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Why SMEs need to make workforce compliance and risk management a priority for 2024

In today’s ever-changing business landscape, small and medium-sized businesses (SMBs) face a multitude of challenges.

From economic uncertainties to fast-paced technological advancement, navigating these complexities is no small feat. Amidst these challenges, there is one critical area that often goes overlooked: workforce compliance and risk management. 

As concerning work safety statistics continue to trend, along with associated economic impacts and evolving legal landscapes, there is a growing need for SMBs to adopt tailored risk controls and data-driven frameworks to ensure workers have access to a healthy and safe working environment.

Concerning Statistics Continue to Trend

Recent statistics paint an alarming picture of the state of the workplace in Australia. Work-related mental health conditions are on the rise, causing detrimental consequences for not only the individuals affected but also organisational productivity and morale.

According to the Australian Bureau of Statistics, in the year 2020-21, 7.5% of Australians suffered from a mental condition which affected their ability to work. This same period also saw mental health conditions account for 9.2% or 11,700 serious workers’ compensation claims, which is significantly higher than the 6.5% reported 10 years ago. The number of serious claims for mental health conditions in this period has increased by a whopping 43.3%, making it the largest growing major group of injury/illness. 

Additionally, a 2022 report by the Australian Human Rights Commission revealed that one in three people had experienced sexual harassment at work in the past five years. This is a distressing statistic that cannot be ignored. Such incidents can have severe consequences for both the victims and the organisation. Failing to address issues related to mental health or harassment can lead to a toxic work culture, increased absenteeism, decreased productivity and legal repercussions.

Legal Landscapes in the Workplace Are Evolving

The legal landscape surrounding workplace compliance is evolving rapidly. Laws at both federal and state levels, along with various workplace health and safety laws and guidelines (including the Model Code of Practice: Managing Psychosocial Hazards at Work) are tightening to ensure workplaces are respectful, equitable and safe. 

A societal shift towards greater awareness of mental health and wellbeing means that organisations must proactively address and manage psychosocial hazards like poor support and workplace discrimination to maintain a fair and compliant workplace. Failure to do so not only puts an organisation at significant legal risk, but also damages brand reputation and employee morale.

The Economic Impacts of Non-Compliance

The economic impact of failing to prioritise workforce compliance and risk management is substantial. Workplace sexual harassment alone cost the Australian economy $2.6 billion in lost productivity. Likewise, workplace mental health conditions are one of the costliest forms of workplace injury, leading to significantly more time off work and higher compensation paid compared to other injuries.

In 2020-21, the average time lost from mental health condition claims was more than four times the median time lost across all claims (34.2 working weeks), while the average compensation paid was close to four times the median compensation paid across all claims ($15,743). With a majority of SMBs operating on tight budgets, the financial consequences of legal battles, decreased productivity and employee turnover related to these claims can be devastating. 

The Need for Fit-for-Purpose Risk Controls

The business landscape is constantly evolving, and so too are the risks that organisations face. Many organisations mistakenly believe that having risk controls such as policies, procedures and guidelines in place is sufficient. However, it’s essential to maintain these controls, keeping them current, fit for purpose – and actionable. 

With many SMEs adopting more agile ways of working, business leaders cannot assume all existing policies and procedures will remain relevant. When operating models or organisational structures change, the risk profile of your workplace also needs to change. Legacy risk controls that are obsolete or redundant pose a significant risk in themselves, so CEOs must constantly ask themselves, are these controls still relevant and how do they align with the organisation’s strategic objectives?

Often organisations use tools such as OKRs (Objectives and Key Results) as well as QBRs (Quarterly Business Reviews) to become more agile in their ways of working. While this is good practice, if SMBs want to remain adaptable and resilient in the face of change, CEOs need to embed risk controls and workforce compliance criteria into these strategies from the beginning, rather than as an afterthought.

Using Technology to Mitigate Risk and Enhance Compliance

In the digital age, technology plays a pivotal role in workforce compliance and risk management. Data and artificial intelligence (AI) frameworks can analyse data to identify patterns and anomalies, helping SMBs to detect, recognise and mitigate potential risks in the workplace before they escalate.

Moreover, these digital frameworks can also assist organisations in planning for the 2024-25 financial year by generating real and relevant data, backed by current and relevant evidence. From here, SMB can build business cases and form initiatives that measurably impact profit, people and the planet.

Embracing a virtually-enabled workplace can be a win-win for both employees and organisations. It enables employees to achieve a better work-life balance, leading to increased job satisfaction and retention, while for organisations, it enhances productivity and facilitates connection to commercial outcomes.

The Path Forward: Forging a Resilient Future For Your SMB

By prioritising workforce compliance and risk management, CEOs can create workplaces that are not only legally compliant, but also respectful, equitable and safe. In doing so, SMBs can avoid financial pitfalls, boost productivity, improve employee morale and improve their bottom line – creating a more prosperous future for themselves and their employees. 

For CEOs looking to prioritise workforce compliance and risk management, consultation with  professionals in this space is a great place to start. At Thinkless, we assist SMBs in tailoring advisory strategies, systems and technologies to align with their specific business needs and compliance standards. We identify and assess industry-specific laws, regulations and standards to ensure operational compliance, safeguarding your business and driving it forward

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