How confident are you that your ethics and compliance programme is helping your organisation navigate today’s risks? Economic uncertainty, geopolitical conflict, supply chain disruption, stakeholder activism, and increased scrutiny by government regulators present significant challenges for the road ahead. But new data from LRN’s 2023 Ethics & Compliance Programme Effectiveness Report shows that programme effectiveness reinforces corporate resilience in challenging times.
Based on a survey of nearly 1,860 ethics and compliance professionals at companies and organisations worldwide—one of the largest surveys of its kind—this annual report aims to help businesses:
- Access important benchmarks to evaluate and enhance their own compliance programmes.
- Learn what worked, what needs improvement, and why some E&C programmes excelled while others did not.
- Answer a critical question posed by government regulators: Does their compliance programme work in practice, not just on paper?
This year’s report determines the critical differentiators that make some E&C programmes more effective than others. These differences—and the best practices embraced by high-performing programmes—are even more critical to understand than before. Let’s dig into eight key insights from the report (which you can read in full here) and what they mean for improving ethics and compliance programme effectiveness in 2023.
Ethical culture is getting stronger across compliance programmes
Ethics and compliance programmes emerged from the COVID-19 pandemic with strengthened ethical culture. According to the report, 85% of respondents stated that their ethical culture is stronger as a result of their experiences meeting challenges over the past year. Even more reported that ethics and compliance considerations were taken into account in meeting these challenges. And 84% reported that their organisations relied upon values, rather than rules, to motivate employees to do the right thing.
Ethical leadership matters to compliance programme effectiveness
Tone at the top is always a critical factor in the success of any E&C programme, but managers are the “first responders” when it comes to incorporating ethics into the workplace. More than half of the report’s respondents gave their executives and managers high marks for taking ethical considerations into account in business decisions, managing risk, and balancing employee needs with business goals and priorities.
The need for good data and analytics has skyrocketed for E&C programmes
Ongoing evaluation via operational data and analytics, particularly in light of changing risks, is a key component of improving programme effectiveness and emphasised frequently by regulators. The 2023 report found that use of employee surveys, engagement with ethics and compliance resources, root cause analysis, and other metrics to assess programme effectiveness increased by one-third over LRN’s 2023 report results, highlighting the importance of continuous review and improvement.
Effective E&C programmes influence business outcomes
On the whole, effective ethics and compliance programmes are impactful when it matters. Encouragingly, over half of the report’s respondents stated that E&C factors and risks led to their organisation substantially modifying or abandoning a business initiative. And high-performing E&C programmes were 30% or more likely than those ranked as less effective to impact important business decisions, relevance, and continuous evaluation and improvement.
Engagement with E&C improves when programmes keep things simple and accessible
Ongoing enhancements designed to improve programme impact with employees are a defining difference between high-performing and less-effective E&C programmes. More than half of high-performing ethics and compliance programmes improved their engagement with employees using interactive codes of conduct, improved and more flexible training, and simplified policies.
Employee ethics are a greater factor in professional advancement
According to the 2023 report, more and more organisations—over 60% of those surveyed—have formal requirements that executives’ and employees’ ethical behaviour is taken into account in performance evaluations, promotion, bonus awards, and hiring for key control functions.
There is also growing emphasis on consequences of ethical misconduct
LRN’s report found that 56% of all respondents stated that their organisation’s policies provided for clawback of bonuses, incentives, and compensation in the event of misconduct—an area emphasised by regulators and a “must have” best practice.
Inadequate internal systems are the biggest obstacle to programme effectiveness worldwide
Ethics and compliance programmes worldwide are hitting a wall when it comes to improving their reach, employee engagement, and use of data metrics. In order to meet the challenges of remote and hybrid work, platforms need to be multi-functional to help E&C teams do their work efficiently, particularly in light of the staff shortages and budget constraints (also cited above).
The key takeaway
These insights and others from the 2023 Ethics & Compliance Programme Effectiveness report validate a central lesson from LRN’s ongoing research: that the most effective programmes—those taking a values-based approach to governance, culture, and leadership—correlate strongly with reduced risk and better business outcomes. To learn more about how you can reinforce your programme—and organisational—resilience, download the report today.