The document discusses different approaches to compliance and ethics programs. It argues that a dynamic approach using behavioral science, data, and positive language is more effective than a traditional prescriptive approach. A dynamic approach frames compliance in a rational, scientific context and emphasizes the benefits of compliance rather than penalties of non-compliance. It also tailors messaging to different levels in an organization by understanding their unique motivations and objectives. An effective program requires understanding an organization's business and adapting to motivate long-term, meaningful change.

1. ethikos September/October 2016 3
What’s your approach?
BY JYOTI PANDEY
T
ry telling a kid to eat something because it is good for
them or because “we said so.” More often than not, the
instant reaction is one of resistance. It is often puzzling to
human minds that despite knowing and understanding that break-
ing a bad habit and complying with something for the greater good
of the self often meets with resistance. It often appears that at its
core, people agree internally but the outward acceptance is where
we face maximum challenges.
Now try changing the approach to tell the kid to eat some-
thing by describing the importance of each element in the food
such as protein, calcium, magnesium, and several different vita-
mins and their positive impact in our overall development. If a
child is athletic, focusing on building more muscle to improve
agility and strength will have a stronger impact. Similarly, if a
child is more academically inclined, talking of the different roles
vitamins will play in building gray matter will meet with a posi-
tive response.
The behavioral pattern exhibits the mindset most of us operate
from. It appears that qualitative words such as good, bad, excel-
lent, etc. sound more prescriptive and we don’t like being told
what to do. However, when we shift our approach and put the
theory in a rational and scientific context, it is easier to implement.
In her scholarly article, “Rethinking Resistance and Recogniz-
ing Ambivalence: A Multidimensional View of Attitudes toward
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2. 4 September/October 2016 ethikos
an Organizational Change” (2000), Sandy
Piderit, a Santa Clara University professor,
writes that the definition of the term resis-
tance must incorporate a much broader scope.
She states that “a review of past empirical
research reveals three different emphases in
conceptualizations of resistance: as a cog-
nitive state, as an emotional state, and as a
behavior.”1
Notice the emotional piece. Compli-
ance and ethics professionals feel the brunt
of the emotional state of mind working with
employees and the organizations at large in
their change management efforts. I faced
that challenge too. And after a thorough
analysis, critically thinking through the sim-
ulations, and reading scholarly materials on
the topic, I figured out that the way to work
with employees in the most efficient way is to
adopt a dynamic approach vs. the traditional
approach. The dynamic approach needs to
be more scientific (behavioral science), data
based, and positive language based—remov-
ing any fear-based language and emphasizing
the positive aspects of change. There is also a
target-based approach, the big picture view—
senior leadership, operational data—middle
management, and the personal development
and growth of individual contributors. Let’s
review them below.
Behavioral science
Over the last 10 years, the role of a compliance
and ethics officers has evolved significantly.
Gone are the days when CCOs were merely
responsible for writing compliance policies
and rules, and reviewing transactions for com-
pliance with laws and regulations. With the
changing economy and with the introduction
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3. ethikos September/October 2016 5
of technology in every sphere of our business
and personal lives, understanding that critical
piece of business analytics is extremely import-
ant. These days, CCOs mostly deal with
knowledge workers. They are aware, smart and
capable. In order to work with them and help
them comply with best compliance practices
that last longer and have meaningful impact,
it is important that the compliance and ethics
professionals bring more science to their work.
As Andy Fastow, former Enron CFO (after
serving his sentence for fraud in the biggest
financial scandal in the country), stated that
everything that he did was “legal,” in that it
was approved by the respective departments
it passed through for approval.2
Yet it was
unethical. According to recent estimates, in
one year corporate fraud by companies such as
Enron, WorldCom, and Parmalat accounted
for an estimated $37–$42 billion loss to the
U.S. gross domestic product. Employee theft
causes U.S. companies to lose approximately
$52 billion per year. And fraudulent narcotic
prescriptions, which often involve complicity
by healthcare workers and pharmacists, cost
health insurers up to $72.5 billion per year.3
Considering the environment we are
dealing with, a report released by the Ethics
and Compliance Initiative aims to provide a
roadmap for companies looking to develop an
ethics and compliance program that moves
beyond the bare minimum requirements of
the U.S. Department of Justice’s sentencing
guidelines. The report was prepared by a panel
of chief compliance officers, former regula-
tors and lawmakers and other thought leaders
in the area of ethics and compliance. The
five key tenets considered the best and most
high-quality ethics and compliance programs
in the proposal are described here.4
Data based
Although there is risk to relying too much
on data, the resource draining risk of non-
compliance far outweighs not bringing data
into our discussion. As per sources, the U.S.
spent $29.8 billion on compliance activities
in 2010.5
In the healthcare industry, the
impact of noncompliance on healthcare costs
is significant. In the US alone, it has been
put at $77 billion to $300 billion a year. An
article published in the Wall Street Journal
called, “Accounting Choices Blur Profit Picture”
states that, “Just 29 companies in the S&P
500 index—or 5.7% of the total—closed
their books for 2015 exclusively using U.S.
Generally Accepted Accounting Principles,
or GAAP.”6
The numbers are significant
and create an impact when we incorporate
them in our conversation. It appeals to our
reason when we discuss cost and data in our
conversations with our clients during risk
management initiatives or change manage-
ment approach.
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4. 6 September/October 2016 ethikos
Positive results–based approach
Humans don’t like fear-based language. We
build resilience to fear over a period of time.
Gradually, at certain levels, employees implic-
itly start reasoning, “Why should I care?”
Many industries approach the subject of
compliance talking about how many things
can go wrong by not complying with the laws
and regulations. That tactic prevents us from
gaining widespread approval and cooperation
from across the organization. It is critical that
everyone, companywide, agrees to take an
initiative for change because it is important
not because they are forced to do so. As Phil
Cotter, Managing Director, Risk, Thomson
Reuters states:
“Wehaveseenanongoingriseincompliance
leaders expressing regulatory fatigue as they
are being held to increased accountability
amidst an ever-escalating volume of regula-
tion,theexpectationofbeingknowledgeable,
and the added pressure of being exposed
to record fines for non-compliance. With
heightened scrutiny and accountability,
it has never been more vital for boards to
continue to support the compliance func-
tion and senior leadership with the budget,
resources and tools to help ensure a culture
of transparency, trust and adaptive-change
in behaviors throughout firms.”
Such an objective can be achieved effec-
tively when we highlight the positives of
compliance vs. negatives of non-compliance.
We need to highlight the examples of compa-
nies that are doing everything right and how
that adds to their bottom lines and make them
look good—which, in turn, helps them hire
the best talent and earn the best resources.
Target-based approach
Each level of the organization, by its unique
position, has its unique objective. It is often
beneficial to understand the entire business
environment before designing the best compli-
ance and ethics program.
§§ Understand the market the company
operates in;
§§ the business needs;
§§ the competitors;
§§ future outlook and growth strategies;
§§ unique strengths and weaknesses;
§§ the products;
§§ the vendors;
§§ the suppliers; and
§§ the compliance and business environment
of their strategic partners.
Don’t follow a formulaic approach. Talk
to the employees at each level to understand
what motivates them and what they fear
the most. Develop emotional intelligence
(EI) to be able to connect with employees at
each level. Research has demonstrated that
emotional intelligence has a strong impact
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5. ethikos September/October 2016 7
on organizational performance. Sanofi, the
French pharmaceutical company, focused on
the emotional intelligence skills of its sales
force, which resulted in boosting their annual
performance by 12 percent.7
After Motorola
provided EI training for staff in a manufac-
turing plant, more than 90 percent of those
trained saw a boost in productivity.8
The big picture view approach is mostly
conducive for the senior leadership of the
organization Financial metrics such as ROI
and cost efficiency measures for middle
management, and approaching the topic
from the standpoint of personal growth and
advancement for individual contributors are
useful. Last but not least, using language with
forward focus helps grow participation and
desired outcomes. Transparency and account-
ability further help to build credibility. When
Anthem’s data breach happened, the company
came out in the open talking about it and
advising measures for further safety. Same
with Home Depot. Transparency and accep-
tance go hand in hand.
It is about time, the compliance and regu-
latory professionals become true advisors and
trusted friends whose goals are not merely to
keep the companies out of trouble but to also
help them become the market leaders and the
best out there. n
Jyoti Pandey is a Management Consulting professional
helping clients with Risk, Ethics & Compliance, and
Regulatory needs.
ENDNOTES
1 Author: Sandy Kristin Piderit from Case Western Reserve University.
Academy of Management Review 2000, Vol. 25, No. 4, 783-794. https://
goal-lab.psych.umn.edu/orgpsych/readings/18. Organizational Change
and Development/Piderit (2000).pdf. “A review of past empirical research
reveals three different emphases in conceptualizations of resistance: as a
cognitive state, as an emotional state, and as a behavior” (page 3).
2 Published in Fortune Magazine. Confessions of Andy Fastow by Peter Elkind,
Published on July 1, 2013. 9.00 am EDT http://fortune.com/2013/07/01/the-
confessions-of-andy-fastow/
3 http://ecoaconnects.theecoa.org/resources/blogs/
blogviewer?BlogKey=74d5f282-a536-4f6a-a7b7-cade1d12bc1c
4 http://blogs.wsj.com/riskandcompliance/2016/04/25/how-to-create-a-top-
notch-compliance-program/
5 Governance , Risk and Compliance spending not Focused on Technology.
Published by Linda Tucci, Executive Editor, in searchcompliance.techtarget.com
on December 1, 2009. http://searchcompliance.techtarget.com/news/1375707/
Governance-risk-and-compliance-spending-not-focused-on-technology
6 http://www.wsj.com/articles/accounting-choices-blur-profit-
picture-1467086625
7 See the research by S. Jennings and B.R. Palmer in “Sales Performance
Through Emotional Intelligence Development,” Organizations and People,
2007. http://static.genosinternational.com/pdf/Jennings_Palmer_2007.pdf
8 Bruce Cryer, Rollin McCraty, and Doc Childre: “Pull the Plug on Stress,”
Harvard Business Review, July 2003. http://www.dce.harvard.edu/
professional/blog/emotional-intelligence-no-soft-skill
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