What you'll learn on this podcast episode
In an episode of the FCPA Compliance Report, host Tom Fox 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. Susan shares her expertise on the vital role of E&C programs, emphasizing the importance of continuous training and integration into HR systems. She also advocates a shift from rules to values, fostering personal responsibility and accountability.
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Guest: Susan Divers
Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients 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 sharing 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.
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.
Host: Tom Fox
Tom Fox is literally the guy who wrote the book on compliance with the international compliance best-seller The Compliance Handbook, 3rd edition, which was released by LexisNexis in May 2022. Tom has authored 23 other books on business leadership, compliance and ethics, and corporate governance, including the international best-sellers Lessons Learned on Compliance and Ethics and Best Practices Under the FCPA and Bribery Act, as well as his award-winning series "Fox on Compliance."
Tom leads the social media discussion on compliance with his award-winning blog, and is the Voice of Compliance, having founded the award-winning Compliance Podcast Network and hosting or producing multiple award-winning podcasts. He is an executive leader at the C-Suite Network, the world’s most trusted network of C-Suite leaders. He can be reached at email@example.com.
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 FCPA Compliance Report Podcast hosted by Tom Fox, the founder of the Compliance Podcast Network. Tom talks to LRNs own Susan Divers about key findings from the special global standards edition of our annual Ethics and Compliance Program Effectiveness Report, which is now available at lrn.com. It's a great discussion and I hope you enjoy it.
Susan Divers: I think you've heard me say it read an excerpt from a Soviet manual on how to fix the truck. And that wasn't particularly helpful for employees, but it allowed companies to check the box and say, we trained all 6,000 employees. That only works if you've actually given them useful information that they can retain.
Tom Fox: That was Susan Divers. I'm Tom Fox. I'd like to welcome you to this episode of the FCPA Compliance and Ethics Report. Today, Susan and I visit on LRN's Ethics and Compliance Program Effectiveness Report, 2023 Global Standards Edition, the fascinating exploration into some of the top topics around what makes a great compliance program, how compliance professionals can benchmark using this report and what it means for the profession going forward. I know you'll enjoy this episode with Susan Divers. Hello, everyone. This is Tom Fox, back again for another episode. And I'm thrilled to have back with me my good friend and colleague, Susan Divers. Susan, first of all, welcome back.
Susan Divers: Thanks, Tom. And thanks for being such an excellent podcaster and champion in the ethics and compliance field.
Tom Fox: Thank you, Susan. Susan, you're back for what is turning into an annual event, where we look at the annual LRN Ethics and Compliance and Effectiveness Report. This year it's entitled 2023 Global Standards. So, I was wondering if we might be able to start with you reminding our audience what the report is, how you guys do the research and then how is it generated internally.
Susan Divers: I'll be happy to do that, Tom. And first, I'm going to make one general correction. This is actually the second report we've done this year. And this is a look back over four years of data, because what we thought would be interesting is to see, looking back over four years of data, how programs have changed in the wake of the pandemic. I should have labeled this one 23B and the first one 23A, but we really didn't know we were going to do a second report until recently. But this one looks back over four years and picks out certain themes that are common.
Tom Fox: Then let's just hop right into it. And you start with the key findings, and we're going to go through each individually, but I'm going to read them for our audience. High performing programs, number one, rely on values. Number two, are embedded in decision making. Number three, are accessible and relevant. Number four, innovate in training, design and delivery. And then number five, prioritize personal responsibility. Maybe let's just start with the first one then, which is high performing programs rely principally on values to motivate and guide ethical and compliant behavior. And frankly, Susan, this is something that you guys have both found and have been talking about for multiple years. So, is this something new, different or really consistent with what you've seen in the past?
Susan Divers: Tom, I'd say it's consistent, but also validated by what happened during the pandemic. Look, as I remember, at the beginning of the pandemic, there was a fair amount of speculation that ethics and compliance programs might fade into the woodwork as companies grappled with their very survival. And that as is sometimes the case, the management would view ENC as a visit to the dentist and not want to visit, but that's in fact not what happened. And our data over four years shows that the majority of programs, and we surveyed 1,860 programs this year worldwide in the last PEI report, our data shows that companies relied on their values and relied on their ethics and compliance programs to inspire people, and hold together and to make the changes that needed to be made in order to survive the pandemic. And there are some wonderful examples that I can give, if you're interested, but we really saw that as a vindication of the approach that we've taken since LRN was founded.
Tom Fox: Susan, it strikes me, or the following question rather strikes me, is it inconsistent to say that a compliance program is dynamic, responding to both geopolitical events, business developments, as well as legal and regulatory, and of course, your company and employees and values are more static? Meaning, once you develop a set of values that you believe in, you hopefully will keep those values. Is that in any way contradictory?
Susan Divers: I don't think so, Tom. I think values underpin your structures and they underpin how you respond to regulation. To give you one example, it's not against the law or regulation to use algorithms that feed people additional content, clickbait, based on where they've been on the internet. But if you're doing that with young vulnerable teenagers and you're feeding them something about suicide repeatedly, that's not consistent with anybody's ethical values, unless your ethical value is I make money at any cost. I think values should remain constant and are really universal. That's the other thing we saw when we did this retroactive look. But they underpin how you actually approach things like regulation or other aspects of your program and how you behave.
Tom Fox: So, number two, key finding number two is high performing programs are embedded in the decision making processes of their... Why is this so critical to have really those values and your programs embedded in the decision making processes?
Susan Divers: Well, because Tom, that's where it's won or lost in terms of preventing misconduct. And if the compliance team finds out right at the last minute that the company is launching a major initiative in a very high corruption country, they don't have a chance to help mitigate risk from the very start. And they don't have a chance to work with management to evaluate what's the impact going to be of operating in such a high risk jurisdiction. And that's absolutely critical if you're going to be effective in preventing misconduct, otherwise, use the classic metaphor, you're frequently closing the barn door after the horses already bolted. So that's one reason.
And another reason is that organizational justice is so important in companies. And it's really one of the key planks of whether you actually have an ethics and compliance program or just a bunch of paper or policies. And if you don't have values underpinning that, the tendency can be to say, "Joe's a high performer, so we're going to keep him, even though if somebody else did this, they'd get fired." And so, it really has to be embedded in the thinking and the problem solving approach of the company.
Tom Fox: Next up is the key finding that high performing programs make it easy for employees to access resources and place a premium on relevance. What were your findings there?
Susan Divers: Our findings there, and this is something I think really was driven and moved forward by the pandemic, was that I think even five years ago, a lot of training consisted of 45 minute or one hour lectures on a particular topic. And I think you've heard me say it read an excerpt from a Soviet manual on how to fix the truck. And that wasn't particularly helpful for employees, but it allowed companies to check the box and say, we trained all 6,000 employees. That only works if you've actually given them useful information that they can retain. And during the pandemic, we saw companies like Dell, who's one of our longtime clients, really pivot. And they moved all of their training onto mobile devices and they succeeded in doing that. And they did it in part because they understood that people were home and they were fighting for computer time with their kids who were doing remote learning, or they were fighting for computer time with their spouses.
And so, Dell made it easy for people to continue to engage with the program. They even moved their hotline onto the mobile app, which I think is utterly amazing. And so, there was a new premium placed on that kind of accessibility, and it's something that was there before the pandemic. We saw it in our research, but the pandemic certainly pushed that concept forward. And DOJ did its part, too, by making comments and some of the guidance, that codes of conduct should be searchable, policies should be searchable. It shouldn't take two hours to find the answer to what you're looking for. You should be able to find it on your mobile phone. I think that's the right way to think about it.
Tom Fox: Let me pick up on that point, because in the report there was for me an incredibly powerful very small box with information entitled High Impact Differential. And offering mobile compatible ENC training, for instance, at a 7.2X differential, but that wasn't even the highest. Having searchable policies, and procedures and codes of conduct also was 7.1. And then this one was my favorite, 7.5X having translation capacity for non-English speakers in their hotline. Susan, this seems to me to be one of the most basic things we've talked about for 15 years, which is have a hotline for native speakers in their own language. And here, even today in 2023, nearly 2024, it's over 7.5X increase by doing so. Are we just not getting that message out?
Susan Divers: You raise a good point. And I will point out, too, that this year our data was very global. North America and the US, Canada for about 25% of the 1,860 respondents. And so, we really expanded the number of people we surveyed around the globe. And we do find that some programs abroad I think are slower to adopt best practices. I think if I pulled the North American numbers for you, they wouldn't be as dismal as the ones that you just said. But I think also smaller mid-size companies really struggle with how they deal with translation capability when it comes to hotline, and probably policies and training too.
Tom Fox: Susan, our next key finding is that high performing programs innovate in designing and delivering training. And frankly, I can't think of a better person to visit about the innovations on compliance training than you, given your work in our field. And that's certainly something I've heard you talk about probably since the first time I've met you. But how did the report find that the innovation component in designing and delivering training is not simply a key finding of a high performing program, but really almost a basic key?
Susan Divers: Yeah. That's a very good question, Tom. I think that really these days is table stakes. And I have a way of thinking about it that I'll tell you, because I think it really helps. I think in the past, most programs, when it was time for their quarterly report to the board or to upper level management, and I plead guilty to this too when I was running mine, would report training completions as evidence of effectiveness. But to me, that's like taking a handful of corn, throwing it over your neighbor's fence and say maybe next spring there'll be some shoots. It doesn't mean that your training was effective. It doesn't mean that it communicated clearly. It doesn't mean that people actually retained anything out of it.
And so, the ENC area has really caught up with that. And the government has helped too in the guidance by saying, "How do you know if your training has been effective?" And if I had been a chief ethics and compliance officer when that came out, I would've said, "I'm not sure I do know." So, you really have to rethink how you're training. And some of the best practices that we talk about in the report, which are all, of course, part of our training at LRN, are things like test out. And I'm a big fan of that, because if you're assigning courses and you have, let's say a highly educated workforce, they don't want to take the same basic training on a topic that they've taken every year.
And so, if they can test out, first, that tells you that you've been effective in that area. Secondly, you can assign them something more challenging if you would like. And thirdly, you have some evidence of effectiveness to point to that's hard data, rather than just simply saying, yeah, 3,000 people took the training. And there's other, is we've got analytics that look at what subjects people failed, what subjects people aced, what kind of employee did that, who got it, who didn't, what location are they in, what business unit are they in?
And that, again, allows you to get beyond just assigning training and into the mechanics of how people are interacting with your training program. And that's really a feature of high performing programs. They care how employees are doing and they get the data. And that also gives them evidence of effectiveness at the same time to satisfy the regulators' expectations.
Tom Fox: But Susan, it's actually even other innovations that really intrigued me. And I'm going to go back to that high impact differential box you had for key finding number three. And actually, the highest multiplier was offering just in time training. And for employees who may be traveling, who may be filling out expense reports, things that you and I think are fairly basic, but just a general reminder, whether it's 60 seconds, whether it's three minutes. And even that is innovative for employees, at least as they view compliance.
Susan Divers: Absolutely. And if you think about it, I have seen companies where when I do my review of their programs, where they rely on once a year training. And one and done is, it's very difficult to argue that it's effective, because you tend to forget. And if six months later from having done anti-corruption training, you're on a plane to China, you may not remember what all the rules are with public officials or with non-public officials. And so, as you're landing in China, if you get a reminder on your cell phone that says, "Welcome to China. Do you know what the rules are for gifts and entertainment?" And that can pop up, people are much more likely to really understand what's expected of them and to remember it. And I think that is a perfect example of innovation in training and the way that it can really be tailored to help employees do work.
Tom Fox: And Susan, key finding number five is high performing programs focus on personal responsibility for ethical and compliant conduct. What did you find in this or what data did you find that led to this finding?
Susan Divers: Actually, we had seen a trend for the last several years, Tom, towards companies incorporating ethics and compliance considerations in their HR systems, whether it would be an annual performance review, a bonus, a promotion, or even sometimes in the case of high ranking new hires, making sure doing some due diligence to see if they had the same ethical standards. And what we've seen in the last year in particular is, with the shift in Department of Justice priorities and with Deputy Assistant General, Attorney General Lisa Monaco, noting that personal responsibility is the key priority for the DOJ going forward. That has, I think, really accelerated the trend.
And what we're seeing is that more companies have clawback. The SEC does require that, of course, in some instances. But if you look at the charts we've got in this report, you can really see that is an established best practice. And so, if you're a company that isn't subject to SEC jurisdiction and you don't have to have clawback, you might want to consider implementing a policy like that to make sure that you are conforming to the best practice of holding people accountable for misconduct. And if they are responsible, making them live up to the consequences of it, as you would.
Tom Fox: Let me just pick up on that word consequence, because our good friend, Kenneth Polite used that word in the 2023 evaluation of corporate compliance document in the context of consequence management. And I guess here, Susan, for a long time, the DOJ has said you need to incentivize ethical behavior. You need to incentivize doing business ethically and in compliance. But the DOJ was very forceful in adding what they called a consequence if you don't. And you engage in a violation, that consequence could be a clawback, it could be a holdback or some other devising actions. Do you believe we should really have both, both an incentive and a disincentive, if I can use that, or incentive and a consequence, those really literally bookend together, or is it something different in your opinion?
Susan Divers: I really do think it bookends, Tom. And I think the incentive side is part of your culture. And as we both know, if you have a program on paper that says we always act with integrity, even if it costs in terms of lost opportunity, and then you don't act that way and you don't take into account when high performers are really setting a different standard of we make money at any cost, even if it means bending the rules, then you don't really have much of a compliance program except on paper. So, I think making sure that you do incentivize good behavior and even celebrate it. With DOJ, I think also talks about giving examples of employees who've done the right thing, even if it's been difficult. I think that's absolutely essential. And I think Polite is absolutely right that misbehavior has to have consequences.
Tom Fox: Susan, in going through the report myself to prepare for this podcast and now interviewing you, I really find... How can I say this? I really find the situation I think is more hopeful or more positive than I had perhaps thought before. And that many of the qualities of a high performing program embedded in your key findings are things that can be done relatively easily, relatively quickly. Some may be more structural. For the CCO or compliance professional reading this report, I don't want to characterize it as lessons learned, but are there things they can draw from the report, that in your opinion they could either benchmark their program against or if they don't have some of these things, use this as a guidepost to implementing some of these high performing indicators?
Susan Divers: No. Absolutely, Tom. And in some ways, one of the easiest ways to do it is to focus on the first one, which we started out with, which is making it more values focused. And I've worked with a number of our clients to move their programs from being what we call cop to coach. And anyone who's ever raised kids' knows, or dogs, rules are not self-executing. And so, you can have all the rules you want, but if people don't follow them, or they're too intricate or they don't make sense, then you're not going to have a high degree of self-executing behavior. Taking a look at your program and the tone of it, is the hotline user-friendly? Is it welcoming? Is the training employee friendly, like we just talked about? And is the culture one of personal responsibility?
I think that's a shift that you can make without spending a lot of money. And I do think that the last point we talked about, personal responsibility, I think that's now a must have really. And I think DOJ's made that very clear, that you should have mechanisms, formal mechanisms in the company to ensure that misbehavior has consequences and that you also focus on actual causation when you're doing investigations.
Tom Fox: Susan, unfortunately, we are near the end of our time for this episode. But before we leave, if our listeners wanted any more information on LRN or even to get a copy of this report, what might be the best place for them to go?
Susan Divers: It is right on lrm.com, Tom. And also, we'll share a link with you, too, so that people could click on it, but I hope they will. And thank you again for having me.
Tom Fox: Susan, it's always great. I hope we can continue this conversation.
Susan Divers: Sounds good.
Tom Fox: This is Tom Fox again. Thank you so much for listening to this episode of the FCPA Compliance Report. If you've enjoyed this episode, I hope you'll subscribe, rate and review wherever great podcasts are listened to. I'd like to tell you about two great new podcasts on the Compliance Podcast Network, adventures and compliance, where I look at the intersection of Sherlock Holmes, leadership compliance and business ethics. I'm doing all of the Sherlock Holmes stories, as well as the novels. Another is report from ECI 2023, where I interviewed speakers, guests and participants at ECI 2023. I know you'll enjoy both of these new podcasts.
Carolyn Grace: Thanks again for listening. You can get a copy of the Global Standards Edition of LRN's 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 principled performance and 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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