The ROI of Using Compliance Training As a Risk Management Listening Tool? Lower Costs.

For the last decade, companies have routinely used listening tools to identify and measure employee sentiment on employee engagement to predict employee productivity and retention. The same concept can be applied to listening for compliance risk.? Savvy organizations can measure employee sentiment about the behaviors that lead to business compliance risk and EEO risk, measurably lowering costs. Now that companies are assigning employees three to five hours of compliance training each year, leaders should be compelled to drive benefits and efficiencies from those programs. At Emtrain , we embed a predictive listening tool right in our annual online compliance training.

People are the most significant cost of a business. It’s estimated that around 70% of a company’s operating budget is allocated to people. But people are not robots.? People are flawed and often exercise poor judgment; they create employee conflict and act in ways that create compliance risks.? Despite the substantial investment in people and the significant costs resulting from their poor actions, companies have lacked visibility into employees’ behaviors and social dynamics.? However, by embedding a listening tool within annual compliance training, we can measure both EEO and business compliance risks and address problematic behavior before it becomes more costly.

Quantifying the Cost of Employee Conflict, EEO and Business Compliance Risk

Imagine if employees spend 10% of their time complaining about managers and co-workers and dealing with (or creating) interpersonal conflicts.? Some amount of employee relations issues result from this unproductive employee time.? In fact, a recent HR Acuity Report shows that employers experience an average of 25 employee relations complaints for every 1,000 employees, or 2.5% of the workforce will be involved in an employee relations complaint.? Each employee relations or EEO complaint has a direct cost that includes HRBP or Employee Relations staff time; investigation costs; sometimes litigation costs and the costs of remediation, including settlement costs.? Given the wide range of these costs, let’s identify $25,000.00 as a very conservative average direct cost per employee relations or EEO complaint.? So for example, a 1000 person company will experience $25,000.00 x 25 = $625,000.00 per year in direct employee relations/EEO costs.

Now, let’s also imagine that in addition to spending 10% of their time in unproductive behaviors, employees also exercise poor business judgment; they click on digital links and attachments from unverified senders; they engage in conflicts of interest; they submit expenses that are not authorized or work-related; they use other companies’ IP without authorization or attribution; they make unauthorized statements on social media that damages the business; they provide thoughtful gifts to foreign officials who have influence over their business, and so on . . .

Now let’s assume that employees’ poor business judgment results in risky actions that create compliance violations at the same rate as they create employee relations or EEO complaints, which is 2.5% of the workforce.? Each compliance issue or violation has a direct cost that includes compliance officer staff time; investigation costs; sometimes litigation costs and the costs of remediation.? Business compliance violations are typically much more expensive than employee relations issues, and often cost millions of dollars in direct costs. Given the wide range of these costs, let’s identify $50,000.00 as a very conservative average direct cost per compliance issue or violation.? So for example, a 1000 person company will experience $50,000.00 x 25 = $1,250,000.00 per year in direct compliance violation costs.

So a 1000 person company is typically experiencing $625,000 + 1,250,000 = $1,875,00.00 in direct EEO and Business compliance costs due to employee conflicts and compliance issues that could have been prevented with a listening tool.?        

The Multi-Level Benefits of Using Online Compliance Training as a Listening Tool?

Using online compliance training as a listening tool to provide insight into employees’ actions will yield significant benefits at multiple levels: the individual, the team, and the organization.

1. Benefits to the Individual: Reduced Conflict

Effective compliance (and culture) training equips employees with the tools and skills needed to navigate and de-escalate interpersonal conflict in real time.? This not only improves individual job satisfaction and engagement but also reduces the annual number of employee relations and EEO complaints.? When employees are equipped to skillfully handle conflict, they spend less time in unproductive activities and more time contributing to the business.

2. Benefits to the Team: Enhanced Performance

Pinpointing risky behaviors within teams allows for proactive remediation before problematic behaviors grow and get more costly. Employee relations and business compliance teams can do their job more effectively by using the heat map of highest risk behaviors to prioritize their time. Across the business, managers will have more time to optimize talent around core business needs, because they will spend less time managing suboptimal employee behaviors. Using compliance training as a listening tool allows leaders across the business to see the strengths and weaknesses of each team and provide targeted support where needed.

3. Organizational Benefits: Decreasing Unnecessary Costs Resulting from Risky Employee Behaviors?

At the organizational level, the benefits of using compliance training as a listening tool are profound: companies can save millions of dollars on direct compliance costs each year.??

Moreover, with less time spent on EEO conflicts and compliance violations, the organization can devote more time to strategic initiatives, innovation, and moving the business forward. The cumulative effect of these improvements is a more efficient, effective, and competitive organization.

Presenting the Financial Case to the CFO

For Compliance Officers, HR Business Partners (HRBPs) and Employee Relations staff seeking budget for compliance training that doubles as a listening tool, presenting a clear financial case is crucial. Here’s how to articulate the ROI:

1. Highlight Current Direct Costs: Quantify the time and financial resources currently wasted due to unproductive and risky employee behaviors. To calculate the direct costs, calculate 2.5% of the total employee population and then multiply that number by $25,000.00.? Thereafter, take that same number (2.5% of the total employee population) and multiply that number by $50,000.00.? Add those two numbers together and that’s your annual average direct cost for EEO and compliance issues.? Tell your CFO that advance visibility from a listening tool will cut that number down by 5%.
2. Detail the Benefits: Explain the multi-level benefits of compliance training as a listening tool—less conflict, improved team performance, and decreasing costs of unproductive employee behavior.
3. Use Data and Case Studies: Present data from similar companies that have successfully implemented compliance training programs as behavior listening tools and seen measurable reduction in costs and improved team productivity.
4. Propose a Pilot Program: Suggest starting with a pilot program to demonstrate the potential benefits on a smaller scale before a full-scale implementation.

By presenting a well-rounded financial case, Compliance, HRBPs and Employee Relations can effectively communicate the value of investing in compliance training that doubles as a listening tool. This approach not only aligns with the CFO’s focus on ROI but also underscores the strategic importance of enabling a culture that measures, tracks and improves employee behaviors to drive success at the individual, team and organizational level.???