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Sarbanes Oxley : Thought Leader
Assessments: Taking the Headache Out of Corporate Compliance
By
Mary Clarke
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Mary Clarke
President and CEO
Cognisco
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The Enron/WorldCom scandals drove the need to crack down on intentional fraud, giving corporate executives plenty to deal with in terms of SOX-inspired governance, compliance and risk regulations. Yet unintentional human error can also result in devastating consequences, namely lost revenues and customers. The recent Ace Hardware $152 million accounting shortfall due to human error is just one of many recent examples. In a new report that surveyed over 450 global businesses, the IT Policy Compliance Group sounded an alarm about the severity of this problem: Human error is the main cause of sensitive data loss (75% of all occurrences, with one in every four cases due to violations of company policies).
An effective way to address the problem of human error and take the headache out of compliance and risk management is to implement a well-crafted employee assessment program. With employee assessments, companies can:
• Measure levels of employee understanding, competence and confidence in their job roles,
• Identify knowledge gaps,
• Use that data to find the right methods to enhance employee performance and meet compliance standards; and
• Reduce the likelihood of future human error.
Assessments are invaluable tools that more companies should use to improve regulatory and internal policy compliance.
Taking the current corporate temperature
Without an ongoing employee assessment program, companies are ill equipped to identify the extent to which employees truly comprehend how to fulfill the requirements of their jobs, the level of confidence employees have in their capability to perform their jobs, or the big decisions they are likely to make on behalf of the company. Even the best employees are putting companies at risk - even senior managers who may not realize it.
The importance of conducting regular employee assessment cannot be understated. Yet today, surprisingly few companies incorporate a thorough assessment method into their risk management process. Corporate employee assessment strategies typically rely on management to make a subjective assessment about an employee’s performance, drawing from a personal development plan. Worse still, some companies count on employees themselves to make these judgments about how well they understand crucial aspects of their job. Subjective methods put companies in a risky situation because these methods cannot be sustained over the long term, nor provide concrete data for both management and employees to measure improvement over time after each new assessment phase.
The power of assessment
Employee assessments, when correctly developed and implemented, can precisely measure levels of employee understanding, competence and confidence. Assessments that are actually useful are those that gather vital but previously unattainable workplace data - objective measurements of employee understanding and knowledge gaps. To reap any real value from assessments, they must identify levels of employees’ true understanding of how to meet the requirements of their job role and confidence in their skills.
Assessments can also be used to identify those employees who do understand their jobs, but lack the confidence to make the right decisions in tough business situations. By pinpointing the individuals at risk, management can arrange for proper training and empower staff to gain the confidence needed to do the right thing. In other words, assessments help individuals reach their true potential so that employers can, in turn, continuously improve overall business performance.
A comprehensive employee assessment program can map employees’ actual skills and knowledge against the landscape of skills needed for a particular job. Perhaps more importantly, they can provide companies with detailed recommendations for tailoring training programs to improve performance as needed. That is, rather than investing in blanket retraining programs, assessments can get very specific and separate out those employees who do not know how to meet the requirements of their job role. This can translate into big cost savings.
Smart companies integrate employee assessments within existing corporate development and learning frameworks. This provides companies with a rich pool of data—both objective data from carefully defined assessment questions about job skills and fulfillment of job requirements, and more subjective data from personal performance reviews. This approach acts as a safeguard against human error and noncompliance.
Nowhere is a comprehensive approach to assessment and employee development more important than in the highly regulated financial services industry. Internal development and learning frameworks, when used by themselves, may not necessarily assess staff in a strict enough manner. A customized assessment can be designed to verify that key personnel have specific product or service knowledge. This will protect the consumer from receiving poor financial advice through inadvertent misrepresentation of a banking product or service. For a global bank that wants to improve customer service across several regional markets, a well-crafted assessment can provide access to a complete, highly detailed database of the precise skills and competencies of its entire associate structure—from Tellers to Banking Center Managers.
Assessments for compliance needs
Compliance managers should lobby their senior executives in HR and the front office to implement a comprehensive employee assessment program. Employee assessments can ensure the workforce is properly trained to safeguard against:
• Regulatory penalties
• Personal injury claims settlements
• Tax / revenue penalties
• Inefficient financial practice (treasury or tax)
• Industrial tribunal settlements
• Poor procurement practice
• Loss of business due to downtime
• Loss of business due to disaster
Truly effective employee assessments are those that can be sustained over the long term. Ongoing assessments drive employees towards a benchmark standard in all required areas. By aligning to industry standards, assessments can be used to administer exams, which results in certification and compliance. Regular assessments provide a reliable way to objectively measure the performance of employees against their job roles and requirements over time. Particularly in competitive industries like clean tech (what is clean tech?), a consistent approach ensures companies can maintain the quality and effectiveness of their training programs for both new and existing employees.
Today, senior executives are increasingly held accountable for the actions—and errors—of their staff for compliance reasons. Most successful companies know where the actual and potential risks lie, and have systems in place to identify which employees have the potential to mitigate against these risks before the worst happens.
Mary Clarke
President and CEO
Cognisco
Mary J Clarke has served as Chief Executive of Cognisco since January 2004. Under her leadership the company has achieved sustained profitability and implemented a new operating model, developed a more customer and market driven culture and expanded the role and reach of Cognisco. In addition to serving as Chief Executive for Cognisco, Ms Clarke is Deputy Leader of South Northamptonshire Council, East Midlands and Cabinet Portfolio holder for Economic Development, Enterprise & Growth. She is a mathematics graduate from Heriot Watt University, Edinburgh. Before joining Cognisco Ms Clarke spent over twenty years in the IT and Telecommunications industry. She has developed a number of businesses from start-up in the UK and Far-East, served as Vice President for Lucent Technologies, formerly AT&T Network Systems and as Director of Network Services, Digital Equipment Company Limited.
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