Compliance Program Benchmark Surveys!

Who doesn’t love a good survey report on compliance officers and the challenges they face? This week we have two worth your time, with observations both great and small that compliance officers can use as you ponder how to strengthen your own compliance programs. 

Our first study comes from LRN, which last week published its annual E&C Program Effectiveness Report. The findings are based on a survey of more than 1,800 ethics and compliance professionals at organizations around the world. The report’s big theme: that most compliance professionals believe the ethical culture of their employer has grown stronger over the last year.

That’s not surprising; it was also the theme of LRN’s Program Effectiveness Report from last year. This year, more than half of respondents gave their executives high marks for including ethical considerations in business decision-making, and a whopping 84 percent said their organizations relied on values, rather than rules, to motivate their employees to “do the right thing.”

Another big theme in the LRN report was the gap between “high-impact” ethics and compliance programs versus low-impact programs. Again, no surprise there; LRN sells technology and services to compliance officers, so of course the company wants to nudge you to high-impact approaches. Commercial interests aside, LRN still made a great point with this paragraph:

Many of the dramatic gaps between high-performing E&C programs and less-effective ones documented in the report can be summarized as the difference between, on the one hand, meeting the basic E&C program requirements of training, code of conduct, policies, and hotlines; and on the other, continuously improving them dynamically and effectively to meet evolving risks and lift employee engagement to positively impact behavior.

Appreciate what that paragraph is really saying. Companies can implement program fundamentals as dictated by the U.S. Sentencing Guidelines — whistleblower hotlines, training programs, third-party due diligence efforts, and so forth — but those programs still require an extra level of executive commitment and technology capabilities to drive analytics and improvement. Which is precisely what the Justice Department says it wants to see for the fabled “effective compliance program” you’re supposed to have.

Survey a Path Forward

The rest of the LRN survey explores specific bottlenecks in compliance program development and potential paths forward. They are great food for thought as you consider the state of your own program and what changes you might want to implement to push your program to a higher performance level. 

For example, only 48 percent of respondents said their policies are in a searchable digital format, and only 48 percent track employees’ interactions with policies to see which issues are at the top of employees’ minds. In an ideal world, both of those figures should be much higher. A more interactive policy format creates the ability to track employee interactions with policies. That gives you the data you can analyze, to update problematic policies, refine training, implement sterner disciplinary procedures, or take whatever other action seems wise.

Figure 1, below, shows the most common obstacles to compliance program improvements. Notice that top obstacles are all practical hurdles: inadequate technology, staff shortages, budget constraints. Obstacles related to the compliance program’s respect within the company trail farther behind (although, not that far behind). 

Source: LRN

Anyway, lots to consider here. I’d recommend sticking with findings for the overall group, rather than LRN’s high-, medium-, and low-impact categories; but you can choose your own adventure.

CCOs and Leadership

We also have a fresh report from Ethico (née ComplianceLine) and FTI Consulting that surveyed 200 senior compliance officers about the leadership challenges they face. The big theme in this report: despite increased regulatory pressure for strong cultures of compliance, few compliance professionals feel adequately equipped or empowered.

Figure 2, below, tells the tale. A respectable majority of compliance officers believe that they’re reporting to the right person within their organization; but far fewer compliance officers say their role is clearly defined and that senior management understands what compliance officers are supposed to do.

Those findings track with what I’ve heard from compliance officers for years now. Namely, most CEOs and boards aren’t opposed to ethics and compliance; they just don’t know what they’re supposed to do to support an ethical culture at scale — and specifically, they don’t know what they are supposed to do for that goal, versus what you’re supposed to do. 

Indeed, I wouldn’t be surprised if this confusion has grown worse over time, as the world keeps raising expectations for a highly ethical corporate culture. Well, who’s responsible for that highly ethical corporate culture? Plenty of people would say CEOs are responsible for it, including lots of CEOs themselves. But increasingly, compliance officers are responsible for monitoring ethical culture, reporting on it to management, and nudging it forward. One can see how the lines might get blurry, which is what Figure 2 is telling us.

Another finding from the survey: 54 percent of respondents said senior management is paying more attention to compliance policies and procedures; and half said they’d been asked to brief the executive committee on the ROI of compliance programs.

That’s to be expected. Senior executives always want to control costs, and they especially want to control costs when interest rates are high and economic growth is more precarious. So the immediate questions for compliance officers are (1) how do you calculate that ROI number today; and (2) what smart, strategic improvements can you implement to drive your program’s efficiency and effectiveness tomorrow?

The Ethico-FTI survey has some ideas for both questions; and the LRN survey has numerous ideas for the latter. So if you have a spare hour to give the reports a close read, they’re worth it.

(Disclosure: Ethico does pay me to host some of its Ethicsverse webinars. The company did not pay me to write this post or get to see the content in advance.)

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