To summarize our last post here on this topic, people are no better nor worse than they were before the Women’s March on Jan 21st, 2017. The same risks are festering within your organization. The fraud, theft, bribery, harassment, and anti-competitive behavior that may have been occurring before is still occurring now. The difference is that now people are speaking up, calling their organizations to account and doing so very publicly.
To defend against this, you can no longer use the tired old practices from the last decade, all done in anticipation of a regulator challenging the effectiveness of your program. This defensive approach to ethics and compliance will not protect your organizations, your executive team, nor yourselves.
As Sun Tzu stated: “Attack is the secret of defense; defense is the planning of an attack.” And by George Washington: “offensive operations, often times, is the surest, if not the only means of defense”.
The role of ethics and compliance is evolving. We are here to protect the company and to protect the people that make up that community. People are human, we are flawed, we will succumb given the opportunity, the motivation and the rationalization. You are here to coach, guide and nudge each individual away from crossing the line, protect people from themselves, and protect the community that makes up your organization.
Integrity programs are going through an evolution that we have seen accelerate in the last couple of years. From the days of reactive programs that focused purely on the basics of hotlines, marginally promoted, with crisis management ready to respond to scandals; to affirmative defense programs that expanded their approach to prepare for DOJ, SFO or other prosecutorial inspection, guided in large part by the definition of an effective compliance program in the Sentencing Guidelines or similar; to the visionary programs at the leading organizations of today, that are focused on proactive ethics, driving shareholder value, driving employee engagement, and thereby ultimately delivering elevated behavior throughout the organization.
This Harvard Business Review article has some excellent pointers for improving the effectiveness and accountability of an integrity program:
- Create an ethics committee of the board
- Appoint a high-ranking chief ethics and compliance officer
- Establish and post online ethical and compliance standards and procedures
- Promote quality and safety with clear escalation policies
- Develop measurable integrity performance indicators, reward good behavior, and do not create misaligned incentives.
- Use due care in hiring C-suite executives.
- Mandate interactive training to communicate the ethical and compliance standards
- Make sure employees aren’t retaliated against for speaking up
- Apply the rules evenly across entire organization
- Be prepared for compliance failures
I would like to expand on three of these:
(#3) Establish and post online ethical and compliance standards and procedures.
Many organizations post their standards and codes of conduct online in the form of a document. Today, visionary organizations are publishing interactive codes of conduct: rich media sites that don’t just convey page after page of rules and expectations, but rather, are engaging immersive experiences. These interactive web sites have multiple benefits:
- The content is dynamic. You can adapt, refresh and reinvigorate the content and the message as needed unlike document based codes of conduct of old that took months of work to update and republish. This enables you to respond to changing circumstances, emerging trends and current events. Imagine being able to set up a mini site focused on the #metoo movement and sexual harassment in the workplace, start a dialog with your employees, and drive participation and engagement to that site. How much more relevant does that make your program?
- The content is interactive. Short bursts of rich media are far more compelling than 1000s of words on a page.
- Rolling campaigns. You can create monthly campaigns that highlight different sections of the code. Driving engagement and topical relevancy.
- Monitor engagement. Imagine the insights you can derive by being able to see which departments and locations are engaging with the content and which are not. Why does one division rarely engage with the campaigns you send out? What message is management sending within that group? Why did a cluster of people suddenly engage with one aspect of the code? Even before employees go to the helpline, you will we see the precursor, the canary in the coal mine, in this activity.
(#5) Develop measurable integrity performance indicators, reward good behavior, and do not create misaligned incentives.
This is an area that most integrity programs have proven to be woefully inadequate at. The majority tend to measure activity not the outcome of their programs. For example, measuring the number of people being trained and their ability to complete a short test immediately at the end of it is irrelevant and misleading. Do delayed testing (say 3 months after the training) and see how many retain the learnings.
Another idea, is to establish programs, like a compliance passport, as proven by Keith Read. As employees complete the sections within their passport they become eligible for rewards, promotions, or even are barred from bonus attainment unless all sections have been completed. Paramount, though, as with all programs, measure the results. Test before and after, do A/B testing to show the outcome from different programs and roll the most effective across the enterprise.
(#7) Mandate interactive training to communicate the ethical and compliance standards.
We fully agree with the need for training, but it needs to be effective. The vast majority of the training we see being delivered is horrendous. Move to micro-training, short bursts of relevant, engaging, humorous (where appropriate) content that can be quickly consumed, but that immediately reminds the individual of the right behavior. A gentle nudge in the right direction, delivered frequently is far more effective than an hour-long lecture delivered annually. Even better is to deliver the short training at just the right time: on hire, on promotion, when traveling, when negotiating a new contract. The right content, at the right time, on the right device.
In the final post in this thread, we will explore how you can change the conversation at the board level. These integrity programs require investment, and that investment comes easiest with board support. Upgrading the conversation to focus on the value of your integrity program is a leading driver to secure that funding.