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Overcoming Obstacles to Effective Ethics and Compliance Training

Most organizations recognize the importance of ethics and compliance and the impact it has on business results, brand reputation and employee morale. But an effective ethics and compliance program requires much more than simply drawing up a code of conduct and a set of rules and regulations and hoping for the best. Sufficient training is essential for ensuring that employees and stakeholders 1) understand the importance of ethics and compliance and 2) can identify unethical and non-compliant behavior and know how to avoid it.

However, it can be difficult for organizations to get their employees to take ethics training seriously and to give it the attention it truly deserves. Many employees view ethics and compliance in general as irrelevant to their specific job functions; they tend to see any training that does not improve their job skills and knowledge as a waste of their valuable time.

In this article, we will examine the various hurdles that can reduce the effectiveness of ethics and compliance training and offer tips for how you can overcome them.

Obstacle #1: Employees’ natural resistance to the subject matter.

The concept of ethics and compliance can have negative connotations to employees. Making the training adversarial by placing too much of the focus on the consequences for failing to behave in an ethical manner can cause them to tune out completely. A better approach is to emphasize the benefits of an ethical workplace, such as a more collaborative work environment, better morale, increased productivity and enhanced job satisfaction.

Obstacle #2: Providing training that is not job-specific.

Many organizations attempt to implement a “one-size-fits-all” ethics and compliance training program. The problem with this approach is that you are likely to cover materials that simply are not relevant to some employees. For instance, materials related to bribery and corruption will have little meaning to employees who do not engage in business transaction with third parties. Providing access to job-specific online training materials is one way to customize the training to the different areas of your organization.

Obstacle #3: Not making the training relevant to current ethics and compliance issues.

While the Enron, Tyco and WorldCom accounting scandals of the early 2000s paved the way for the increased focus on ethics and compliance that prevails today, they are now viewed as old news in terms of what is pertinent to today’s work environments. Your staff will get more out of ethics and compliance training if it is applicable to the issues and risks that currently impact your organization and industry.

Obstacle #4: Failing to hold the employees’ attention.

Certain topics – particularly compliance-related subjects that deal with laws, rules and regulations can be somewhat dry in nature. Making the training interactive is a good way to engage employees and is more likely to hold their attention. Using vehicles such as role-playing and case study analysis that require group participation and feedback can be extremely effective training techniques.

Obstacle #5: Holding training sessions that are too long.

Attempting to cover all aspects of ethics and compliance programs and procedures in one extended session is likely to cause attendees to tune out at some point. A more effective approach is to devote shorter individual sessions to specific topics. These sessions should be as brief and concise as possible. Don’t require your staff to take an hour out of their busy day for a topic that can be fully covered in 30 minutes.

Obstacle #6: Not implementing multiple training formats.

Repeatedly using one training format for making visual presentations is likely to result in learner fatigue. Integrating multiple formats and media into the training program is a good way to keep attendees attentive and engaged. Using a combination of slide shows, webinars, videos, animation and motion graphics is much more effective than using just one of these formats on its own.

Obstacle #7: Failure to update training programs and materials.

As with most things that impact your organization, your ethics and compliance needs will evolve over time. Thus, it is imperative to review your ethics and compliance training program on a regular basis to ensure it will continue to meet your changing requirements. Whenever your staff reviews your updated training materials, they should find new, fresh information that wasn’t included previously.

Obstacle #8: Not being passionate about ethics and compliance.

If you are an ethics and compliance professional who is conducting in-person or video conference training, it is essential to display enthusiasm and passion for the subject matter. If you are not passionate about the materials and information you are presenting, you can’t expect attendees to take the subject matter to heart.

Effective Ethics and Compliance Training Begins with a Strong “Tone at the Top”

While taking steps to overcome these common obstacles will improve the results of your ethics and compliance training efforts, your staff will not truly take ethics and compliance seriously unless they have a solid example to follow. The single most important factor in getting employees to recognize the importance of ethics and compliance is when board members, executives and managers make a point of modeling appropriate behavior in their daily activities.


How to Prevent Workplace Retaliation Claims – and Preserve Ethics and Compliance Program Integrity in the Process

How to Prevent Workplace Retaliation Claims – and Preserve Ethics and Compliance Program Integrity in the Process

Establishing an ethics and compliance program is an important – and necessary – step for any organization that wants to maintain a strong ethical cultural. However, workplace retaliation claims can undermine your program’s integrity and even make your organization the target of a lawsuit. They can also cause significant damage to your organization’s reputation and brand.

Workplace retaliation can be defined as any adverse action taken against an employee who files a complaint against an employer due to violations in areas such as illegal harassment or discrimination. For a retaliation claim to be valid, the employee must be able to show that:

  1. He or she was engaged in a legally protected activity such as reporting a violation or supporting another employee who filed a complaint.
  2. The employer knew or believed the employee engaged in the protected activity.
  3. He or she suffered an adverse employment action such as a demotion, pay decrease or shift reassignment.
  4. The engagement in the protected activity caused the employer to take the adverse action.

Why Are Workplace Retaliation Claims on the Rise?

Retaliation claims have experienced a steady increase over the past two decades. Per U.S. Equal Employment Opportunity Commission figures, the agency received 18,198 discrimination-based complaints in 1997. By 2015, the number had risen to 39,757. Several factors have contributed to more retaliation claims being filed over the years. As Robert Weisberg, regional attorney for the EEOC Miami, FL district points out, employees have become more aware of their legal right to protection and are more willing to exercise them.

“I see often where there’s sexual harassment that in the past might have been tolerated, now is leading to internal complaints of discrimination, and that then sets the stage for retaliation of some sort,” Weisberg said.

Two U.S. Supreme Court rulings have also contributed to the increase in retaliation claims. In a 2006 ruling in the Burlington Northern & Santa Fe Railway Co. v. White case, the Court broadened the types of employer behaviors that can be considered as retaliation to include less obvious adverse actions such as receiving less favorable work assignments. In 2011, the Court’s ruling in Thompson v. North American Stainless expanded who could sue for discrimination. In this case, a man was fired after his fiancé accused their mutual employer of sexual discrimination. The ruling enabled the man to claim wrongful termination, while also paving the way for the filing of future retaliation claims by third parties.

How Do Retaliation Claims Impact Ethics and Compliance Program Integrity?

With the increased focus placed on ethics and compliance, organizations of all types and sizes have developed and implemented programs, policies and procedures in an effort the establish an ethical culture.

However, even the most ethical organizations may have to deal with some type of discrimination charge at some point. When a charge is levied against an employer, it can put the organization’s ethics and compliance efforts to the test. If the employee who made the charge remains employed with the organization, it can create an awkward, tense work environment. Often, the employer may feel it is walking on eggshells; the smallest action, even if there is no malicious intent, could be perceived by the employee as retaliation and could lead to the filing of a claim. Other employees may also be watching closely to see what transpires in the wake of a discrimination charge. If the employer does not respond appropriately, it could create a lack of trust and even resentment that permeates the culture and limits the effectiveness of the organization’s ethics and compliance initiatives.

Strategies to Prevent Retaliation Claims

The onus is on the employer, and specifically, its ethics and compliance and management teams, to develop and implement strategies to limit the likelihood that retaliation will occur. In turn, this will reduce the risk of a retaliation claim being filed against it, while also helping to maintain a strong ethical culture. Components of the strategy should include:

  • Learn what constitutes a workplace retaliation claim: Utilize resources such as information provided by the EEOC and your state’s labor and industry department’s website to learn more about the relationship between employment discrimination, supervisor liability and retaliation claims.
  • Develop a clear-cut anti-retaliation policy: You should have a policy in place that indicates what retaliation is and strongly emphasizes that it will not be tolerated in your workplace, be it from managers or rank-and-file employees. It should also list the steps employees should take if they believe they are being retaliated against.
  • Conduct training: Conduct training sessions with your managers and supervisors to ensure they have a clear understanding of your organization’s policies and procedures regarding discrimination complaints and retaliation claims. Training should include specific examples of what constitutes supervisor retaliation and how to prevent it.
  • Communicate with the complainant: When an employee does make a retaliation complaint, be sure to take it seriously. Launch a thorough investigation and keep the complainant informed throughout the process. Lighthouse Services, Inc. offers an informative whitepaper that provides step-by-step instructions on how to conduct an effective, confidential ethics-related investigation.

These steps will help minimize retaliation claims and allow you to manage them in-house before they can escalate. They will also prove invaluable is assisting your efforts to create and maintain an ethical organizational culture.


Developing Ethics and Compliance Programs for Small to Medium-Sized Organizations

While ethical breaches that occur in Fortune 500 companies tend to get the most publicity, they also happen with great frequency in small to medium-sized enterprises (SMEs). According to the National Defense Industrial Association, the overwhelming majority of organizations that are suspended or debarred from engaging in government contract work due to ethical misconduct are smaller entities. And as with larger organizations, small business owners can be held criminally liable for illegal acts committed by their employees while performing their job duties.

In truth, the risk of misconduct is present in any organization, regardless of size. And it only takes one rogue employee acting in an inappropriate manner to cause irreparable damage to a smaller organization’s reputation. Unfortunately, too many SMEs fail to set up an effective ethics and compliance program, often due to concerns over cost or a shortage of manpower.

An Informal Approach to Ethics and Compliance Works Best for SMEs

Larger organizations typically discover the need to create a separate department headed by a chief ethics and compliance officer to develop and implement their ethics initiatives. The department works in lockstep with top management and reports to the board of directors on a regular basis. SMEs are less likely to have the need for such a structured approach, and even if they wanted to create a dedicated ethics and compliance department, resource limitations would likely prevent them from doing so.

A more practical solution for SMEs is to take more of an informal approach to developing and implementing ethics and compliance programs. This typically will not require the addition of more staff or the creation of a separate ethics and compliance department.

SME Ethics Program Development Procedure

As with larger enterprises, SMEs should take a risk-based approach to the development of an ethics and compliance program. The first step is to identify the specific compliance risk areas the organization faces. It is also important to determine the core values of the organization that will encourage ethical conduct and add value to the business operation. Questions to ask when attempting to pinpoint the core values can include:

  • What does our organization stand for?
  • What is most important to us?
  • What matters most to our stakeholders?
  • How do we want to be viewed by our customers?

Once the key risk areas and core values have been identified, the next step is to establish a set of standards of ethical conduct and compliance controls that, when followed, will reduce the organization’s exposure to risk in each area. Developing a code of conduct and a written set of guidelines will give a clear indication to employees and stakeholders of what is considered acceptable – and unacceptable – behavior.

It is important to designate one individual who is responsible for promoting these standards and controls. In a smaller organization, this role can often be assumed by a key employee, which prevents the need to hire a dedicated ethics and compliance officer.

The next step in the process is to provide training to employees on the newly created ethics and compliance standards. In a smaller organization, it may not be necessary to conduct formal training sessions. Instead, the individual who has been designated as the ethics and compliance program leader can implement more of a teaching and coaching approach on an individual or small-unit basis.

One advantage smaller organizations have is that, because of their size, it can be easier to take a targeted approach to ethics and compliance training. For instance, the training for the company accountant can focus more on fraud prevention, while the sales staff can receive tailored training covering appropriate gift-giving practices when dealing with customers and prospects.

Promoting Ongoing Ethics and Compliance

In addition to the development and implementation of the ethics and compliance program, it is important for a smaller organization to have a system in place for monitoring adherence to the standards. Even an SME can benefit from an internal reporting mechanism such as a third-party hotline that enables employees to report incidents of misconduct in an anonymous and confidential manner.

All hotline reports should be reviewed and acted upon as quickly as possible. The Appendix section of the Lighthouse Services whitepaper "Best Practices for Handling an Ethics Hotline Report: Developing Policies and Procedures for Conducting an Effective Ethics Investigation" includes a checklist that can serve as a helpful guide during the investigative process.

Finally, it is essential to take appropriate disciplinary action when improper conduct occurs. The failure to do so will send a message that your organization does not take ethics and compliance seriously, a message that can quickly infiltrate and damage the culture of a smaller organization.


The Impact of the “Millennial Mindset” on Workplace Ethics

The Millennial generation, which includes individuals born from 1982 to 2000, has become the largest living generation in the U.S., surpassing Baby Boomers (those born between 1946 and 1964). More Millennials are entering the workforce each year – by 2020, they will comprise roughly half of the labor force, and the figure is expected to reach 75 percent by 2030. As the number of Millennials who become full-time employees continues to rise, their impact on organizational culture is already being felt, particularly from an ethics and compliance perspective.

From an organizational standpoint, the influx of Millennials into the workforce is not necessarily considered as a positive development. Millennials are sometimes derisively referred to as “Generation Me” – they are often characterized as being entitled, impatient and overly result oriented. Technology, particularly the advent of social media, has played a prominent role in how Millennials view and interact with the world around them – and not always for the better.

Positive and Negative Millennial Traits

A 2013 Ethics Resource Center’s report, “Generational Differences in Workplace Ethics,” which was released as a supplement to the 2011 National Business Ethics Survey, identified the following positive traits as being applicable to the Millennial generation: skilled multitaskers, tech-savvy and appreciative of a diverse workforce.

On the downside, the report indicates that Millennials lack basic literacy fundamentals. They also have extremely short attention spans and are easily distracted. Organizational loyalty is a foreign concept to Millennials – most expect to have many employers and even multiple careers during their working life.

Ethics and Millennials in the Workplace

It is these negative Millennial traits that are raising concerns with many ethics and compliance experts. One of the biggest areas of concern is workplace theft. A 2015 Ethics Resource Center study found that, perhaps because of their heightened sense of entitlement, Millennials are nearly twice as likely as Baby Boomers to use a company credit card to purchase personal items. Additionally, they’re approximately three times as likely to use social media as a forum for making negative comments about their employer. What’s more, Millennials are approximately two and a half times more likely to remove company software from the workplace.

Millennials may exercise questionable judgement while on the job, which can lead to ethical lapses in certain areas. The pervasiveness of the Internet, which enables files, data and proprietary information to easily be shared with others outside the organization, has created a mindset that everything is “common property,” even if sharing the information could damage the employer. Time theft is another issue with the Millennial generation, as many employees spend much of their day using their personal devices for non-work-related activities. Too often, the desire to be “tuned-in” trumps doing actual work.

Paradoxically, while Millennials do not place a high value on ethics in terms of their own behavior, they do prefer to work for organizations they perceive to be ethically sound and that conduct their business operations in a socially responsible manner.

The Need for Organizations to Embrace the Millennial Mindset

While organizations certainly cannot change the way a whole generation of workers thinks, they can attempt to embrace the Millennial mindset. As an increasing number of Millennials will be entering the workforce in the coming years, doing so will become a virtual necessary to ensure organizational survival. One way employers can gain a competitive advantage when recruiting talented Millennials is placing a strong emphasis on improving ethics and social responsibility. For instance, many Millennials want to work for organizations that emphasize giving back to the local communities and finding ways to protect the environment.

Ethics Training for Millennials

The nuances of the Millennial mindset require organizations to rethink the way they approach ethics and compliance training. As social media is so ingrained in the everyday life of Millennials, it can serve as an effective training tool. For example, organizations can use various social media channels to deliver messages from leadership on pertinent ethics and compliance-related topics.

It’s also important to make all training activities as engaging as possible. Training should be interactive and fast-paced and include mobile content accessibility. Ideally, ethics training should feature a combination of online, in-person and video training sessions. Brevity is also critical due to Millennials’ relatively short attention span. Millennials crave feedback, so it should be provided as often as possible during training.

In terms of content, it’s important to craft and “brand” the training program so that the employees will view it as beneficial to their ongoing professional development. Keeping in mind that most Millennials probably are not planning to work for the organization for the next 30-40 years, the training should focus on the development of “transferrable” ethics and compliance knowledge and skill sets. Key ethics topics that resonate with Millennials who have managerial aspirations include detecting and preventing retaliation, how to investigate incidents of ethical misconduct, and conflict resolution.


The Difficult Demands on the Chief Ethics and Compliance Officer

New regulations and greater enforcement both domestically and abroad are putting increased pressures on compliance officers. In the United States, regulatory bodies, including the Securities and Exchange Commission, are upping their enforcement efforts due to newly enacted laws and published regulations, as well as being provided with greater enforcement personnel.

Andrew Careens, the SEC’s co-director of the Division of Enforcement, touched on this in November when he gave the keynote address at the International Conference on the Foreign Corrupt Practices Act.

He noted that “The SEC’s work in the FCPA arena over the last 35 years has been a fundamental part of the SEC’s mission. And the last 10 years have seen an even bigger increase in FCPA enforcement actions. As most of you know, three years ago, we formed a specialized Unit within the Division of Enforcement devoted to investigating potential FCPA violations. Our FCPA Unit has approximately three dozen dedicated attorneys and other professionals nationwide…” Careens told the group at the top of his speech and later reminded them about the “increasing the number of FCPA actions against individuals” that the SEC filed in recent years.

Stephen L. Cohen, SEC associate director of enforcement, ended his remarks at the Society of Corporate Compliance and Ethics 2013 Annual Compliance and Ethics Institute with something of a “carrot and stick” notice. “First, there is no doubt in my mind that a strong compliance and ethics program not only provides direct economic benefits to your company but will also allow you to reap significant credit should you ever deal with us or our law enforcement colleagues. The alternative may be squaring off against our vigorous enforcement program,” Cohen said.

In this environment, chief compliance officers and chief ethics and compliance officers need to operate from positions of strength, rethink strategies and be sufficiently staffed with the individuals who are suited to handle the difficult brief.

Evolving issues

Writing on his blog, Michael Volkov, an attorney who specializes in corruption, crime and compliance, notes how compliance officers tend to focus their efforts on the issue of the day. Not long ago it was anti-money laundering programs, now it’s anti-corruption compliance, he says.

In an environment where the CCO is constantly putting out an evolving variety fires, the likelihood of career burnout is high. Volkov calls changing and evolving high-risk compliance issues “stovepipes” and recommends tactics to avoid them.

He points out that there are costs associated with focusing on “single-risk compliance functions.” Essentially, organizations lose the economies of scale. He suggests finding ways to integrate compliance programs so that they cross boundaries. For instance, anti-money laundering, anti-corruption and antitrust efforts can be grouped.

While there are certain legal standards and details that may vary, “there are aspects of every compliance area which can be leveraged across different substantive risks,” Volkov writes. “The challenge for a chief compliance officer is to identify potential overlaps and economies to be gained,” he says.

Perhaps creating compliance systems that take a more integrated and “holistic” approach can, in the long term, lessen the stress on CECOs and CCOs.

Roles and responsibilities

The best way to define and implement the role of the CECO has been a topic of study and debate for some time, and it drew much renewed interest with the passage of the Sarbanes-Oxley Act (SOX).

Matt Brady, writing for National Underwriter: Life & Health, notes this in his 2005 article, “The Evolving role of Chief Compliance Officers.” While it was apparent that newly-powered CECOs should “focus on ensuring transparency and clearly defining their roles,” Brady says, “several aspects of the chief compliance officer position” remain unresolved with the enactment of SOX.

Brady points out a possible conflict in smaller companies. He notes that while larger companies can afford to have a CCO who is independent of operations, some smaller companies might find themselves in the difficult position of having a CCO who is also directly responsible for managing some element of operations.

The authority-independence tension

The dilemma, or trade-off one might say, is between authority and independence. A CCO not responsible for operations has the necessary independence, but may lack the authority required for enforcement. If the CCO responsibilities are vested in an operational manager, that person might have the authority but not the independence. Either situation clearly adds stress to an already-stressful position.

When the Journal of Health Care Compliance took an overall look at these issues in 2007 in “Paper Discusses the Role of a Chief Ethics and Compliance Officer,” author Susan Kavanaugh writes, “many CECOs reveal frustration that they cannot fully do their jobs due to deficient resources, inadequate preparation, or insufficient authority.”

Kavanaugh was reviewing a study conducted by the Ethics Resource Center’s Fellows Program. She noted that there are four governing principles recommended for the position of CECO. Two of these directly—although perhaps not adequately—address the tension between independence and authority. They are:

  • CECOs should be independent to raise concerns without conflict of interest or fear of reprisal, and
  • CECOs should be connected to company operations so they are able to build an ethical culture.

These two principles should be viewed in the light of the first principle, that is, the CECO should be held accountable to the governing authority, i.e. have sufficient “up line” access to do the job.

Striking the balance

When these responsibilities are properly implemented and balanced, the CECO has the ability and opportunity to do the job. But there may be one final factor to consider when an organization wants to avoid the burnout problem: the CECO’s constitution and personality. With such a diverse and divided “bailiwick” it’s not a job everyone can perform.

Companies might want to examine a professional like Patrick J. Gnazzo, who established the CECO position at Computer Associates International Inc. after the company ran up against the Justice Department in 2005. Business Week magazine called him one of “The New Ethics Enforcers” and he was as comfortable strutting across a Las Vegas stage exhorting CA employees, "Don't lie, don't cheat, don't steal!" as he was navigating the board room.

An important part of his success was establishing relationships with management that encouraged them to seek Gnazzo before a situation would turn into a problem. He worked hard not to be seen as an “outsider.”

The difficulty inherent in the position of compliance officer will never go away. The tension between independence and authority over operations will continue to keep many compliance officers awake at night. However, the right person, with the appropriate authority, sufficient staff and contract support, and the freedom to design relevant systems should help organizations increase the longevity and effectiveness of their CECOs and CCOs.





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