Interest in Ethics and Compliance Programs Grows


By Bill Leonard January 16, 2008

Following a rash of corporate scandals and enactment of the Sarbanes-Oxley Act, employer interest in ethics and compliance training programs has never been higher, experts say. However, when it comes to committing resources and putting in the effort needed to make these programs truly effective, employer interest wanes considerably, according to Ronald Berenbeim, principal researcher of global corporate citizenship for The Conference Board.

“Interest in ethics and compliance programs is very high among employers throughout the United States and across the globe,” said Berenbeim. “The problem is that the businesses which are merely paying lip service to the idea vastly outnumber the employers that have taken the steps and made the commitments necessary to make these programs truly effective.”

However, that could change soon, as the federal government’s Office of Management and Budget prepares to implement a set of rules requiring federal contractors to have an ethics and compliance training program in place.

“The attitude is changing, and an increasing number of employers are making the commitment to develop effective programs,” said Alex Brigham, president and CEO of Corpedia, an ethics and compliance training firm. “However, these companies are still in the minority, and that should begin to change as more and more companies come to understand the true value these programs provide. It will take time, though.”

Brigham and other sources for this article say the value of having an ethics and compliance program is fairly obvious in that businesses can avoid costly investigations and fines by adhering to ethical standards and complying with federal and state regulations. The harder sell, they admit, is showing top management that committing to an effective ethics and compliance program is worth the resources and effort needed.

Training Is Expensive, Necessary

One of the most expensive aspects of an effective ethics and compliance program is providing adequate training to employees. A good training program is a necessary component, says Frank Guglielmo, senior vice president of leadership and organizational development for the Interpublic Group of Companies.

“You can’t have an effective ethics and compliance program without good training, and that does take a significant commitment of resources,” Guglielmo said. “The challenge is showing the training does add value, and that can be tricky.”

Tricky indeed, as one aspect of such successful training is an increase in the number of reported incidents of ethical violations or noncompliance after completion of the program. The C-suite typically wants to know why there’s an increase in reported noncompliance, according to Guglielmo.

“It’s a natural question that upper-level managers may have if the number of reported incidents increases after training,” he said. “The answer is to see this as a good indicator that the training program is working.”

Peter Liria, director of global ethics and compliance for Avaya Inc., agrees with Guglielmo and says that an increase in reported incidents should be expected and a welcome result.

“A good training program will raise awareness, but it won’t change behaviors immediately,” Liria said. “By raising awareness, you will eventually change behavior. When I have been asked why the number of incidents has increased following the training, I say that the behaviors have always been there, and the training shows we are addressing the issue.”

Liria said that the importance of good training often is played down, and organizations that don’t make it a high priority are making a mistake.

“The foundation of a good ethics and compliance program is training [that] engage[s] participants and ha[s] them think about and understand the effect of ethical behavior in the workplace,” Liria said.

After examining different training formats, Avaya settled on web-based training, Liria said, because it provided the flexibility and accessibility the company was looking for. He reviewed several training courses to find the best and most engaging programs. Training that does not engage and merely lectures on what ethics and compliance should cover will lose the interest of participants and won’t have the impact employers want and need, he said.

“Training that makes employees think and actually involves them in making decisions and seeing the impact of those decisions works best,” he said. “It’s also important that employers review the training courses frequently and look for ways to address new issues and to make these programs more creative and engaging.”

Liria and Guglielmo agree that there are difficulties in measuring the true value of ethics and compliance training. However, the overall effect of ethics and compliance programs goes beyond just limiting legal liabilities and can help shape employee attitude and corporate culture.

“We have found through attitude surveys [that] our employees truly appreciate the fact that everyone within the company can be held accountable for their actions, regardless of their position or level,” said Liria. “It has definitely had a positive impact on our corporate culture.”

Bill Leonard is senior writer for HR News.


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