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Non-Compliant Workers on Average Cost Organizations $1.6M Yearly

Non-Compliant Workers on Average Cost Organizations $1.6M Yearly

Research from CYPHER Learning shows HR and business pros believe policies and procedures are essential to business success, but getting workers to comply is a ‘major headache’

PLANO, Texas, 18 January 2024 - CYPHER Learning, provider of the leading modern learning platform for business and academic settings, today released a new study of employee education around workplace compliance with regulations, policies, and procedures: The True Cost of Rule Breakers in Workplace Compliance. It found that failure to comply costs businesses $1.6M per year on average, with the most common causes of policy breaches being employees either not knowing or not understanding the rules – yet educating staff remains a comparative afterthought.

The survey of 400 HR and business leaders across the US and UK found that nearly nine in ten (88%) of respondents agree that greater employee accountability would mitigate business risks. However, 71% believe staff don’t ‘get’ the importance of policies and procedures, so engagement is an ongoing battle – with 68% saying getting workers to comply with policies is a major headache. Furthermore:

  • Unknown risks: Almost three-quarters (71%) of respondents think staff are likely breaking rules, but often don’t know until something goes wrong – with policies relating to HR, data sharing, and health and safety being the areas people believe employees are most likely to cut corners.
  • Lack of time and resources: 98% of respondents believe employees would be more likely to understand and comply with policies and procedures if training was more engaging. However, 87% said barriers such as a lack of time, funding, and urgency prevent them from making training more engaging.
  • A growing problem: In the past three years, organizations have created or updated policies and procedures to cover topics such cybersecurity, social media, hybrid working, sustainability, data bias and AI. But 74% of respondents said although they should be regularly updating policies and procedures, realistically they don’t have the time.

Graham Glass, CEO of CYPHER Learning, said:
“From shifting regulations to the introduction of new technologies, new threats and evolving societal norms; what was acceptable or trusted one year may not be the next. It’s hard to keep up. But lack of policy compliance – or failure to have a policy in place – can quickly result in reputational damage, injury, fines, revenue loss, reduced productivity, or even legal action. These costs are just the tip of the iceberg. Policy breaches can manifest in several ways that fly under the radar and chip away at revenues.”

One of the issues highlighted by the research was a lack of investment and focus on making training around policies and procedures more engaging. Less than half (44%) of budgets assigned to policies and procedures is spent on employee education – equating to just $105,000 per year on average. Meanwhile, 66% of respondents admitted employee education is often an afterthought, with 62% complaining that training in this area is “one of the most boring things” they have to do. 

The research also showed that:

  • Email updates and company newsletters (47%) are the most common ways employees learn about policies and procedures. 
  • Less than half (45%) of companies conduct online training. Fewer still (31%) create explainer videos or interactive, gamified training experiences (26%) to drive the message home.
  • Only 56% of companies continually educate employees on policies, with 65% admitting to treating training as a ‘one-and-done information dump’ during the onboarding process. 
  • Less than half the companies surveyed (44%) test employees’ knowledge to ensure they have fully understood a procedure, or educate them on the purpose of each policy to aid understanding (45%). 
  • Even fewer (37%) tailor guidance to individual competencies and job roles to ensure relevancy.

Graham Glass, CEO of CYPHER Learning:
“Reducing risk and increasing employee engagement go hand in hand. Making learning more interactive and engaging has been proven to increase information retention and engagement. Yet finding time and resources to think creatively about policies and procedures is a challenge. This is where AI can lighten the load, helping teams create timely, relevant, and engaging courses at speed – while making individual learning at scale a reality. By bridging skills and resources gaps, AI can give teams more time, more resources, and more freedom – with remarkable efficiency and economy.”

Read the full CYPHER Learning report, The True Cost of Rule Breakers in Workplace Compliance

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