What you'll learn on this podcast episode
There is a lingering misconception that ethics and compliance programs are too US-centric, when in fact they are largely global in nature. What trends and best practices have emerged to underscore the growing reach of E&C? In an episode of the Corruption, Crime, and Compliance podcast, host Michael Volkov dives into the topic of program effectiveness with Susan Divers, director of thought leadership and best practices at LRN. Listen in as the two unpack the latest findings and best practices from the Global Standards Edition of LRN’s Ethics & Compliance Program Effectiveness Report.
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Guest: Susan Divers
Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
Michael Volkov specializes in ethics and compliance, white collar defense, government investigations, and internal investigations. Michael devotes a significant portion of his practice to anti-corruption, sanctions, trade, antitrust, and AML compliance and defense. He regularly assists clients on FCPA, UK Bribery Act, AML, OFAC, Export-Import, Securities Fraud, and other issues.
Michael has extensive trial experience and has developed a problem-solving approach to serve client needs. He has extensive contacts in the federal government and on Capitol Hill. Given his broad government experience, he represents clients in federal and state court, before the Justice Department and other federal agencies, and on Capitol Hill.
Prior to launching his own law firm, Mr. Volkov was a partner at LeClairRyan (2012-2013); Mayer Brown (2010-2012), Dickinson Wright (2008-2010); Deputy Assistant Attorney General in the Department of Justice (2008); Chief Counsel, Subcommittee on Crime, Terrorism and Homeland Security, House Judiciary Committee (2005-2008); and Counsel, Senate Judiciary Committee (2003-2005); Assistant US Attorney, United States Attorney's Office for the District of Columbia (1989-2005); and a Trial Attorney, Antitrust Division, United States Department of Justice (1985-1989).
Mr. Volkov resides in Washington, D.C., San Diego, California, and Marsala, Italy, with his wife and six children. He and his wife enjoy traveling, the arts, and philanthropic activities. Mr. Volkov is an avid tennis player.
Principled Podcast transcription
Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Carolyn Grace: Hey there, listeners. This is Carolyn Grace speaking, the producer of LRN's Principled Podcast. This week we're excited to share a recent episode from the Corruption Crime and Compliance Podcast hosted by Michael Volkov, the CEO of the Volkov Law Group. Michael talks to LRN's own Susan Divers about key findings from the special global standards' edition of our annual ethics and compliance program effectiveness report, which is available now at lrn.com. It's a great discussion and I hope you enjoy it.
Susan Divers: If you're relying on rules, almost inevitably you're incentivizing people to game the rules. And as a former chief compliance officer, the number of times people who I was talking to about issues would say to me, "You said that we couldn't take people out for a very expensive dinner, but you didn't say we couldn't take them out for a very expensive golf outing." As you know, that's a frustrating answer for a compliance officer because it means that they're not really acting in accordance with values, they're just gaming the rule. So the more companies really realize that and move from a cop approach to a coach approach, the more effective their programs are going to be.
Host Intro: Global companies face unprecedented risks and challenges in today's economy. To mitigate these legal and economic risks, companies are rapidly embracing and elevating the importance of robust ethics and compliance programs to promote positive corporate citizenship. On corruption, crime and compliance, you'll hear from industry leaders and insiders about how to create effective ethics and compliance programs that will mitigate risks and maximize financial performance. Here's your host, Michael Volkov.
Michael Volkov: Well, hello everyone, Michael Volkov here. Happy to have Susan Divers here. She's from LRN, and she's the director of thought leadership and Best Practices, and she's here for a review of LRN's PEI survey, which I've always said is the most board worthy report. I borrow that term from Donna [inaudible 00:02:54] that every board member should read. And this year's report is, like last years and the years before, just incredible. So Susan, first off, welcome and thank you so much for taking time to speak to us about the LRN report. Congratulations on yet another great report.
Susan Divers: Thank you, Michael. It's always such a pleasure to speak with you.
Michael Volkov: Well, I'm coming to you from Sicily, and Sicily is a great place. I spend four months a year here. My wife fund's an artist workshop here, but I always say if LRN ever wants to do a symposium here, we'd be more than happy to host you, and I can't think of a better place to do it. It's just gorgeous here this time of year. Well anyways, Susan, if you could set the stage a little bit for the report. Eating is chock-full of really important findings, and I think every compliance officer needs to read this, but also to use it to educate some of the people in the company, and the senior management, and at the board level. But if you could take a moment just Susan, to set the stage for the report, what were some of the major findings that you found, and we can go from there.
Susan Divers: Great, thanks Michael. So this report actually is a special PEI report. We refer to the program effectiveness report that we publish every year as the PEI in shorthand. So what we did this year, sort of midyear, if you will, is we realized that we have data going back at least 10 years in this area, in terms of what makes programs impactful and effective. As we all know, we've just had a tremendously disruptive time of it with the pandemic. Unfortunately, the disruptions keep coming as we've just seen with the dreadful situation in Israel. But at any rate, we decided that because we have such good data on what ethics and compliance programs did to respond to the pandemic, that we take a look back. And we started in 2019, looked at our data going forward from then, which is basically our 2020 report. Our goal was to see what was the impact of the pandemic in particular on ethics and compliance programs, and if there were changes or pivots, have they remained?
Are they still there? Then going forward, taking a look at what those trends are, and what the best practices are, that were put in place really to respond to crises. And we came up with some very interesting data, I think, which I looked forward to exploring more with you. But to give you a little bit more scene setting. We had 1,860 respondents worldwide. Nearly 75% of those were outside North America, which is a big change from the way most ethics and compliance surveys are done. What we were trying to do was get a sense for what the global standard is for ethics field compliance programs. Because I'm sure you've heard people say that ethics and compliance is US-centric or US phenomena, and one thing the report clearly establishes is that that's not the case. Many programs have the same features wherever they're located, whether it's code of conduct, training, policies, audit, that's now the global norm in terms of ethics and compliance.
And then the second element to that is if you look at US enforcement over the last even 10 years, you see that at least 47% of US enforcement in the FCPA area has involved non-US companies. More recently, those stats are even more dramatic with nine out of 10 of the biggest fines, since the FCPA started, involving foreign companies, and the largest number of enforcement actions in this year to date has involved foreign companies. Looking at it that way, global companies are subject to the same level of enforcement really as those in the United States in many respects. That was one very surprising finding that came out.
Michael Volkov: Let me comment on that. I was not surprised by that, because years ago I calculated that about 40 to 50% of the people in jail for FCPA cases, involving money laundering as well, were foreign nationals. And I think that's consistent with your finding in terms of enforcement against foreign companies that have US operations or on the stock market or whatever. I think it's good to reinforce that message, particularly as we're seeing promises to elevate FCPA enforcement as well as sanctions coming up. I wanted to turn though to one issue that really struck me in the report.
There are many, but once again, LRN has concluded through, I think, just convincing data that ethics and compliance programs that rely on values but also ethical cultures to motivate and guide and ensure ethical and compliant behavior, are much more effective than companies that rely on a rules-based system, a rules-based set of controls and says, "Here's all our rules and you have to comply with them." To me this underscores again, the pure value of ethical culture as your best control. Because obviously we can't watch over everybody at every minute. But I wanted to get your comment on that and I feel like LRN is the only organization, or probably the loudest voice on this point. And I hope it's getting heard. That's what I really hope.
Susan Divers: Well, Michael, we certainly share that with you, that hope. Certainly our founder really has always focused, going back nearly 20 years, on the power of values. And when you think about it, rules are not self-executing. If you're relying on rules, almost inevitably you're incentivizing people to game the rules. And as a former chief compliance officer, the number of times people who I was talking to about issues would say to me, "You said that we couldn't take people out for a very expensive dinner, but you didn't say we couldn't take them out for a very expensive golf outing." As you know, that's a frustrating answer for a compliance officer because it means that they're not really acting in accordance with values, they're just gaming the rule. So the more companies really realize that, and moves from a cop approach to a coach approach, the more effective their programs are going to be.
Michael Volkov: I love that phrase you just used from a cop approach to a coach approach. That is terrific. And I hate to repeat myself, but I do all the time, where ethical companies, the positive benefits of it are so obvious and have been demonstrated through, not just LRN, but social research, and I've always pulled together all the studies on this, that you have lower employee misconduct rates, you have greater employee satisfaction and productivity. And then in the end, that leads to greater sustainable financial performance. Not to say you guarantee profits, but you are going to make more than an unethical company would make. And this is my argument against looking at compliance as a cost center. It's not a cost center. Compliance is a value add, and it's your research that helps people to make that argument. That's what I'm saying, and your advocacy for this important point,
Susan Divers: We really appreciate that, and your confidence in that and we share that perspective. We do have extensive studies that show that companies with a vibrant ethical culture outperformed, and the only thing you didn't mention is that out performance, not only are employees more motivated generally, but during the pandemic we saw examples of employees volunteering to isolate themselves in order to keep critical infrastructure going 30 days at a time. And as you and I know, as lawyers, you can't force people to do that, but if people volunteer, then their organizations were in a position to support them, and that's an example of values in action.
Michael Volkov: Yeah, I agree. There was also some interesting, I think, more not practical approaches in terms of some of the findings you all made with regard to high performing programs in what I would call employees access to resources. And in today's world where everybody operates off their phones, how do you integrate compliance into that? And what were some of the findings that you had in terms of specific actions that companies can take to bridge that gap between remote workers and bringing workers into a community feeling around the compliance initiative?
Susan Divers: That's a great topic, and one of the ones that's closest to my heart actually. Because the pandemic really made companies think hard about the employee side of the equation, particularly in the area of training. So I think in the past the focus used to be on just shoveling content out at people and saying, "Here's a 45-minute course on [inaudible 00:13:22] bribery. You're going to learn a lot about the FCPA." Well, maybe that's not the best approach, because not everybody is a lawyer, firstly, thank goodness. Secondly, that doesn't really focus on the key messages or the key behaviors that people need to adopt. So shifting the focus onto the employee side, and that in part was driven by the pandemic, is a terrific trend that's gotten underway and is really emerging as a best practice, to mention some of the aspects of that that we see.
For example, if people want to read the report, there's a section on the difference between high performing programs and how they place a real emphasis on relevance. Some of the characteristics there would be moving your training to mobile devices so that you're able to take, for example, a module on gift giving while you're checking in to go on a business trip at the airport, rather than have to sit down in front of your computer, do all the logins and then go through it. Shorter modules and mobile friendly training really are the way of the future. Other aspects like just in time training that rolls out when you're about to go on a trip, so it's relevant to what you're thinking about at that time. And features like test out, where if an employee feels that they've actually mastered that subject, they have an opportunity to take a test.
If they pass it, then they can go on either to a more challenging training course or they can be done with that one for the year. All those types of features are very good at making the employee feel, not like a cog in a wheel, but basically that training is tailored to them. And another aspect of that would be training courses that depend on your role and your function in the company rather than one size fits all. So I think there really is a revolution going on in terms of that. For example, our training is very geared towards all of those features, and also more in terms of understanding what employees have learned and where they may need help to master a subject.
Michael Volkov: Those are great ideas for training and we're seeing that happen. Every organization I work with, for example, are quickly moving to modules, making them relevant. Just like you said. And I love the adjusted time idea that you have. A number of my clients use LRN for training, and I know that these are some of the tailored solutions that you have. The other thing that I thought was interesting, that you all noted, was the importance of web access and offering interactive capabilities.
How many times have we gone in to do a risk assessment and we look at the compliance policies, they're on an intranet, and the old version of a policy is up on the link or the link doesn't work or whatever. And I think the DOJ and its last iteration of guidance on compliance says not only do they want those links to work, but they want you to keep track of what are people clicking on? What are people looking for? What are they reading on your web accessible compliance policies and procedures type of page? What I thought was interesting was that you all found that one of many, but that was one element of how to make yourself accessible to the employees, and I thought that was really good, particularly in this remote working context.
Susan Divers: That's something that we've really, I think, been a leader in, which is first to make things easy to find like modular topics. Secondly, in areas like code of conduct and policies, if you simplify those and you make them web-based, DOD at one point I think in the guidance does ask if policies are searchable. So rather than reading 50 pages of sites to cases or references to the CFR, you can type in a topic and find what you're looking for. That's really very employee friendly. And then the same with a code, being able to search by keyword to find what you're looking for. You mentioned the other aspect, which is another hallmark of highly effective programs, and that is getting data analytics out of those interactions with employees, so you're able to see how long people spend on a particular topic compared to other topics. You're able to see who's passing on the first try and who needs a couple of more tries in order to get a passing grade. And you're able to see is that a particular group of people maybe in a particular location or a particular characteristic.
And the reason you want to know that is it allows you then to tailor your efforts to help that group, if there is a group, really learn better or master the topic or master it in a different way. And so it gives an answer to the other really critical department of justice question, which I know you're very familiar with, which is, does your program actually work in practice? As you know, and I know, ethics and compliance professionals have struggled with that for years. And even metrics really give you a means in answering that in a lot of regards.
Michael Volkov: Yeah, there's no doubt. That is one area where data is expected and there's so many areas. If anything, I think compliance officers have so many options in terms of data. They have to be careful not to get overwhelmed and choose the right metrics and start to set standards, and to get metrics that are usable after a period of time. You got to start somewhere is what I always say. One other point, and this is a little bit more on the macro points, but the thing that I also... It's like if I could have written a report that proves what I have been arguing about and we've been arguing for for years, is that you also found that high performing ethics and compliance programs are embedded in the decision-making process of their companies.
What a great finding. In other words, 70% of the respondents reported that taking an ethics and compliance risk, they looked at it, they assessed it, and it caused the company to modify or abandon a business initiative. Now, if you want a demonstration of a company's commitment to ethics and compliance, I can't think of a better one. Those are legendary stories that go through a company. But you are finding about effective programs and that embedded decision-making process. Again, I can only hope that a board and a CEO reads this and says, "Hey, that's a great idea. Are we doing that?" Any comments you have on that, just in general?
Susan Divers: We ask that question every year in our program effectiveness report. And to me, it's the most important question in the deck really, because it's basically asking if you've taken action based on ethics and compliance and made a tough decision. As you and I also know, for a long time, there was a certain complacency in the ENC community. You reported on your activities. You went to the board and you said, "Yeah, we've trained 6,000 people on four subjects, we've updated our policies and we've done a few audits." Those are all activities. They don't really tell you if your program is in fact impacting the business and impacting people's behavior. But a question like this does. And I wish I saw it in more surveys for that reason. Because if you have to make a tough decision and you come down on the side of your values, then your program is working. And I agree with you, I think boards should be asking for examples of that, and companies certainly should be keeping track of how they do that, and educating people in the company about those types of scenarios.
Michael Volkov: I couldn't agree more. We're getting close to the end here. But I have to turn to my favorite finding or my favorite part of the [inaudible 00:22:22] which says you what a geek I am, and I apologize for that. But you had talked about training and the greater emphasis being placed on training and tailoring training and LRN's approach to this, which I think is fantastic. You had an idea and I thought, "Oh my God, what a great idea. Why didn't I think of this?" Now I find out that this is not a new idea, and so let me spill it out.
It is that at the end of training courses, companies, high performing companies, are offering a short ethical culture survey at the end of courses. What an important opportunity to, number one, get people to participate in the survey. And number two, what better time than right after a training module, let's say, that you include a culture survey so that we're not dependent upon HR for their annual survey or we're pushing for having our own compliance survey, and you have to fight that battle. Link it up with your training program. But anyways, give us the history of this idea, Susan, because it's just a fantastic idea. I commend you guys for this.
Susan Divers: Well, I'm glad you called that out, Michael, and I'm glad you see the significance. So a number of years ago, one of our senior sales team members came up with that idea and talked to me about it, and we worked on it. And it's taken a while and some revisions to our platform. But now we offer that as a feature. We call it the ethical pulse culture survey. We put it at the end of whatever course client wants, usually code of conduct. And the beauty of it is that everybody is asked to do a short survey nowadays, if you book a flight or you do anything really. And we keep it short. I think it's seven or eight questions now on key features of ethical culture. And we ask people to do it at the end of the course, which is good, because the research shows that asking people to answer ethical questions after they've taken training is much more effective and accurate than doing it separately. And what we're seeing with our clients that are doing that is a 95%, sometimes 97% participation rate.
Michael Volkov: Terrific.
Susan Divers: Very hard to get otherwise. And some of our clients are taking that data and slicing and dicing it by business unit to show over time. And the other advantage of this is it's a moving average. It's not a one and done. But they're able to show over time how that particular business unit is doing. And they're incorporating that data into scorecards along with other data that you can get, for example, on how quickly employees do training, or how many people are passing on the first try when they do. And they're allowing then their business managers or their business unit heads to see that data.
This is another example of operationalizing compliance. And they're finding that the business managers and leaders really like having that type of insight into how their ethical culture is faring in that particular period. And of course, you can go back and look at where you were a year ago and where you are today. So that gives you a data insight that you wouldn't otherwise have. I think it's a game changer in a lot of ways, and it answers the DOJ question, which is in the guidance of how do you measure your ethical, [inaudible 00:26:10] right?
Michael Volkov: Perfect. It's fantastic, and I think it's the most effective way I've heard of rather than negotiating with HR or trying to get your own resources out there, work with your training people to incorporate this in. But Susan, it's just a great idea. Frankly, it solves a problem, but it does so in a great way. So congratulations on that one as well. Thank you so much, Susan. This has been, as always, a great conversation. If people want to get in touch with you concerning the report, but even more importantly, LRN's training or other services that you have, which are comprehensive, how can they best get in touch with you?
Susan Divers: Michael, I'm easy to find and always happy to be found. So it's email@example.com. And we also have a website where people can see a lot of resources that we have and also inquire if they want a briefing on something that I've talked about.
Michael Volkov: That would be great. Again, Susan, thank you so much and congratulations on another report. Hopefully we'll get a chance to speak about another report, not just the PEI, but you've had some other ones come out that are really interesting as well. So thank you again.
Susan Divers: Oh, you're welcome, Michael. It's always such a pleasure to interact.
Host Outro: If you enjoyed this episode, the best way to support the show is by subscribing on your favorite listening platform. To learn more and connect with Michael Volkov, go to volkovlaw.com.
Carolyn Grace: Thanks again for listening. You can get a copy of the Global Standards edition of LNS Ethics and Compliance Program effectiveness report at lrn.com, or click the link on our show notes. I'm Carolyn Grace, and we'll see you next week on the Principled Podcast.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principle performance in global organizations by helping them foster winning ethical cultures, rooted in sustainable values. Please visit us at LRN.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
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