eComms Surveillance & Compliance for Financial Services
In previous editions of our newsletter, we’ve talked about the pending “return to office” expected with the wind-down of COVID. Fast forward to today’s edition where many employers have embraced “hybrid work” or WFH as a permanent arrangement. That all sounds great if you’re the employee – but clearly sub-optimal if you’re the compliance officer wondering how you’re going to keep everyone in line when your co-workers are mostly out of sight.
One of the challenges is that it gets a bad rap. As children, we’ve been conditioned to exile any child labeled as a “tattletale” from the playground. Once we’ve entered adulthood, few of us wholly embrace tattling on our co-workers and management. For many, it’s regarded as a career-limiting move. For others, it’s a pragmatic cost-benefit calculation. Sounds cold, but self-interests typically take center stage. And it’s precisely this messy milieu that compliance officers must navigate to drive employees towards ethical reporting – even if workers aren’t feelin’ the moral obligation to do so.
Recently, Gartner released a report that notices fewer instances of misconduct reported: down 31 per 1,000 per year in 2020-21 versus 2018-19. This 30% decline is significant and has implications for compliance. Typically, compliance leaders rely on three levers to incentivize employees to “do the right thing.” These three tactics are increasing ease of reporting, offering employee safety, and encouraging a greater sense of personal responsibility to report. Historically, most compliance and ethics officers rely heavily on the lever of reporting ease and invest in efforts like the creation of additional reporting channels. Many employers enact “no retaliation” policies to protect the safety of their staff. However, the level of enforcement of such policies is widely variable.
Gartner shared their research to offer insights regarding how compliance officers can encourage reporting in a hybrid world. It all begins by building a compelling value proposition as a means of leveraging that under-utilized third lever: increasing personal responsibility, which has the greatest impact on behavior. Increasing personal responsibility increases the likelihood of reporting by 77%.
In organizations where the perception is that misconduct is routinely reported, employees are 33% more likely to believe their employer is ethical and 34% more likely to believe that their leadership cares about them as individuals. On the flip side, those employed by organizations where the perception is that misconduct is rarely reported see 25% less employee engagement.
Increasing personal responsibility sounds simple enough, at least in theory. In practice, however, this is non-trivial. Perhaps the most sobering statistic is that only 54% of employees believe that reporting is the right thing to do.
Here’s the net-net of Gartner’s findings: compliance offers must craft a value proposition that is based on the three beliefs that impact reporting behavior. Trust, safety, and benefit all need to be appropriately harnessed to increase the personal responsibility of staff. Now that we’ve given away the punchline, let’s roll back and get into the details regarding how this can be achieved.
When it’s done correctly, the impetus to report is driven by the appreciation that there will be both personal and organizational benefits. The first lever, ease of reporting, is utilized almost unanimously (96%) amongst Chief Compliance Officers who responded to the survey. Surprisingly, only 80% had firm anti-bullying and retaliation policies in place and regularly upheld them. Around 70% had circulated messages to their co-workers stressing that reporting is a moral obligation.
However, most companies overlooked two key beliefs: one, that there will be a personal benefit to reporting; and two, that the report will be handled transparently and fairly (note that fewer than 43% of employees surveyed feel that reporting is handled transparently and fairly). Sounds like an opportunity for improvement …
Their study revealed a significant delta between the proportion of employees who believe reporting is the right thing to do (54%) versus the proportion of compliance leaders (81%) who think that their employees believe in reporting. Here are a few more interesting findings. “While safety, trust and benefit impact responsibility by 19%, 38% and 51%, respectively, we found that 98% of employees who believed all three also thought reporting was the right thing to do.” There is a clear opportunity for a force multiplier if you can offer all three; that would be a compelling value proposition!
Here are five (5) practices that you can immediately put into effect:
When we work together to make personal responsibility more than a moral obligation and appeal to the pragmatic, “WIFM” (What’s In It For Me) rationale, we can encourage ethical reporting.