How To Improve Compliance In Organizations

When people don’t comply with legal requirements organizations can face penalties and fines running into the thousands. To take just a few recent examples:

In November last year a Greater London pizza manufacturer was fined £15,000 after failing to respond to warnings about an unsafe doorway.

Also in November Hertfordshire County Council accidentally faxed details of two cases it was dealing with to a member of the public and was fined £100,000 for breaching the Data Protection Act.

Sheffield-based A4e was similarly fined £60,000 for losing an unencrypted laptop with the details of thousands of people.

While in December Osem UK, a kosher food company owned by Nestle, was fined £27,372 for not complying with the packaging waste regulations.

And in January this year The UK’s biofuels watchdog fined three companies a total of £60,000 for failures to comply with environmental legislation designed to reduce carbon emissions from the transport sector.

Many compliance breaches occur in HR and at present the compensation limit for Unfair Dismissal is £65,300 while the compensation limit for Breach of Contract is £25,000. Over 20% of all UK business are fined due to non-compliance issues. Non-compliance can be a costly business.

To avoid these penalties organizations put a lot of time and effort into ensuring that people comply with regulations and requirements however many psychological factors work against them.

1. The overwhelming attractiveness of short-term goals in an immediate context

Faced with the choice between achieving an immediate, positive outcome now against incurring a probable negative outcome some time in the future, people are drawn to the short-term immediate outcome. Smoking is a classic example. We know full well that at some time in the future it may have a negative consequence, but right now we really want that nicotine hit. Similarly in organisational terms we know that taking a shortcut through the length process of getting rid of someone in the organisation opens us up to the risk of a possible financial penalty, but the short term attraction of solving our problem right now can be overwhelming.

2. The belief that success recognition depends on goal achievement

We usually congratulate people on the achievement of a goal, getting that job, getting promoted, making that sales figure etc. We are not overly practiced at recognising process towards a goal, except when we know we are in a teaching situation, for instance when helping our children learn to read. Here we offer praise and celebration at every possible point; if we waited until they were fluent readers before we offered a word of praise or encouragement they would long since have given up.

If we set a goal of perfect compliance, and offer no reward or encouragement or celebration of success until it is achieved, we are unlikely to reach the goal.

3. A lack of alignment of organisational objectives

All too often in a particular context within the organization it can appear as if choices have to be made between being compliant and ‘getting things done’. These two organisational demands appear to people to pull in different directions: some classics are: filling the job quickly by ‘just appointing someone’ and going through a proper recruitment and selection process; keeping production going and taking downtime for regular machine maintenaince checks; and, dutifully recording every contact with a client, however short, and getting on with the next task. Given these conflicting priorities, people usually consider ‘getting the job done’ by far the most important.

4. Actions speak louder than words

It is a truism that what people do, or how they behave, is a clearer indication of their belief system than what they say. People in organizations watch who actually gets recognised, praised, promoted and rewarded, and assume their behaviour to be that which the organization truly values. So if an organization preaches adherence to standards of practice, but rewards those who achieve goals by any means, then people will see little value in being the mug who adheres to standards and gets left behind in the race to the top.

5. People are strongly influenced by local culture norms of behaviour

The classic recent example here was the MPs expenses scandal. Spoken more or less loudly by everyone involved was the fact that ‘everyone was doing it’. In practice it was highly condoned by the organization. It was a well accepted ‘bending of the rules’ to correct a perceived injustice over MP’s pay. It is highly likely that there was an underlying message of ‘you’re a fool to yourself if you don’t’. It is a highly principled person who can clearly see the wood for the trees here.

This sort of situation exists in many organizations where the left hand doesn’t allow itself to see what the right hand is doing. So one part of the organization can say ‘hand on heart’ we are complying, while another part is busy bending rules to produce outcomes.

What can be done?

1) Strengthen weak feedback loops

In essence the negative effects of non-compliance need to be brought nearer to the action of non-compliance. Many organizations do understand this and have internal mechanism for coming down heavily and immediately on breaches of compliance. However too much of this can create a very coercive environment, which ultimately leads to people hiding breaches, errors, mistakes etc.

So, in addition, the positive consequences of compliance need to be brought much more strongly into view. To take our smoking example, helping people visualize a healthy older age, still able to play sports, play with their grandchildren, clean lungs, more money to help their children, well flowing blood, breathing easy etc. brings the long term benefits of healthy living now more clearly into view. As we can see it also connects to their values, in this example family.

In the work setting it is likely to be: being able to feel proud of where you work, knowing you are helping the environment, that work is fair, reputation, prizes and recognition.

2) Reward effort and progress as well as achievement

Again some organizations already do this. Have charts that demonstrate levels of compliance in different areas, congratulate people who come to ask how to do it right, publicise best enquiry of the week. Essentially celebrate when things get better and when they go right. Highlight the benefits of doing it right at every opportunity.

3) Move from either/or to both/ and

Help people understand the highest priority is, for example, creating a sustainable business, and that compliance and task achievement are both important for this overarching goal. Therefore their challenge is always to be thinking how can we do what we need to do - right?

4) Model what you want

The lead has to come from the top otherwise your compliance officers have a thankless task. If senior management don’t truly believe that compliance is an important investment in a sustainable future that affects everyone, and not just a bureaucratic inconvenience, then why should anyone else?

For leaders it can be very tempting to pull rank to bypass procedures. Just remember that people take their cue about what is important from what you do more than what you say. If you are aligned in word and deed, then the message is very powerful.

5) Build the culture to support your objectives

You want to create a culture where people do the right thing when no one is watching. For this to happen there needs to be good alignment between organisational values and practices. And people need to know what is required of them, and how to spot when they are being asked or being led into being mis-aligned, and what to do about it.

Sarah spoke at the inaugural conference of Governance, Risk and Compliance and  found there was a lot of interest in this topic of the psychology of compliance. 

Other Resources

More on using Appreciative Inquiry and other positive psychology techniques at work can be found in Sarah’s book Positive Psychology at Work.

See more about Performance Management in the  Knowledge Warehouse.

Appreciating Change Can Help

Appreciating Change is skilled and experienced at supporting leaders in working in this challenging, exciting and productive way with their organizations. Find out more by looking at how we help with Leadership, Culture change and with employee Engagement.

For further information on these alternative approaches to change, please contact us or phone 07973 782 715