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Employee Conflicts of Interest Ethics & Culture

Considering The Human Factor In Your Compliance Program: Part Two

Insights from psychodynamic-management consultant Dr. Alexander Stein’s Star US User Conference Talk

At this year’s StarCompliance US User Conference, a program highlight was the session with Dr. Alexander Stein. Dr. Stein is Founder and Managing Principal of Dolus Advisors, a New York-based risk and psychodynamic-intelligence analysis consultancy, and also a Principal in the Boswell Group. He advises executives, boards, and entrepreneurs in areas of corporate and organizational life, and has extensive experience in leadership development and senior-team dynamics. 

Dr. Stein specializes in helping organizations mitigate and resolve human-factor issues and is widely regarded as an expert in the psychology of fraud, insider threat, and white-collar misconduct. Following are excerpts and insights from his conference talk: Considering The Human Factor In Your Compliance Program. This is part two of a two part series. Read part one here.

“To really infuse learning, and a perspective and an understanding of the compliance function, the articulation of a holistic view throughout the enterprise is crucial. And it can’t just be given lip service. It’s not just mandatory training, culture audits, well-crafted memos, or tone from the top. It’s got to be made clear that everyone from the top on down understands, and that communication, attitude, and behavior from senior leadership and business-line leaders is authentic and consistent. Executive hypocrisy can be just as destructive as outright toxicity.”

“And it really does need to be something that’s delivered directly and in full, not just from the chief compliance officer or human resources department. It ultimately has to do with the values and principled way of running an organization. Compliance can’t be treated as a contained exercise, i.e., we need to do this because the regulators are breathing down our necks. Compliance, as in creating a culture of compliance not just an operationally compliant enterprise, needs to be something that’s instilled and lived in the human ecosystem. It needs to be an ethos. A shared ethos.”

“What gives rise to a behavior? Think about behavior as a signal or a symbol of something. Don’t just take it at face value. Part of your role, if you’re a compliance officer, is to decode the symbols employees are exhibiting, and not just look at action as a direct product of intentional thought or someone’s doing something as detached from their thinking. This goes beyond the old saying that ‘actions speak louder than words.’ This is about recognizing that actions are often saying something in place of words, communicating things about how somebody is feeling and what’s going on in somebody’s mind.”

“A simple illustration is young children. For the first several years they can’t use words very well, but they’re always doing something. They’re not telling you what’s going on with language, but they’re always communicating. Your workforce aren’t children but think about employee behavior as more than what it appears to be. If you do, you’ll get a lot more information about what’s really happening, which will perhaps help you prevent something else from happening.”

“People are constantly giving off signals. The FBI refers to this as “leakage.” So-called deception detection involves scanning for unconsciously exposed signs that someone might be lying or evading. I refer to this as shadow data, and for compliance officers it’s not necessarily about scrutinizing for willful deception. It could be a symbol or a coded signal. It could be a symptom (a sign or pointer about something wrong). Consider the employee who comes asking about what’s okay to do or not. While yes, that could be a covert ploy preceding malicious action, it could also be somebody signaling a need for guidance in an ethical dilemma—maybe teetering at the top of the proverbial slippery slope, or possibly witness to a co-worker’s misdeed. In that scenario, just answering the question asked would miss what’s actually being asked for. People are constantly communicating things, signaling in roundabout ways and with subtle cues through their actions; it could be about something they’re struggling with or worried about but can’t say, or indicating something they might be considering doing but aren’t sure about, or have already done and don’t know what to do about now.”

“There’s a tension that exists between the qualitative and the quantitative. Some aspects of human behavior cannot be rendered as hard data. A lot of what goes on inside people’s minds and what their behavior suggests simply cannot be accurately captured and translated as useable data. How do you technologize some of the things I’m talking about? You can’t always. Or only partially. Particularly in compliance and at scale, that can be a problem. But it’s not an unsolvable one. The solution may be a hybrid: one combining technology and the human in collaboration.”