Do You Have the Right Types of Metrics?

Choosing metrics that matter is a perennial problem. We know we need to monitor our program, both for ourselves and to please regulators like the Department of Justice and SEC.

Many, if not most, compliance officers struggle with choosing metrics and implementing a sound strategy for execution and reporting. If you’re one of them, don’t worry, help is on the way.

I’m going to let you in on an exclusive announcement – I’ve recently been creating an incredible online class called Prove Your Worth! which has a really great bonus module detailing 25+ ways compliance programs are using AI (coming soon!). In the process of creating that course, I discovered that there are two different kinds of metrics, and both are crucial.

If you’re only using one kind, your monitoring will be lopsided and less successful than if you use both. This is one of the secrets I discovered to choosing metrics that matter (and make YOU matter by showing your value).

Do you have the right types of metrics?

Effectiveness Metrics

The first type of metrics are effectiveness metrics. Effectiveness metrics show how effective your program is. An easy example of an effectiveness metric is tracking user satisfaction with training. Many eLearning programs can poll the learner at the end of the course to rate the training and allow the learner to provide feedback on what they liked and didn’t like. Tracking training reviews could show you how effective your eLearning is.

You could survey folks after live or webinar-based training to compare how effective the live training is. You could even compare the scoring for eLearning versus live training. That would give you a full picture of the training program’s effectiveness.

Effectiveness metrics should always have a KPI associated with them. If your metrics show that investigations close in an average of 30 days, you need a KPI to know whether you are getting closer or farther from your goal. If, in previous months, your investigations were averaging 35 days to close and now they are at 29, your KPI shows that you’ve improved.

Trend Metrics

Trend metrics are those that can show trends in the business. They are often used to identify red flags, outliers, or activities that may need investigation to understand. It’s important to note that these metrics do not directly show the effectiveness of the program. They are used to alert you to movements in risk.

For instance, a trend metric could be the number of exceptions granted to the gifts and hospitality policy. If that number spikes, it is critical to investigate to understand why and where this is happening. The spike might show that the anti-bribery program isn’t effective, but it is more likely that a person or department is either ignorant of the policy or engaging in conduct that needs to be reined in.

Trend metrics don’t typically need a KPI, but they do lend themselves to storytelling. If your metrics show that last year, 10 countries were listed as high-risk in your risk assessment, but this year, there are only 8, you must tell the story around that.

Explain why this is a good outcome because risk is reduced. Perhaps your company pulled out of a risky territory or terminated a challenging distributor relationship.

The story puts the metric in context, making it meaningful. Without the story, the metric won’t matter.

Some Data Can Be Used for Both Types

Some data can be used as an effectiveness metric and a trend metric depending on how you look at it. For instance, let’s say you have an effectiveness metric where your KPI is to have fewer than five compliance-related audit findings. If you have four at the end of the year, congratulations, you met your goal in showing your program was effective in practice, as  Internal Audit found few problems.

This same information could be used as a trend metric. If you compare the number of audit findings year-on-year and find that the program only had two compliance-related audit findings last year, and that number doubled, it’s important to explore why that happened.

You Need a Mix

You need a mix of both effectiveness metrics and trend metrics to ensure you’re balanced in how you’re reviewing your program. By providing effectiveness metrics to your executive leadership and board of directors, you will ensure they are aware of how good the compliance program is and how well it is functioning. By providing trend metrics, you’ll be able to alert them to problems or needs of the business.

Once you’ve identified the metrics you want to track, ask yourself which type of metric each is and make sure you’ve got a good balance.

Want more information on choosing metrics? Sign up to receive my weekly newsletter to be the first to hear about the Mastering Metrics course and an upcoming free downloadable e-guide called ‘Stop Getting Ignored: Seven Secrets that Make YOU Matter’.

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Kristy Grant-Hart

Kristy Grant-Hart

Kristy Grant-Hart is the founder and CEO of Spark Compliance.
She's a renowned expert at transforming compliance departments into in-demand business assets.