Five insights and actions to enhance compliance programs

Authors: Caitlin Handron, Nitish Upadhyaya, Scott Young

How can cultural psychology and behavioral science be leveraged to improve compliance programs? 

We recently explored this question in a webinar featuring experts from Behavioral Insights Team (BIT), alongside Ropes & Gray’s R&G Insights Lab, Hui Chen, former Compliance Counsel Expert at the U.S. Department of Justice and R&G Insights Lab Senior Advisor, and Professor Benjamin Van Rooij, author of The Behavioural Code.

Below, we’ve distilled their collective insights into five themes to help Compliance professionals meaningfully reflect and take initial steps to increase compliance at their organizations.

1. The limitations of traditional tools

Compliance policies are traditionally communicated to employees through training sessions and detailed handbooks, perhaps supplemented by reminder systems. While these approaches are certainly a mainstay of the compliance toolkit, it’s also important to acknowledge that they’re limited in their effectiveness. That’s because they carry the implicit assumption that providing information (and perhaps a bit of persuasion and guidance) is sufficient to drive positive behavior.

The reality, however, is that overloading people with information isn’t likely to drive behavior change. In fact, the behavioral sciences suggest that we learn best in small doses, at our own pace, and by doing rather than by listening. Thus, a single session of training may foster goodwill and positive intent, but it is not likely to change behavior over time, just as a long, complicated manual is unlikely to be read.

Reflection and action points: 

• Do your organization's compliance efforts consider how people learn and what actually shapes their behavior and influences their choices? 
• How can training and communications efforts be refined to increase their likelihood to instill positive habits and behaviors? 

2. The value of behavioral science

Many of the policies and practices that exist today are built on an outdated understanding of human behavior, like the mismatch between how trainings are often structured and what existing research tells us about our ability to process information. Taking a behavioral science approach means employing an evidence-based understanding of how people operate and why.

For instance, although “bad actors” typically get the headlines, we must recognize that noncompliance is not always deliberate or intentional. In most organizations, the majority of employees presumably don’t actively disagree with most policies or seek to flout them; it’s just that the compliant path may be more burdensome or hard to remember. Behavioral science, the study of human behavior and the factors that shape our actions, can help compliance officers minimize this unintentional non-compliance and help people act on their positive intentions. Here are a few possibilities:

• Simplifying processes: Behavioral science tells us that the slightest friction (e.g., an extra click or a point of confusion) can derail us, particularly when we are trying something new. So, taking a few minutes to go through a compliance process to identify where it feels complex, unclear, or unintuitive is a great starting point.  A well-designed program that takes the human experience into account, is more likely to be an effective one. 
• Improving communications: Clear communications help people find what they need, understand it quickly, and take action. Replacing legal jargon with plain language and leveraging behavioral science heuristics, such as social norms (e.g. 95% of your colleagues have already completed this training) can help make compliance communications far more effective.
• Incorporating nudges: A nudge alters people’s behavior in a predictable way without limiting their options or employing financial incentives. Changing the way options are presented (“choice architecture”), identifying a “most popular” choice, or employing defaults (the automatic option when another isn’t actively selected) are all examples of nudging. Similarly, we’ve seen that when employees are asked to go through relatively long processes or surveys, providing a sense of progress (i.e. “30% completed”) and some positive reinforcement can help “nudge” them to completion.

These strategies should be applied with an understanding of the cultural dynamics at your organization. Each organizational culture is different, and what works for one will not necessarily work for another. It’s therefore fundamental to understand context and then tailor your approach accordingly. It’s also important to measure outcomes. Most compliance programs are designed by thoughtful, well-intentioned compliance professionals; a modern compliance program tests those intentions to see whether the things you’re doing are actually working. More on that later.

Reflection and action points: 

• Are you aware of and up to date on the latest findings in behavioral science that are relevant to compliance?
• Are your organization's compliance processes as streamlined as possible? 
• Can you identify a compliance process or a communications effort that can be enhanced by insights from behavioral science? 

3. The challenge of measuring culture

Understanding your organization’s culture really comes down to listening—to both the intentions of leadership and the impact of those intentions on employees.

Organizational culture is a complex web of interweaving factors. Scholars have offered various frameworks to capture its most critical components. We recommend using the Culture Cycle, which breaks culture down into four interacting levels known as the “4 I’s”: ideas, institutions, interactions, and individuals. By measuring, analyzing, and listening at each of these levels, you can develop an understanding of your organizational culture.

Measuring these elements of culture requires a mix of qualitative and quantitative approaches. For instance, if you already collect quantitative data regarding elements of your compliance program (e.g., volume of speaking up reports), you may enrich and interpret that data with employees’ narratives to understand how speaking out is actually viewed. Is it, for example, seen as snitching? Or helping the company do what is right? These narratives can provide critical context for your quantitative data, to help you understand how speaking up is actually perceived in your organization and to provide a solid benchmark and basis on which to build any change initiatives.

Reflection and action points: 

• How do you define culture, and what impact does this have on the kind of questions you are asking?
• What metrics are in place to measure culture - and its influence on compliance - in your organization? 
• How can you use a mix of qualitative and quantitative methods to capture the richness and nuances of culture?  

4. The need for an experimental approach

Clearly, there are many factors that drive non-compliance, ranging from misaligned incentives to complicated processes or unclear communications. Therefore, we can’t assume that there’s one solution (a “silver bullet”) to improve compliance. Nor can we be sure that interventions that have worked in one context will translate across to another (in fact, best to assume they won’t).

To ensure your efforts produce desired results, it’s important to embrace an experimental approach. This involves breaking down a problem into parts, identifying specific variables or interventions to change, testing new approaches and ultimately adapting, based on the evidence. This may involve process changes, modifications to communications or reminder systems - or even changes in the physical environment.

For example, one company decided to study whether the length and format of a policy made any difference to employees’ knowledge of the rules and their subsequent behavior. It turns out that no one style was better than the others. In fact, what people perceived to be the social norm in the organization was a far better predictor of an individual’s behavior. Having this sort of information about your program might very well save time and effort re-designing policies, and enable your compliance team to focus on other initiatives (like shaping and measuring culture). In all cases, the key is to develop the capability to test new approaches in the real world and measure their impact.

Reflection and action points: 

• What’s a question or an intervention that you would be interested in testing? 
• What are the variables or options that you would test? 
• How would you go about setting up the test and what are you measuring? 

5. The importance of shifting mindset

Experimentation, while potentially exciting, involves uncertainty, and therefore, risk. We acknowledge that embracing new ways of doing things may require a shift in mindset. This shift in mindset can involve thinking more creatively, embracing the opportunity for learning (if some parts of the initiatives don’t quite work out), and being open to change.

You can start with small and targeted pilot projects, then build on the evidence you collect for a wider program of change. As Hui Chen noted, it is possible to “Do More with Less” in challenging times and we hope that embracing the strategies in this article will give you some new perspectives to choose from.

Reflection and action points: 

• What is one area of your compliance program that might benefit from a more creative or innovative approach?
• How can you build evidence to support the case for trying and testing new approaches?

We hope that these themes and reflection points help you to look at your organization’s compliance efforts from a different perspective, which complements current approaches.

If you’d like to learn more about Behavioral Science or Measuring Culture, please contact Nitish Upadhyaya or Caitlin Handron, at R&G Insights Lab, or Scott Young, at the Behavioral Insights Team.

You can also access the recent “Creating a Culture of Compliance” webinar via this link.