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The High Cost of Low Priority

One of the hardest jobs we have here is getting buy-in that compliance is a high priority not only due to ethical considerations but also financial ones.  Why companies continue to under-staff or de-prioritize various HR functions—including and especially those involving compliance—is puzzling.

Case in point:  NCS Pearson just signed a conciliation agreement with the OFCCP to pay $100,000 in back wages and interest to 67 Asian job seekers in Iowa.  (See the OFCCP press release here.)

Obviously the discrimination itself—assuming this case was not a recordkeeping or poor statistics issue (which many are: see here and the HRU March Newsletter)—is bad.   But I would not be surprised if NCS Pearson had trouble putting their affirmative action plans together before half the plan year had already gone by, using only one semi-trained staff member, with no real best practices or training for the hiring managers, and applying inconsistent standards to the job applicants. They may have used a third-party vendor to make up for the semi-trained staff member, but most vendors have no follow-up program to support any actions needed to rectify problem areas—leaving this to the one semi-trained staff member who probably never read the plan.

The absolute worst part is that I suspect they had every of improving all these areas.  As the saying goes, however, “The road to hell is paved with good intentions.”  Other business priorities come up, financial and human resources are pulled from Human Resources, very possibly 67 Asian job applicants aren’t given a fair shake, and the company is out probably a minimum of $200,000.

“What?  I thought you said they only had to pay $100,000.”  You’re right.  But they had to take what HR staff, as well as several senior executives, off of other tasks to deal with this issue rather than focus on the work of the company.  These people had to conduct an internal investigation, probably headed by a lawyer (who, for this event, likely was hired for around $400/hour), disrupting the productivity for those managers and employees involved in the hiring process, all of which equals a good sum of money.  Add in any other consultants, other legal fees, costs of documentation and document preparation, and, finally, the costs of actually tracking down these 67 people and getting the money to them.

Speaking of which… That $100,000, when divided 67 ways, is only $1,493.  Hardly worth it for the recipients.  Certainly not life changing.

Those additional costs, as a rule of thumb, double the settlement costs .

NCS Pearson, as part of their conciliation agreement, had to promise to change their ways, do a better job, self-monitor their progress, and document it…which they have every of doing.

But other priorities will come up, HR will continue to be undervalued and under-resourced, compliance will move to the backburner, and…

…THAT’s why the OFCCP almost always audits these companies again in two years.

Don’t ignore your compliance efforts.  To do so is like the teenage driver who thinks “I’ll never get in an accident.”  Protect your business and make compliance priority one!  (Okay, priority two is acceptable.)

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