Stifling the business

The Ethics & Compliance professional…

  • Provides advice and guidance to employees with concerns or questions
  • Writes policies and provides training to protect the organization and its employees
  • Conducts audits and investigations to ensure that policies are implemented and followed
  • Protects employees who are the target of retaliation
  • Implements controls to prevent fraud
  • Protects the reputation of the organization by stopping conduct that is lawful but awful
  • Instils a sense of pride in employees who want to work for an organization that does the right thing
  • Allows the organization to attract candidates whose values are aligned with its own
  • Focuses on the long term in a world of quarterly results

And because of that last bullet, E&C professionals are often accused of stifling the business.

Those who make these accusations actually believe that their organization would be better off without us. They are the descendants of those who, decades ago, did not want to provide safety training and equipment to employees because it was cheaper to replace an injured worker with an able one. Today, they want to open millions of fake bank accounts, they want to sell cars with cheating devices in their emission system, and they want to jack the price of life-saving drugs.

And they find it difficult when E&C professionals get in the way.

So frustrating.

For the benefit of the company

After 12 years as an Ethics & Compliance Officer, it still confounds me when I hear an employee, who is about to be fired for breaking the law, that he did it for the company.

The employee will argue and plead that they did not personally benefit from their wrongdoing. It was all for the benefit of the company.

And then I will ask this question: “Why did you think that breaking the law would benefit the company?”

Every time, the employee will try to respond quickly, on the edge of his seat, with a frantic look in his eyes, but nothing comes out of his open mouth. Then his body slumps, his eyes look down, and he leans against the back of his chair. Realizing for the first time that what he thought was the absolute right thing to do actually never made any sense whatsoever. After a minute of silence, comes the crushing realization that he will have to face his colleagues, spouse, kids, and friends, and explain why he’s not working at XYZ Company anymore.

It’s one of the saddest sights to experience in the corporate world.

The many challenges of E&C professionals

Here are some of the challenges facing organizations who provide ethics & compliance training to their employees:

  • Employees dread the training sessions (it gets in the way of doing their job)
  • The training is high-level (to cover all employees) and doesn’t really help each employee do their job better
  • Employees believe that the company provides the training as a check-the-box and/or CYA exercise
  • In-person training can be difficult to track (and thus prove that it was provided when the regulators knock on the door)
  • The effectiveness of the training is difficult to measure
  • Training is often provided months before an employee is faced with the risk, making it difficult to recall
  • In some jurisdictions, the training must be approved by employee unions
  • For multinationals, training must/should be translated in many languages. And scenarios like “John met a supplier at the hockey game and the supplier paid for the hot dogs” do not resonate well with your employees in Indonesia.
  • Online training, with its audio and video files, requires a strong internet connection, something still not available in many countries
  • In companies of 1,000+, 10,000+, or 100,000+ employees, how do you deploy the training? What are the consequences for employees who don’t complete their training on time?

The complete list would easily be thrice as long.

And that’s just for training. Wanna talk about communications? Policies? Audits? Investigations?

The decreasing returns of doing more

The more a single person does, the less time she has to communicate to others what she is doing.

Less communication leads to confusion, conflict, frustration, disengagement, and waste. Not ideal when the goal is to do more.

For many of us, it would be wise to consider doing less and being more transparent about what we do. Transparency leads to trust, respect, integrity, and excellence – outcomes that all ethical leaders should seek to generate.

The games we play

We may not like to admit it but we are all playing games.

The organization puts pressure on its employees to meet the demands of shareholders.

An employee exploits a loophole or a ambiguity to meet his goals and, when caught, blames the company for not training him properly.

The regulator, unable to pin the wrongdoing on the employee, goes after the company.

The company, now blamed for not adequately training its employees, spends all kinds of resources on training – resources that could be put to better use creating an ethical culture where employees don’t feel the need to exploit loopholes.

Admitting that we are playing this game can be difficult.

But it’s the first step towards playing a different game.

Reputation recruiting

More than ever, people join an organization because its values matches theirs.

The work of identifying these organizational values, of embedding them in the organization, of protecting them, started long before the applicant knocked on the door.

If we want the right people to knock on our door next year or in 5 years, we must continue this work. We must know who we are and who we want to be. We must adopt policies and procedures that align with our ideals.

Only then will we have a sustaining cycle of caring for people who care about our mission.

Only then will our reputation match our marketing.

Don’t sell a better future

In his post today, Seth Godin explained why it’s almost impossible to sell the future. “When [humans] buy a stake in the future, what we’re actually buying is how it makes us feel today.”

This helps explain why it can be difficult to sell business leaders on the importance of improving the culture of an organization. What we are selling is the promise of a better workplace in the future, a future that is often years away. And, we add, it’s going to get worse before it gets better. Not a great sales pitch.

Here’s an example. You work for an organization that goes to market via agents that are compensated exclusively with commissions that are only payable if they hit a stretch goal by year-end. Everyone in the industry works that way. This process eventually leads to a bad outcome and you (correctly) suggest that it needs to be changed. At the same time, you admit that many of the agents might quit and sales will go down in the short term. If you work for a publicly traded company, this won’t make anyone feel good. But, you say, after the bad agents leave and we consolidate our sales with the good agents and we create a reputation in the market for doing things right, then sales will pick up and we won’t need to spend money on fines and penalties, and we’ll have a workforce that feels good about how they do business.

Few companies take that path. Most who do are forced into it by a regulator – at great expense.

This is why writing a policy, providing training, adding internal controls, conducting audits are easier to sell after a failure. Business leaders can feel the immediate results. But none of these things actually change how we do things.

I had a boss who used to tell me “You need to explain how this is going to help them do their job.” I understood why this was important but I could never find a good answer. Now I realize that it’s because I was only selling them future, and even I was left on my appetite.

As E&C professionals, we need to figure out how to make our business leaders immediately taste the benefits of what we are selling.

Self-inflicted wounds

We have known for a long time that the right amount of pressure – emotional and financial – can lead people to commit fraud (see fraud triangle).

Yet, organizations continue to use all kinds of scorecards and incentives to apply financial pressure and shame their employees.

And then, when something goes wrong, when someone breaks the rules, the organization says that a “bad apple” is responsible for this “isolated event”.

Every time.

Really?

 

We make better decisions when the right people are involved

Employees who are under investigation for making a wrong decision often say that they were rushed into making it.

They believe they only had a split second to decide – and thus cannot be blamed for making the wrong call. It was just a mistake.

But it’s rarely, if ever, a matter of a split second. If may feel this way when the bid is due the next day. Or when the customer expects a call back within two hours. Or when the supplier invites you to dinner after a long day of work. Our fear to lose, to deliver bad news, or to say no pushes the panic button and time suddenly shrinks. And we lose sight of the fact that it only takes a minute to call our supervisor for help (or HR, or Legal, or the Ombudsman, etc.).

We make better decisions when the right people are involved. When we only have minutes to make a tough decision, they are best used by seeking help. No customer or supplier will fault you for smiling and saying “Do you mind if I place a quick call? We have strict rules at my company and I want to make sure we do this right.”

Oh, and if they do mind, you have your answer.