Does Your Organization Pursue A Culture Of Compliance And Ethics Through Annual Performance Goals?

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Post By: Adam Balfour (LinkedIn), Vice President and General Counsel for Corporate Compliance and Latin America, Bridgestone Americas, Inc.

Whether or not Peter Drucker actually said “what gets measured gets managed”, the essence of the message is true.  Many organizations use a variety of metrics and KPIs to measure things that are important, and annual performance goals are a good way to help measure the contributions of individual employees.  For many organizations right now, employees are working to draft and/or finalize their 2021 annual performance goals, and this presents an opportunity to strengthen your compliance program by encouraging employees to include some compliance related goals.

Alignment And Commitment On Important Priorities

For many organizations, a strong and effective ethics and compliance program is a key objective and way of operating and conducting business.  In order to ensure that “all noses are pointing in the same direction,” organizations often use annual performance goals as a way to help ensure that employees are aligned and committed to the direction set by senior leadership, and use annual performance goals as a way to tie compensation to performance against the stated goals.

U.S. Department Of Justice

According to the Department of Justice Evaluation of Corporate Compliance Programs (Updated June 2020), “[s]ome companies have even made compliance a significant metric for management bonuses” and tying compliance and performance goals together is a good way to help create “incentives for compliance.”  The Department of Justice also stated that “some companies have also found that providing positive incentives – personnel promotions, rewards, and bonuses for improving and developing a compliance program or demonstrating ethical leadership – have driven compliance.”

Goals Relating To Compliance

While some elements of an effective compliance program are difficult to turn into measurable goals (i.e. a goal relating to speaking up may be difficult to measure and/or require a reporter to disclose his or her identity if they otherwise wanted to report anonymously), there are various compliance related goals that can be objectively assessed during the year and can make a meaningful impact on an organization’s compliance program.   Compliance related goals can be particularly useful for leaders, managers and supervisors given the important role that each of them plays in helping to build and sustain a culture of compliance throughout the organization.

Here are some suggested goals that you might want to consider for your organization:

  • Goal 1: “I will talk with employees at least once a ____ about the importance of compliance, ethics and integrity and how they are relevant to the roles of our employees.”
    • Comments:  This goal is particularly relevant for leaders, managers and supervisors, especially given the impact that it has on employees when an employee’s direct supervisor talks about compliance.
  • Goal 2: “At least once a ____, I will make sure to ask my direct reports if they have any concerns or know of any wrongdoing.”
    • Comments:  Speaking up can be difficult in the best of times, but especially difficult if someone is working from home/remotely and cannot “drop by” their manager’s desk or workspace.  Proactively asking employees about compliance issues or concerns can help address issues early on and reinforces that speaking up is encouraged and safe.
  • Goal 3: “I will speak on at least ____ internal leadership discussion panel event(s) for employees during the year related to compliance, ethics and integrity.”
    • Comments: Training and communications, in the words of the Department of Justice, are “[a]nother hallmark of a well-designed compliance program.”  Getting leaders involved in trainings and panel discussions can help to reinforce the important of the topic and help make it relevant for the target audience.
  • Goal 4: “Ensure 100% of employees on my team have completed any required compliance e-learnings or annual disclosure certifications by the due dates.”
    • Comments: This goal also helps ensure that leaders, managers and supervisors are accountable for the ongoing training and learning of employees who report into them.
  • Goal 5: “Encourage/require leaders/managers to set the example by completing any e-learning requirements within 10 days rather than 30 days.”
    • Comments: If a senior executive can carve out time of their busy schedule to complete a 30-minute e-learning, then other employees most likely can too.  Completing a compliance related e-learning before the deadline can send a clear message about the need to prioritize compliance and can encourage, what the Department of Justice refers to as, “demonstrated rigorous adherence by example.”  Whether you include this goal or something different, it can be helpful to encourage leaders to include a goal that recognizes and reinforces how they “set the tone for the rest of the company” and encourages them to model the desired behaviors for other employees to follow.

There are many other goals that organizations could consider to promote an effective compliance program and hopefully the above examples give you some suggestions and ideas.

Note:  Opinions expressed are solely my own and do not express the views or opinions of my employer.

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