The Cost of Noncompliance

When someone says “noncompliance” to you, what’s the first thing you think of in a business sense?

Inevitably, the first thing that comes to peoples’ minds is “fines”.

While true, the monetary costs due to noncompliance can be severely damaging to a business, if you limit your thinking to only dollars and cents, you’re missing out on the larger picture and, in the long run, may be setting up your business to fail.

It’s Not What You Do, But How You Do It

In today’s global economy, there’s no shortage of people and companies that do what you do, even in the most specialized industries. Competition is getting tougher as more and more businesses fight for a piece of your particular marketplace. More and more, customers are looking at how you do business and factoring that into their decision making process. Your management systems are becoming more valuable in gaining market share. Whether it’s quality, information security, occupational health and safety, environmental, or any other management system, how you do business should be your guiding principles.

Reputation Is Everything

The largest non-monetary cost of noncompliance is reputational damage. Your business could have the best, fastest, most whizbang product or service on the market, but if your company takes a substantial hit on a compliance issue, that fact won’t matter.

There’s an old saying that goes “how you do one thing is how you do everything” and if your company takes a noncompliance hit, it gives the impression that is how you do all your business. If your business takes a substantial noncompliance hit you can be seen as careless, inattentive, or, at worst, unethical in your business operations. Potential clients will Google your business and if they see you’ve been noncompliant in an area that’s important to them, they may pull current contracts, choose not to renew contracts, or simply refuse to consider doing any business with you.

The impact goes beyond clients and customers. Future staffing my become difficult as potential employees will look at your company’s reputation and weigh the impact on their own personal and professional reputations.

In business, as in life, a damaged reputation will take substantial time and effort to repair.

Noncompliance Can Cost You Everything

Once your reputation is damaged, once customers and clients begin pulling their business, and once employees start leaving, your business may find itself on an irreversible course towards extinction.

Compliance may seem like an annoyance, like a function with no immediately recognizable return on investment, but that couldn't be further from reality. Compliance, particularly when it comes to management systems, keeps your business running efficiently, ensures you're able to adapt to market fluctuations and disruptions, and can mitigate potential damage from catastrophic events like data breaches or supply chain disruptions.

Compliance, in all areas of your business, is the lifeblood that keeps your business healthy. It's an intangible "thing" that gives you an edge over your competitors. Investing in your business' compliance regimens is an investment in the future of your business, your clients and customers, and your employees.