Decline in senior leader compliance training raises ethics culture questions

Jul 27, 2015
<p>Recent NAVEX survey shows sharp drop in training time even as creating &lsquo;culture of ethics and respect&rsquo; is top goal of programs</p>

For all the lip service being paid recently to ethics and compliance at US companies, the top concerns for E&C professionals include less time devoted to training for senior leaders and board members and growing cynicism among employees about how effective this training is.  

Those are among the results of NAVEX Global’s second annual Ethics and compliance training benchmark report, based on a survey of 677 E&C professionals. Establishing a strong ‘culture of ethics and respect’ needs to be the predominant focus of such training, say 46 percent of respondents, while 31 percent say that ‘complying with laws and regulations’ is the top training objective for their organization.

NAVEX’s survey shows a 25 percent decline (from nearly 5.9 to 4.4 hours) from last year in ethics and compliance training time provided by companies to their senior leaders and a one- to two-hour decline in training offered to board members. This occurred even as training for non-management employees rose by more than 16 percent from last year to 7.1 hours on average.

‘When you think about the importance of training on the risk areas facing the company, everybody has to be involved in that training. They all need to receive good training and they shouldn’t be seeing a decline of that magnitude,’ says Ingrid Fredeen, vice president of online learning content at NAVEX.

Because Fredeen and her colleagues didn’t expect to see such a big drop in training hours, they didn’t include a question about why those numbers had declined. ‘I expected annual training hours to stay fairly stable. We’re always trying to encourage our clients to make sensible increases in seat time, so not just increase training hours for the sake of doing it, but really assessing your risks and building your programs so they become more effective and better at covering risks. In a time when risks are really increasing for organizations, to see a decline was actually very surprising.’

As for worries about things that could undermine compliance training, 37 percent of respondents cite employee cynicism about the effects of culture change efforts in their organization, 35 percent point to hesitation among employees to speak up out of fear of retaliation and 34 percent mention middle managers who don’t display desired compliance behaviors.

Another concern is the struggle by E&C departments to secure the resources they need to run comprehensive programs. One quarter of respondents say they don’t have a dedicated budget for E&C training, while 40 percent have an annual budget under $25,000. Nearly three quarters (71 percent) of respondents expect their budgets to stay flat over the next 12 months and 12 percent identify the greatest challenge to training as ‘not enough budget.’

What’s striking is how this that should continue to be true even as nearly half (48 percent) of respondents say E&C training has been used to defend their company in a lawsuit, enforcement agency action or to help secure a better outcome when negotiating a settlement. Large organizations have used such training as a legal defense more often than smaller ones in the last three years -- nearly 5.8 times on average versus 3.6 times and 2.1 times on average by medium-sized and small organizations, respectively.

A question from last year’s survey that NAVEX didn’t include this year showed ‘much more public support for quality training from our enforcement agencies -- the DoJ, the SEC -- on the privacy front,’ says Fredeen. ‘You’re seeing things where companies are being rewarded for the training they’re doing. We’ve seen it for years with labor and employment law issues. It’s been a workhorse of those compliance programs. So I wanted to start trending data on that to say this is important and we’re seeing it used more frequently.’

The number of companies now using training programs as part of a legal defense ‘should be an eye-opener for any organization that’s looking to develop new training or purchasing new training,’ she adds. ‘That is an audience that will likely see this material, so make it good, make it worthwhile.’

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