[00:00:00] Speaker A: In this episode, we'll take a look at how the way we enforce the rules can be as important as the rules we're enforcing. I'm your host, Bill Coffin. Welcome to the Ethicast.
Managing People Created risk is at the heart of what ethics and compliance is all about. Whether it's making sure people understand, follow and properly interpret the rules and advancing cultures of integrity, or measuring those systems to ensure that they're effective, this work plays a crucial role in reducing organizational risk and building value. But it's so easy to get caught up in the creation and maintenance of programs, policies and procedures that we can lose sight of the reason why they exist at all. To modify human behavior, whether it's by stick or by carrot, these things are really there to get people to behave with honesty, transparency and integrity. And that's where the discipline of behavioral science can play an important role in helping ENC programs make the greatest impact for the greatest good for the greatest number of people.
Our guest for this episode is Kristen Hunt, the founder of Human Risk, a behavioral science led consulting and training firm specializing in the fields of ethics and compliance. He is also the author of the book Humanizing Bringing Behavioral Science to Ethics and Compliance. Previously, Christian served as the head of Behavioral Science at UBS and prior to that he he was COO of the UK Prudential Regulation Authority, a subsidiary of the bank of England responsible for regulating financial services. Christian, welcome to the Ethicast. It's wonderful to have you on the program today.
[00:01:35] Speaker B: It's a pleasure to be here, Bill. Thanks for having me.
[00:01:37] Speaker A: You recently shared a really great story about how you kind of gently broke the rules while you were on a train ride and how the conductor's reaction to that provided a fantastic example of a smart way to enforce rules, rules and regulations. Would you mind sharing that and talking a little bit more about what that whole episode taught you?
[00:01:57] Speaker B: With pleasure. So I should add that I divide my time between London in the UK and Munich in Germany, where I am now. And after the pandemic I got a bit fed up with flying so I decided to travel by train. And it's a relatively long journey. It's about nine or ten hours between the two cities.
And so I do this on a regular basis. And very recently I'd had a few delays and as anybody who's traveled in Germany, the German railways are not what you might expect in terms of efficiency. They've underinvested. And so I was a little bit frustrated. I was catching my final train from Frankfurt down to Munich, a Sort of four or five hour final stint of the journey. And because I'd missed my original train that I had a seat booked on, I got onto a train that was, that was pretty busy. And generally speaking, there's some reserved seats and some unreserved seats. And I was just so frustrated, so too tired, wanted to get on. I just jumped on the train and I sat in seats that are reserved for status customers. Now, I'm not a status customer, not because I don't use the trains a lot, but because I use a rail pass that doesn't qualify me for status. And so I sat in seats that I frankly should not have been sitting in. Now, this isn't a sort of formal rule, but they're just reserved for people with status and generally speaking, people, it's a sort of honor system that people respect that. Anyway, I'd sat there for the best part of four hours and I'm coming to the end of my journey and this is the first time on this train that my ticket's been inspected and the ticket inspector checks my pass, all fine, and then says to me, do you. Are you part of our loyalty program? And I said no. And she said, well, you're sat in seats that reserved for people, the loyalty program.
And I kind of knew that. And I said, well, you know, I said, I just decided to sit here because, you know, like, I need a seat. And I sort of explained the day that I'd had and I knew that I shouldn't be there. And I knew that this system only really works if people operate on a, on a basis because it's very difficult to police if you're an ordinary member of the public and the staff aren't always going to be there. So this is sort of honor code attached to it.
And so I said to her, well, no, but I would have got up if someone had come along, which is a slightly weak argument, to be honest. And she then started to tell me that I shouldn't be sitting there. And I thought she was going to throw me out of the seat. But actually, to her credit, what she said to me was, well, look, please, next time you're traveling, can you not sit in these seats and then let me sit there for the rest of my journey.
And I remember being struck by, particularly if you think about the reputation that Germany maybe has in terms of enforcement of rules. I was struck by the fact this seemed very pragmatic to me because on the one hand she wasn't making me move unnecessarily. It wasn't like somebody needed the seat. On the other hand, she was still reinforcing the regime that protects these seats, that rewards frequent rail travelers with ensuring they have a seat on the train. And so I thought this was very smart and I took it away. And hence I wrote about it because I thought it was a really clever way of thinking, simultaneously being pragmatic, not making me move unnecessarily, but equally upholding the sanctity of the rules. And I thought it was such a reasonable response, I took it away. I thought, actually, do you know what? Next time I probably wouldn't sit in that. I can't guarantee that I wouldn't, Bill, but next time I probably won't sit in those seats. And for that reason, I thought, really interesting lesson. We sometimes think we need to enforce rules fully in order for them to stick. This is just another way of thinking about it.
[00:05:07] Speaker A: So a lot of compliance Experts say that 10 to 20% of employees at an organization can be counted on to do the right thing 100% of the time, and then 10%, 20% of people can be counted on to do the wrong thing 100% of the time, and that the real struggle is figuring out how to reach that 60 to 80% in the middle. Christian, what do you think about that and what does that tell you about the state of thinking in today's ethics and compliance profession?
[00:05:30] Speaker B: So I might challenge the percentages a little bit, Bill, but the dynamics are absolutely correct. As you say, very small percentage of people that that will deliberately set out to break the rules, a very small percentage that will never break them. And then the majority of the population.
Now, one of the first thing I would say is, look, anybody that never breaks a rule is deeply suspicious because we all break the law on hopefully nothing severe or major. But I'll go on a limb here, Bill. I'll say that you and I have this week, over the past week, we will have broken at least one law, hopefully a minor thing, but we'll do that. So there are laws we're not aware of.
There are things where we can find an ethical justification to do it. So we're all capable of bending rules. And we all, let's be honest, we all do. And so what I find really interesting, if we look at compliance, we could say to ourselves, look, those people that never break any rules, watch them carefully, because that's very, very suspicious. They may be up to no good, but that's a strange category of people. But that's not normal. Equally, people that are deliberately setting out to break the rules.
Actually, many of the things that we use in compliance are not going to be effective on those people. So for example, training, in order to train people, there's a degree of you have to want to go along with it because we've all sat in training and learned nothing because we were not paying any attention whatsoever. And so just attendance at training doesn't demonstrate. So there's goodwill required. We have to listen, we have to want to learn and we have to pay attention and we have to remember it afterwards. Some training, of course, makes that very, very difficult. And so as we look at it, in a way, there is no point in trying to reach those people who are deliberately setting out to break the rules. Because to the extent that they're paying attention in things like training, they may be looking for loopholes.
You know, they, they, they may be trying to look like they're paying attention, but they're not reachable. So what we're trying to do with compliance is not to get everybody, we need to look at it and say the average employee, the vast majority of people are showing up to work trying to do the right thing. And so what we need to do is focus on them and say, how can we facilitate that, how can we help them in doing that? And, and, and sort of turn to their natural proclivities of wanting to be, broadly speaking, compliant.
And therefore, if we treat everybody like they're never going to break the rules, well, that's missing something. If we treat everybody like they're criminals and they're all setting out to break the rules, which is really tempting to do that because that's the danger zone that we want to avoid, then we end up treating them as if we think they're criminals and they will respond in kind. So the trick here, I think is to recognize, let's show some goodwill towards people and assume that they want to do the right thing. If we have evidence they're not, we should absolutely be careful of that. And we need to find ways to catch these people that are deliberately setting out to break the rules. But I think working with the average person who has the capability to be non compliant, but also probably the willingness to be compliant I think gives us the right focus because then we can hit that we are not going to be able to target everybody, we just need to target the vast majority of people. And so look at the interventions that we have and say, actually if this is an intervention that relies on people's goodwill, then let's presume that that is there and let's use monitoring and deterrences to capture the people at the margins.
[00:08:26] Speaker A: So a lot of ethics compliance work is very proactive in that regard. But let's look at the true enforcement of things once actually misconduct has happen.
And when we look at examples of employees misconduct, it often falls into, you know, a couple different categories. There are the professional miscreants, right. People who just simply choose to misbehave. There are employees who, you know, are maybe are tired or simply make a mistake and break the rules that way. And then there are folks who maybe broke the rules, but with good intentions. Right. So can you talk a little bit more about your recommendations for ethics compliance officers in terms of how to figure out, you know, how to discern between those three cases when enforcing organizational rules and in particular when inflicting punishment for breaking those rules?
[00:09:08] Speaker B: Well, I mean, the first thing to say is I think it's really, really hard to assess. You can't just look at someone and conclude what, what they're up to and they may not even realize it themselves. And you know, you pointed towards sort of bending the rules, interpreting in a way that suits us. You know, we all do that on some level. We find excuses. If I was breaking the speed limit, I can come up with a really good excuse. In fact, I like to talk about the interchange between ethics and compliance. People often say, why are those two things together? Well, if you, if you have a look at it, if you want to be unethical, we often use compliance as a reason for that. So what I basically mean by that is to say that, well, there was no law that said I couldn't do that type excuse. So we can, we can find that compliance is a great way of justifying unethical behavior. Well, if I shouldn't have done that, there should have been a law against that. There wasn't one that was okay. The opposite is also true where we use ethics to override compliance. And so we might find a reason to say, I understood that that was a rule, that I shouldn't have done this particular thing.
[00:10:00] Speaker A: Thing.
[00:10:01] Speaker B: But actually, here's my reason for doing it. A kind of ethical override. And so as we look at these dynamics, particularly in an era of AI where we are hiring people to do things that technology can't, we're going to increasingly be hiring people to do smart human things, things that involve nuanced judgment, emotional intelligence, the stuff we can't give to the machines, brackets yet.
And so as we look at that, we're going to have people, you know, we're hiring people for their brains much more. In old days it was physical labor.
Nowadays we're looking much more at sort of humans. Human brains are the big value add in most cases. And so when we look at that, we say, well, look, we're hiring people to think for themselves and to be creative and to bring human attributes to work. We shouldn't be surprised when they turn those same human attributes on the rules and principles that they're required to comply with within the organization. So this challenge that we've got is going to get harder and harder. As we look at the sorts of the reasons that we hire people and, and what we're asking them to do in their day job. Don't be surprised if those skills lend themselves towards non compliance. But actually you might find those increasingly happening there. So it's really hard to determine what people are up to. So what I basically say is, look, the trick to all of these things I think is to recognize that where we can, what we should try to do is to make it as easy as possible for people to do the right thing.
And if we can make it as easy as possible for people to do the right thing, then when they don't do the right thing, that points towards it being willful.
And so actually what it does is firstly, if you make things easier for people to do, break it down, keep it simple, don't require huge amounts of their time, use plain English or whatever language you're communicating them with so that it's easy for them to follow the particular rules. If you do that, what happens is firstly, you increase the likelihood that the average person will comply because you've made it easier for them. The second thing is, if you've made it really easy, what happens then is you say, well, hold on a minute, we made this incredibly easy. If these people are not following the rules and we've made it incredibly easy, we have much more right to enforce against them. And so I think there's a beautiful double whammy effect here of saying make it simple, approachable, understandable. And bear in mind, of course, what's easy for us to understand is the rule writers may not necessarily work for them. You know, we're experts, we spend our whole time looking at this stuff. They're not. So we have to look at it from their perspective. But if we can make it simpler for people, then actually what we do is we make the greater likelihood of people complying, but also much easier when we're dealing with that disciplinary side we
[00:12:23] Speaker A: see out in the world that Organizations often struggle to find the right kind of balance between the impulse to put up barriers versus the desire to expand trust. So I'd love to get your thoughts on that.
[00:12:36] Speaker B: Well, we've all been in situations where we have not felt trusted. And we can think about times maybe you've walked in a museum and somebody follows you round, or you're in a store and the staff are looking in a strange way. And of course, this will impact certain of your viewers more than others.
You know, we know that not everybody gets treated equally in the world nowadays. And so, you know, there are also, we've all been situations where we have found ourselves not. Not being trusted. My favorite story on this one, Bill, was back about 20 years ago, I stayed in a hotel, I won't name the city in the uk, it wasn't London. And I checked into the hotel and there was a long, prolonged process of credit checking and all sorts of things before you could get to the room. And then you get to the room and every single thing that could be changed to the wall was changed to the wall, including the mattress, the TV remote control control, the kettle, the chair. Every single thing that could be locked down was locked down. And, and I sat there and just thought these people, you know, clearly they don't trust people. And the reaction to that is to sort of go, well, I don't trust, you know, like I'm going to return that in kind because you're not demonstrating faith in me, I'm not going to demonstrate faith in you. Now, very hard to do that in that situation because they couldn't really exact any situation. But we've all been in situations where we felt ripped off, where we felt like we haven't been trusted, where there's been excessive amount of control on us and we react against that. It's a behavioral science dynamic called reactance, right? We react to those sort of, we respond to it. And because we're picking up on the signals and we're responding in kind. And so when we find ourselves in the equivalent of that hotel room that I've just described, we are likely to respond in kind. So I always say to organizations, look, if you want people to be, you know, to trust you and you do to deliver lots of these objectives, then you need to kind of trust them. Now, that doesn't mean that you don't monitor at all, you don't do things behind the scenes. But the more you lay it on heavy with the we don't trust you, the more you're going to get a reaction to that and it's not always going to be a positive reaction. So there's a delicate balancing act here. But I think often we don't think about well, what does this actually feel like?
So a good example would be induction training. What message are we sending to people? Now we want to make it clear to people that we do monitor these things and it's not a sort of free for all. Do whatever you want. The organization has controls in place, but you don't want to over egg that because actually if the message is this organization doesn't trust you, then you've kind of lost them at the start. And people bear in mind if you're in a compliance function, you want people to come forward to talk about, you know, to tell you about things that have gone wrong or to ask questions, then they're not going to do that if they don't trust you. And so the challenge I think here is that balancing act of clearly you need a Terence factor. Clearly if things have gone wrong, you don't want that to happen again. We need to have monitoring and surveillance and we need to handle that appropriately.
But if we don't start with trust, they're not going to trust us either. And I think that poses greater problems than if we start with the opposite.
[00:15:17] Speaker A: What are some other core concepts of behavioral science that you think ethics and compliance professionals would do well to internalize? But generally speaking, they're not right now.
[00:15:27] Speaker B: So I will quote you and this is where my favorite German word, Schleich Verbung, which means stealth advertising. Bill, I'm going to Stealth advertising is my book Humanizing Rules.
The most important quote in that book, which I think summarizes my whole approach, is to say that we need to think not how we would like people to behave, but how they are likely to behave. And what I mean by that is often we have this rose tinted view of the world that all people, everybody will want to be 100% compliant. They will understand this stuff. They will have nothing else to do but follow compliance processes and they will never be tired and they will never have other things to do and they will never have missed something or not be aware of something or not have other pressures on them. And so that quote is really driving at to say, look, we need to be realistic about this stuff and say to ourselves as we try and influence their behavior. And compliance for me is the business of influencing human decision making because organizations are only compliant. When the individuals within it decide to collectively be compliant, then the organization becomes compliant. You can't really address the organization without addressing the individuals in it. And so as we look at trying to influence humans, it's really important to see things from their perspective. And that's very hard for us to do because we're not there.
And there's something called the curse of knowledge, which is when we have a level of expertise and experience, we can't unknow what we know. And so we look at the world through compliance professionals lens. They look at it through somebody that is not interested in compliance. And I say not interested in compliance, not in the sense of they hate it, they might not like it, but if they were really passionately interested in compliance, they would work in compliance, they'd be working with us.
Instead, they're doing sales, marketing, whatever their job is. And so we have to recognize they have other things on their mind and they're not thinking the way we are.
And if we design training processes for experts, that will be different to designing it for people that are not experts and probably have no interest in becoming experts, nor do they need to be experts, do their roles. So that mantra is really pointing towards look at things through their perspective, try and get a realistic view about how do they see things, how are they experienced, what is their user experience of compliance. And what we find often when we look at that is many of the things that we impose on them actually don't have consideration to what does this feel like? I'm not saying we dumb down the rules or we make, you know, we sort of cut people's slack when they're doing things they shouldn't be doing. But actually a lot of our processes are designed for people that are used to the processes. You know, we look at them the whole time, they don't. And so if we can flip the lens and say, what does this feel like for them? How are they likely to react to this? We can then design things that make it more likely they'll do the things we want and less likely they'll do the things we want.
[00:17:53] Speaker A: Well, Christian, this has been a fascinating conversation. Thank you so much for joining us today and for sharing your insights. Really appreciate it.
[00:17:59] Speaker B: Thank you so much for having me.
[00:18:01] Speaker A: To learn more about Christian and his work, connect with him on LinkedIn. Also visit humanriskuman-risk.com and be sure to check out his
[email protected] you can order a copy of Humanizing Rules Bringing Behavioral Science to Ethics and Compliance at your favorite online bookseller. And and finally, make sure to subscribe to the Human Risk
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