How does your compliance and ethics team measure the effectiveness of its ethics and compliance programs? How do those efforts compare to others?
One way teams can keep current on best practices and current trends is to send representatives to relevant industry conferences. Another is to pay attention to conference summaries, such as the 2015 SCCE Compliance & Ethics Institute: Session Highlights and Key Takeaways, a report compiled by the Ethisphere Institute.
One of the highlighted sessions, “Creating a Compliance Playbook: How to Evidence Compliance” by TechData’s Jean-Paul Durand and KPMG’s Scott Hilsen, addressed ways to define, measure, and document compliance.
Durand and Hilsen quoted a 2014 Compliance Week survey reporting that 42% of chief compliance officers say they are “only somewhat confident” or “not confident” that the metrics they use give an accurate sense of their program’s effectiveness.
Their session encouraged practitioners to “focus on a host of meaningful and measureable metrics” and to use effective methods of measurement, including risk assessments, surveys, and ethics hotline disposition reports (Ethisphere, 2016).
Compliance and ethics teams must maintain critical information for each element of their overall compliance process and must measure the effectiveness of each element and of the overall program through meaningful metrics, they said.
They then suggested that compliance and ethics teams apply three questions to various aspects of the programs. These questions are from A Resource Guide to the U.S. Foreign Corrupt Practices Act (2012).
- Is the company’s compliance program well designed? (Per Durand and Hilsen, look at policies and procedures; controls; budget and resources)
- Is it being applied in good faith? (Look at training and communication; audit and monitoring; investigation and enforcement)
- Does it work? (Look at hotline reporting; employee awareness; efficient and effective investigations)
In terms of what to measure, Durand and Hilsen offered the following suggestions:
- Number of claims processed correctly
- Number of matters resolved within deadlines
- Efficient use of budgets and resources
- Timely completion of remedial measures
- Completion of trainings and communications
- Results of employee awareness questionnaires
- Results of audits / reviews of key compliance controls
- Completion of third party audits / reviews
As for how to measure, they identified the following tools:
- Data tools and analytics
- Risk assessments
- Employee surveys and questionnaires
- Hotline disposition reports
- Reviews by outside consultants and/or lawyers
- Benchmarking against corporate peers
We summarized related metrics in last year’s blog post about fraud investigations (September 2015). Metrics matter, as does benchmarking, when it comes to maintaining an effective compliance and ethics program.
Ethical Advocate provides comprehensive ethics and compliance solutions, including confidential and anonymous hotlines and training on fraud awareness, business ethics, harassment and discrimination, the Foreign Corrupt Practices Act, and more.
Durand, Jean-Paul and Scott Hilsen. “Creating a Compliance Playbook: How to Evidence Compliance,” 2015. http://www.corporatecompliance.org/Portals/1/PDF/Resources/past_handouts/CEI/2015/507_2.pdf
U.S. Department of Justice and U.S. Securities and Exchange Commission. A Resource Guide to the U.S. Foreign Corrupt Practices Act, November 2012. https://www.justice.gov/criminal/fraud/fcpa/guidance/guide.pdf