Episode Transcript
[00:00:00] Speaker A: The DOJ's evaluation of corporate compliance programs pinpoints that a key element of an effective compliance program is its training.
Why then does it seem that compliance training so frequently fails?
All this and more on today's episode of the Ethicast.
Hi, everyone, I'm Julia Boyes, and today we are honored to be joined by Andrew Jacobs, chief compliance officer of Avangrid Networks. Andrew recently published a paper entitled why Compliance Training Fails, and in it he outlines the major pitfalls that compliance programs are facing with their training. He also gives great guidance on what you can do to make your compliance training more effective and more meaningful.
Andrew, thank you so much for joining us today.
So, to jump right in, some of our listeners may not have had the pleasure of reading your paper yet, but if someone was hoping to make their compliance training more successful, where would you suggest that practitioners begin?
[00:01:11] Speaker B: Yeah, well, first of all, thanks for having me here and thanks for having me on the efficast.
Avangrid has been a really good partner, I think, over the last several years with Ethisphere and the Bella community and others.
This is kind of a personal pet project of mine. It's obviously related to my work and what I do, but this is something that I did through an academic study. I got a master's degree at the University of Connecticut. They have a compliance program.
So I did some research and let me just say one thing about the paper and then I'll tell you what else is important besides the paper. So the paper I wrote both as my first thesis, but I also presented it recently at an academic conference.
That's really low key. And because they weren't circulating the papers for the conference, I put it on ssrn, which is a website for people to just post academic papers and you can get feedback or share it with people. So if anybody's interested in the paper itself, it's called why Compliance Training Fails. And if you go to ssrn, then you can put that in quotes in the search feature and it will pull up the paper. The paper goes in three parts. It's, you know, what did we ever expect compliance training to do?
As you mentioned in the introduction to the podcast, there's some, some really important things that regulators and others expect it to do. It then measures what we know today as far as, you know, how it works or if it works, and then it ends. On a very optimistic note, despite the title, it really tells us a lot about what can make really effective compliance training. And I think that's the future for both research and for everyone. But as far as, you know, what can, what can people do to start, you know, getting into this? I think it's a fascinating question because I did it myself. I started out as a lawyer and worked for about 10 years in different roles, different practices, and then I went in house and then started looking at some of the academic research in our area.
And, you know, I think one thing I really want to do and why I really appreciate this podcast opportunity is because my interest has been there's this really interesting work that's going on in universities, both in, you know, criminology, law, psychology, cognitive science, social science.
You know, there's some really interesting work being done, including a lot of empirical work, meaning they're going and actually testing things in the field.
And, you know, my goal, my real interest has been as a practitioner to bring a lot of that research, as, you know, other groups have, like, like Bella has, for example, a lot of resources that connect the research to practitioners, but really to bring what we're learning in the, you know, in research directly into the field. So if anybody's not familiar with it, I'd recommend starting with what I call the business self help books. So if you ever go to, you know, the, the bookstore, you know, you can see the self help section. And there's kind of a section in my mind for, for business books. And you usually find them at airport bookstores, but there's some really great foundational reading. If anybody hasn't done it. The classics are Robert Cialdini, who's a psychologist, who wrote Influence.
Max Bazerman invented the concept of behavioral ethics, and he wrote a book called Blind Spots.
Ira Chaliffe wrote very early books on whistleblowing, looking at studies of blind dog training for Sorry for Blind People.
And Eugene Soltis, who's a Harvard business professor, wrote a great book a number of years ago called why they do it. And he looks inside the mind of the white collar criminal. So if anybody's not familiar with it, those are some great books. And they'll go over a lot of the experiments in our field, a lot of the basic concepts, you know, what we know and the directions that we have to explore.
[00:05:04] Speaker A: You know, you mentioned the sort of research with the dogs for the blind people, which sort of ties into my next question, because within your paper you cite incredible studies, so much data, and you're such an incredible storyteller. One of the, I mean, every piece of your paper was so informative, but you told it in such a way that it was so easy to read. And I loved the Studies that you, that you gave.
I was curious if within your paper there are any studies that were most impactful to you or that you feel impacted your research the most.
[00:05:42] Speaker B: Yeah. So, you know, as I mentioned, there's incredible research being done. And I think, you know, part of the problem is practitioners like us aren't really accessing the academic literature. But then also, as you mentioned, the academic literature isn't so accessible for practitioners. So some of these studies are very difficult to read.
They're written, you know, you have to have an understanding of statistics and, you know, you know, some other background to really even begin to digest them. And they're, they're somewhat not understandable to the layman, you know, and a lot of what I did was look at them and say, how can we easily explain these? So I've looked at, you know, some studies, meta analyses, I've looked at, you mentioned storytelling. So I've looked at individual stories and we have a lot of really great examples that, that I found to put together. Everyone from juvenile delinquents to white supremacists are mentioned in there. We have people who believe in the flat earth.
We have individual offenders like Walter Pablo and some others, Garth Peterson, you know, a bunch of different people who've told their stories. And there's some really interesting stuff in there. I think, for compliance training.
The, obviously the challenges that we have in an organization are being able to study the effectiveness. And so a lot of, you know, a lot of what's in vogue in our area is sort of that really short term intermediate thing, like how much did somebody know before training and how much do they know after?
And I think, you know, the most relevant study that's, that's been done on that, it comes from the 1990s when some researchers looked at jury instructions.
And so, you know, in our US Jury system, people get an invitation to show up at a court and you sit in a pool. And because it's a jury of your peers, you're sort of selected at random with a few other criteria to serve on a jury. So it turns out that if you show up for jury service, in all likelihood you're not actually serving on a jury that day or possibly ever. You might get returned home. But some people do wind up getting chosen and they sit on a jury. What's really important about that is they sit for the trial, they see the facts, they hear the witnesses, they may hear from experts, but at the end, before they go and deliberate, the judge instructs people on what the law is and so we have a very kind of close analog. We have people who really have an interest in learning, you know, if you've ever served on a jury, which is an absolute pleasure, if you're a U.S. person or in a system with juries, it's one of the greatest things, I think, contributions that we as individuals can make is to participate in the jury system.
It's such a unique experience. And, you know, these people want to fulfill their service. It's very important they recognize the impact they could be serving, let's say, on a murder trial or on a civil matter, you know, things that are really important to people, and they want to do the right thing. And so they're really interested in listening, and the judge instructs them. And, you know, I've seen this side, too. As both a lawyer and as somebody who's worked in a court system, the lawyers argue very much over the wording of those jury instructions. A lot of time spent on the jury instructions, taking the law and then converting it into what you would tell somebody who's a fact finder about, you know, how to apply the law to the facts of the case that they heard. And so these people really want to understand it. Lawyers spend a lot of time working on it, wordsmithing every single word.
There's lots of loss. You know, appeals and all sorts of other legal decisions about the wording of jury instructions are very important to people. And then researchers went in and they looked at those two groups. So they looked at people who were chosen for a jury and people who weren't chosen for a jury.
If you weren't chosen for a jury, obviously, and you went home, you were in that pool. You were in this control group, right? So you're this sort of sample set that didn't get the jury instructions. And if you were chosen for a jury and went through the trial process, you got jury instructions. And so the researchers, soon after people were released, asked people questions to understand how much they understood about the law. And those were both procedural questions.
For example, is what a lawyer says in court, is that testimony? And then substantive questions about perhaps the crime that was committed, what are the elements of a burglary, or something along those lines. And what they found was that in the procedural questions, there was a small difference in the two groups. In the substantive questions, there was essentially no difference. And in both sets, the knowledge was at an absolute level, was extremely low, meaning that people were essentially guessing at random.
And so while you could say that some of the results were statistically significant, in essence we have this example of where we've tried to give somebody instructions who's willing to learn, who wants to learn, and we have a thoughtful way of doing it. And what it really shows is the difficulty of getting somebody to know what those rules are and let alone apply them when they need to.
[00:10:54] Speaker A: Yeah, I'm sure compliance practitioners watching this right now are sort of banging their head against the table like, yes, that's what we're experiencing. Like people don't know the rules.
And you know, that.
That leads me to my next question. It's sort of tangential, but in one of the sections of your paper, it's entitled Training Should Move to Psychology and Culture, you make the case that human beings tend to follow the quote unquote norm that we are going to, the majority of the time will do what we perceive to be the accepted normal behavior. And you give great examples of how that can actually apply to misconduct and corruption within organizations, which is the opposite of what we all want. So how can compliance professionals work to change the norm within their organizations for their employees?
[00:11:48] Speaker B: Yeah, and I think that's a great question. I think, you know, let's take a step back and let's assume that you're a compliance person in an organization and somebody's giving you an invitation to speak at their off site or on site, or maybe the legal group has asked you, you've had an issue, and as part of it, the first suggestion that came up is this group needs training, so you've been asked to present to somebody. And I think where we've gone to so far in the conversation is we realize that it's really difficult to tell people what the law is and in a way that relates to, a way that relates to their work. So oftentimes, you know, we think that we're, you know, you're the compliance person or you're a lawyer in an organization. You're, you know, you're educated, you're trying to, you have the knowledge and you're trying to bring people up to speed on what that is. We've seen the difficulties in, in applying the laws. Part of what I suggest in moving to psychology recognize is that if people are really not good learners of the law, let's go back to that jury study. One of the things is there's always an option in the responses to say, I don't know. And when I look at the data in those studies, it's amazing how often people do not say I don't know. Instead, they give an answer that's wrong.
What it says to me is that, you know, people don't understand the limits of their knowledge. And when we, when we educate them about the law and then they, but then they have to go apply rules, they do what's intuitive to them, they do what they think makes sense. And so I think where we have to meet them is to give them an environment where those rules, you know, do make sense. And it's just the easy, natural thing to do.
And so I think we have to approach training from that way. You know, if we're going to use training as an opportunity, we have to focus less on the content of the material and focus less on imparting knowledge.
And in a lot of ways, like one thing we've always asked in compliance training is about knowledge. We almost never ask about attitudes. We never ask about how does somebody feel towards the subject or towards even the instructor. We often ask, what did you know before training, what did you know after a training? How many hours did you spend in a training, did you take the training?
Those kinds of questions. But in a lot of ways, attitude is as important, if not more important than knowledge and emotion is as important, if not more important than reason. And so we have to meet the people where they are. So I think when we talk about subjects, you know, we have to, the first thing that we can do, anybody can do in a compliance training is talk about how much that subject is accepted in the organization, in the organization's culture, and how frequently people do it. Because a lot of what we do is sort of just on autopilot.
There's some studies that show that the fact that something's illegal can make up as little as 5% of our decision making. And largely what we're doing is doing what everybody else or our environment does to suggest that we should do. So if you have the opportunity in a compliance training, let's say you're doing an anti bribery training. You could start off by really emphasizing how undesirable bribery is in the company.
And even if there's ways to make more money doing something, your company has chosen to do the right thing and that it's really desired by leadership, it's done by everybody's peers, that you have a system in place to support that kind of thing. And then obviously you can run through the elements of what the UK Bribery act or FCPA or SAP and, or whatever your regime is.
But again, more important, or perhaps as important as what everybody's knowledge is, is what their attitude is towards the subject. And so you can really use Those social levers in the training to reinforce what people are supposed to be doing. And then obviously, there's. That's kind of the, I think, the easiest lever to pull on, the easiest thing to do. But obviously, there's a lot more options that we have in trainings and a lot more suggestions. And obviously, I go into detail as to what we currently know about what is effective, what can actually move the ball. You know, we talked about the jury training, not jury instructions, not really changing behavior. But we do have studies. There's one health and safety study. I show that by changing culture, they've reduced an injury rate by 84%. So you can have these huge impacts on an organization by focusing on those things that actually do work.
[00:16:10] Speaker A: Well, thank you. That's very encouraging. I feel like I could talk to you about your paper all day, but before we let you go, I'll limit myself to one more question.
You know, if I was a practitioner looking towards, you know, let's say, 20, 26 and my training calendar, and I'm feeling overwhelmed.
What encouragement. I mean, I think your whole paper is encouraging, and I really hope everyone goes and reads it. But for right now, in this moment, what encouragement would you give to compliance professionals tackling their upcoming training who might be feeling a little overwhelmed?
[00:16:44] Speaker B: Yeah, I think that's great. I mean, I think, you know, first, just stick to nuts and bolts. I mean, we do know that obviously, if you want somebody to remember things, there's factors that are important, like frequency, duration, repetition, and we have more resources today than ever before for content.
And so what I would say is, if you're developing a learning plan, you know, stick to the basics. And the basics are what your probably your boss expects you to do and what regulators expect you to do, which is to train on what the law is. So, you know, you can look at your risks, you could look at what, you know, topics you think are relevant to you, and then obviously, there's resources to train on them. I don't think that, you know, we're talking about some techniques where, you know, I think that if anybody ever came back in afterward to examine the effectiveness of your program, they'd still want to see the nuts and bolts stuff. They'd still want to see that, you know, regardless of how much you think it makes a difference.
You know, we have in the. In the paper, there's one FCPA offender who received 54 reminders about how not to violate the FCPA. But. But, you know, as much as you think that those kinds of things may or may not work. Start with the basics, list out all your topics, and then, you know, do training. And as I said, there's. There's never been more resources than before. I think the thing that's important after that is to take the next step and, and to really think about the way that we know the training works is largely through culture. And the way that we can get that done as a mechanism is something called signaling. And so if you pull into a parking lot and there's a sign that says reserved for employee of the month versus a sign that says reserved for the CEO, you know that there's huge differences between those two organizations. And so after you've done the basic stuff, I think you need to meet people where they are.
You know, we need to focus on those kind of face to face interactions one on one.
You know, there's so many assumptions I think we should. We need to get rid of in training. One of them is that I know more than you or I'm superior to you in some way, because that's not really going to convince somebody of anything.
It may or may not be true, but it certainly may be off putting to the people receiving the message. And so there's a number of techniques for both how to deliver a training, but then how to pull on those levers of culture and psychology and other things that we have where we know that they can make a difference. And there's one example that I've used for my organization of it's based on a concept I go over called restorative justice, which is pretty much the only thing that works for criminals to reduce recidivism.
And you know, I mentioned in the paper that, you know, I picked a movie, I screened it, you know, at our company or made it available over a holiday weekend.
The person who. It was a real story. And so the person who committed the crimes was on a podcast. So I give a couple of links to the podcast episode. And then we did an event and we really opened it up to the potential that we can let ourselves down and the vulnerability that we have to have in approaching those things. And I think that a training like that would be very effective at preventing fraud or misconduct or corruption or whatever those kind of key risks that you face in your organization are.
[00:20:20] Speaker A: Wow. Well, Andrew, thank you so much for your time today and we look forward to seeing you soon, hopefully either on another episode of the Ethicast or maybe even at another event at Ethisphere. So thank you, Andrew.
[00:20:33] Speaker B: Yeah. And I encourage everyone to reach out, obviously my contact information is if you again go on ssrn, you can find that paper, but reach out if you have any ideas or if you're aware of research, or if you want to get into this field and really connect, be that bridge between the practitioners and the research.
[00:20:53] Speaker A: Awesome. Thanks, Andrew.
[00:20:55] Speaker B: Thanks.
[00:20:57] Speaker A: All right, to read Andrew's paper, you can go to ssrn, click the link in our show notes or type in why Compliance Training Fails by Andrew Jacobs into your favorite search engine. Bill Coffin and I have already had a book club on this incredible paper, and we encourage you and your colleagues to do the same.
To find more resources on the effectiveness of compliance training, culture, data, and more, visit ethisphere.com resources until next time, I'm Julia Boies and this is the Ethicast.
