The Compliance Matrix: Ensuring Training Compliancy

ComplianceMay2013 Fig2APast articles of the Project Post-Gazette’s Compliance Central have talked about The Sentencing Reform Act of 1982 and the Guidelines Manual that specifics sentences for most federal crimes.

The 2011 United States Federal Sentencing Guidelines (FSG), Chapter Eight for Effective Compliance and Ethics Programs (C&E), is the foundation for the Guidelines Manual and the building blocks for organizations’ C&E programs. These guidelines have a dual purpose:

1. provide a structure to deter illegal behavior by employees within an organization and
2. provide a set of statutes that attempts to bring greater sentencing uniformity to the over all compliance program

While the FSG are not mandatory for organizations to follow, they are a guide for federal judges to determine how well each organization meets, or does not meet, these specific standards. This guide also helps provide what the consequences will be should an organization get into ethical trouble. Many organizations use these seven elements as a guide to show they are putting into place the most efficient structure possible. Federal judges may consult this manual but they are not bound to impose the sentences it calls for.

For many years, organizations have been in the mindset that by setting up their C&E programs according to the FSG, penalties will be reduced if their organization does get into trouble and they can show that they had an effective C&E program in place at the time of the violation.

However, according to in an article called “Ethical Compliance Programs and Corporate the Illegality: Testing the Assumptions of the Corporate Sentencing Guidelines,” [1] it was found that the assumption that incorporating the FSG into your organization as the backbone of your C&E program does not result in less organizational illegality. In other words, the belief that if an organization sets the tone for an ethical climate and puts into place practices to deter illegal behavior shows that just implementing a program is not enough.

Is it enough to put into place a structure that provides: C&E training, ethics hotlines, and yearly signed codes of ethics?

The article above talks about the three theories of corporate illegality which are:

  • Motivation: the organization needs motivation to break the law such as the need for survival;
  • Opportunity: if there is a strong enough motive, and the opportunity for the organization to engage in illegal behavior, and
  • Lack of effective oversight and controls to deter wrongdoing.

This article went on to say that putting into place a C&E is only the first step. The organization has to take that next step to ensure their C&E program is actually implemented, embraced by the senior leadership, unethical behavior is punished, and reporting unethical behavior is rewarded for the organization’s C&E to actually be effective in influencing behavior.

Is your C&E program just window dressing or does it provide a mechanism to train your employees and to further prevent wrongdoing within your organization?

The rest of this article will provide suggestions for your organization’s C&E training component. All employees within your organization should be required to take C&E training. Below are some guidelines on the specific training that is recommended:

  1. New employee training
  2. Tailored training
  3. Ethics and code of conduct training
  4. Compliance standards, regulations, and statutes training

S1: New employee training.

All new employees should be required to take training as soon as possible after their start date. Organizations also need to think about those employees that are contracting for the organization on how they anticipate training for those individuals. Many organizations set a timeline for all their employees and any newly contracted employees to complete their ethics complaints training within 30 to 60 days from their start date.

S2: Tailored training.

Individuals working in risk areas and specific employee groups, such as managers and corporate officers, should receive specialized training in topics related to their responsibilities. Any employees on government contracts should take training on charging the time to government contracts.

S3: Ethics and code of conduct training.

Ethics and code of conduct training is a critical component of your compliance program. Not only should your ethics and code of conduct be able to fully engage your employees and the values and principles that matter the most to the organization, but Ethics & Code of Conduct is designed to help organizations comply with Sarbanes-Oxley (SOX) directives, the Federal Sentencing Guidelines (FSG), Federal Acquisition Regulations (FAR) and amendments, and the Dodd-Frank Act. Along with training for compliance and ethics, your employees should sign a code of conduct statement annually. One of the mistakes many organizations make is writing their code of conduct in very legalistic language. The message you want to convey is an important enough to spend time ensuring your annual code of conduct is written in a language employees will read and understand.

S4: Compliance standards, regulations, and statutes training.

Organizations need to train and educate employees on the laws, regulations and company policies that apply to their day-to-day job responsibilities as well as training in your state and local regulations. Some of this training should include training on: Sarbanes-Oxley (SOX), the Federal Sentencing Guidelines (FSGs), Federal Acquisition Regulation (FAR) amendments, and the Dodd-Frank Act.

Training for your employees needs to be engaging enough where the training is actually effective. People learn in different ways. Many people learn more from a visual presentations than from written presentations. It is important that your organization present training in a variety of different ways to engage all audiences. For instance, using a PowerPoint presentation, video, group discussion and a written assignment together engages your employees to listen, watch, and switch between these different venues.

Some of the more effective training incorporates case studies based on real issues that come from your organization. Employees can talk about these cases in small groups and they can start to relate their training to real-life situations. Ethics and value messages are extremely difficult to convey due to the fact that teaching values are difficult by computer training only.

Of course all this depends on the budget that is allotted for the C&E training. Many organizations incorporate imaginative ideas such as paperweights, magnets, notepads, stickers and other ideas with the toll-free number to your organizations C&E program’s hotline. The small but tangible giveaways are quick reminder of your C&E training that are in front of your employees long after the training has been completed.

C&E training is never really completed. Repetitive and engaging communications is extremely valuable. Branding your C&E from your training to your posters in the hallway to newsletters, Internet messages, brochures, emails and payroll stuffers will be an inexpensive way to remind your employees the importance of compliance and ethics.

The FSG provides organizations with the required elements for your C&E program but is up to the organization to be creative. It is not enough to just implement training for your employees, you need to ensure you employees embrace the message to effectively reduce unethical behavior within your organization.

1 McKendall, M., DeMarr, B., & Jones-Rikkers, C. (2002). Ethical compliance programs and corporate illegality: Testing the assumptions of the corporate sentencing guidelines. Journal of Business Ethics, 37(4), 367-383.


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