Compliance in a well designed environment: Nudging Speaking Up

"First, never underestimate the power of inertia. Second, that power can be harnessed." – Richard Thaler 

The Preframe

This week, I am taking a short break from appeasing the sharks in Shark Tank by implementing their recommendations in our program, and concentrating on something so important, I think even the sharks would encourage us to work on it. The approach, in true Shark Tank style, is entrepreneurial (meaning inexpensive (in this case free), we do more with less, and get better results.

It's also part of the latest chapter I am writing for my book: Told: How in-house legal and compliance professionals secure airtime, gain traction and transform organizations (TOLD) - extract below.

And it starts with a recent work trip to Las Vegas. I got in a day early and had high hopes on my first evening in to catch up on emails, admin and even finish the chapter of my book. But I got waylaid - it seemed wherever I looked, went or heard, there was the lure of a show. I ultimately found myself buying tickets to The Piano Man that evening (me with the star of the show, Kyle Martin below).

I did not regret a single moment but it did get me to think about how I went from writing a chapter of my book to watching a show. As you can see from my example: our choices are not always our own.

But here is another learn for me, at the start of the show, Kyle said something that we certainly would not hear on Broadway or in London. He encouraged us to take photos and videos and share with friends and post on social media. Everyone there had their phones immediately up and Kyle had a few hundred people promoting the show for him!

What was Kyle doing? He was nudging us to carry out the most effective marketing activity of all time - sharing and recommending.

• [Short side note: if you like this newsletter please feel free to copy and paste your favourite part on a LinkedIn post and send the url to someone you think would benefit from it.]

And it's not just Kyle (and me). Often we are nudged (guided and coaxed) toward decisions we may not have consciously chosen. And this isn’t just my theory; it’s a well-researched, widely accepted behavioral science concept known as nudging.Thanks to Richard Thaler and Cass Sunstein, who literally wrote the book on this (yes, it’s called Nudge), the idea of nudging is everywhere—from podcasts to government programs. The UK even has a “Nudge Unit” dedicated to influencing people’s behaviour on everything from tax compliance to organ donation, all by adjusting how choices are presented.

Want people to recycle more? Make the recycling bins easier to reach than standard rubbish bins or have more of them. Want healthier eating habits? Put the salad front and centre. Want your kids to get ready quicker in the morning, set up their environment so that breakfast is on the table, uniform is out, shoes and socks are by the door - outcome: children are ready to leave on time. Just simple adjustments in the environment—no lectures, no punishments—just nudges.

And we’d be lying if we did not admit to experiencing and acting on a little nudging in parts of our lives such as our finances.  How many of us have their pension or superannuation set to default settings rather than going in and intentionally updating it to align with our specific goals? Something I am now doing since researching this chapter.

The Piano Man and Compliance

In our ethics and compliance programs, this concept is a game changer. Nudging helps us move away from orders and the act of ‘telling’ people what to do and expecting them to do it when it matters. Instead, we can focus on setting up an environment, so employees make the right decisions because it is natural, not forced.  

The extract below focuses on one critical component of any compliance and ethics program from my chapter on Nudging Compliance, which is reporting, speaking up, whistleblowing or whatever you refer to it as.

About this newsletter

This newsletter isn't just another read; it's a whole new way of looking at legal and compliance. By integrating insights from a diverse array of fields—think psychology, neuroscience, economics, physics and beyond—with seasoned legal and compliance expertise, we're crafting a narrative that legal, ethics and compliance in organisations is a catalyst for innovation.

The information in this newsletter is not intended to be used as legal advice. I would be happy to provide specific legal or compliance advice if you have any specific questions. Just email me at nicole@untoldcompliance.com. Alternatively consult with a qualified professional for advice tailored to your specific situation.

Extract from Told: Nudging Speaking Up

Why people don't Speak Up?

In a series of compliance workshops for a particular bank across regional Australia, I would ask the same question: Why don’t you speak up? By the end of the two-day sessions, people were ready to “be honest,” and I’d capture their answers on a flip chart. I delivered around 30 of these workshops, and each time, the responses were almost identical: “Nothing will happen.” “We’ll get into trouble.” “I won’t be believed.” “It’s not worth it.”

In these workshops and also other organisations I worked with, it was always the same. People hesitate to speak up for a host of reasons, and not just because of fear of retaliation. There’s the belief that the organisation won’t actually do anything with the information, that they’ll be ignored or brushed off. Some worry they’ll end up with a reputation as “the complainer” or, worse, that they’ll be branded as untrustworthy by their team. Others genuinely fear damaging relationships with colleagues. For many, it’s simply that they can’t see the personal upside—why risk their own peace for a battle they’re not even sure will be fought? 

The reality is, when we ask people to ‘blow the whistle’ or ‘speak up’, we’re effectively asking them to run a marathon without training. Speaking up about wrongdoing is not a natural reflex; it’s a skill, and one that most employees haven’t had a chance to practice or even warm up to. For years, they may be telling themselves that to ‘get ahead’ they need to to keep their head down, and ‘not make waves.’ Then suddenly, we’re asking them to leap over that belief and report something significant. No wonder they hesitate!

[Short side note: If you want to know more about the fear of speaking up through the voice of one who experienced retaliation on a much larger scale check out my The Eight Mindsets podcast interview with Pav Gill From Silence to Safeguard.]

How to nudge people to speak up

 The age old question in every single organisation I have ever worked in or with is:

How do you get people to speak up and report?

In order to answer this question (and I believe, in true entrepreneurial spirit, that we can), we need to ask a better question.

How do you get people to regularly speak up as part of how they perform their role?

To create a culture where people feel comfortable speaking up, we need to build that confidence step by step. It’s like getting ready for a big race; you don’t start with 26 miles. You start by setting your alarm, putting the shoes by the front door and getting your playlist on Spotify set up the night before, so you have all the nudges in place for the next morning to go for that run.

And it’s the same with nudging people to speak up. We need to gently guide employees toward speaking up in ways that don’t feel like a ‘big act’. Instead, they think of it as small, everyday actions that get them comfortable with voicing concerns long before it’s something major.

So how do we do this? Simple – by encouraging regular short activities. Let me explain. 

Employees practice speaking up

"It was a beautiful song, / but it ran too long / (If you're gonna have a hit, you gotta make it fit) / So they cut it down to 3:05". - The Entertainer, Billy Joel

This verse references the shortening of Joel's song "Piano Man" to fit a radio slot. But it also illustrates an important point. By cutting down the song, Joel got more airtime.

We want people to practice speaking up as part of their work life - to get more airtime when it comes to speaking up by cutting down any barriers to them having airtime.

We can do this by normalising feedback, turning it into an ordinary part of the workday so that when something serious does come up, they don’t feel like they’re stepping off a cliff. Or running a marathon with no training. This could be as simple as:

1. Prompting managers to open every team meeting with a reminder that everyone’s perspective is valuable or encouraging employees to bring up minor process improvements during team huddles.
2. Recognising employees for bringing up small issues—not just in the context of misconduct, but even day-to-day operational concerns. When employees see that speaking up is valued, not punished, it builds trust that larger issues will be taken seriously too.
3. Using regular, anonymous surveys to ask employees to give feedback on how a particular event or launch of a new product went that your team was working on.
4. Then using anonymous surveys to ask more pointed questions – for example how safe they feel to voice concerns? This gives them a way to speak honestly without immediate exposure, while helping managers and legal and compliance teams understand where the gaps in trust might be.

Managers practice receiving feedback

All of the above requires a two way environment for success. We also need to nudge managers to handle feedback (concerns or otherwise) appropriately. Often, employees’ first experience of speaking up is with their immediate manager. If that interaction goes well, they’re far more likely to feel confident escalating a larger issue if it arises. So how can we set up the environment for managers?  Here are some suggestions:

• We can make data (feedback) a part of operational success. The more data they capture, good and bad, the better.  This makes feedback a positive, whatever it is.
• We provide nudges around that feedback –we provide an environment for managers to capture and share that data. It could be as simple as an excel document or even a Smart Sheets form or using CLM or other technology you use.  The point is whatever system is set up has a number of fields; so in addition to capturing when people provide feedback (data) there are also columns to complete (pre-populated) for:

- whether there was an interaction with the employee,

- the type of interaction with the employee, and also

- whether it was successful or not (on a scale of 1 -5).

Do you think managers would want to capture more 1s (poor) or 5s (outstanding)?

• And how about if you had a system of checking the data? Compliance or another team could interview 1 to 3 employees per month on information captured by the managers - so that managers are less likely to inflate their scores but are nudged into honesty?

The great thing about capturing reporting in this way, is that the employee sees that giving feedback is part of how they operate. And you may even want to set up something similar for customers – making it a part of the way that you do business.

All of this may seem like a lot of work, but if the system was set up, it just becomes a way to capture feedback data quickly and effectively. What business doesn’t want to see data? If you wanted to (as my yoga teacher says) ‘level it up’ you could set up a competitive environment with other teams to see who has captured the most feedback.

Final Thoughts

The point is, that if we want people to cross the finish line—to speak up about the big things—we need to design an environment where giving and receiving feedback properly is second nature, a habit, a reflex. That way, when it really matters, employees (and their managers) are ‘ready to go’.

And on that thought, let's end with Billy Joel from his song, 'You May be Right':

You may be right / I may be crazy / But it just may be a lunatic you're looking for.

Thanks for reading.

Nicole

Untold Compliance Co-host of the Eight Mindsets Podcast

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