Compliance Corner with Alex Henderson: Issue 3 – Only Human

Continuing our column “Compliance Corner”, this week Alex Henderson considers the impact of human error, and how to deal with it. We’re “Only Human”, he argues, and must build from our mistakes.

An incident, regrettable but memorable, occurred shortly before the start of our recent festive holiday season. It involved a team member from a customer-facing department making a mistake which resulted in a potential risk to one of our operations. It made me recall previous organisations I have been part of – and how errors are treated, and the culture this creates.

Here’s a real life example: One of my previous CEOs had a very strict approach to handling employee errors, particularly in regards to compliance. If an error occurred resulting from a team member within this department, or a department involved in the customer journey, it was entirely unacceptable and was met with immediate, harsh disciplinary action. The thought process behind this mindset being that only ‘perfection’ was acceptable within the Compliance Department and, by extension, across the wider business workforce.

Now–being the outspoken pain-in-the-neck that I like to be at times–I  completely disagree with this approach. 

Which in turn leads me to question the efficacy of such a tyrannical disciplinary process, and the commonplace fear of challenging negative hierarchical ideologies.

It begs the question, is it wise to take disciplinary action against an employee who is consistently reliable but who makes an innocent mistake? It may appear to make sense to come down hard on errors in the Compliance Department–after all they set the benchmark standards for much of the company–but I firmly believe that sending a message that perfection is the only form of acceptable performance, if anything, only creates an increase in human error.

Every situation needs to be treated on its unique merits. Obviously, the severity of the mistake in question, the impact it has on the business and on reputation, should all determine the response.

For an error that results in little-to-no realised negative impact, or one that can be rectified swiftly, should be handled in a way that adds value to the outcome for both employer and employee. If you discipline employees when they make mistakes, then the culture that you create is one where employees cannot be open. Within compliance, you need to know that all employees feel comfortable coming to you with any challenge. This includes being open when they have made, or identified a mistake. 

Unjustly disciplining your colleagues sends the one message in compliance that you don’t want to send, which is: Cover up your mistakes. Hide your errors. Don’t tell anyone. Because if you do, you are in trouble.

Instead, I prefer this alternative: Come to me when you have made or spotted a mistake. Let’s work together to find out how–and why–the mistake occurred. Let’s find a solution that reduces the chance of the same mistake taking place. I don’t want my colleagues to hide their errors. I want a culture of openness and two-way trust. This culture can only be embedded when employees know they can be forthcoming with questions and concerns. I suggest a few simple steps that could be taken to help create this culture:

• Identify the cause of the error, i.e. lack of training, knowledge, staff working over capacity, tiredness.
• Clarify if the mistake is a one-off or a consistent issue.
• Work with the person/team in question to implement a solution that prevents the situation occurring again.
• Conduct a Q&A to determine if the fix has been effective.

Another major reason for the necessity for openness and integrity is–believe it or not–compliance officers are imperfect creatures. They make mistakes. I make mistakes, and sometimes make the wrong call in a situation. I cannot expect perfection as it sends the message that I have never made, and never will make, a mistake – which is not accurate. 

Regulators also make mistakes (Granted, some more than others). And the fact remains that mistakes are going to occur because we are all flawed human beings by creation, and we should not be punishing colleagues in the hope that mistakes will not occur again. Rather, we should be learning from mistakes and taking action to remediate the risk of repetition. After all, a big part of compliance is finding the best way to manage these risks within the organisation.

In conclusion, we need to accept the fact that mistakes are going to happen. It is an unavoidable–yet manageable–risk for every organisation, whether you are a supplier, operator or regulator. Data shows that draconian forms of enforcement, or reprimand, are often ineffective. We only have to look at the Repeat Offender Rates in the US, compared to reform-based countries, such as Denmark, to see the unquestionable veracity of this argument. 

As mentioned, we must consider alternative approaches and never forget that we are all human, and that human risk is something that can be managed. The objective, surely, is not to make the imperfect, perfect but to turn incompetence into competence.