How to Use Incentives in a Compliance and Ethics Program

Using incentives in a compliance and ethics program can be controversial, but the truth is they can be a powerful force when used correctly. Utilizing incentives in these programs can help motivate employees to act ethically and legally while preventing misconduct.

In order to change behavior and habits, you ultimately have to change recognitions and rewards. People are naturally inclined to engage in proper behavior, as you have defined it through your compliance and ethics program, once they realize you are willing to reward them.

Furthermore, incentives are a way for your organization to communicate what it is you value the most. In a sense, rewards are the most effective communication tool you have at your disposal.

So, how can you use incentives in your compliance and ethics program? What benefit does it offer you, and what are the best practices you can follow? Let’s take a look at everything you need to know.

Why You Should Consider Using Incentives in a Compliance and Ethics Program

Using incentives in a compliance and ethics program can be a powerful strategy for promoting ethical behavior and ensuring regulatory compliance within an organization.

Using Incentives in a Compliance and Ethics Program

There are many compelling reasons why you might consider incorporating incentives into your program, which we’ll explore in this section.

Motivating Behavior

In our articles and posts, we’ve talked quite a bit about incentives and rewards as behavior modification. At the end of the day, humans are creatures of habit. If you want to encourage and reinforce certain behaviors in your workforce to reach certain outcomes, utilizing incentives is one of the best strategies.

Motivated Employees

Incentives serve as motivators for employees to adhere to ethical standards and comply with regulations. When employees see the potential for rewards or recognition, they are more likely to make ethical choices and follow established rules and guidelines.

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Though incentives can be incredibly powerful at changing behavior, it’s important to recognize that not all incentive programs are created equal. To learn more about what differentiates successful from less successful programs, check out our recent post about ten reasons that incentive programs fail.

Reinforcing Values

Another reason why you might consider using incentives in your compliance and ethics program is that they can help reinforce the organization’s core values and principles.

Reinforcing Values

By aligning rewards with desired behaviors, you send a clear message that ethical conduct is not only expected but also valued and recognized.

Boosting Awareness

Your employees are busy– they have a lot to keep track of all of the time. If you want to make sure that your compliance and ethics program doesn’t quickly fall onto the backburner of everyone’s mind, incentives and rewards can be a powerful tool.

Incentive programs can raise awareness about compliance and ethics standards among employees. When employees are aware of the program and the potential rewards, they are more likely to engage with compliance training and adopt ethical practices.

Boosting Awareness in the Workplace

A well-informed workforce is more likely to recognize that ethical behavior is not just a set of rules but a core part of the company’s identity and long-term success. Additionally, boosting awareness goes beyond just stating the rules; it emphasizes personal accountability. Employees should understand how their actions can impact the organization’s reputation and success.

Beyond that, the more aware your employees are of your compliance and ethics program, the more it becomes an integral part of your company culture. Employees are more likely to internalize ethical principles and integrate them into their daily work when they are compelled to be aware of them through incentive programs.

Finally, rewarding and reinforcing positive behavior can help you avoid ethical blind spots. Ethical blind spots can occur when employees are unaware of potential ethical dilemmas in their day-to-day work. Incentives and the awareness they bring can help shine a light on these blind spots and empower employees to make ethical decisions in challenging situations.

Creating Accountability

Designing an incentives program that rewards employees for abiding by your compliance and ethics program also shows that you aren’t just paying lip service to ethical issues as a brand– you actually expect workers at every level of the company to abide by them.

Creating Accountability in the Workplace

By tying incentives to compliance and ethical conduct, organizations create a sense of accountability among employees. Individuals are more likely to take responsibility for their actions when they know there are consequences, positive or negative, associated with their behavior.

Promoting Reporting

Participation from workers at every level of the company is essential for your compliance and ethics program to be effective and successful. Using incentives in conjunction with your program can help raise awareness about the importance of reporting problems.

Encouraging employees to report unethical behavior or compliance violations is crucial for maintaining a strong compliance program. Incentives can be used to incentivize reporting, ensuring that potential issues are identified and addressed promptly.

An Employee Reporting Unethical Behavior

Compliance problems could result in truly outrageous fines, depending on your industry. For this reason, it’s worth investing in encouraging employees to report problems as early as possible once they crop up. On the other end of the spectrum, it’s important to never penalize employees for reporting non-compliance in good faith, regardless of the outcome.

Building a Culture of Compliance

Workplaces are living, breathing organisms that are made up of countless different individuals. At the same time, when they all come together, they create an environment– a culture– that has its own character and qualities.

Building a Culture of Compliance

You can help ensure that the culture at your workplace incorporates the importance of ethical behavior and compliance through the use of incentives. When employees observe their peers being rewarded for ethical behavior, they set a positive example and encourage others to follow suit.

Mitigating Risk

A robust compliance and ethics program, backed by incentives, can help reduce the risk of legal and regulatory violations, which can lead to costly fines, lawsuits, and reputational damage.

Mitigating Legal and Regulatory Risks

This situation is where it is well worth some upfront investment to save money, headaches, and trouble.

How to Use Incentives in a Compliance and Ethics Program

Leadership Offering an Incentive

Now that we’ve taken a closer look at why incorporating incentives into your compliance and ethics program is well worth the effort and investment, let’s investigate how you can best use them as a part of your program.

Define Clear Objectives

The first step in incorporating incentives into your compliance and ethics program is to define clear objectives.

Defining Clear Objectives

What specific behaviors or actions do you want to encourage or discourage among your employees? Are you looking to reduce instances of fraud, improve data security, or enhance transparency? Setting clear and measurable objectives can align your incentive program with your organization’s broader compliance and ethical goals.

Make Sure All Essential Elements Are in Alignment

A successful compliance and ethics program is built on a foundation of alignment. Your incentives should be consistent with your company’s mission, values, and code of conduct.

Ensuring All Essential Elements Are in Alignment

Ensure that the elements of your program, from policies to training, are in harmony with the desired ethical behaviors and compliance requirements. When your incentives align with the core principles of your organization, they become a natural extension of your corporate culture.

Understand What Drives Your Employees

People are motivated by different factors, so it’s crucial to understand what drives your employees.

Some may be motivated by financial rewards, while others may value recognition or opportunities for career advancement. It can be worthwhile to conduct surveys or engage in one-on-one discussions to gain insights into your workforce’s motivations.

A Team of Motivated Employees

Though it can take some extra research and planning, tailoring your incentives to individual and collective preferences will yield better results.

Consider Diverse Incentive Options

Incentives come in various forms, and a one-size-fits-all approach is rarely effective. Consider diverse incentive options, such as branded debit cards, recognition programs, promotions, merchandise and travel rewards, or even extra time off. This variety allows you to appeal to a broader spectrum of employees and cater to their unique preferences and needs.

Coming Up With Various Incentive Options

At the same time, it’s important to be aware of any specific regulations surrounding incentives in relation to compliance and ethics programs. Before deciding how to reward employees for their behavior, make sure you check all relevant federal, state, and industry guidelines.

Set Clear Metrics and Standards

To ensure the effectiveness of your incentive program, establish clear metrics and standards for evaluating employee performance.

Setting Clear Metrics and Standards

These metrics should be directly tied to your compliance and ethics objectives. By quantifying what success looks like, you create a roadmap for employees to follow and a basis for determining who qualifies for incentives. Furthermore, this helps ensure there isn’t any question of fairness when it comes to handing out rewards in relation to your compliance and ethics program.

Communicate Openly and Clearly

Effective communication is a cornerstone of any successful compliance and ethics program, and the process through which incentives will be given out is no exception.

Communicating Openly and Clearly

Be transparent about the incentive program’s objectives, eligibility criteria, and rewards. Clearly explain how ethical behavior and compliance contribute to the company’s success and how employees can actively participate. Open and honest communication fosters trust and engagement, while a perceived lack of transparency can quickly lead to cultural problems that permeate the whole workplace.

Monitor and Measure Performance

Once your incentive program is in place, continuously monitor and measure performance.

Regularly assess whether employees meet the established standards and whether the program achieves its desired outcomes. If necessary, you can make adjustments to the program to ensure its continued relevance and effectiveness.

Monitoring and Measuring Performance

The best incentive programs are living entities rather than fixed systems. No matter how much thought and effort you put into designing your first program, you will likely gather more information along the way that you can incorporate to further motivate the proper behaviors and achieve the desired results.

Of course, there are more or less organized ways to go about this part of the process. By leaning heavily on the power of technology to gather data, organize it, and analyze it, you can ensure that you are learning the most valuable lessons possible from your program so that you can turn around and improve it.

Celebrate Achievements

Recognizing and celebrating ethical behavior and compliance achievements is a powerful motivator– no matter how large or small your company, your employees want to know that their hard work and honest efforts are seen and appreciated.

A Team Celebrating Achievements

When employees see that their efforts are acknowledged and valued, they are more likely to continue demonstrating the desired behaviors. Celebrations can take various forms, from public recognition to small tokens of appreciation.

Assess Effectiveness Over Time

Lastly, don’t forget to assess the long-term effectiveness of your incentive program.

Assessing Effectiveness Over Time

Over time, the dynamics of your organization may change, and compliance requirements can evolve. Regularly evaluate the program’s impact on reducing unethical behavior and promoting compliance. Be prepared to adapt and refine your approach as needed to stay aligned with your goals.

Incorporating Incentives Into Your Compliance and Ethics Program

Using incentives in a compliance and ethics program can be valuable for promoting ethical behavior and ensuring regulatory compliance within your organization. By defining clear objectives, aligning essential elements, understanding employee motivations, offering diverse incentive options, setting clear metrics, and consistently communicating, monitoring, and celebrating achievements, you can create a culture of integrity and accountability that benefits both your employees and your organization. Regularly assess the program’s effectiveness to adapt and enhance its impact over time, and you’ll be well on your way to building a robust compliance and ethics framework.

An Employee Being Rewarded For Proper Behavior

Is it time that you communicated to your employees what your organization finds most valuable by rewarding them for the proper behavior? Do you want to promote awareness surrounding your compliance and ethics program in order to benefit from the substantial risk mitigation it can offer?

If so, you’re in the right place. Level 6 is North America’s leader in fully custom incentive programs, and we’d love to help you design the perfect incentive program for your compliance and ethics program.

Are you ready to get started? If so, be sure to schedule a call with us today!

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