In recent years, industrial relations laws have shifted significantly, placing increased responsibility on board members and executives to proactively manage workforce compliance. Avoiding financial penalties, remediation costs, and reputational damage remains a strong motivator for compliance. However, there is a deeper perspective that can guide compliance in a way that benefits both employees and businesses: prioritising employee well-being is essential for business success.
Changes in the expectations of employers
Compliance responsibilities have increasingly shifted from the corporate level to individuals, especially in areas such as Workplace Health and Safety (WHS) and Respect@Work regulations. This shift is also reflected in the criminalisation of wage theft and the imposition of individual penalties under The Closing Loopholes Acts. Overall, there has been a heightened focus on the employer’s responsibility to support accurate employee compensation and comprehensive workplace safety, including psychosocial aspects.
Employers are realising the importance of embedding compliance into their organisational culture as a proactive strategy rather than an afterthought. With the entry of Gen Z into the workforce, bringing a heightened awareness and confidence to address issues, leadership must be open, aware, and visibly proactive. Embracing this evolving mindset not only can embed compliance into their culture, but also fosters a more effective and engaged work environment.
Focusing on the human
Inadequate compliance frameworks can lead to increased burnout for employees, a condition that has surged since COVID-19. Defined by the World Health Organisation (WHO) as chronic stress that is not successfully managed, burnout results from high job demands, low job control, ambiguity, poor support, and isolation. Manifesting as constant fatigue, negativity, withdrawal, and ineffectiveness, burnout can lead to serious health issues like hypertension, insomnia, substance abuse, and depression. Recent McKinsey research in Australia shows that 24% of employees experience burnout, creating psychosocial risk.
When a business does not pay its staff correctly, it can inadvertently impact the well-being of its employees. For example, where employees are paid a salary yet are exempted from overtime regulations, they will not get compensated for excessively long workweeks. Supporting fair pay practices and adhering to labour laws not only supports employee welfare but also creates a healthier, compliant workplace essential for long-term success.
Shift from reactive measures
Leadership plays a crucial role in establishing a culture of compliance. Leaders must model the behaviours they expect from their teams, take responsibility for compliance outcomes, and ensure that the right teams are engaged in mitigating risks. Proactive leadership can help organisations move from a reactive approach to one that anticipates and addresses issues before they escalate.
Key tips for adopting a proactive approach to compliance and employee well-being:
- Taking responsibility: Individuals with the capacity to influence outcomes should take ownership of compliance within their roles.
- Modeling desired behaviours: Leadership should exemplify and encourage the compliance behaviours they expect from their teams.
- Centralised accountability: Designate a key individual to oversee compliance risks and promote accountability organisation-wide.
- Encouraging collaboration: Foster open dialogue and collaboration among teams to identify and mitigate compliance risks effectively.
- Invest in well-being programs: The program could include a reduction in healthcare costs. Reports from the Australian HR Institute (AHRI) demonstrate that organisations prioritising employee well-being experience higher job satisfaction, organisational commitment, and overall performance.
- Regular audits: Conduct regular payroll compliance reviews to avoid contraventions of the Fair Work Act and ensure your employees are being paid correctly.
People-first governance: A guide to proactive compliance
By focusing on the human impact of compliance and fostering a proactive culture, organisations can not only meet regulatory requirements but also create thriving workplaces. This approach not only protects the business from financial and reputational risks but also enhances employee well-being, job satisfaction, and overall performance. As the regulatory landscape continues to evolve, staying ahead of compliance through a human-centered approach will be key to long-term success.
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