Goldman Sachs Cheating Scandal: Lessons for Your Compliance Training Program

The recent Goldman Sachs and JPMorgan cheating scandals teach us some valuable lessons about compliance training. In these headline cases, newly hired junior analysts were caught cheating on internal compliance-related tests that their firms had administered as part of orientation training. So why did so many bright young college graduates, who worked so hard to get a foot in the door at these prestigious financial firms, do it?

Why They Rolled the Dice

More than one factor may have motivated the analysts to take a chance on cheating. How many of these apply to your compliance training?

  • Time and performance pressure may both have played a role. Trying to fit training and testing into the long workdays famously demanded of fledgling bankers puts pressure on priorities. Test taking is not usually at the top of the list. There also was plenty of pressure to pass the tests—though reportedly the exams were not very difficult.
  • Cheating was easy due to the ability to self-proctor completion of the training. Maybe the real issue here was a broken moral compass.
  • No fear of getting caught seemed to be a part of these scandals. A legacy of cheating has allegedly existed in the finance industry and was an “accepted part of finance training,” according to a recent Business Insider article. That is, until now.
  • Employee cynicism may have had a role in the misconduct. In NAVEX Global’s recent ethics and compliance training survey, 37 percent of respondents thought employee cynicism was the top threat to the effectiveness of their compliance training programs. Apparently many employees see efforts to improve the culture as window dressing and corporate posterior-covering.
  • Lack of engagement results from a perceived lack of relevance or importance by the learner. Reportedly, trainees viewed “the tests as annoying yet unavoidable chores left to the last minute,” and they were "a big waste of time… cheating was done only to get rid of them."
  • Managers too often fail to set the right tone related to compliance and training. In the aforementioned survey, 34 percent said mid-managers do not display desired compliance behavior, which employees take as permission to do the same things. Setting a tone that supports training sends a strong message about its value, which includes managers never rolling their eyes or making jokes when it’s discussed.

Five Keys to a Winning Compliance Training Strategy

If you are about to discard your compliance training, wait. You can employ a few simple strategies to make your compliance training curricula engaging and effective.

  1. Make it relevant. In addition to making the content fit the risks and roles of the audience, use approaches that are shown to work with different generations. At a recent Society of Corporate Compliance and Ethics conference, generational expert Cam Marston shared that boomers want to know the past scenarios and history fueling the training. Gen Xers and Millennials want to know the personal consequences if they do/don’t uphold the standards.
  2. Use real stories. Some lawyers get hives if they hear you want to use actual, sanitized cases in your training programs, but this is what employees repeatedly ask for. The technique meets the differing needs of all generations in the workplace.
  3. Adopt a blended approach. Deploy traditional courses sparingly in your compliance education plan and include short-form modules (two to eight minutes long), which are often video-based and focused on a single topic. Use both online and live training if you can, and make it high quality.Release follow up communications in various formats to reinforce important messages. Good quality helps engagement; variety and frequency make messages stick.
  4. Avoid overloading the learner. People can absorb only so much information in one go. Spread compliance training out and deliver it in smaller bites to help more information sink in. New hires frequently can’t recall much from the tsunami of information they get at orientation. Same goes for tenured employees when they’re presented with a plate full of long courses packed with topics.
  5. Ask top leaders to set the example. Goldman Sachs and JP Morgan certainly did that by firing the cheaters, but it is a lasting example only if it is consistent. So it falls to company leaders to set tough, consistent standards for themselves and all management by:
    • Demanding appropriate discipline for misconduct
    • Managing inappropriate pressure
    • Verbalizing the seriousness of the training and the consequences if it’s not completed as required
    • Funding and supporting best practice content and administration of training/testing
    • Ensuring that all their actions align with company values to neutralize cynicism

Today the stakes for compliance are higher than ever in most organizations. Let’s do the hard work needed to prevent employees from gaming our compliance training programs.

Talk with a NAVEX Global solutions expert today to get help making a business case for creating a compliance training program that truly protects your organization, and helps you build a culture of compliance.

Chat with a solutions expert to learn how you can take your compliance program to the next level of maturity.

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