Seven Ways Assessments Fortify Compliance

Posted by John Kleeman
Picture of a tablet being used to take an assessment with currency symbols adjacentWhy do most of the world’s banks, pharmaceutical companies, utilities and other large companies use online assessments to test the competence of their employees?

It’s primarily because compliance fines round the world are high and assessments reduce the risk of regulatory compliance failures. Assessments also give protection to the organization in the event of an individual mis-step by proving that the organization had checked the individual’s knowledge of the rules prior to the mistake.

Here are seven reasons companies use assessments from my experience:

1. Regulators encourage assessments 

Some regulators require companies to test their workforce regularly. For example the US FDIC says in its compliance manual:

“Once personnel have been trained on a particular subject, a compliance officer should periodically assess employees on their knowledge and comprehension of the subject matter”

And the European Securities and Market Authority says in its guidelines for assessment of knowledge and competence:

“ongoing assessment will contain updated material and will test staff on their knowledge of, for example, regulatory changes, new products and services available on the market”

Other regulators focus more on companies ensuring that their workforce is competent, rather than specifying how companies ensure it, but most welcome clear evidence that personnel have been trained and have shown understanding of the training.

People sitting at desks with computers taking tests2. Assessments demonstrate commitment to your workforce and to regulators

Many compliance errors happen because managers pay lip service to following the rules but indicate in their behavior they don’t mean it. If you assess all employees and managers regularly, and require additional training or sanctions for failing tests, it sends a clear message to your workforce that knowledge and observance of the rules is genuinely required.

Some regulators also take commitment to compliance by the organization into account when setting the level of fines, and may reduce fines if there is serious evidence of compliance activities, which assessments can be a useful part of. For example the German Federal Court recently ruled that fines should be less if there is evidence of effective compliance management.

3. Assessments find problems early

Online assessments are one of the few ways in which a compliance team can touch all employees in an organization. You can see results by team, department, location or individual and identify who understands what and focus in on weak areas to look at improving. There is no better way to reach all employees.

4. Assessments document understanding after training

Many regulators require training to be documented. Giving someone an assessment after training doesn’t just confirm he or she attended the course but confirms they understood the training.

5. Assessments increase retention of knowledge and reduce forgetting

Can you remember everything you learned? Of course, none of us can!

There is good evidence that quizzes and tests increase retention and reduce forgetting. This is partly because people study for tests and so remind themselves of the knowledge they learned, which helps retain it. And it is partly because retrieving information in a quiz or test makes it easier to retrieve the same information in future, and so more likely to be able to apply in practice when needed.

6. By allowing testing out, assessments reduce the time and cost of compliance trainingTake test. If pass, skip training. Otherwise do training.

Many organizations permit employees to “test out” of compliance training. People can take a test and if they demonstrate good enough knowledge, they don’t need to attend the training. This concentrates training resources and employee time on areas that are needed, and avoids demoralizing employees with boring compliance training repeating what they already know.

7. Assessments reduce human error which reduces the likelihood of a compliance mis-step

Many compliance failures arise from human error. Root cause analysis of human error suggests that a good proportion of errors are caused by people not understanding training, training being missing or people not following procedures. Assessments can pick up and prevent mistakes caused by people not understanding what they should do or how to follow procedures, and so reduce the risk of error.

 

If you are interested in learning more about the reasons online assessments mitigate compliance risk, Questionmark are giving a webinar “Seven Ways Assessments Fortify Compliance” on April 11th. To register for this or our other free webinars, go to www.questionmark.com/questionmark_webinars.