Prong 6, Training and Communication, of the Justice Department’s Evaluation of Corporate Compliance Programs reads, in part:
Form/Content/Effectiveness of Training – Has the training been offered in the form and language appropriate for the intended audience? How has the company measured the effectiveness of the training?
Most companies have not considered this issue, the effectiveness of their compliance program. I would suggest that you start at the beginning of an evaluation and move outward. This means starting with attendance, which many companies tend to overlook. You should determine that all senior management and company Board members have attended compliance training. You should review the documentation of attendance and confirm this attendance. Make your department, or group leaders, accountable for the attendance of their direct reports and so on down the chain. Evidence of training is important to create an audit trail for any internal or external assessment or audit of your training program.
One of the key goals of any compliance program is to train company employees in awareness and understanding of the law; your specific company compliance program; and to create and foster a culture of compliance. In their book, entitled “Foreign Corrupt Practices Act Compliance Guidebook: Protecting Your Organization from Bribery and Corruption”, Martin T. Biegelman and Daniel R. Biegelman provide some techniques which can be used to begin evaluate ethics and compliance training.
The authors encourage post-training measurement of employees who participated. A general assessment of those trained on the FCPA and your company’s compliance program is a starting point. They list five possible questions as a starting point for the assessment of the effectiveness of your FCPA compliance training:
The authors set out other metrics, which can be used in the post-training evaluation phase. They point to any increase in hotline use; are there more calls into the compliance department requesting assistance or even asking questions about compliance. Is there any decrease in compliance violations or other acts of non-compliance?
What if you want to take you post-training analysis to a higher level and begin a more robust consideration of the effectiveness of compliance training through an analysis of return on investment (ROI)? Joel Smith, the founder of Inhouse Owl, a training services provider, advocates performing an assessment to determine ethics and compliance training ROI to demonstrate that by putting money and resources into training, a compliance professional can not only show the benefits of ethics and compliance training but also understand more about what employees are getting out of training (IE., effectiveness). The goal is to create a measurable system that will identify the benefits of training, such as avoiding a non-compliance event such as a violation of the FCPA. Smith admits that calculating compliance ROI is very difficult as ethical and compliance behavior is an end-goal and of itself - not necessarily one that everyone feels should be subject to a ROI calculation.
Smith noted, “it is extremely difficult to isolate the training effect to calculate what costs you avoided due solely to your ethics and compliance training. Although each organization will have a unique ROI measurement due to unique training objectives, it is possible to use a general formula to calculate ethics and compliance training ROI.”
Smith’s model uses four factors to help determine the ROI for your ethics and compliance training, which are: (1) Engagement, (2) Learning, (3) Application and Implementation, and (4) Business Impact. These four factors are answered through posing the following questions.
The next step is to isolate the benefits of training so that you properly attribute the ROI to the ethics and compliance training. To make this determination, you need to know at a minimum (1) whether employees understood the training and (2) whether employees are applying the training. This information must be compared with other factors, namely: (1) the effects of any other company initiatives involving anti-corruption, (2) employee attitudes regarding the topic and training, and (3) any business factors such as decreasing/increasing international revenue, macro-economic trends, etc. that may contribute to avoidance of a noncompliance event. From these calculations, you should then apply a percentage of the benefit to the training. Here Smith suggests 25%.
The importance of determining effectiveness and the evaluation of your ethics and compliance program is now enshrined by the Department of Justice (DOJ) in its Evaluation. The Evaluation is the first formal step taken by the DOJ to demonstrate it wants to see the effectiveness of your compliance program. This is something that many Chief Compliance Officers (CCOs) and compliance professionals struggle to determine. Both the simple guidelines suggested and the more robust assessment and calculation laid out by Smith provide you with a start to fulfill the Evaluation but you will eventually need to demonstrate the effectiveness of your compliance training going forward.
Three Key Takeaways
This month’s podcast series is sponsored by Oversight Systems, Inc. Oversight’s automated transaction monitoring solution, Insights On Demand for FCPA, operationalizes your compliance program. For more information, go to OversightSystems.com.