Reject Checklists, Focus on Culture and Behavior – Susan Divers in The Anti-Corruption Report

 
PEI

Organizations with the most effective compliance programs focus on the presence or absence of ethical behaviors to measure program effectiveness rather than on checklists itemizing the number of training courses, hotline calls or other compliance program elements.

“A lot of the meltdowns that have occurred in the last couple years involved corporations that had a code of conduct, training and many of the features of a good ethics and compliance program,” Susan Divers, a senior advisor at LRN, told The Anti-Corruption Report. “The problem,” she said, “was the ethics and compliance programs, while looking great on paper, were not working in practice.”

LRN’s Program Effectiveness Index Report (PEI Report) measures three outcomes of workplace behavior: ethical decision-making, organizational justice and freedom of expression. LRN surveyed 556 ethics, compliance and legal experts from a variety of industries who were asked to rate their organizations on criteria such as whether high performers who violate their organization’s code of conduct are tolerated and whether managers sometimes act as if they are above the rules.

Ethical decision-making requires employees to make choices based on their values rather than mere expediency. “A company’s ethics and compliance team should be posing difficult questions when trying to measure ethical decision-making,” Divers said. For instance, she suggested, asking “how many times has the company turned down business or an acquisition or a joint venture or a sales representative because of ethical considerations?”

Organizational justice obliges senior executives and high performers to be held to the same standards of conduct as other employees. “It is not uncommon for people to report that there is one set of rules for them and another set of rules for the high fliers,” Divers observed. “For instance, very successful sales people might gain immunity. Even though these high performers might have problems with their expense reports or give lavish gifts, companies frequently wink and nod and excuse the behavior because this individual is a “high performer”,” Divers noted.

“Basically, a company then is saying to its employees, ‘Yes, we have all of these ethical principles and everyone must abide by our code of conduct, but it’s subjective,’” Divers continued. “‘Because Jim produces $1 billion a year in sales, we are going to ignore his potentially unethical behavior.’” Although that is “not an uncommon scenario, it is very corrosive for trust and faith in the system,” Divers said.

Freedom of expression encourages employees to raise concerns in an atmosphere of trust and respect. “The company that probably has fostered freedom of expression the most is GE,” Divers said, pointing to its system of open reporting.

“Open reporting involves looking beyond a hotline and training managers to focus on the issues that employees raise and to triage those issues so they are dealt with correctly,” Divers explained. “Ultimately, only a small percentage of complaints or issues come in through a company’s hotline. Plenty of issues are raised directly by employees to their managers, though.”

Successful companies integrate organizational core values by expressing them in behavioral terms,” Divers observed. For instance, she said, “many companies now are mentioning sanitized but real-life scenarios that actually happened rather than just reciting statutory prohibitions against bribery. Revising training to focus on actual scenarios that had occurred helps employees understand what can happen and how to make the right choices. That is much more effective training than a long list of ‘don’t do this, don’t do that,’” Divers maintained.

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