Compliance Programs Shouldn’t Focus On Bad Actors

Recent research assumes that the traditional premise of corporate compliance programs, to identify and remove the organization’s bad actors, is not adequate, and may de-legitimize compliance efforts and have other negative consequences. Most compliance programs assume that individuals act rationally and make a simple cost-benefit calculation about misconduct, avoiding it if they think that the likelihood of detection outweighs the benefit of the wrongdoing, but research shows that this does not reflect the reality of human behavior. Agonizing about character and ignoring context is therefore a waste of effort. Companies can do better on compliance with a focus on the cues they are giving employees via incentive structures, leadership choices, approaches to diversity and inclusion, team goals and responses to whistleblowers. Training compliance officers to understand and identify behavioral risk factors, and on wider team and group dynamics that may indicate ethical challenges, is achievable via creative interactive training modules. Equipping compliance teams with these tools will save time, money, and effort.