Directors & Boards: Feature

Home |

Subscriptions |

Articles Archive |

Current Issue |

Back Issues |

Shopping

Advertising |

List Rental |

Editorial Calendar |

Background |

Feature

Martha Braunstein
Senior Vice President
Kaplan EduNeering

Ramping Up the Compliance Effectiveness of Board Communications

Every company has a ‘learning management system’ for delivering vital information to the board. With shareholders raising the ante for board accountability, is your LMS up to the job?

By Martha Braunstein

Corporate boards are caught in a crossfire that isn’t likely to quiet down soon. Stakeholders demand accountability for corporate performance while regulators and enforcement agencies, both domestic and foreign, are getting fat on successful prosecutions for ethics and governance violations.

There’s more. The 2007 Ethics Resource Center’s National Business Ethics Survey concludes that ethical misconduct in general has shot back to pre-Enron levels and that only one in 10 companies surveyed has a strong ethical culture.

There’s no question that an ethical culture produces business benefits, whether through compliance or customer loyalty. There’s also no question that an ethical culture starts from the top of the organization and relies on consistent communication for reinforcement. There’s no question that companies have cut down, cut back, and cut out all but the most critical costs.

The question that does need an answer is this: How can a board of directors avoid the quicksand of noncompliance and non-ethical behavior throughout the organization — but do so without adding huge costs or massive new systems?

First, use existing technology such as the company’s learning management system (LMS) to do double, triple, and quadruple duty. Second, take advantage of that same LMS for its content.

Get More Value from Technology
Competitive companies already use technology, particularly for recordkeeping and communication. The proliferation of employee-to-employee emails, corporate communications and, often, compliance-required training has overwhelmed all but the hardiest among us.

Add the need to fill in, sign off, and return “hard copies” that are then filed in some bottomless chamber or reentered into an electronic database. Even then, the inefficiency of the system is only one part of the problem.

The riskier part is the potential for lost, misplaced or damaged records and the resulting inability of the organization to self-audit or respond quickly to external audit requests.

An effective LMS that integrates compliance, communication, and auditability does more than send out emails. In fact, it has to do more, including:

•    Target relevant information to recipients based on their need to know, whether to board members or from them to reinforce the board’s commitment to an ethical corporate culture.
•    Enable e-signatures that comply with the standards contained in 21 CFR Part 11, which sets specific requirements for electronic signatures to be accepted in lieu of paper-based, handwritten signatures and records.
•    Support multiple communication, compliance, and training efforts, from the distribution of standard operating procedures to shop floor supervisors to regulatory updates for directors.
•    Document all communications in audit-ready format to confirm that board members have received and reviewed required critical documents in a secure, validated learning platform.

Getting the Content Right
Corporate directors are not required to know everything about their organizations’ operations, nor are they expected to ensure corporate compliance with all regulations or operational efficiency throughout the organization. They are, however, required by law to exercise a duty of care in decision making and oversight. Beyond that, shareholders are raising the ante for board accountability, and companies increasingly recognize the role boards must play in creating and maintaining an ethical culture.

Like everyone else in the organization, directors need relevant information specific to their roles and responsibilities. Critical information comes from outside the organization — and from inside — such as the following:

•    Board meeting minutes, resolutions, and financial statements that require confidentiality in distribution and storage. The same system used to distribute these documents can be used for real-time board voting, with all documentation preserved through a secure, validated learning platform.
•    Critical updates including regulatory requirements, court rulings, and industry-specific alerts about emerging trends. Things can change quickly. In August 2008, for example, the U.S. Court of Appeals for the District of Columbia Circuit upheld Sarbanes-Oxley. Do directors need to know the plantiffs’ arguments or read the ruling? Probably not. The point is to provide the necessary information, along with access to more detailed coverage.
•    Corporate activities such as new product launches, product recalls, or regulatory investigations, employee complaints about ethics violations, and the status of complaint resolution.
•    Training on corporate code of conduct and key regulations such as Foreign Corrupt Practices Act and False Claims Act, which are seeing a lot of government attention.

No matter how important the information is, it has little value unless it gets to the right person, at the right time, and in an understandable format.

People write the content, but it is technology that enables boards and directors to monitor the compliance culture of their organizations in a way that is paperless and auditable.

Martha Braunstein is senior vice president of Kaplan EduNeering, responsible for business development. Her career spans more than 26 years. As a founder of two companies and holding executive-level positions, she has lead and assisted many companies through aggressive revenue growth and operational change. Her expertise includes implementing change, streamlining operations, and business strategy.

Kaplan EduNeering is a leader in the development of knowledge solutions that improve business performance, minimize risk, and assure regulatory compliance. The company provides tailored technology solutions to corporate and government clients in the pharmaceutical, medical device, health care, energy, manufacturing, casual dining, and food sectors. The company's solutions include a Web-based learning management platform, custom course development, and technology consulting services.

Kaplan EduNeering is part of Kaplan Inc., a worldwide education services leader and a subsidiary of The Washington Post Co.

The author can be contacted at mbraunstein@kaplan.com.