Leadership and learning are indispensable to each other.
John F. Kennedy
In today's volatile and ambiguous world, sustainability is the common goal of private industry. Corporate compliance programs are designed as a compass for companies, protecting them from unethical practices and helping them to avoid financial and reputational harm in a proactive way. An inevitable but commonly underestimated pillar of these programs is compliance training. Training is mostly seen as nice-to-have, but not as a must and is usually cut first in a cost analysis. However, compliance training equips employees and other stakeholders with the skills and knowledge needed to develop corporate behavior and culture. Led by the US in the early 1990s and followed by others such as Brazil and the UK in extra-territorial anti-corruption legislation, compliance training became a factor that was assessed when authorities charged companies for unethical practices. This created a culture of internal training which provides important lessons for companies around the world.
Risk Based Approach
Companies carry out risk assessments by considering many criteria such as their sectors, size, distribution of employees by department, location of operations, and fields of activity. A compliance program must be designed to detect particular types of risk and misconduct that a company may face during its operations. Bribery, corruption, data privacy, conflict of interest, hostile work environment, third-party risks, violation of equality principles, etc. are examples of areas of risk that a company often faces.
A compliance program must provide information about periodically updated and revised risk assessments, how the risk management process is shaped, and lessons learned from the past cases. Training as part of compliance program is essential for effective protection. To prevent possible risk, companies should provide training to ensure that employees know about the company's compliance program and engage with it. The case of SEC vs. a Morgan Stanley executive in 20121 demonstrates the significance of compliance training in serious fraud. In the case, a dealmaker at the company who attempted to enrich himself by violating the internal controls received a prison sentence whereas the authorities decided not to charge the company due to their effective and frequent compliance training.
Improving Corporate Culture
Compliance programs create a corporate culture that has benefits beyond risk prevention. Customers and business partners are attracted to a strong ethical culture, which makes a business more sustainable. A compliance program that targets corrupt practices can also help companies meet social responsibility goals as part of their corporate culture. An ethical corporate culture protects the image and reputation of a company in the public's eyes from risks other than legal concerns and creates a trusted partner for other businesses.
Conforming to industry and corporate standards as well as respecting human rights are also some of the more direct benefits of corporate culture. On the other hand, the existence of a corporate culture also creates an environment in which employees want to work. This increases employee performance, engagement and efficiency. The positive impact of compliance programs on the workplace extends even further into embracing diversity and employment rights. The ultimate benefit is reduced employee turnover, as a result of which experience and talent are used in the most productive way and motivation is increased. Additionally, employees respond to change more positively if there is a properly established and implemented compliance program. A study shows that there is "an indirect effect of workplace ethics culture on the work engagement dimensions of vigor, dedication, and absorption through the mediation of ethical leadership."2
'Paper Programs' vs Effective Compliance Training
Constantly reshaping a compliance training program is fundamental to its success. The U.S. Department of Justice ("U.S. DOJ") labels certain compliance programs as "paper programs" to refer to companies that spend large amounts on programs that provide no real improvement. A closer look at these companies reveals that their programs do not use the feedback gathered from practical experiences. Effective compliance training requires an accurate assessment of the results it provides. Focusing only on superficial figures such as attendance levels or the amount of information given to employees does not show the actual impact of compliance training.
There must be a strong connection between the risk landscape of a company and its compliance training. Companies often fail to review their compliance training according to the fraudulent incidents that they have experienced. This means that the opportunity to learn from past experiences and to prepare for any potential effects is missed. Focusing on elements that are not driven from material findings on the ground also results in compliance training that does not have the right targets.
The U.S. DOJ evaluation of corporate compliance programs3 ("DOJ Guideline"), underlines the wide scope of the audience in compliance training. Ergo, well-designed compliance training should cover employees at all levels, third parties, agents, and business partners where applicable. In order to run an effective compliance program, it is important that employees and other stakeholders are aware of the zero-tolerance principles, real-life examples and training tailored according to their role in business.
Additionally, a program must also be accessible to all employees and other stakeholders, in every jurisdiction applicable. If there are barriers, such as language barriers, the company should inform its audience of what measures it has taken to overcome them for the functionality of the compliance program.
Tailoring the Training
As outlined in the DOJ Guideline, getting to know your audience is necessary when providing the right type of content at compliance training. The content provided in training sessions should address the audience well enough in terms of both connecting with their individual experiences at the workplace and finding the right motivational messages on the benefits of compliance. Training content should be shaped according to the audience's size, sophistication, or subject matter expertise. Training should also be tailored to the risks associated with the business and sector of the company with lessons learned from prior compliance incidents. Whether online or in-person training, the audience should be given an easy mechanism to ask questions and raise concerns. This will provide more efficient training both in terms of the time dedicated to it and its level of effectiveness.
Assessing the Training
Training should be frequently assessed by compliance professionals in terms of clarity and correctness of language, relevant and up-to-date content, and duration. Employees should be encouraged to give feedback about the training satisfaction. Online surveys can be used to understand whether employees have any comments or advice about the methodology and examples used in training.
Testing employees' level of awareness frequently before and after training is necessary to assess its effectiveness. The company should also assess if any employees failed in specific parts of the training and consider follow-up training.
Training materials should be living materials. That means they should be constantly reviewed based on information collected at ground level concerning the matters described above. Renewing materials will provide a further opportunity to remove content that employees have already been exposed to too many times and can no longer engage with. Keeping in mind that training is periodic, every opportunity to change the format and content should be used so that it does not become monotonous for the audience. This can be achieved by engaging outside consultancy, employing new training methods, ensuring that the needs of the company are viewed from different perspectives and working on new cases.
Training should create extrinsic motivation by interesting methods at first and should encourage employees to engage with the program. These methods can include using behavioral economics, real-life scenarios, gamification and interactive content.
Another dimension of creating the right format is to make sure that it fits the way in which the audience is going to make use of the content that is provided. Given that compliance training is done periodically, there are gaps between the sessions where employees are expected to implement the training. The best way to design training is to spread these gaps according to the needs of employees and ensure that training is continuous. A variety of sources provided at the workplace should be used in order for the training to become part of an employee's work experience.
Five Takeaways from This Article
- How training sessions are being measured themselves should be assessed.
- Past experiences, current characteristics, and operations of a company should be used to tailor the curriculum.
- The work experiences and roles of different types of employees should be recognized and training should address the risks associated with different groups and sectors.
- Resources should be made available and guidance on compliance policies should be provided outside of the training sessions. The messages from training in terms of company stance should be continuously communicated by managers outside of the sessions.
- Training should explain to staff when to communicate, to speak up and to seek advice. Companies should assess if employees are able to this.
2. Jeremy Mitonga-Monga, Aden-Paul Flotman & Frans Cilliers (2016) Workplace ethics culture and work engagement: The mediating effect of ethical leadership in a developing world context, Journal of Psychology in Africa, 26:4, 326-333
3. https://www.justice.gov/criminal-fraud/page/file/937501/download U.S. Department of Justice Criminal Division Evaluation of Corporate Compliance Programs (Updated June 2020)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.