Why Self-Auditing Matters

Courtesy of Flickr.com

Courtesy of Flickr.com

 

For you among the crowd that have been involved with audits whereby an infraction was found and you had to pay up- it cuts deep. It stings even worse when in hindsight you recognize that you weren’t proactive and missed something that has now cost the company money. The ultimate question from the top will always be:  “how did this happen?” How will you answer: “I don’t know”, “I’m sorry”, “It was a mistake”. Mistakes happen. However, when your mistakes are preventable and they cost your company money that could have been used for other endeavors-HR is going to take some heat and rightfully so.

Take a small to mid-size business (SMB) for instance. You are a business that makes a specific coating for tanks used by the US Military and your federal contract is worth 2.5 million dollars. You have other clients too and they keep you solvent, but this federal contract keeps you afloat. Now consider this: you have not run a pay equity analysis in a few years. As such, one of your mid-level employees has just had a compensation discussion with their boss that turned ugly and in return alerts both OFCCP and DOL of discriminatory compensation actions. You (HR) receive a notice from DOL asking for your entire compensation history for the past three years. Their review of females and minorities corroborate the narrative supplied by your employee- which leads to an onsite audit. Over the course of a year, they find there are plentiful pay equity violations that result in a fine of $700,000. Ouch! Fines of this magnitude can sink a business or at a minimum leave an indelible wound.

Do you remember the Astra-Zeneca DOL Settlement of 2011? Women were found to make at least $1,700 less than their male counterparts doing the same job at AZ. 124 women were awarded a $250,000 settlement. In return, AZ promised to review pay practices and fix any problems.

Could Self-Audits have helped Astra-Zeneca?

Yes. Had they been reviewing their compensation policies and practices regularly they would have seen issues warranting attention and revision before this became a class-action lawsuit. Self-auditing or mock audits can save you and the company from hefty fines, awkward conversations and/or having to close your doors.

Here are some tips on implementing self-auditing as a practice:

  • Depending on how often you can expect to be audited by outside agencies, set up an internal audit schedule.
  • Create an internal audit team to review your practice against your policy and procedures. Where possible, it is ideal to have someone outside the group being audited conduct the audit for objectivity purposes and for a fresh pair of eyes.
  • Summarize findings and create a threats and opportunities analysis to see where you need to improve. “Threats’ in this context would be items that are inconsistent with your policy and violate the law. “Opportunities” are areas where you do well in complying with policy, but there is potential for violating the law.
  • Get your team involved. Ask them to conduct their own random spot checks. This holds everyone accountable for the consistency of following procedure and allows you to get ahead of potential issues.
  • Train your team on communication during an audit. Saying the wrong thing or too much during an audit can be detrimental your success. Ensuring that each of your team members understands what to expect and how to respond can be helpful for when they are faced with a real auditor.

When it comes to your business, ignorance isn’t bliss. Don’t be afraid to self-audit. It is far better for you or your peers internally to point out your faults than any regulatory agency. Become informed about where your fall short and tighten up your practices. You will thank yourself and the executive team will thank you for saving their money.

LASHRM 2014 Snippet: Don’t Talk About Diversity-Show Me Diversity

In just a few days, I will descend upon Baton Rouge, Louisiana as a speaker for the Louisiana SHRM State Conference.  My session is entitled: Get Real About Your Good Faith Efforts- What The OFCCP Really Expects From Employers. Some of the most significant changes in OFCCP guidance will take place this year. Federal contractors everywhere are frantically watching every webinar, attending every breakfast meeting and are quite handsomely paying employment lawyers to help them comply with the new regulations.

I could have addressed the new regulations and spelled them out in plain English to the best of my ability, but you all know by now I don’t do the status quo.

My hope for this session is much bigger and broader.

Yes, the new regulations are onerous, but have you asked yourself why? I have heard so many practitioners carrying on about how these new regulations are not achievable and how the federal money they receive in return may or may not be worth the hassle for what the government wants from us.

Newsflash: There is a rich history of how all of these regulations came to be. Each of them delegated out as executive orders by the presidents of the time due mostly to the injustices being experienced by women and minorities in the workforce. These new regulations- are yet another instance where regulation was needed to decrease the numbers of differently-abled and veteran applicants that have recently been discounted, ignored or outcast by employers in recent years.

It amazes me- that until now, most federal contractors and even regular companies slap an EEO tagline on their website and put up a few stock photos of an Asian, African-American , someone in a wheelchair etc. all for the value of giving the appearance that they value diversity. I say if you truly value diversity, let me see your C-suite makeup.  Let me see your employee ecosystem; more importantly- let me see your outreach efforts also known as “good faith efforts”. Some other considerations, are you paying everyone based on a consistent and logical model? How about hiring? How far do you go to ensure a diverse applicant pool?

I suspect that the OFCCP and government are just as tired as I am of companies doing the bare minimum to appear compliant. They are essentially saying to each of us federal contractors- don’t talk about diversity; show me diversity.

I present on Monday, April 7th from 10:30-11:45 am. Attendees will leave my session with an alternate way of approaching these guidelines, good faith efforts and hopefully diversity within their organizations.

I’m looking forward to a spirited conversation on this topic- as well as  engaging with all of the attendees. If you cannot make it, please follow the #RealGFE session hashtag on Twitter. Also, don’t forget to check out the #Czarinatravels hashtag to keep up with my travel adventures.

Want more hashtag craziness? Follow #PICHR, #ePIC, #LASHRM14 and #goodfaith to follow the conference and all associated events.

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