Searching for Relevant Compliance Measurements
Some areas of compliance are truly nascent. For a profession which is undergoing a radical change in terms of demand and new technologies, more research is needed and greater understanding of program measurements. The more subjective the measurements used, the more risk that companies can manipulate or even ignore significant compliance concerns.
One stark example in this area is the use of hotline complaints. Every chief compliance officer knows how to categorize and track these complaints. Every compliance report to the board or to senior management includes colorful graphs and bar charts carving up the statistics in every possible permutation.
I have to admit the presentations are fantastic looking and impressive. But let’s stop for a minute and ask a question – what is the significance of an active or inactive hotline?
I can argue either side of the issue – an active hotline may reflect a significant level of dissatisfaction and non-compliant conduct. An inactive hotline may indicate a lack of trust in existing reporting channels and compliant conduct.
Relying on such numbers for any type of conclusion is really not very relevant to the overall effectiveness of a compliance program. It is only a starting point, a beginning frame of reference for further investigation. For example, to me, the relevant inquiry is not how many human resources or safety-related complaints did the company receive on a hotline; rather, the question is how many did the company receive and what was the company’s response to the complaint?
It is important to dig into each complaint and find out if the company responded to the complaint and what did the company do in response. Did the company resolve the complaint? Did the company communicate to the employee its response (assuming it was not anonymous)? How long did the company take to resolve the complaint?
If the focus of complaints is expanded, the information collected can be very relevant to measuring and evaluating the company’s overall compliance culture. If the company does not respond, or takes months or even years to address an issue, it is likely that employee dissatisfaction and lack of trust exists. This can have devastating conse2quences to a company which may encourage internal reporting and rely on such reports as an important tool to correcting internal problems.
Complaint data, on the surface, can be helpful in identifying trends concerning a specific company office or operation, or a specific type of risk. But it is only a small piece in an overall compliance puzzle.
It is a cop out for CCOs to just collect basic information on complaints and try to interpret the significance of such data. There is a lot to be learned by tracking complaints and investigating the company’s response to each complaint.