Are We Giving Up on Ethics & Compliance Programs?

by NAVEX Global
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The recently released 13th Global Fraud Survey from EY notes that, despite an aggressive enforcement environment focused on fraud, bribery and corruption, “the percentage of companies that have anti-bribery/anti-corruption policies has increased by only 1% over the past two years, and a persistent minority has yet to take even the basic steps toward an effective compliance program.” 

Additionally, an alarming minority of C-suite executives admitted they are willing to justify unethical conduct to meet goals. At the same time, reported fraud and corruption remain high, while the amount of risk assessment, helpline implementation, corruption training and discipline are disappointingly low. Based on the results of the past 10 years of doing this survey, the authors state that there is “a level of unethical conduct that businesses are unable to eradicate.”

Such bad news may suggest that ethics and compliance programs are not doing their jobs. That is absolutely not true. In fact, high performing programs dig into issues like those uncovered in the survey and find creative ways to remediate them. The net outcome is a more effective ethics and compliance program, a stronger culture of integrity and a more successful company.

Reaching Peak Program Effectiveness

Below are six key ways to strengthen your ethics and compliance program—particularly addressing the issues of non-engagement and persistent misconduct, as well as increasing program effectiveness.  

1) Move away from a “check the box” mentality. Sure, your program may have all the right parts, but is it impacting your culture?  A rigorous culture assessment yields big dividends by uncovering simmering trouble spots in your organization where ethics and compliance has not penetrated. The assessment process should be multi-pronged, including many data gathering tools, such as focus groups, interviews, surveys and data mining. 

2) Find one or more executive champions—the higher the better. If your efforts to engage the board and executives fall flat, identify at least one leader who “gets it” and ask them for help.  A high-ranking champion can often accomplish what you cannot, and can increase receptivity to discussions related to leadership oversight and ethics responsibilities. He or she can also break down resistance to training, presentations to the board, and other compliance activities that must include, and be supported by, these leaders.

3) Get involved in, or start, due diligence processes. Your organization likely conducts background checks on new hire candidates, but what about due diligence on third party business partners both up and down stream, such as vendors and distributors?  The EY survey revealed that 38 percent of businesses never conduct forensic or anti-corruption due diligence during mergers and acquisitions. The software programs available now not only vet third parties before contracting, but can help monitor them for signs of misconduct on an ongoing basis. These are powerful prevention and detection tools that can protect an organization’s reputation and long-term success.

4) Collaborate with other departments. There are many ways this pays off. Try working across departments to identify sentinel data that can help you detect wrongdoing. For example, legal has third party contracts and accounts payable sends checks. By working together and including audit, you can monitor whether payments comply with the terms of the contracts. You could also work with risk management to include ethics and compliance risks in their assessments.  Risk management can also be a good partner to help you make the case for new and emerging risks that may not be high on the board’s risk list.

5) Revitalize executive training.  Our 2014 Ethics and Compliance Training Benchmark Report shows that training is insufficient or non-existent for boards, third parties and middle management. These are groups that can get you into trouble due to the risks they represent. Work to teach the board and top executives more about their oversight and ethics responsibilities. And if you cannot get in front of them and online training will not work, invite an outside party to do the job. We know that consultants sometimes are considered more credible than the folks in our own organizations. Increasing or instituting training in these areas underpins culture and strengthens prevention of misconduct.

6) Demonstrate that your ethics and compliance program makes a difference.  Mine your organization’s data to show program effectiveness. Correlate compliance activities to changes in company data, where possible. For example, if anti-corruption training just concluded, monitor the helpline data, legal issues and expense report audits during the next couple of quarters for any sentinel changes. Review employee satisfaction survey results to find potential problem locations, business units or managers. Gather more data through interviews and focus groups to identify what is going on relative to ethics and culture in these problem areas. Compliance is often involved in any remediation.

Long-Term Commitment to Ethics & Compliance Programs Pays Dividends

To move the needle on engagement and misconduct, it takes a multi-pronged approach and a lot of commitment and creativity by the ethics and compliance team. The ideas for action included here are only a few among many. 

Clearly, ethics and compliance programs have too much to contribute toward the success of any organization to give up on them now.

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NAVEX Global
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