Survey respondents (485 HR professionals in Canada and the U.S.) were asked to rank four potential outcomes of a compliance failure, from highest to lowest concern. The study found that larger organisations are most concerned with the impact on the organisation’s future, followed by reputational risk. Smaller ones, however, are most concerned with the potential heaviness of the fine itself.

“Smaller firms tend to have more to lose from large fines,” said Debbie McGrath, Chief Instigator and CEO of HR.com. “A severe fine can put a smaller company out of business. Bigger companies can easily absorb a large monetary fine, so their main concern tends to be the publicity’s hit to the brand, which can potentially cost more than the fine itself in terms of loss of business.”

What makes the situation even more dangerous is that many smaller firms find it hard to stay in compliance. Over a quarter of all survey respondents cited compliance with labor laws as a major challenge, and the problem was somewhat more pronounced for smaller organisations with fewer than 250 employees than for larger ones with over 500 employees.

Results revealed today’s biggest compliance problems. Complex regulatory and legal environment was the biggest obstacle to staying in compliance. For smaller organisations, the risks are often compounded by a general lack of access to critical internal expertise.

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