How a Compliance System Saved ABC Healthcare’s Bacon During an Audit
The following is an edited excerpt from the book, People Processes: How Your People Can Be Your Organization’s Advantage by Rhamy Alejeal
Compliance systems are essential for providing timely updates in regulation changes, and can make all the difference in a company crisis. Consider, for example, how ABC Healthcare stayed on track in the face of impending doom.
ABC Healthcare works in the field of Medicare and Medicaid, and the entirety of their compensation is government-provided at $13.50 per hour. Their full-time staff ranges from 200 to 250 at any given time, and they have another 300 part-time employees. On average, they hire about 150 people a month because the turnover rate in the industry is roughly 400 percent. The company can only pay their employees around nine dollars an hour, leaving $4.50 per hour per employee to run the rest of the company.
ABC Healthcare’s sheer number of staff greatly increases the risk of having a disgruntled employee or two. It is common knowledge that the more employees you interview and hire — and the more complex your situation — the higher your odds of receiving a complaint from a regulatory authority or lawyer. In ABC Healthcare’s case, an employee complained to the Department of Labor and cited unfair hiring practices. She claimed the company was discriminatory and that she wasn’t hired for a race-related issue.
One day, without warning, two Department of Labor auditors strolled into ABC Healthcare’s doors and announced the company was under a review for compliance. On the spot, the auditors asked to see the company’s hiring records, a list of all questions asked on the employment application, the full employee handbook, and a complete list of onboarding processes. In addition, they also asked to review a few recent interviews in their entirety.
Although surprised by the audit, the HR and executive team at ABC Healthcare were not worried. They had conducted 150 interviews that month, so there was no shortage of interviews to review. More importantly, the company had a compliance system in place that allowed them to quickly and efficiently show the following: who had applied for jobs, who had been hired, how interviews were conducted, what information was provided at onboarding, what documents were signed (by whom and when), what trainings were required and completed (per person and per role), and all manager actions for every department. In addition, the practices and policies of the company were at their fingertips and easily shared with the auditors.
An unannounced auditor visit to most companies with that kind of turnover would have HR teams and business owners sweating bullets and nursing ulcers. Without proof to back up claims, you’re often up a creek with no option but to hire expensive lawyers and hope the business survives. In ABC Healthcare’s case, an audit that could have taken months took two days, and they were cleared of any wrongdoing. Crisis averted.
For more about HR and compliance, pick up a copy of People Processes: How Your People Can Be Your Organization’s Advantage by Rhamy Alejeal
