What does "effective" compliance training look like?
Do we need to do in person training?
Who should be trained?
And how often?
Answering these questions is critical to create an "effective" compliance program in line with the US Federal Sentencing Guidelines (which ultimately could prove to mitigate fines incurred by companies which are prosecuted by the DOJ). Unfortunately, there is no "one size fits all" solution, and the Department of Justice (DOJ) hasn't given many real world examples of "effective" programs.
Compliance counsel have long known the minimum basic requirements for an "effective" corporate compliance program:
establish standards and procedures to prevent and detect criminal conduct;
ensure that the governing authority (most often, the board of directors) and all high-level personnel exercise reasonable oversight with respect to the implementation and effectiveness of the program, as well as assign overall responsibility for the program to high-level personnel;
exclude from positions of substantial authority any individual that the company knows, or should know, is engaged in illegal or unethical activities;
conduct training on and disseminate information about the program's standards and procedures (emphasis mine);
monitor, audit, and evaluate the program, as well as provide a mechanism for anonymous or confidential reporting;
promote and enforce the program through appropriate incentives and disciplinary measures; and,
respond appropriately to criminal conduct that is detected and act to prevent further similar conduct
But for the first time, the DOJ has provided insight into what makes a corporate compliance program effective enough to earn a recommendation for a lower fine under the Federal Sentencing Guidelines.
We'll take a look specifically at the training component of the DOJ's guidance.
In US v. Kayaba Industry Co., the DOJ's sentencing memorandum provides amazing insights into what it considers to be "effective" antitrust training.* Using these insights, we get some clarity on what the federal sentencing guidelines require of an effective compliance program and its training.
*Please note: this does not mean that the DOJ considered the program to be "effective" solely because of the training.
Here are the key takeaways that corporate counsel need to know in order to create "effective" training for their company:
1. Train senior management
Once Kayaba was notified of the government's investigation into potential antitrust violations, it immediately implemented a new training program that included senior management.
Training senior management is not only important to the training component of the Federal Sentencing Guidelines, but also helps set the "tone from the top" that compliance is important to the company (another requirement of an "effective" compliance program).
In fact, the Kayaba Sentencing Memo specifically mentions that direction from the top and training senior management are important elements of an effective compliance program.
In light of this guidance, corporate counsel should consider training all senior management on compliance topics.
2. Train lower level employees when compliance pertains directly to their position
The Sentencing Memo details that Kayaba "entered into...conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to allocate markets, rig bids for, and to fix, stabilize and maintain the price of shock absorbers."
I.e., Kayaba was accused of violating antitrust laws.
After being notified of the DOJ investigation, Kayaba quickly targeted high risk employees for antitrust training - here, the salespeople. The DOJ specifically mentioned Kayaba's directed training efforts in the memo as one of the compliance program "highlights".
This provides a critical lesson for corporate counsel designing training programs: you will need to train lower level, high risk employees when the compliance risk area pertains directly to their daily job.
Training is not limited to senior management.
3. Provide 1-on-1 training where necessary
How often do corporate counsel train a room full of people and "leave it at that"?
Obviously doing 1-on-1 training is extremely time consuming, but the DOJ specifically mentioned the importance of Kayaba providing 1-on-1 training to certain high-risk employees.
Key takeaway: if you want your training to be "effective", you may need to follow up your general group training sessions with 1-on-1 training.
4. Test the effectiveness of the training
Corporate training (usually done online or through an LMS) typically uses post-training testing to "confirm" that employees understood the material.
But how do you know the training materials themselves are effective?
Maybe the employee knew the answer before taking the training?
By examining employee's understanding of antitrust compliance concepts before and after the training, Kayaba gained valuable understanding of whether the training itself was effective.
The DOJ called out this type of testing in its compliance program "highlights," which means corporate counsel should think about designing a similar testing program for their own company.
Even though the Kayaba Sentencing Memo doesn't provide an exhaustive description of an "effective" compliance program, it provides a great roadmap for corporate counsel designing compliance training programs.
If you're looking for help to design your compliance training, check out our Ultimate Guides:
Cover photo provided by:
"Usdepartmentofjustice". Licensed under CC BY-SA 3.0 via Commons - https://commons.wikimedia.org/wiki/