SHARE   |  

Compliance Conundrum: Multiple Disparate Systems Can Create Unnecessary Risk [Infographic]

Over the past few weeks, we’ve been exploring the compliance conundrum – the employment-related compliance challenges facing CFOs, human resources and finance executives operating in today’s business landscape. This week we’ll examine another top challenge: how the use of multiple systems and processes to manage employment-related tax and payment compliance may expose companies to unnecessary risk.

With the employment-related tax and payment compliance landscape becoming increasingly complex, CFOs, human resources and finance executives are challenged to find a comprehensive, proactive approach to compliance management. And many don’t think they need to make a change – according to a recent survey conducted by the ADP Research Institute, 80 percent of mid-sized business owners surveyed believed they were compliant with government regulations. However, a full one-third reported having been fined or penalized in the last 12 months – an average of 6.4 fines or penalties each – due to noncompliance*.

Although many companies have come to see  penalties and fees imposed as a result of failing to comply with applicable employment-related laws as a necessary cost of doing business (a recent survey conducted in collaboration between CFO Research and ADP shows that 60 percent of companies surveyed incur employment-related noncompliance penalties with some regularity**), it is possible to significantly reduce risks associated with noncompliance while simultaneously improving business process efficiencies. Eliminating two common risk factors can help significantly improve the employment-related compliance management process:

  • Manual processes. Inherently, manual processes can be time-consuming, prone to errors and cumbersome to manage. In many cases, spreadsheets can only be handled by a few employees at a time and must be routed internally via manual methods. Without an automated approach to compliance – one that automatically tracks regulatory changes and employment-related compliance deadlines – CFOs, HR and finance executives may be putting their businesses at significant risk of incurring compliance-related fines or penalties. Despite these risks, nearly 80 percent of executives surveyed still rely on largely manual methods or multiple, separate information systems to help manage these compliance requirements and processes**.
  • Managing disparate systems. Equally challenging is the employment-related compliance management process that uses a combination of multiple vendors. In struggling to find a more automated approach to employment-related compliance, many finance managers have cobbled together components of various software and tools to create a patchwork of systems and solutions that work independently to help manage compliance, often with little to no integration. According to data from a survey conducted in collaboration between CFO Research and ADP, more than 70 percent of senior finance executives surveyed use multiple, disparate systems to help manage employment-related compliance**. The result is often a set of disparate instruments, each designed to address individual compliance elements – but without effective communication or a connection between them.

Finding a consolidated approach to employment-related compliance can help provide CFOs, human resources and finance executives with a more strategic, proactive view of employment-related compliance activity across the enterprise. In fact, 47 percent of those surveyed cite improving existing compliance technology and systems as a top strategy for helping to improve employment-related compliance management in the next two years**. Systems that work with existing ERPs, financial and human resources of record can help make technology improvements even more seamless.

A consolidated approach can also help improve business process efficiencies, streamlining time-consuming management methods and freeing up staff time to focus on growth. A recent survey conducted in collaboration between CFO Research and ADP supports this statement – 65 percent of finance executives surveyed believe reducing the number of touch-points and handoffs in employment-related compliance processes could increase efficiency and productivity at their company**.

For more on this, see the Compliance Conundrum, as well as a closer look at the challenge increasing complexity and shrinking budgets can pose.

Learn more about how ADP SmartComplianceSM can help companies ease the burden of employment-related compliance management, improve business process efficiencies and drive organizational growth.

*Top Concerns of Business Leaders in the Post-2008 Economy, ADP Research Institute, May 2012
**Managing Compliance in a Changing Environment, CFO Research, in collaboration with ADP, January 2013

ADP SmartCompliance is a service mark of ADP, Inc.


Sign Up for
Email Updates

featured webinar