Managing Compliance at the "Hotel California"

When the Eagles first started crooning about what the ‘American dream’ means, they probably didn’t foresee how their hit song would one day serve as an allegory to how the current legislative landscape of California affects the hospitality industry nearly 40 years later.

Ask anyone in hospitality about their business in the Golden State (or intentional lack thereof) and most of the time you’ll be met with a rolling of the eyes or inevitably segway into a story about how difficult it is to get everything ‘right’ by a thoroughly fed-up business operative.

So why is compliance in California such an uphill battle?

And more importantly,

How the heck does any business worth its salt balance make a profit with the anticipation of increased costs from new legislation every six months?

The fact is that compliance isn’t just some cool title businesses are handing out these days, it’s a framework that any business – any good business – prioritizes. This ‘framework’ starts at the heart of leadership and fans outward until it’s a communal direction of the entire company.

As a compliance professional, it’s my job to identify problems for the business and help it decide how to pivot based on them. Not every bill in the state Senate is something you should know or care about (sorry, legislators), so cultivating a compliance framework begins with ensuring you have someone on staff who can distinguish what is impactful and what is white noise when it comes to legislation because these laws, especially in California, change on the turn of a dime. Once you have someone at your company who can tell you what is relevant, you must consolidate that relevance into the most efficient package available.

I’ve never met an executive with the luxury of extra time; leadership is always in meetings about one thing or another.

So, when I identify upcoming legislation, I’ve got to bring attention to it to get it across to leadership while I have them at the table. Part of that is finding a spare 2-3 minutes on someone’s calendar, and part of that is being concise. When discussing a new law, I will tell you the minimum requirements the business needs to meet and when it will go into effect. I will also come to the table with suggestions on alleviating the risk.

As I mentioned, leadership doesn’t have time to hear why you think they should care about a new law – they want to know why the business should care about it. And let’s be frank, many business executives don’t sit and ponder judicial theory behind new business practices; they act. So, when I anticipate these discussions, I consider what the business could do from a practical standpoint; Is it as simple as updating an employee handbook or as complex as modifying a system configuration?

From a business perspective, the correct answer usually comes down to the most cost-effective and straightforward workflow. That’s where having business know-how comes into play. Knowing where to find legal information is one thing, but knowing how to apply it to your company is a unique aspect that will determine if you can keep a lawsuit at bay.

How this usually plays out is as simple as considering your options from a practical business standpoint:

Option A will cost less but won’t be implemented until after the effective date because so-and-so is on leave, whereas Option B will cost more, but it will be a quick fix for the team to implement.

Both options will eventually get the company in compliance, but with the help of a risk assessment, leadership will decide which option is the best way to get there.

The framework doesn’t stop once the people at the top decide what needs to be done.

If anything, the step after choosing what to do is probably the most critical leadership support.

I try to maintain an 80 percent plan when working because adjustments for compliance will only be made if blockers to implementation are eradicated, and blockers will always come up from some avenue, despite my best ‘Type A’ desire to plan for every eventuality.

My mother, an outstanding leader, told me early in my career that people will conform to your lowest bar. And she is right.

Eliminating blockers tends to be the pièce de résistance to fulfillment, so if leadership doesn’t provide support via helping remove those blockers, no one else will either. Alternatively, if leadership shows a priority for ensuring compliance over succumbing to blockers, managers, supervisors, and other personnel will take note of the set bar and work in varying degrees to support compliant functionality. Once the blockers are gone, the compliance role evolves into maintenance until a new and inevitable piece of legislation comes down.

California complexities aren’t going away any time soon and the legislative landscape there is geared toward ensuring employee protections over employer profits, so hospitality industries must set up a structure in anticipation of evaluating upcoming legislation and addressing its potential impact before the impact hits.