compliance conference part 2 v20090818
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People Risks, Compliance Motivationand Culture
PART 2: Solutions
Keryl EganStormont Consulting
Presented at the 6th Annual Financial Services and ComplianceConference, Sydney, February 9-11, 2009
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Applying Influencer to Compliance
Motivation and Culture
Influencer is a Vitalsmarts programme which provides amethodology for bringing about behavioural and cultural change. In
this presentation Influencer is applied to culture change at the
hypothetical Blue Sky Bank.
Keryl Egan is a Vitalsmarts certified trainer and consultant forInfluencer and Crucial
Conversations.
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Navigating
Change
withInfluencer
Influencer
The Power to Change Anything
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Problems with Compliance Motivation
Measures of the current culture on the trading floor at
Blue Sky Bank indicate that 55% of traders regard
compliance as obstructing their trading objectives and
therefore seek ways of circumventing or ignoring
regulations.
Blue Sky Bank is seeking to develop effective internal self
regulation and to preserve its reputation as a sociallyresponsible corporate citizen.
Setting the Sails for ChangeBlue Sky Bank Clarifies its Current
Position
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Setting the Sails for Change withInfluencer
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Applying the Influencer Model Clarify Blue Sky Banks outcomes:
Why does compliance matter and what has to change? Research the context and problem.
Find Vital Behaviours: What would people have to do to obtain the Banks desired
compliance outcomes? Who does it well and what can be learned from them?
Crucial Moments: When do the vital behaviours matter themost?
Use Influencer Six Sources of influence to promoteselected vital behaviours
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Clarifying Outcomes: Moreexternal regulation or more
internal motivation National Australia Bank solution:
Excessive focus on process,documentation and procedure
manuals rather than onunderstanding the substance ofissues, taking responsibility andresolving matters.
Carapace: Measures external to
human motivation do not have theflexibility, judgment and balancenecessary for human systems.
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DESIRABLE OUTCOMESInternal Values and Grace in
Execution Personal and Social Values
Develop core strength in thecompany through shared andstated values
A Framework provides Safety
Regulations and compliance areused the backbone or frameworkfor good judgment, initiative andinformed risk taking
Compliance and FreedomA solid backbone and core
strength produce an agile,motivated culture which providessecurity and strength but alsoallows for boldness, skill anddegrees of freedom.
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Blue Sky Bank Develops a
Desirable OutcomeOutcome Statement
Within 12 months, by July 1st 2010, there will be a
70% measurable improvement in traders ability to
reach their trading goals whilst working withincurrent
regulatory requirements.
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Design a Setting for Pro-social
GrowthBlue Sky seeks to achieve the desired outcome by influencing behavioural
and cultural changes which harmonise external regulations with internal
values , business goals and public values or expectations.
Arrange a hierarchy of experiences
Start with single, small acts of responsibility or acknowledgement ofthose behaviours which are key to the goal
Gradually escalate these acts of responsibility or acknowledgement
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INFLUENCER: Find the first Vital
behavioursFind the specific and measurablebehaviours which
demonstrate
that traders are actively pursuing their trading
objectives and
observing current regulatory requirements.
What would you see the person actually do
which shows this?
What would be the impact if they did this?
How can you measure it and its impact?
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Derive Vital Behaviours fromGeneral Principles
for Pro-social Growth (Zimbardo) Encourage admission of mistakes
Encourage personal responsibility - prevent diffused responsibility
Reduce anonymity by acknowledgment of self worth
Support critical thinking - discourage blind conformity to the norm Discourage small transgressions which can escalate
Reward behaviour based on values consistent with law andregulations
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Examples of Vital Behaviours at
Blue Sky Bank
Speak up about violations of compliance rulesand challenge each other on the spot
Admit to mistakes without fear of reprisal
Encourage challenge, problem-solving anddiscovery of innovative solutions
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INFLUENCER MODEL: Define
Crucial Moments
When are these behaviours critical tosuccess?
At what time of day, month, year does itmatter most?
Which conditions make it a crucialmoment?
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Examples of Crucial Moments When someone has just ignored or by-
passed a regulation
When business is brisk and time is short
You have made a mistake and you aretempted to hide this
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Putting It All Together Research and Diagnosis: The reason for by-passing regulations
No time
Poor systems and access to daily changes in regulations
Pressure from clients or upper management
Inexperienced back office staff Compliance regulations dont make sense or have no real meaning
Vital Behaviours: Start small and add more behaviours over time.Blue Sky Bank starts with Traders speak up and say no to clients even when they may lose
the client for doing so Middle and back office say no to traders who ignore compliance All check regulatory changes consistently and often
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Sources of Influence to PromoteCompliance & Achieve Desired
Outcomes Research shows
most people apply only one source ofinfluence at a time when they want to change
behaviour
People who use multiple sources of influenceachieve better results X 10
Designing an influence strategy takes time, skilland courage BUT..it makes success inevitable!!
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BehavioursSpeaking Up, Admitting Mistakes, VolunteeringIdeas
Motivation Ability
PersonalConnect the person to their own values bycreating a
dialogue about self regulation, selfresponsibility and
values. Define individual responsibilities for
regulation at every Level and create a crisisof
conscience by expecting people to speak upand
working to get buy-in.
Provide training to enable the vital behaviours e.g.Crucial
Conversations training for speaking up in high stakessituations
Social Define responsibilities for self regulation ateveryLevel. Find Opinion leaders to model the
behaviours
and help others to speak up, admit mistakesand
Volunteer ideas.
Seek support of senior management who are willing to provideresources or knowledge and problem-solving
Structural
Design incentives and rewards for
speaking up, admitting mistakesand innovating.
Use office design, data and cues plus IT tools to keep the vital
behaviours in mind
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Creating an Influencing Strategy
Source of Influence 1: Managers describe socially responsible reasons forcompliance and speaking up & admitting mistakes: give stories andexamples
Source of Influence 2 : Training in communication provides skills for
speaking up
Source of Influence 3: Engage opinion leaders to lead the way
Source of Influence 4: Upper management provides resources andremoves technical obstructions to compliance and problem-solving
Source of Influence 5: Public acknowledgements and rewards for speakingup, admitting mistakes and finding solutions.
Source of Influence 6: Place reminders, data and cues in easy to seeplaces
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Measuring Success Measure compliance incidents, reporting and handling
over the year to July 1st 2010.
Criteria for team performance and productivity includesbehavioural measurements and ratings
Measure pro-social engagement, collaboration and jobsatisfaction over one year from base measure
Analyse and evaluate results to determine next steps
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Continuous Improvement
Define the next set of desirable outcomes
Develop the next set of vital behaviours
Construct the next influencing strategy
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P.O. Box 327, LeichhardtNSW 2040Ph: 02 9564 0425
Mobile: 0414 734 840Email:[email protected]:www.stormontconsulting.com
Thank
you
mailto:[email protected]:[email protected] -
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References
APRA, March 2004: Report into Irregular Currency Options Trading at the National Australia Bank Bullen, D: Fake : My Life as a Rogue Trader. Publ. by Wiley 2004 Calavita, K and Pontell, H: Heads I win, Tails you lose: Deregulation, Crime and Crisis in the Savings and
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Miller, A. The Sociology of Good and Evil, Guildford Press, NY, 2004 Parker, C. The Open Corporation: Effective Self Regulation and Democracy, Cambridge University Press,2002.
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Zimbardo. P: A Situationist Perspective on the Psychology of Evil: Understanding How Good People AreTransformed into Perpetrators in A. Miller, The Social Psychology of Good and Evil. Guildford Press, NY,2004