Project: Corporate Counsel - Law Firms State of the Art Compliance Training

Wednesday, June 1, 2005 - 01:00

Joseph: Gary, why is the training of senior executives important ?

Senner: The Guidelines mandate dramatically harsher penalties for companies that do not have adequate compliance programs. Training of senior executives is important in meeting the requirements of the Guidelines. In addition, since the most serious corporate exposures typically involve the conduct of senior executives, this training is vitally important in deterring major exposures.

Joseph: What is the most effective way to do senior executive training?

Senner: Senior executive training should be done in a face-to-face, small group setting in order to encourage real interaction and free and open discussion. Although this may sound daunting given the logistics of training senior executives, the benefits of training in this manner are substantial.

Joseph: What are the goals in doing this type of training?

Senner: In my view, there are basically three goals: (1) identification of areas of business opportunity and need, and related risks; (2) education and sensitization of the executives; and (3) obtaining their commitment to the compliance program.

Joseph: Why is identification of areas of business opportunity and need, and related risks important?

Senner: The training must be a dialogue with the lawyers learning about the current business activities of the company and its significant risk areas, and the executives learning how to deal with those risks in the context of their business activities. In addition, the Guidelines require that the company conduct a risk assessment. This aspect of executive training is a part of that risk assessment. Finally, understanding the company's current business based on the perspective that only senior executives can provide, is an important step in determining the final standards and policies with which all executives and employees must comply.

Joseph: Can you give an illustration of how this part of the process should work?

Senner: Yes, antitrust training provides a good example. The most severe antitrust penalties can result from situations involving cooperation with a company's competitors. Price fixing, allocation of markets or customers, and other agreements with competitors which eliminate competition generally are per se illegal offenses. Such conduct can result in massive criminal fines and class action exposure. On the other hand, the antitrust laws recognize legitimate bases for cooperating with competitors which provide opportunities for both companies and/or satisfy business needs. Examples include trade association activities, joint ventures and alliances, customer-supply relations, and intellectual property licensing relationships. To effectively train senior executives, you must understand the nature and extent of the company's contacts with competitors, the business reasons and the risks which they entail.

Joseph: How do you go about educating and sensitizing the executives?

Senner: First, as indicated previously, you need to focus on the real business situations with which the executives must deal. So, for example, in antitrust training, you want to focus on issues arising from the executives' competitor contacts. You need to balance clear rules with a degree of flexibility. In addition, you need to sensitize the executives regarding situations that will require further advice, since no training can provide all the answers that the executives will need.

Joseph: Are there any other aspects of education and sensitization?

Senner: Yes, there are two other areas as to which all key personnel, including senior executives, should be trained. They should be prepared concerning governmental investigative procedures. For example, in conducting criminal investigations, Department of Justice Antitrust Division attorneys and/or FBI agents will make unannounced visits to the homes of executives who are under investigation. In addition, they should be sensitized concerning document preparation and communication in the electronic world. Finally, to satisfy the requirements of the Guidelines, senior executives must be knowledgeable about the operation and the content of the company's compliance program.

Joseph: What do you mean by obtaining commitment to the compliance program?

Senner: Another requirement for compliance with the Guidelines is that senior executives must be committed to providing oversight and leadership for the compliance program. In my view, there are two keys to obtaining the necessary senior executive commitment. First, they must not only understand what the compliance rules are, but why they are necessary. Second, the program and rules must fit the company's business.

Joseph: How do you measure the effectiveness of senior executive training?

Senner: You need to worry if they don't come back for more. Because you cannot provide the executives with all of the answers they will need, a key element of the training is to sensitize them regarding situations requiring further advice.

Joseph: Mindy, you are the new National Director of Training and Development at Sonnenschein. Why do you focus exclusively on training?

Chapman: With separate training services, we have responded to our clients' needs by expanding our counseling to include proactive business solutions. Our training covers employment and labor laws; Sarbanes-Oxley compliance; corporate ethics; diversity skills; environmental compliance; employee benefits; healthcare regulations; and many other areas of business compliance and human resources training.

Joseph: How would you describe or view a firm's "return on investment" for training?

Chapman: Extraordinarily high. There are two key aspects to the return on investment for training; the concrete monetary aspect, and the "intangible" benefits.

In the area of equal employment opportunity laws, for example, employers should train their workforce for many reasons, some of which are:

  • Proactive training expenses are nominal compared to the costs associated with litigation and harm to the reputation of the organization. An employer defending employment law claims can incur average costs in excess of $595,000 (more, in the case of large jury awards) per claim for attorney fees and settlement costs or jury awards.

  • Consistent management throughout the organization, also known as "centralized compliance," contributes to higher morale which in turn increases productivity leading to greater employee retention.

Joseph: What are some of the state and federal law requirements regarding training?

Chapman: Last year, California passed a new bill, Assembly Bill 1825, requiring California employers of 50 or more employees or contractors to provide two hours of sexual harassment training to all their supervisory employees. Under AB 1825, all supervisory employees must receive training that is effective, interactive, and provides practical guidance regarding federal and state laws concerning the prohibition and prevention of sexual harassment, as well as the remedies available to victims of workplace sexual harassment. Under the law, trainers must have knowledge and expertise in harassment, discrimination and retaliation prevention. And, beginning on January 1, 2006, employers will need to provide on-going harassment training for all supervisors every two years.

The federal Equal Employment Opportunity Commission Guidelines state that employers "should take all steps necessary to prevent sexual harassment from occurring, such as affirmatively raising the subject, expressing strong disapproval, developing appropriate sanctions, informing employees of their right to raise and how to raise the issue of harassment under Title VII, and developing methods to sensitize all concerned."

While these laws focus on training managerial and supervisory employees, the prudent employer will also train non-supervisory employees. Employees also need to know and understand how to comply with the rules at work.

Joseph: Can there be any legal liability in training?

Chapman: Yes, poorly designed and inadequately conducted training can expose organizations to grave liability instead of preventing it. For example, incompetently designed training can solicit participants to use discriminatory and stereotyping language that could potentially lead to a hostile work environment claim and litigation. The discussions from employee and supervisory training sessions and materials are all discoverable, and done properly, should be proffered as a legal defense. What's the solution? It is critical to lay out specific and strategic ground rules for the training at the beginning of the session and then vigilantly monitor them.

Joseph: Marty, the workforce has become much more diverse over the last several years. Should that have an impact on training programs?

Castro: Yes, it should impact training on a number of different levels. First of all, as the workforce becomes more diverse in terms of gender, race, ethnicity, sexual orientation, generationally and in other ways, employers will want to ensure that the organization manages that diversity to achieve its full potential. Therefore, employers may wish to consider diversity training. However, employers should first consider conducting an assessment or audit of the state of diversity and other processes at the organization to customize the training to the organization's culture, needs, and opportunities. When considering diversity training, employers must beware of diversity consultants or lawyers who use a one size fits all approach. Such a generic approach minimizes the importance of diversity and affects the positive impact such training can have on an organization's workforce.

Furthermore, increased immigration has impacted almost every industry in the United States. A large number of these new employees may be limited English proficient, or mono-lingual Spanish speakers. So for any training, whether it's compliance or safety training, employers should consider providing it in Spanish, and other languages as the organization's workforce may dictate. OSHA and state governments have already begun to focus on businesses with large Hispanic workforces to ensure that companies are properly training their employees.

Joseph: How do you make compliance training effective, interactive and engaging?

Chapman: We use a variety of unique interactive teaching tools in our training. In addition to interactive workbooks, our training includes supplemental tools. For example, participants use different types of interactive, colorful communication cards to vote on hypothetical scenarios, answer specific questions, and share their perspectives on whether or not they perceive conduct to be offensive. Using the cards allows participants to be physically active during the course and also avoids putting any one individual participant "on the spot" when asked a question. The cards also help avoid leaving behind "bad evidence."

Working in groups also keeps the training interactive. Discussing issue-spotting tasks together in small groups, participants have the opportunity to discuss practical scenarios and, as a team, come up with solutions.

Trainers must be credentialed, experienced, and engaging communicators with extensive experience not only in the subject matter, but in facilitation skills.

Confucius observed "What I hear I forget. What I see, I remember. But what I do, I understand." Our training is distinct because participants master compliance skills by having the opportunity, in our training, to "do." Participants can take the skills they master in the compliance training and effectively use them in the workplace on the same day.

Please email Bill Elwin at with questions about this interview.