How to Tell if Your Compliance Program is Working
Risk is inherent to every human enterprise, and how we manage and mitigate risk is often critical to our personal success in life as well as the overall achievement or failure of any organization.
To help mitigate this risk, businesses often draft comprehensive codes of conduct that outline appropriate and inappropriate behavior for both individual employees and the business at large. And to make sure that these written guidelines are followed, corporations invest hundreds of millions of dollars each year into training, reporting, and enforcement mechanisms under the banner of a “compliance program.”
But hidden behind these protocols and investigation guidelines and eLearning budgets, how can an organization be confident that it’s compliance efforts are meeting with success?
How Do You Know If You Have an Effective Program?
Leadership is involved
Few things will highlight a thriving, healthy compliance program more than executive buy-in, and when a company’s leaders are committed to building an ethical culture and prioritizing corporate responsibility, the rest of the organization will follow.
Of course, you don’t have to take our word for it. The , the U.S. Department of Justice (DOJ), the U.S. Securities Exchange Commission (SEC), and the all cite executive leadership as critical in fostering an ethical corporate culture.
No one is exempt
Consistent reporting and enforcement also plays a major role in effective compliance, at least, if you believe recent research produced by behavioral economist Dan Ariely. In a series of experiments, Ariely found that test subjects were more likely to engage in dishonest behavior when exposed to existing corruption. And by merely being offered a bribe, experiment participants were more likely to behave dishonestly.
Bearing this research in mind, it should come as no surprise that in a recent survey of more than 4,000 employees regarding the largest challenges related to worker compliance, Deloitte found that inconsistent corporate practices dominated the responses. In particular, workers were most concerned about the:
- Inconsistency of ethics communications and training (24.7 percent)
- Differing ethical standards for various employee groups (15.4 percent)
- Insufficient incentives to reward/punish behavior (16.8 percent)
- Varying ethical policies of third parties (14.5 percent)
You receive bad news
If your workforce is too afraid to notify their supervisors or senior management of a failure or business setback, they’ll either find ways to hedge the information or outright lie.
Take for example the Veterans Health Administration in Phoenix, Arizona. When staff were unable to cut wait times for medical appointments — one of the key performance indicators used to determine salary increases — workers began keeping “secret” waiting lists and not entering patients into tracking systems. Official reports cited 24-day waiting periods, while patients were actually waiting an average 115 days for appointments.
You need to make clear to staff, both through education and policy, the importance of honesty and compliance.
Your employees tell you
It’s amazing how (sometimes brutally) honest your employees can be when you ask them a direct question, particularly if you offer them the chance to comment anonymously. Even if you’ve built a culture where your staff feels free to bring up problems, they may still feel reluctant to proactively speak out, particularly if the compliance issue is systemic to an entire department.
Routinely conduct anonymous surveys that gauge employee attitudes and perceptions regarding company ethics, discrimination, customer service, and overall corporate culture. Exit interviews are also a good time to raise these types of questions. Then match these impressions of corruption or potential ethical issues against reported incidents. If a noticeable gap exists, you need to take action.
Similarly, your business should have mechanisms in place, such as fraud hotlines, where employees can anonymously report incidents of inappropriate behavior. Based on its 2016 global fraud study, the Association of Certified Fraud Examiners found that tips and whistleblower activity were the most commonly cited means of detecting fraud — cited in 39.1 percent of cases — among respondents.
Don’t forget to vet the effectiveness of your compliance training efforts as well. Not only should you choose a platform that incorporates testing into the training exercises — allowing you to verify that your workers have absorbed the relevant content — but you should test them again a couple of months later to track their overall retention. These results can help you determine whether you need to adjust your education strategy or potentially employ refresher courses.
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