Earlier this month, we witnessed a breakdown in corporate culture with the controversy surrounding the arrest of two African-American men at a Starbucks in Center City Philadelphia. The episode, which was caught on video, prompted the hashtag #BoycottStarbucks that went viral with over 100k mentions across Facebook, Twitter and Instagram in the three days following the incident and spurred protests locally as well as nationally against the coffee giant. Recognized and promoted as a socially responsible and conscious corporation, this incident disrupted the company’s business, diluted its brand equity, and ultimately diminished its shareholder value.
Starbucks serves as a cautionary tale for businesses as to what can happen when there is a disconnect between proclaimed values and true corporate culture. Corporate culture drives conduct and one of the ways to communicate a company’s culture is through training, long acknowledged as one of the core elements of an effective corporate compliance program.
Training, however, is not a one size fits all proposition. As companies develop and refine their corporate compliance training programs, they should consider the following:
1. Customize to the industry. The training for a hospitality company is not the same as for a financial services institution. The regulations are different as are the operational and customer service issues.
2. Align with the staff’s exposure to risk. Tailor the training to the staff’s position. Not everyone needs to receive the same type of training. Those exposed to high-risk areas, such as sales or public sector/government markets, receive a different type of training than administrative staff. Though the scope and content of the training will vary, given the recent Starbuck’s fallout, diversity and inclusion should be incorporated as a training component enterprise-wide.
3. Conduct in person if you can. Online training is convenient. However, it is not necessarily as effective as live training, which promotes interaction (and greater attention). Smaller companies, due to their size and scale, are in a better position to take advantage of live training. Larger organizations typically adopt a more hybrid model of live and online training.
4. Be creative and make it practical. Utilize scenario based hypotheticals of incidents that have occurred in the industry as well as actual past corporate incidents as teachable moments. Engage the audience.
5. Certify and attest. Documentation is key and all staff should certify and attest that they received training. In the event corporate misconduct does occur, by providing evidence of training, companies are able to document that they have met one of the seven elements of an effective corporate compliance program established by the United States Sentencing Commission.
6. Monitor and audit on an ongoing basis. Develop metrics and conduct internal staff surveys to measure the effectiveness of training. Is there an increase in reporting; are there fewer incidents? Also, consider having an audit conducted by a neutral third-party to assess gaps and determine where there are opportunities for improvement.
Starbucks’ current Standards of Business Conduct address a number of issues, including its mission, values, the workplace, and business practices which range from standard corporate compliance matters such as conflicts of interest, gifts/entertainment to international business, sales practices, and fair competition, among other topics. It also includes a diversity and inclusion statement that, “We respect diversity in each other, our customers and suppliers and all with whom we interact”. This statement reflects the “tone at the top”. However, the “tone at the top, mood in the middle, buzz at the bottom” often gets lost in translation because it is not properly filtered and communicated throughout the organization. Starbucks’ decision to close 8,000 stores for racial bias training next month is a first step. However, Starbucks recognizes that a half day of training is not going to reduce discriminatory behavior. It may raise awareness, but it certainly will not rectify the fundamental problem, which is disparate treatment of customers, based on ethnicity.
Rather Starbucks needs to re-examine its corporate culture and how its values are disseminated. In doing so, it should review and revise its policies and procedures so that there are strict and standardized protocols, applied consistently, that set forth prescribed conduct. Equally important, the disciplinary consequences of failing to comply and adhering to the protocols need to be clearly defined and applied universally.
Training is a powerful tool: to communicate culture and to mitigate risk. However, it is not the only tool and to deploy training exclusively, in the absence of well-defined policies and procedures, creates a gap in a corporation’s compliance infrastructure that can have potentially dire consequences. Companies need to ensure that as they structure and reassess their corporate compliance programs, they develop the appropriate controls to align culture with conduct and risk mitigation. Often management is too close to the situation to assess impartially and is well-advised to engage outside experts to view their policies and procedures, conduct investigations, and manage training.