The Behavioral Science of Compliance, presentation to the 3rd Global Summit at the CUMPLEN Spanish Compliance Association

1. The Behavioral Science of Compliance
http://sic2022.eventocompliance.com/ip
Prof. Hernan Huwyler MBA CPA – Compliance Executive Education

2. How organizations decide to meet
stakeholders´ expectations
Organizational Psychology of Compliance
How employees change behaviors at direct requests or
influence of those in a position of authority
Reflected in organizational objectives such as values,
performance goals, discipline and incentives
What is compliance?

3. Understanding how decisions are
influenced has direct implications
• How to avoid biases in assessing compliance risks
• How to disclose conflicts of interests
• How to assign accountabilities and responsibilities
• How to articulate performance objectives
• How to avoid fraud rationalization
• How to design awareness and training campaigns
Why behavioral science?

4. Availability
• Old and unemotional breaches are not considered
Confirmation
• Factors conflicting personal beliefs are disregarded
Overconfidence
• Capabilities to control are overrated
Over-optimism
• Exposures to risk factors are underrated
Group thinking
• Conformity excludes minority views
Present thinking
• Long term risks are not a priority
Biases in assessing compliance risks

5. Studies with compliance implications
1951 Asch Conformity Experiment > peer pressure
• In minority, people conform to wrong answers
1971 Stanford prison experiment > Lucifer effect
• Authority, roles and uniforms promptly result in abuses
1973 Milgram experiment > chain of command
• Authority allows to hurt others even without explanations
2015 Heroic Imagination Project > whistleblower protection
• Heroes can plan or react to combat abuses
Why?

6. Ask for a large requirement expecting
to be refused. Then, make a second
request to the target compliance
Start your compliance requests by
• setting a conservative posture to interpret obligations
• recommending compliance controls for full scope
• benchmarking controls against international best practices
• using a top-down implementation from headquarters
After refusing the initial request, stakeholders will be more likely
to feel compelled to comply with their second request
Door-in-the-Face

7. Ask for a small commitment. Then,
keep increasing requests to the target
compliance
Start your compliance requests by
• testing pilots in the compliance initiative
• implementing low-hanging fruit activities
• increase the escalation of approvals and other controls
• involve the smaller and collaborative business units
After complied with the initial request, stakeholders will be more
likely to also comply with larger requests
Foot-in-the-Door

8. Signal your credible and
knowledgeable authority
When introducing compliance initiatives,
• show your mandate given from the board
• get introduced with credentials and achievements
• engage subject matter experts for backup opinions
• dress up and link your personal brand to reputable institutes
Stakeholders will be more likely to be influenced by leaders
Authority

9. Demonstrate that other groups of
stakeholders are complying
When deploying compliance initiatives,
• show endorsement from top managers > social norming
• use techniques and tools proven in the market
• communicate positive evaluations and testimonials
• share good compliance in peer companies and units
• introduce a “compliance ambassador” program
Stakeholders will be more likely to be influenced by the
wisdom-of-the-crowd
Social proof

10. Build your reputation as an
approachable and easy to be
followed compliance officer
When changing compliance controls,
• identify similar traits and goals with stakeholders
• compliment attitudes and results of stakeholders
• disclose your background and personal data
• tell stories about your mistakes in compliance
Stakeholders will be more likely to comply to requests done by
similar employees
Liking

11. Signal your credible and
knowledgeable authority
When closing compliance initiatives,
• distribute awards as “I complied!”
• make stakeholders to publically communicate values
• address pushbacks with the stakeholders´ public
commitments
Stakeholders will be more likely to be consistent with the
commitments they have previously said or done
Consistency

12. • Ask employees to write when and where they will control
• Add blank boxes for employees to describe their changes
• Give feedback on compliance performance against peers
• Send positive reinforcement to top compliance performers
• Use names and different colors and formats for requests
• Provide reasoning of why employees are asked to control
• Politely explain procedures, recourse options and incentives
• Inform negative consequences of inaction
• Present reputable sources of the requests
• Explain the most important request at the top
• Articulate small tasks for the complex requests
INSPIRE Framework 2017

13. • Train on compliance scenarios and dilemmas > two-ways
• “Co-create” principle-based policies with waivers
• Articulate controls in single responsible and accountable roles
• Get signed acknowledgments after receiving notes
• Communicate cases of policy violations and misconduct
• Allow fearless reporting of breaches, errors and whistleblowing
• Explain the effect of breaches on personal careers
• Periodically repeat key messages in training and awareness
• Follow a change curve with stakeholder management tools
• Do a deep root-cause analysis on breaches
• “Put a face” to people affected by employee decisions
• Create forums to discuss how to meet obligations
Tips

14. Avalado por:
OPEN QUESTIONS
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