SOURCE: LRN Corporation

April 11, 2017 10:00 ET

Layers of Rules Will Not Get You a Good Ethics & Compliance Program, Says LRN

Effective Compliance Programs Avoid Arbitrary Rules and Regulations And Focus on Promoting Behaviors that Reflect Core Company Values

NEW YORK, NY--(Marketwired - Apr 11, 2017) - Compliance programs usually consist of rules to encourage certain behaviors from employees, managers and executives. But often programs with fewer rules -- provided they are the right ones -- can be even more effective, according to research from ethics and compliance firm LRN.

The number of rules or elements in a company's compliance program -- such as the requirement to attend multiple training courses annually, provide annual certifications or report gifts -- is not the best measure of the program's effectiveness. What really matters is whether or not those rules actually promote ethical behaviors that reflect the company's core values, finds LRN's recently published Program Effectiveness Report.

LRN research finds that too few companies are shifting their focus toward corporate values and culture, and away from layers of rules. In an LRN survey of over 550 ethics, compliance and legal experts around the world, only 14% said that their ethics & compliance programs are increasingly focused on values and less on rules.

"Ethics & compliance programs need to be about more than rules," says Mike Eichenwald, who leads the advisory practice at LRN and advises companies on leadership and how to build ethical cultures. "Having a strong, values-based corporate culture can lead to a simpler, clearer and more effective E&C program than a checklist of rules and multiple layers of policy."

Department of Justice: Policies Are Not Enough

The Department of Justice agrees. Their recently published Corporate Compliance Guidelines underscores the need to have the right rules -- not just any rules -- in place.

The DOJ asks compliance officers to analyze "who should be trained on what subjects," and to "determine whether policies/procedures/practices make sense for particular business segments/subsidiaries." They also place an emphasis on whether "policies and procedures have been effectively implemented," and whether "employees understand the policies."

Effective Compliance Programs Start By Defining the Behaviors They Want to See

One way ethics and compliance officers can continue to improve the effectiveness of their programs is to be clear about the behavior they want to see. About 80% of compliance officers in the LRN survey agreed that expressing core company values in behavioral terms is an important part of the ethics & compliance process.

Managers and executives also have the power to foster ethical culture and behavior throughout an organization. The vast majority (90%) of compliance officers at companies that LRN determined have the most ethical cultures said their middle managers are enabled to help communicate the firm's code of conduct throughout the organization. And, overall, more than 70% of ethics officers said their C-suite holds leaders accountable for ethical behavior.

Ultimately, the key to an effective compliance program is first to define the company's core values, and to then translate those values into specific behaviors that employees, managers and executives can emulate. According to LRN's research, among the top quintile of companies with ethical cultures, almost 90% of ethics officers have expressed their companies' core values as specific behaviors in their Codes of Conduct.

"Designing a compliance program around specific, well-defined values allows companies to cut down on unnecessary rules that do not encourage the specific behaviors they want to see," says Eichenwald.

"The best way to measure the effectiveness of any ethics and compliance program is to look for the presence or absence of ethical behaviors across an organization -- rather than keep an inventory of program elements, which may not generate the specific behaviors you want," says Susan Divers, a Senior Advisor at LRN.

To download LRN's 2016 Program Effectiveness Report, please click here: http://pages.lrn.com/pei-2016

To learn more, or to speak with Mike Eichenwald or Susan Divers, please contact Eric Mosher, Sommerfield Communications, Inc., at +1 (212) 255-8386 or eric@sommerfield.com.

About LRN

Since 1994, ethics & compliance firm LRN has helped companies simultaneously navigate complex legal and regulatory environments and foster ethical cultures. LRN works with companies to translate their values into concrete corporate practices and leadership behaviors that create sustainable competitive advantage. LRN has offices in major cities and regions around the world, including New York, Los Angeles, London, Mumbai, Paris and South America. www.lrn.com

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