Do you feel that performance metrics to close cases in a certain number of days negatively influences the substantiation rate?
If that question has you shifting uncomfortably in your seat, you’re not alone. Frankly, while key performance indicators (KPIs) are valuable and necessary for measuring success in your business across most areas (including compliance), they can also result in altering behavior to meet said metrics. When that’s the case, you may find yourself in a bit of a compliance conundrum trying to balance the competing expectations.
What’s driving case closure time: KPIs or investigation results?
That’s the essence of the question we wanted to glean insights about during our recent Regional Whistleblowing & Incident Management Benchmark Report webinar based on some surprising findings in the report detailed below. With a response set of over 650 webinar attendees, we asked if performance metrics to close cases in a certain number of days influences the substantiation rate. In other words, what we wanted to know is: is the goal of meeting KPIs for case closure time potentially influencing compliance program decisions and investigation outcomes?
Nearly two-thirds of poll respondents (65.4%) answered yes.
So, now that we’ve opened Pandora’s Box, let’s take a look inside.
Case closure and substantiation differences: North America vs. Europe
Our interest in polling attendees on this issue stemmed from notable differences observed in case closure time and substantiation rate comparing reports originating in North America versus Europe.
At just 21 days for the 2023 calendar year, North America has the shortest median case closure time among regions by report origination location – and this reflects a decrease of two days over the previous year. Meanwhile, one of the longest median case closure time by report origination was Europe, at 58 days, which is close to triple the closure time compared to North America and a year-over year increase of 22 days. This is a substantial increase in case closure time for Europe and will be watched to determine if this is a trend or an anomaly.
Meanwhile, in 2023, reports made in Europe showed a median 50% substantiation rate, compared to 40% for reports made in North America. It is worth noting that, from 2022 to 2023, both North America and Europe saw an increase in case substantiation rates: by 4 percentage points for reports made in North America and 8 percentage points for reports made in Europe.
This significant contrast may present an opportunity to ensure that a drive for shorter case closure times is not impacting the investigation quality. While it would be irresponsible to draw a firm conclusion about what this data means, the longer European case closure time paired with a greater and increasing substantiation rate compared to North America certainly warrants consideration.
So, why are cases in North America closed almost three times faster than European cases?
Well, that’s the million-dollar question. To bring us full circle to the question you saw at the top: Do you feel that performance metrics to close cases in a certain number of days influences the substantiation rate?
Nearly two-thirds of 650 respondents said yes in our webinar survey. Does that mean cases are less likely to be substantiated with the desire to close them more quickly in North America? Does it mean that in Europe, compliance teams are taking more time to investigate and are ultimately substantiating more cases by giving them enough time to process?
How big is the drive to meet KPIs in your organization?
So, the elephant in the room: are KPIs driving compliance outcomes? Or are compliance outcomes simply measured by these KPIs?
Without running the risk of creating a salacious headline, I’d posit that the former could be true. If it is true, compliance teams have an opportunity to evaluate their case closure KPIs to ensure that a worthy objective of ensuring timely investigations and responses to reporters isn’t having unintended consequences.
And it wouldn’t be the first time that meeting KPIs has had undue influence over performance. This probably evokes some past news stories of unethical conduct being swept under the rug to meet certain performance metrics at a great many institutions. Businesses are driven by KPIs, we rely on them to measure how we’re doing – but does that come at the cost of ethics?
This isn’t just backed up by the many ethics and compliance issues you’ve read about in the news – we have data to prove this may be the case. The annual NAVEX State of Risk & Compliance Report reveals that in a cohort of over 800 survey respondents, only 50% stated their senior management persists in their commitment to compliance in the face of competing interests and/or business objectives. For middle management, respondents stated 46% of middle managers persist in their commitment to compliance.
If over half of these survey respondents believe the opposite, that senior and middle management do not persist in their commitment to compliance in the face of priorities and/or business objectives, that could mean that meeting KPIs comes at the expense of ethics and compliance.
Regional Whistleblowing & Incident Management Benchmark Report
We could easily generate months of content about regional differences for whistleblowing and compliance program data – in fact, there’s a whole report dedicated to just that. For more data and insights into regional differences in hotline reporting – check out the full report and companion webinar.
What is the State of Risk & Compliance in 2024?
Much like the revealing poll results from the recent webinar, we have many more questions for risk and compliance leaders around the world. The annual State of Risk & Compliance benchmark report has been published – and you don’t want to miss this one! Link here for the report and webinar replay.
