With budget and time constraints posing challenges for companies of all sizes, prudent ethics and compliance officers will want to check out a new benchmark report to gauge how their ethics and compliance training programs stack up against their peers.
In NAVEX Global’s 2017 Ethics & Compliance Training Benchmark Report, 929 respondents were asked to rate the maturity of their E&C training program based on the following categories:
Reactive: Program addresses issues as they arise with no formal plan (10 percent of respondents)
Basic: Program trains on basic topics only (32 percent of respondents)
Maturing: Program has a basic plan for the year that covers a handful of topics with limited risk and role-based topic assignments. Effectiveness measures are limited to completion rates and qualitative feedback (48 percent of respondents).
Advanced: Program has a sophisticated multiyear training plan covering a variety of topics assigned to specific audiences based on need and risk profile that includes live e-Learning, short-form and long-form courses, and a variety of engaging formats. A disciplined approach to reporting and measuring training effectiveness that focuses on training outcomes (10 percent of respondents).
Using these categories as a baseline, the report provides a clearer understanding of what distinguishes mature and advanced E&C training programs from those that are reactive or basic. To that point, the report found that ethics and compliance officers of advanced programs are far more likely to assign courses based on the learner’s role or risk, by a margin of 76 percent versus 27 percent of reactive programs.
“Any company looking to improve its training program should consider the report’s insights on taking a risk-based approach,” says Pamela Passman, founder of the Center for Responsible Enterprise and Trade (CREATe.org) and formerly deputy general counsel, global corporate and regulatory affairs at Microsoft. “Defining a company’s risk profile and mapping specific training to the appropriate learners can help to better allocate resources and mitigate top risks.”
“Defining a company’s risk profile and mapping specific training to the appropriate learners can help to better allocate resources and mitigate top risks.”
Pamela Passman, Founder, CREATe.org
“With an increased number of critical issues that need to be covered in employee training, companies need to be more thoughtful and creative in how they capture the attention of their employees and how they do so to resonate with new employees, those starting new positions, and long-term staff,” Passman adds.
Furthermore, advanced programs are more likely to apply multiyear training plans, by a margin of 59 percent versus 33 percent of reactive programs. According to NAVEX, key measures of a multiyear training plan include:
Identify and prioritize risks and learning objectives;
Identify the groups to be educated on each subject;
Determine the time, frequency, and depth of communication;
Determine which training methods to use (live, online, documents, or multimedia);
Determine who is responsible for the delivery of that content;
Document how to record employees’ receipt of training; and
Determine how to measure the effectiveness of the training.
Mature and advanced programs also are more likely to include additional training enhancements—such as micro-learning, social learning, and gamification—in their learning programs. “Smaller companies can learn from those with more sophisticated programs—for example, taking a risk-based, planned approach focused on critical topics and utilizing new and diverse training formats to make training more relevant and engaging,” Passman says.
What also distinguishes advanced programs from all other maturity levels, the NAVEX report found, is that these ethics and compliance officers of these programs tend to conduct a greater number of training activities, with 35 percent indicating they conduct five or more training activities (compared to 16 percent of mature programs, four percent of basic programs, and eight percent of reactive programs).
Advanced and mature programs also tend to rank “creating a culture of ethics and respect” as their top objective. In comparison, smaller companies with reactive and basic programs are more likely to say that “complying with laws and regulations” is their top objective. Furthermore, the report found that “preventing future issues or misconduct” has become a higher training priority overall compared to the previous year, cited by 39 percent of respondents this year compared to 28 percent last year.
Ethics and respect defined. The report also found that companies define a “culture of ethics and respect” in different ways. Larger and more mature companies, for example, are more inclined to believe that a culture of ethics means people are encouraged to speak-up, whereas small and medium enterprises are more likely to define it as an alignment with regulatory guidelines, the report noted.
ETHICS, COMPLIANCE TRAINING OBJECTIVES
NAVEX Global asked respondents to the 2017 Ethics & Compliance Training Benchmark Report: “What Ethics & Compliance Training Objectives Are Most Important to Your Organization Today?”
“There isn’t a universal definition of what a ‘culture of ethics and respect’ actually is,” says Ingrid Fredeen, vice president of advisory services at NAVEX Global. Thus, it’s important to get alignment in your organization on what it means. “As you’re building your program, know what you’re going after.”
For example, if culture matters most, define what that means; figure out how you’re changing culture; learn how to measure whether training is having an impact on the culture. If the company’s key driver is knowledge around legal risk, on the other hand, “make sure your program is covering the right risks,” Fredeen says. “Do a risk assessment.”
When asked how they promote a culture of ethics and respect, the top strategies cited by respondents were training, coaching, and awareness efforts; intolerance of unethical behavior; and executive buy-in and leading by example.
Several obstacles, however, continue to hamper the success of ethics and compliance training, including “learner fatigue,” training “not seen as relevant or useful,” or training “not seen as effective at changing attitudes or behavior. A “lack of executive buy-in” poses an additional challenge.
“Those are all indicators that the culture doesn’t quite support the training efforts of the program and that there is work to be done there,” Fredeen says.
Training efforts that are not relevant to employees’ work, that are of low quality, and lack engagement can backfire on an organization, leading to increased levels of employee cynicism, a lack of behavior change, and a lack of engagement.
“Companies need to think about, ‘how do I engage this learner?’” Fredeen says. “They need to invest in training that matters. It should be visually interesting. It should be constructively sound. It should also be supported by the culture. Those pieces have to work in harmony for the training to be truly effective.”
Board training. Educating board members about key risks is an essential component of an effective ethics and compliance program. Yet, 44 percent of companies provided training to their board members this year, a decline from 58 percent last year. Training new directors is also important, and yet just 17 percent of new directors received E&C training, the report said.
Of the 406 respondents who said they do train their board members, 74 percent said they conduct in-person or live E&C training. Another 47 percent said they provide them access to e-Learning courses that are also provided to employees.
Just 14 percent of respondents said they develop content exclusively for the board, which is down from 40 percent in 2016. Respondents with training budgets of more than $100K are more inclined than those with smaller or no fixed budgets to develop board-exclusive training content, 23 percent versus 12 percent. As far as the frequency of that training, 61 percent said they provide board training at least annually.
Measuring outcomes. Except for seven percent of respondents, most indicated that they do not measure the return on their E&C training investment. “This makes no sense,” says Gregory Keating, chair of Choate’s Labor Employment & Benefits and Whistleblower Defense Groups. “Why invest considerable resources in training without implementing measures to follow up and track its effectiveness? It is similar to a company that rolls out a code of conduct, but lets it gather dust on a shelf or, worse, fails to follow certain commitments.”
“One way to track the effectiveness of training,” Keating adds, “is to consider modifying the performance evaluation metrics of frontline managers, so that they include annual review of the manager’s commitment to compliance and specific effectiveness in handling issues brought to his/her attention and ensuring that the individual who brought the issue forward does not experience retaliation.”
When measuring for success, keep in mind, it’s not just about the measures in dollars, Fredeen says. Behavior metrics, culture metrics, employee satisfaction metrics all play a role.
Measuring outcomes is particularly important given that the report found that companies with more mature E&C training programs realize greater benefits, including reduced employee turnover, improving employee morale, and improved market perception and reputation, among other realized benefits.
“Those with basic and reactive programs are putting themselves at risk,” Fredeen says. “Get yourself to that mature and advanced level.”
For E&C training programs already at the mature level, “How do you move yourself to the next level? What tactics are you going to focus on?” Fredeen says. “And if you’re advanced, how do you keep improving?” New technologies and new methods of reaching employees are always arising, she says.
Finally, understand where your program lives in the maturity index. “Be very self-critical,” Fredeen concludes. “Find points where you can improve, and then strive for improvement.”