing HR action plans with the company’s strategic goals.
HR compliance spans across multiple functions from workplace safety to employee compensation and everything in-between. While each company may face compliance challenges unique to their industry, location, or business, some compliance topics are universal. Anticipating some of the more common questions and scenarios is important for HR to understand when preparing for Board meetings.
Here are some key HR compliance areas important to Board Members that HR should keep on their radar:
- Regulatory updates: Regulatory requirements can change frequently and with little or no notice and HR policies and practices must be updated to remain in compliance. Changes can include new pay transparency laws, updates to minimum wage, changes in reporting requirements, and much more.
- Data security and privacy: Digital technology dominates many businesses, so data privacy and security are a vital compliance concern. Boards want to know how HR uses and protects both employee and customer information. They may want to know how HR determines what information employees have access to, including HR’s access. It’s important for them to know that access to employee data is secure and limited to those who truly have a “need to know” based on their job function. This includes information such as recruitment data, performance review information, merit increase data, health information, etc. The Board will want to confirm that the organization complies with data protection regulations, and even partners with the Information Technology (IT) department (if applicable) to ensure cybersecurity safeguards exist.
- Pay equity: Pay equity compliance also continues to be in the spotlight by regulators, employees, and applicants. Board members want to ensure that compensation is fair, transparent, and free of discrimination. HR should conduct pay audits on a regular basis and retain clear supporting documentation of compensation decisions.
- Workplace safety and harassment prevention: A safe and harassment-free workplace is not just a legal requirement but is also critical to maintaining a positive work environment. Boards will expect HR to have strong safety protocols in place, including policies and procedures for preventing and addressing harassment. Boards are interested in knowing that systems are in place for reporting safety hazards or discrimination, and that complaints are handled in a sensitive and timely manner.
OutSolve can help you ensure compliance with the latest regulatory updates and pay equity. Book time with our experienced consultants today.
Real Questions Board Member May Ask
Being prepared to answer Board members' questions is critical. Here are examples of common compliance-related questions:
- Regulatory updates: "How are we staying current with changes in labor laws, and do we have a process in place to update HR policies accordingly?" “What steps do we take to audit and update our employee handbook to align with changing regulations?”
- Employee and customer privacy: "What steps are we taking to ensure that our handling of data is compliant with privacy regulations?” “What measures are in place to prevent and respond to data breaches involving HR records?”
- Pay equity: "Can you provide insights into our current pay equity compliance audits?” “How do we ensure fair and equitable pay across all job levels, demographics and locations?”
- Workplace safety and harassment prevention: "How do we address complaints of harassment, and what preventative measures are in place?” “How timely are responses to complaints?” “How do we assess and mitigate safety risks, especially for remote and hybrid workers?”
Preparing for Board Meetings
HR can take the following steps to effectively prepare for Board meetings:
- Gather relevant data: Come with the latest HR metrics, including data on pay equity, safety records, employee turnover, etc. It may also be helpful to come prepared with any new laws and your plan to incorporate them into company policies.
- Use HR technology: Implement HR automation solutions that track compliance requirements, employee performance, safety incidents, and other key metrics.
- Build a compliance dashboard for real-time updates: A real-time compliance dashboard provides ongoing insights into key areas.
Best Practices for Answering Compliance Questions
Answering compliance-related questions from the Board can be challenging, especially if there are areas of concern. Here are some best practices for responding to Board inquiries:
- Be transparent: HR leaders should be open about any challenges they face in maintaining compliance. Whether it’s a regulatory change your team is still working through or resource constraints, being upfront and transparent will help build trust with the Board.
- Provide actionable insight: HR professionals should provide clear recommendations for improving compliance processes, backed by data and evidence.
- Highlight successes and ongoing efforts: Don’t forget to report on what’s working well! HR should highlight their successes and share strategy and goals for ongoing plans.
What Board Meetings Mean for your Organization
HR compliance is a critical and fluid part of organizational governance and being well-prepared for Board inquiries is essential. By proactively managing compliance, HR professionals help minimize risk, ensure legal and ethical adherence, and build a more equitable and safer workplace for all employees.
OutSolve can help HR professionals manage their compliance needs. We actively track new regulations in regard to pay transparency, state pay reporting, federal reporting requirements, anti-discrimination laws, and so much more. If you’d like to talk with one of our consultants to see how we can help your company mitigate risk and stay compliant, contact us today.
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