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Compliance training makes the slope a little less slippery

This article puts the emphasis on compliance training as the foundation for better business outcomes.

Compliance trainingThat recent academic research finding that strong internal reporting correlates to better business outcomes is welcome news for corporate compliance professionals, with all sorts of implications for how to run a compliance program smartly.

Today, however, let’s focus specifically on compliance training as the foundation for all that benefit: how to get employees (and third parties) more acclimated to speaking up in the first place.

This has been on my mind because not long ago I heard one of those reformed white-collar criminals on the speaking circuit. You know the type: someone who broke the law, served time in prison, and now talks about their experiences to corporate audiences as a cautionary tale.

What strikes me whenever I hear these speakers is that while their specific stories of misconduct and redemption differ, the start of their fall is always the same: they didn’t quite grasp that what they were doing was wrong.

Maybe they didn’t understand the nuances of the law for their line of work; maybe they deceived themselves because people talked about “gratuity” or “donation,” but nobody said “bribe” so therefore the transaction was OK.

Regardless of how they took that first step, they took it — and then the next step, and the next. By the time they understood, “I’m engaging in misconduct,” they were already neck-deep in wrongdoing and didn’t know how to turn back.

So how does ethics and compliance training intercept would-be offenders at the start?

After all, if you want to generate more internal reporting activity, employees need to generate the raw material: the reports themselves. Yes, managers’ review and handling of internal reports is crucial, but none of that matters if employees won’t speak up in the first place.

And the most precarious moment for employees — the moment most urgent for ethics and compliance officers to catch — is when employees aren’t speaking up about misconduct because they don’t know whether they are doing something wrong.

That’s a question of training. That’s a job for the ethics and compliance function.

Three levels of ethics & compliance education

It’s not unreasonable for an untrained employee to say, “I didn’t know I was doing something wrong!” Proper business conduct, especially in large organizations or highly regulated industries, is a complex thing.

The goal for compliance training, then, is to define what “something wrong” actually is — to help the employee recognize the characteristics that make a thing “wrong.” Compliance officers can distill all that into three questions that your training should address.

Is it legal?

Something as simple as backdating a document might seem harmless, but can expose people or organizations to a felony. Endless white papers have been written about the difference between a bribe and a facilitation payment under the Foreign Corrupt Practices Act. A data breach might trigger reporting duties in one state but not another.

So right away, training must explain what the law is, and explain it in clear terms. Employees need to be able to recognize, “This is illegal.”

Is it proper procedure?

Many times the law applies to the corporation, but fulfilling the law depends on employees following specific procedure. For example, if employees submit expense reports in all sorts of formats, they aren’t breaking any law — but if the company can’t track all those expenses for proper financial reporting, that could violate securities law.

So training also needs to explain what the procedure is. Employees need to understand, “I’m not doing this the right way.”

Is it moral?

In many ways this is the most important question of all, because it raises the issue of employees’ intent. A person can misunderstand the law or procedure by accident. When a person overrules that voice in the back of his or her head warning, “This might not be a good idea,” that’s a more serious matter.

What’s more, compliance officers want employees to think about ethical values, because that helps employees recognize potential misconduct before it happens. The monologue inside an employee’s head shifts from following law and procedure (“If we do it, do it this way”) to ethics (“should we do this at all?”).

That’s what good training does: it helps employees recognize the ethical, legal, and procedural misconduct they could undertake while working for the company. Once they can recognize that misconduct for what it is — then they have the raw material to submit a report. Then you can begin to reap the benefits of a strong speak-up culture.

By Matt Kelly

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Ethics &Compliance Matters ™, Navex Global ®

Ethics & Compliance Matters™ is the official blog of NAVEX Global®. All articles posted on the Inside Internal Controls blog originally appeared on NAVEX Global’s Ethics and Compliance Matters Blog. The blog leverage the news, insights and best practices you find here to stay ahead of GRC trends, and take your compliance program to the next level. Read more
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