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How much does non-compliance really cost?

How much does non-compliance really cost?

In the past year alone, Wells Fargo, Morgan Stanley, and other Wall Street trading firms have paid out a combined $549 million in fines to federal regulators because employees were using personal devices to send work-related texts and communications, in breach of industry regulations.

In these cases and more, there were clear failures to embed policies and procedures (P&Ps) into the organizational culture. This underscores the importance of engaging the workforce and creating clear and visible policy outlines, as without employee compliance, policies are ineffective, exposing businesses to risk.

We surveyed 400 HR and business leaders across the US and UK to understand how they educate employees about workplace policies and procedures, and we learned that although lack of compliance is rated a serious and costly problem, educating staff remains a comparative afterthought. 

Discover the challenges keeping companies from implementing successful compliance policies and procedures, reasons why policies and procedures fail, and how you can better equip your business and employees to avoid fines and remain compliant.

The monetary cost of non-compliance

Non-compliance costs businesses $1.6 million per year on average, and most of these costs are easily avoidable by taking a proactive approach to compliance.

Nearly 90% of respondents say greater employee accountability would mitigate business risks. This is why training and development should be at the heart of risk mitigation strategies.

So, why haven’t more businesses adopted a proactive approach to compliance?

“Too often, policies and procedures are treated as a tick-box exercise. It’s easy to lose sight of their purpose – to drive and influence behavior,” said CYPHER Learning CEO and Founder Graham Glass.

When businesses lose sight of the purpose behind compliance, they fail to relay that purpose to employees. And when you’re required to do training that you feel has little to no purpose when you could be doing other things on your to-do list, courses are often rushed and engagement and retention are low.

Over 70% of business leaders believe staff don’t “get” the importance of policies and procedures, so engagement is an ongoing battle.

Relaying the true value of compliance courses to staff members starts with leadership. By ensuring compliance training is tied to a deeper purpose and that purpose is consistently communicated, you can move your employees toward higher training engagement.

Compliance courses are typically thought of as boring. A painfully dry way of learning necessary information to comply with regulations and procedures. But does compliance training really have to be that way?

Increase engagement and knowledge retention

Clearly communicating the purpose behind compliance training is a good starting point for generating more engagement and knowledge retention in training. But with modern training technology, you can easily generate more engaging courses.

CYPHER Learning provides a modern learning platform with 3 powers: LMS + LXP + content development driven by leading AI innovation. CYPHER AI 360 with Copilot, its best-in-class content creation tool, enables trainers, instructors, and leaders to create and deliver engaging courses in just minutes, upleveling their training and saving valuable time and money.

Gamification has a significant impact on employee engagement, motivation, and psychology. However, integrating and developing gamified elements in courses is typically time consuming, keeping many business leaders and course developers from including them.

CYPHER AI 360 with Copilot can generate gamified, competency-based courses in minutes. AI 360 creates group or individual gamification elements, enabling learners to gain points or compete in periodic leveling challenges. AI 360 aligns gamification elements with competencies so learners can easily visualize their progress and work toward mastering their goals. Elevate your educational and training initiatives, simplify your tech stack, and optimize your workflow. Discover more about the power of gamifying courses with AI 360.

Accountability amidst ever-changing policies

Ultimately, the success of policies and procedures comes down to their implementation and constant monitoring. If you’re training employees on outdated policies and procedures, it’s not going to do your organization much good.

Businesses in the survey create new policies on a range of issues, including: social media use (39%), hybrid/remote working (37%), environment/sustainability (36%), and many more.

Updating compliance courses is a double-edged sword. On one hand, you have to continually update them to stay abreast of changing policies and procedures. On the other hand, continually changing courses makes it difficult to identify what employees have learned and to hold them accountable. Tracking when they took the course and what information was in the course when they took it is a huge challenge.

With CYPHER Learning’s competency-based strategy, ensuring compliance, tracking exactly what employees learned and holding employees accountable is both highly effective and efficient. With competency-based learning, each competency is representative of a skill employees must learn to be compliant. These policies are clearly displayed on the platform and show employees which ones they’ve mastered. 

CYPHER not only ensures your compliance courses cover all of the mandated policies, but it also increases policy visibility and acts as a record for what employees have learned, leading to greater accountability.

Why CYPHER’s competency-based learning tools are the best approach for compliance:

  1. Automatic competency mapping: CYPHER AI 360 can generate entire competency-mapped courses from uploaded compliance policies. Just load a PDF or video into the platform and watch it create a course in just minutes.
  2. Coverage analysis of competencies: After tagging the compliance content, you can see an overview of how well your course covers the competencies. This enables you to identify weak spots and ensure each compliance mandate is included.
  3. Mastery progress tracking: Provide learners with a clear understanding of their proficiency levels of different compliance competencies, enabling them to see what they should know and enabling you to hold them accountable. If there’s ever a discrepancy about whether or not they learned something, you can reference their mastery progress.

Embedding compliance in culture

It’s clear business and HR leaders value policies and procedures. Nine in ten (89%) say they are key to successfully running their business. The same proportion say that when completed in the right way, policies and procedures can be used as an educational opportunity to reinforce company values and instill a culture of best practice.

Instilling a culture of following best practices also entails facilitating effective communication about compliance throughout the workforce. Being available for employees to ask questions can be difficult when you’re balancing meetings, a full email inbox, and day-to-day tasks. That’s why CYPHER makes cross-organization communication easier than ever.

Human connection is at the heart of CYPHER, empowering effective employee communication through a real-time universal translator, built-in messaging, Q&A forums, chat, community groups, and more. CYPHER’s social activity display, the Green Dot feature, enables learners to stay connected and informed, displaying a list of active users with the “online” widget, so learners can easily ask for help regarding confusing compliance content, due dates, and more.

Key takeaways

The monetary cost of non-compliance can be a significant burden for businesses, averaging $1.6 million annually. The key to mitigating these costs lies in adopting a proactive approach to compliance, emphasizing employee accountability through effective training and development strategies.

However, compliance courses are often seen as tedious and purposeless, hurting employee engagement and motivation regarding training. To address this, it is essential for leadership to convey the deeper purpose behind compliance and leverage modern training technology to create more engaging training courses.

AI 360 with Copilot on the CYPHER platform can transform mundane compliance training into an engaging experience with gamification elements. It can also simplify and uplevel training with its competency-based strategy. This approach ensures that employees not only cover mandated policies but also gain visibility into their mastery progress, fostering greater accountability. 

Embedding compliance in the organizational culture is crucial for its success. CYPHER facilitates effective communication and connection among employees, making compliance a shared educational opportunity to reinforce company values and cultivate a culture of best practices.

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