Does compliance training do more harm than good?

Donald Clark gives a personal opinion

This first anniversary of the credit crunch pushed 9/11 memories out of the schedules this autumn. In place of the usual sad scenes of that horrific event, we were treated to the stressed, distressed and finally disbelieving faces of a bunch of bankers in Brooks Brothers suits as they watched the global banking system go into meltdown – a disaster they had each in some part helped to precipitate.

The cast of characters has become all too familiar: Dick ‘The Gorilla’ Fuld, flip-floppin’ Hank Poulson, the oleaginous John Thain … once Masters of the Universe, now universally reviled.

Lehmann Brothers’ bankruptcy was the biggest in history. It threatened to destroy not human lives and corporate buildings but something seemingly more abstract: trust in credit. Not so abstract for those on the receiving end. The repercussions of that weekend’s events, which have now achieved the status of myth, echoed round the planet, wrecking economies and causing real human misery.

Perhaps unsurprisingly, from out of the recriminations that followed came a cry for more and better regulation, to put some brakes on the urges of these out-of-control risk-junkies – and more assiduous policing of the regulations that did exist. L&D departments everywhere began issuing RFPs. A training industry that started 2009 looking at a very uncertain landscape could at least be sure of one thing. It was going to be a good year for compliance training.

But does compliance training do any good? Worse, could it not in certain circumstances actually be harmful?

I’ve discussed the state of compliance training many times on my blog. Let’s face facts: it’s broken. Even before the credit crunch, training departments were swamped with the stuff – to the extent that little else was being done. We’re so busy obsessing about the potential of employees to sexually harass, racially abuse, be biased on gender, discriminate on disability and negative on age, that they’ve scarcely got time to learn anything else.

One major problem is that the training is not evaluated, by and large. And when large academic studies are done, they show no, or counterproductive, effects. Frank Dobbins of Harvard has studied compliance training on the subject of Diversity: “Are these efforts worth it?” he asks; “In the case of diversity training, the answer is no.”

When he and his fellow researchers did a study of 702 companies, they found that diversity training had little or no effect on the racial and gender mix of a company’s top ranks. One reason they suggested for this is that the patronising tone of the training creates a backlash. According to some social psychologists, diversity training can actually create a bias, which is the opposite result of what is intended. Compliance training can do more harm than good.

Could this same dynamic apply to the financial compliance training we will see brought in to curb the overzealous enthusiasm of the risk-junkie traders who precipitated the financial crisis? More than likely.

What concerns me, in this particular case, is the approach of some financial institutions towards compliance and regulatory training. I’ve termed it ‘Methadone’ training. You don’t stop drug dealers and junkies by talking at them in classrooms or making them read text interspersed with multiple choice questions. Whether through naivety or cynicism, a lot of regulatory and compliance training in financial services makes the following disastrous mistakes:

• Hire lawyers to deliver the training (they can’t teach: they simply reiterate the law)
• Deliver dull classroom courses that fail to put people into real jeopardy situations
• Deliver even duller e-learning courses that push the issues out of people’s minds
• Treat compliance e-learning as a commoditised, low price, rapid e-learning task, ensuring its lack of punch and effectiveness
• Refuse to admit to, and use, real, internal failures and disaster stories to make the point
• Play the ‘tick-box’ game – just do it, don’t worry if they’ve learnt anything

This is compliance training at its worst. It’s boring, people don’t like it and it doesn’t work.

Senior managers know that this is all a big game and has no real business impact. It’s merely a protective immunising jab so that people can point towards some spurious LMS report showing that ‘x’ employees completed course ‘y’. This is all about attendance, not attainment; literally ticks in boxes. In fact, I’d argue that the time and resources taken to plan, design, deliver and track these courses outweigh any possible business benefits. In practice, compliance training of this type is likely to have deleterious effects – at a time when the public has greater need than ever for protection from the effects of bad practice.

For employees to toe the line on regulation and compliance, you need attitudinal and behavioural change. This means serious performance simulations that put people in realistic situations. We have the tools, design and capability to do this, and there are many examples of compliance programmes which have not only had remedial effects, but have actually improved performance.

The credit crunch, which revealed the world financial system as one big casino, has also upped the ante for compliance training. It’s time to put a stop forever to box-ticking compliance courses that do more harm than good, and start delivering the real stuff.

by Donald Clark