I recently had the chance to visit with David Childers, Senior Vice President at The Ethics & Compliance Initiative (ECI). We discussedECI’s High Quality Ethics & Compliance Program (HQP) Self-Assessment Tool. You can check out the full podcast here. We also discussed ECI’s great new resource, HQP, which is something that every compliance practitioner should take advantage of for their corporate compliance program.

ECI’s HQP is great way for every compliance professional to consider their corporate compliance program from a variety of approaches. HQP can help you to design, implement or assess a compliance program. Childers explained, “We spent a couple of years, really studying this to come down to five principles. The principles are related to strategy, risk management, culture speaking up and accountability. What I think most people would consider to be a pillar, a good ethics and compliance program.”

Childers went on to flesh out each principle, “We think about strategy in an ethics and compliance program as central to the business operations and strategy. Second, compliance risks are identified, owned, managed and mitigated in the same way that organizations look at other aspects of their Enterprise Risk Management program.” One of the things that ECI research has shown “is that managers and supervisors have an amazing amount of influence in an organization.” This leads to Principal 4 that “leaders at all levels across the organization build and sustain a culture of integrity. Under Principle 4, an organization itself encourages, protects and values the reporting of concerns and suspected wrong doing. Finally, under Principle 5, an organization takes action and holds itself and the people in its organization accountable when things go wrong.”

HQP is a measure of where an organization believes their ethics and compliance (E&C) program operates based on the five principles. “The assessment can be used in several ways. We have organizations that are looking for program improvement. The assessment can be a baseline for measured improvement. It can also be a qualification. As we said this isn’t about a score. In some industries, being at the managing level of maturity may be sufficient for their risk. Most of all it is a great way to create dialog and discussion with your leadership using a definitive measure of your program.”

One great thing about HQP is that it ties directly into what the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) expect, as articulated in the Ten Hallmarks of an Effective Compliance Program. Indeed, it fits directly into Hallmark Nine regarding ongoing monitoring by a company to monitor its own program, then remediate or improve as appropriate. Moreover, from the DOJ’s perspective, they continually ask us how can you demonstrate your program is effective? This means if a company finds itself embroiled in a Foreign Corrupt Practices Act (FCPA) investigation, they must be able to present solid factual data that the program is effective.

HQP can help a company to see if its program is effective. If not, what are the deficiencies? Further, “it would assist a company to understand what they need to do to move towards having an effective program. This would allow a compliance practitioner, in a variety of ways, from literally sitting at their desk, to see where our program might be benchmarking, but if a regulator comes knocking, they certainly have the data to demonstrate effectiveness.”

Moreover, as Childers explained, it does so in a “a non-invasive way. The survey doesn’t take long to complete, yet the information that you gained from it is quite telling. Using the HQP Assessment Tool a compliance professional has the opportunity to be able to do an assessment throughout a year or over a period of time as you are making changes to your program. It also creates a great baseline for improvement.”

Childers also noted that there are other insights provided by HQP, which “we are starting to see from some of the data that is coming from different industries.” This means, “based upon the risk profile of an organization, you may not need to be at 100% of the capacity for an ethics and compliance program, 70% may be more than justified.” This type of information is critical for the DOJ  and SEC as well, because “they’re not comparing all programs the same because we all know that everybody’s program is somewhat different. The results are also beginning to show us some of the areas where compliance programs may be based upon a number of factors which may make optimization more difficult.” Childers concluded it is “exciting for me because it just opens up another realm of research for us to move into, to look at how we might be able to help organizations get over some of those hurdles and move to a higher level of optimization.”

While the HQP methodology is fairly complex, in practice it is straight-forward to use. “For any participant it is only 107 multiple choice questions and it takes less than 30 minutes to complete. It is designed to measure compliance program maturity based on a combination of questions regarding 27 operating components and more than 100 program practices. It consists of four categories of reporting information for each principal, which include: (1) What to measure/review; (2) Questions to consider; (3) Potential sources of information; and (4) Leading practices illustrative of HQPs.”

Finally, this year’s ECI annual conference is entitled “The Ultimate Ethics & Compliance Benchmarking Event” and will feature multiple sessions around ECI’s revolutionary HQP Self- Assessment Tool. You will learn about obtaining:

  • Actual measures of the maturity of your E&C program
  • Reliable benchmarks of the progress of your organization, compared to industry peers
  • Ideas from best practice, specifically related to the areas where you are hoping to improve

Further, through a series of keynotes and small-group benchmarking sessions, you will obtain industry comparisons, contextualize the benchmarks, define what they mean for your program and organization, and discuss practical strategies for improvement. All of this will give you never-before-seen insights in to the way your E&C program functions.

I will be leading a panel on the HQP Self-Assessment Tool so I hope you can plan to join me at this great event. For registration and information on IMPACT2019 click here.

For more information on HQP, go to www.ethics.org

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2019