Principled

Listen again | How KFC crafted an award-winning training program

Training presents an opportunity to not only educate workers, but also inspire their growth. But how can you do that in a way that feels energizing rather than exhausting? On this episode of the Principled Podcast, LRN Learning Manager Leah Hodge explores how to create engaging training with Rachel Donley, the Head of Learning & Performance Enablement for the KFC US market, a division of Yum! Brands. Listen in as the two talk about KFC’s Shift Supervisor training program, which has been receiving lots of industry recognition—winning gold at this year’s Brandon Hall Awards and being selected as a finalist for the Learning Technologies Awards—and improving leadership capability across the KFC US system of restaurants.

Learn more about LRN’s custom learning experiences. 

 

Guest: Rachel Donley

Rachel Donley is a learning leader, instructional designer, gamification proponent, and strategic business partner. With 13 years of experience in the learning industry and 22 years of experience in the retail and food service industries, Rachel’s learning solutions have earned eight Brandon Hall awards. She was named a 30 under 30 Learning Leader in the inaugural Learning 2010 program and awarded the Brandon Hall Rising Star Award in 2017. Rachel holds a Master of Education in learning design from Bowling Green State University in Ohio and currently leads a team of seven to deliver learning and performance solutions to KFC’s 4100 US-based restaurants.

 

Host: Leah Hodge

Leah Hodge brings more than 17 years of instructional design experience to the corporate learning and development space. As a learning manager and expert in strategic partnerships at LRN, she fosters relationships with clients to analyze their training needs with an eye on elevating the learner experience. She is passionate about designing and implementing creative bespoke solutions that get learners excited about their development, taking them on a journey beyond just checking-the-box completion—including blended learning, gamification, video and animation, and onboarding learner journeys. 

Listen again | See something, say something: Bystander intervention training insights

Most of us have heard the phrase, “If you see something, say something.” But what does that look like when someone witnesses bad behavior in the workplace? How can companies help their employees be active bystanders in the face of misconduct? In this episode, LRN colleagues Felicity Duncan, senior instructional designer, and Kristen Motzer, learning director, share their expertise on bystander intervention training and how organizations can effectively give employees the knowledge and skills they need to step in and help their coworkers. Listen in as the two share insights from their latest course development for the training library at LRN.

Access LRN’s 3-year DEI curriculum today to learn more.

 

Guest: Kristen Motzer

Kristen Motzer is an experienced leader in values-driven, empathetic behavior change. As Learning Director for the LRN Library she oversees course content development and online, blended, and facilitated learning experiences. She has expertise in human-centered learning design and has developed and managed education and learning programs at institutions such as NYU Langone Health, NeuroLeadership Insitute, Stanford University, Xavier University, and the Cleveland Clinic. Kristen holds a BA from Wright State University and an MA from Carnegie Mellon University and resides in Chicago.

 

Host: Felicity Duncan

Dr. Felicity Duncan believes that training and communication interventions have the power to transform behavior, including driving people toward more ethical treatment of those around them.

Felicity graduated with a Ph.D. in Communication from the University of Pennsylvania. After teaching at the college level for several years, she transitioned to workplace education to have a bigger impact on working adults by providing them with the training they need to truly thrive in their roles. At LRN, she is focused on developing high-impact, behaviorally focused content for the LRN Library. Her most recent project saw her working with the Library team to create a powerful new DEI Program that includes not only LRN’s world-class Inspire courses but also a set of microlearning assets designed to support, reinforce, and guide behavior change.

Listen again | How does DOJ policy and guidance affect E&C programs?

Over the last few years, federal regulators have provided detailed guidance on what they expect to see in E&C programs when it comes to misconduct inquiries or investigations. What do these recent reports, policies, and guidance mean for compliance professionals? In this episode of the Principled Podcast, LRN Director of Thought Leadership and Best Practices Susan Divers is joined by Jon Drimmer, a partner at the law firm Paul Hastings. Listen in as the two discuss the recent guidance from the US Department of Justice as well as DOJ policy impacting corporate compliance programs and ethical culture.  To learn more, download the 2022 Ethics & Compliance Program Effectiveness Report.

 

Guest: Jon Drimmer

Jonathan C. Drimmer is a partner in the Investigations and White Collar Defense practice and is based in the Washington, D.C. office of Paul Hastings. He resolves complex cross-border problems with the benefit of having sat in every chair at the table: senior legal officer for a global 500 company, federal prosecutor, and seasoned advocate. He is a recognized international expert on anti­corruption and business and human rights, and is a frequent speaker, author, and commentator on issues related to both topics.

Before joining Paul Hastings, he was Deputy General Counsel and Chief Compliance Officer of Barrick Gold, one of the world’s largest mining companies, with operations on five continents. The compliance program he built at Barrick has served as an industry standard, and elements of it have largely been duplicated by numerous other companies inside and outside of the extractive sector.

Mr. Drimmer has directed hundreds of investigations around the world related to anti-corruption, human rights, AML and export controls, tax controversies, environmental incidents, public disclosures, fatalities and health and safety injuries, sexual harassment and discrimination, and other areas. He has represented companies and individuals in numerous government enforcement proceedings in the U.S. and overseas, in relation to FCPA and bribery claims, human rights issues, and a wide array of other matters. He has participated in dozens of major disputes in the U.S., Canada, and abroad, including transnational torts, anti-corruption claims, environmental cases, international arbitrations, tax disputes, construction claims, and land controversies.

He previously served in the Justice Department as Deputy Director of the Criminal Division’s Office of Special Investigations, where he led cross-border investigations, first-chaired numerous prosecutions, and argued federal appeals. He was a partner at an Am Law 100 law firm in Washington, D.C., a former Bristow Fellow in the Office of the U.S. Solicitor General, and a judicial clerk on the U.S. Court of Appeals for the Ninth Circuit. Mr. Drimmer served on the board of directors of the Voluntary Principles on Security and Human Rights Initiative from 2012-2014, and again from 2015-2017. He served on the board of TRACE International from 2012 until 2018, and currently sits on the board of the TRACE Foundation. He has also taught international law courses at Georgetown University Law Center for nearly 20 years.

 

Host: Susan Divers

Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.

Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.

Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative. 

Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. 

For a transcript of this podcast, please visit the episode page at LRN.com.

Happy holidays from LRN

We’ve officially wrapped season eight of the Principled Podcast and are taking a break for the holidays. Stay tuned for more conversations on culture, ethics, and compliance in the coming calendar year.

Happy holidays!

S8E14 | What goes into making award-winning code of conduct training?

It’s no secret that writing a code of conduct doesn’t change your company culture overnight. It’s important to develop training that educates your employees on what’s included in your code, and how those elements apply to their day-to-day work. But how can you do that in a way that makes your code dynamic and accessible? On this Principled Podcast episode, host Jim Walton talks to Chris Dunstan, the Chief Compliance Officer & Group General Counsel at SPX FLOW, about how the company tailored its code of conduct training to better reflect the responsibilities of employees, while also keeping the material interactive and connected to its evolved brand. The training has received enthusiastic industry recognition, winning gold at this year’s Brandon Hall Awards for Best Advance in Compliance Training. More importantly, the training has reached a record-high completion rate across SPX FLOW’s global offices. 

 

Featured guest: Chris Dunstan

 

Chris Dunstan is a versatile legal leader with an aptitude for legal operations, strategy, and optimizing the intersection of business and the law. He is the Chief Compliance Officer & Group General Counsel at SPX FLOW, a diversified manufacturer of industrial equipment with operations in more than 30 countries. In this role, he manages the global litigation docket and compliance program and leads a team responsible for all commercial legal activities for multiple product portfolios. Prior to joining SPX FLOW, Chris was the general counsel at Lucifer Lighting and spent more than a decade working as the senior litigation counsel for Ericsson. 

Chris has spent much of his career helping both public and private companies navigate complex legal issues in dynamic, highly regulated industries such as telecommunications, consumer products, and industrial equipment manufacturing. He always strives to share his deep functional expertise in high-stakes litigation, IP protection and licensing, foreign and domestic regulatory compliance (FCPA / UK Bribery Act / GDPR / CCPA), and commercial transactions.  

 

Featured host: Jim Walton

 

Jim Walton is a member of LRN’s Ethics & Compliance Advisory Services Team – with over 25 years of professional experience in corporate, institutional and government settings, spanning the fields of ethics and compliance; environment, health and safety; and energy management.

Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics & compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third-party due diligence reviews; and helping managers at all levels become better ethical leaders.

Jim is a Certified Compliance and Ethics Professional.

 

For a transcript of this podcast, please visit the episode page at LRN.com.

S8E13 | Islands of civility: A special Edelman report on trust in the workplace

As today’s societal issues continue to mount, employees are turning to the workplace as one of the safer spaces for debate and a primary source of community. In fact, data from a special edition of Edelman's 2022 Trust Barometer—specifically analyzing trust in the workplace—notes that 78% of employees trust their employer over other established institutions and connections. So, how can companies leverage trust and adapt their own practices to better address employee concerns? In this episode of the Principled Podcast, host Emily Miner explores key findings from the Trust in the Workplace report with David M. Bersoff, the Head of Research at the Edelman Trust Institute. Listen in as the two discuss what drives trust and how employers can strengthen trust in—and beyond—the workplace. 

Get a copy of the Edelman's Trust in the Workplace special report. 

 

Read our blog post on takeaways from this report. 

 

Featured guest: David M. Bersoff, Ph.D.

As the Head of Research for the Edelman Trust Institute, Dr. Bersoff is the lead researcher on all of Edelman's trust-oriented thought leadership, including the Edelman Trust Barometer. He also leads the Institute's research-based collaborations.

Prior to joining Edelman in 2016, David spent 18 years as a consumer insights and marketing strategy consultant at The Futures Company. In his last 5 years with the organization, he served as its Chief Insights Officer and was a member of its global board of directors. In that role, he ran the Global Insights Group and drove the research, data analysis, IP creation and product development strategy for all of their syndicated consumer insights offers – Yankelovich MONITOR, Multicultural MONITOR, Global MONITOR, Health and Wellness MONITOR, Financial Services MONITOR, and the TRU Youth MONITOR. 

In addition to his background in IP development and insights product management, David has also served as a trusted advisor and marketing/brand strategy consultant to major clients in industries as diverse as financial services, automotive, media, professional organizations, energy, and the military.

Prior to entering the consulting world, David spent 12 years engaged in social science research at various Ivy League institutions, including 4 years as an assistant professor of social psychology and research methodology at the University of Pennsylvania.

 

Featured host: Emily Miner

Emily Miner is a director in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact.

Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.

 

For a transcript of this episode, visit https://blog.lrn.com/islands-of-civility-a-special-edelman-report-on-trust-in-the-workplace

 

 

 

S8E12 | Geopolitics and the interconnectedness of compliance risks

In this episode of the Principled Podcast, host Susan Divers continues her conversation from Episode 11 with Tom Fox, the founder of the Compliance Podcast Network, on the changing geopolitical landscape and its impact on E&C. Listen in as the two discuss how anti-corruption is a key component of ESG, the consequences of compliance in cybersecurity, and the growing interconnectedness of risks. You can listen to Episode 11 here. 

To learn more, download a copy of Tom Fox's white paper Never the Same: Five Key Areas in Which Business Will Never Be the Same After the Russian Invasion. 

 

Featured guest: Tom Fox

Tom Fox is literally the guy who wrote the book on compliance with the international compliance best-seller The Compliance Handbook, 3rd edition, which was released by LexisNexis in May 2022. Tom has authored 23 other books on business leadership, compliance and ethics, and corporate governance, including the international best-sellers Lessons Learned on Compliance and Ethics and Best Practices Under the FCPA and Bribery Act, as well as his award-winning series "Fox on Compliance."

Tom leads the social media discussion on compliance with his award-winning blog, and is the Voice of Compliance, having founded the award-winning Compliance Podcast Network and hosting or producing multiple award-winning podcasts. He is an executive leader at the C-Suite Network, the world’s most trusted network of C-Suite leaders. He can be reached at tfox@tfoxlaw.com.

 

Featured host: Susan Divers

Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.

Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.

Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative. 

Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. 

Principled Podcast Transcript

Intro:

Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.

Susan Divers:

Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Susan Divers, Director of Thought Leadership and Best Practices at LRN. Today, I'm continuing my conversation from episode 11 with Tom Fox on the changing geopolitical landscape and its impact on ethics and compliance. If you haven't listened to that episode yet, we highly encourage you to do so. Tom is the founder of the Compliance Podcast Network and the author of the award-Winning FCPA Compliance and Ethics Blog, as well as the Complete Compliance Handbook, which is in its third edition. Tom, welcome back to Principled Podcast.

Tom Fox:

Thank you, Susan.

Susan Divers:

Tom, in our last episode, we talked about the impact of the war in the Ukraine on compliance and ethics. And specifically on the challenges that's imposed or brought to the fore for companies and specifically for their compliance teams who hopefully have a real seat at the table in terms of dealing with those challenges and mitigating those risks. But one of the topics that underlies what we were talking about is that of conducting your business in a fair, transparent, and sustainable manner. And I'm really struck by some of the things you were saying about the need to be transparent and the need to walk the walk and talk the talk. Because if you fail to do so, we live in an age of radical transparency and easy access to social media, and moreover, it's the right thing to do.

So with that as the background, anti-corruption has long been a focus for regulators. I mean, it's probably defined yours and my careers in a lot of regards. But only recently have some people started talking about it, and you're one and I'm one, as a major component of ESG. Could you explain for our listeners how that works and the role of anti-corruption in ESG?

Tom Fox:

Sure. So ESG, in my mind, Susan, the power of ESG is that it has brought together disparate strands that have existed in every corporation for some lengthy period of time. But brought them together in a way that someone is looking at them holistically. So, I'll pick on E because that perhaps is the easiest. As a compliance officer, I never looked at environmental issues in our company. That was somebody else's responsibility.

Susan Divers:

Me either. Right.

Tom Fox:

Didn't mean there wasn't environmental compliance, but it meant that I wasn't looking at that from the compliance perspective. Now, whether it's the Chief Sustainability Officer, whether it's the Board of Directors, whether there's a Board ESG Committee, somebody's connecting compliance to environmental. And so that in and of itself is, to me, the most powerful reason to have a robust ESG program. But anti-corruption in ESG, in my opinion, Susan, I've always seen it directly in the G.

Susan Divers:

Me too.

Tom Fox:

Number one, it's a good governance issue. Number two, it is a Board of Director's issue. Number three, it's illegal and regulatory issue.

But now Susan, I'm beginning to see it and have tried to articulate, that I see it in the S component as well as sustainability. Part of it is around one of the topics we touched on our last podcast of radical transparency, that if you do business ethically and in compliance, and if there's a question raised about a supplier, a customer, a distributor, a someone you've done business with in today's era of modern social media, that you can respond to that in a way that won't hurt your business from the public perception perspective. Leaving completely aside the regulatory perspective. So, I see ABC or anti-corruption compliance now, Susan, as directly within the S of ESG as well. And I also see it in the E. So to me, it sort of bleeds across all aspects of ESG and is a key component of a best practices ESG program.

Susan Divers:

Yeah, and I'm glad you articulated it so clearly for people, because I think there's a tendency perhaps, to silo ethics and compliance and sustainability. And they really are part and parcel of the same thing. And I'm going to quote from your recent white paper in support of that. "As a fundamental threat to the rule of law, corruption hollows out institutions, corrodes public trust, and fuels popular cynicism towards effective accountable governance." And that's, I think, a quote from the U.S. Strategy on Countering Corruption. Can you talk for us and link together how anti-corruption, anti-money laundering, and sanctions all are part and parcel of the same thing and relate to ESG? I think that'd be helpful for our listeners?

Tom Fox:

So Susan, the statement you read interests me for a couple of reasons. That came out of the U.S. Strategy on Countering Corruption, and it was aimed at national governments, so national governance. And I think it's absolutely correct that corruption, money laundering, all fuel cynicisms towards effective, accountable national governance. But Susan, as you were reading that, it struck me, that is equally true about corporate governance, or the G in ESG. Because violations of the rule of law, corruption, money laundering, they all corroded trust in our corporations, and indeed fuel cynicism towards effective accountable corporate governance.

The United Nations estimates that $3 trillion is lost to the global economy annually because of bribery and corruption. The United States Department of Treasury estimates that $2 trillion is lost annually because of money laundry. That's $5 trillion taken out of the global economy that could be used for a wide variety of other ways, reasons to help countries and people that's not available to them.

So having an effective anti-corruption and anti-money laundering strategy as well as trade sanctions, I think, are directly a part of ESG. They're certainly all in the G. We've talked about how they relate to sustainability. But money laundering and trade sanctions are as invidious, in my mind, as corruption is.

After 9/11, we saw a spike in the first real spike in FCPA cases starting sort of circa '04. And it was said that corruption led to crime, which led to terrorism. And there was really a belief that corruption had a direct line to the terrorism that impacted the United States directly on 9/11.

And now we see how corruption leads to erosion of trust in governance. But governance is not just corporate governance, it's democratic governance and democratic institutions. And certainly the Russian invasion of Ukraine put another exclamation mark on that. Whatever Russia is, it's not a democracy. And it is, if you want to see evidence of the invidiousness of corruption, you only need to look at a Russian army, their failures in Ukraine, how they've treated the people of Ukraine all wrapped up in an anti-democratic form. And that all speaks to the G. And when you read that line or that quote from my white paper, it struck me, that really works on multiple levels of governance.

Susan Divers:

Well, and you raise a good point too, that it's in the corporate governance area because if you... I've said this so many times, but it's worth repeating. If you have a code of conduct and you have training and you have policies, and you have an E&C team, that doesn't mean you have an ethical company, particularly if your leadership is engaging in sexual harassment or they're dealing with people who are banned because they're under sanction or they're violating anti-money laundering controls because it's a big account and they want the commission. That just means that your program is basically window dressing.

So for corporations and for E&C professionals, it seems to me that making sure that you're doing business in an ethical, compliant way is part of and parcel of being sustainable. And part of demonstrating that trust that is essential, if you're going to do business effectively, as we've talked about. We talked last time a little bit about how the Biden administration has basically shifted the view of anti-corruption enforcement. And I think that bears reemphasizing, 'cause I thought that was such an interesting point that you raised about that in the last podcast. Do you mind repeating that?

Tom Fox:

Sure. So in December, 2021, the Biden administration release our U.S. Strategy on Countering Corruption. Once again, this did not come about because of the Russian invasion of Ukraine, but it occurred during the run up to it. And it's one of the things that I think the Russian invasion have put an exclamation point on as to why business will never be the same in certain areas.

You and I have been in the anti-corruption field for a long time. As of December, 2021, our fight is now a national security fight. And they elevated anti-corruption and the fight against corruption to a national security issue. When something becomes a national security issue of the United States, that means resources are made available for that fight.

The strategy released by the Biden administration was the internal U.S. Government Strategy. It didn't impact our former employers or us today directly. But what it did was say, "The U.S. is going to enhance the global fight against corruption. They're going to work with foreign partners, foreign prosecutors, foreign departments of justice or ministries of justice to bring to justice people who engage in bribery and corruption, people engage in money laundering in a way they haven't done before."

Interestingly, there was a section on journalists and the fourth state and a specific acknowledgement that exposes, business exposes by journalists all the way from blood money of the story of Theranos to the Paradise Papers, to the Panama Papers, to the Paradise Papers, all exposed bribery and corruption, all exposed money laundering, all exposed sham corporations, all exposed fraud. And for the first time, we have the U.S. Government saying, "We're going to work to try to encourage good journalism to help expose these, because we can't do all of this on our own." And newspapers have a vital role to play, and reporters have a vital role to play. So, we have the fourth estate now being openly discussed by the United States.

We have government agencies that had never concerned themselves with anti-corruption, now being tasked with anti corruption. And I would point you to NATO. NATO's been around most of our lives. No, well, I guess all of our lives.

Susan Divers:

Yeah.

Tom Fox:

It's a key component of what I see as U.S. Security interests. But I've never heard NATO and anti-corruption in the same breath before. Well, now NATO is charged with enforcing anti-corruption statutes for its suppliers. It's suppliers are not all U.S. companies. NATO's a 23 member, I think, organization. So any country can have suppliers to NATO. Well, now they have to comply with U.S. anti-corruption laws probably in the form of the FCPA.

So, we have a greater scope, a greater reach, we have greater resources in the form of prosecutors or investigators. But the U.S. is acknowledging and saying, "This is part of our overall fight." And in part one of our episodes, Susan and I talked about the Department of Treasury saying that U.S. corporations are a part of the fight against money laundering. Well, I think the Department of Justice has come pretty close to saying that U.S. corporations are a part of the fight against bribery and corruption. And because it's a national security issue, we want you to come to us. We will incentivize you to come in and self-disclose, once again, even if it's within your organization.

I think that this means more funds, a wider remit for government agencies that have not had this remit before. And when you start talking about the press as a key part or a key whistleblower within the context of overall whistle blowing programs, I think that's an acknowledgement that is long overdue.

Susan Divers:

I totally agree with you. And I think it also sort of ups the ante, because when you couple that with DOJ's recent re-emphasis and added emphasis on personal responsibility and liability for misconduct, it's in a sense saying, "If you go out and you bribe or you violate anti-money laundering or you do business with people on the sanctioned list, or you help oligarchs move their yachts, you're not just committing an economic crime. You're doing something that violates the U.S. National Security interests." And I think that's something for boards and executives to really think about, especially in light of the recent absolutely horrible Lafarge cement case where they were bribing ISIS in order to keep their Syrian cement factory open.

It's an interesting dynamic. Let's leave that and let's talk about cybersecurity, because that's another major risk area for companies. And it directly plays into the area of sanctions in AML as well as others. What are you seeing in that space as a result of the war in the Ukraine and the risks that's created?

Tom Fox:

So once again, Susan, cybersecurity, cyber attacks, cyber hacks have been with us for some period of time. I think Target was probably the first one that got the attention of most of us in the compliance community. But certainly within the cyber community, this was well known. But what the Russian invasion of Ukraine has done is, here I have to cite to Brandon Daniels, CEO of Exiger who said, "We are now under permanent non-kinetic warfare.", meaning we are permanently under attack by our enemies in the cyberspace. Every company is subject to attack. It can be a state actor or it could be rogue groups. It could be criminal groups. So, that's sort of point one. We are all under attack now and we have to harden our defenses.

But point number two is that what you sort of raise at the end, Susan, you're attacked, you're hacked. You want to get the key so you can unlock your documents. You make a payment. Who are you making that payment to? They're probably not going to say, "My name is Thomas Robert Fox. My bank account at Chase is..." They're going to give you a false name and some sort of drop account that you don't know, or you may not know who the end user is. Well, in 18 months or 24 months, when you get a little knock at the door from the Department of Treasury, which says, "You've just paid ISIS." Or, "You've just paid Russia. We'd like to ask you some questions under oath." The point being that if you don't know who you're paying, you may be paying someone who's on the sanctions list. You may be paying rogue agents or agents rather from Cuba, from North Korea. You may be paying agents from China.

And so, cybersecurity is tied to money laundering and trade sanctions because of the potential payments. As a business, you're in an extraordinarily difficult position because you may have not had hardened defenses. And you may be at risk for losing your data or having it put out on the dark web. And that's not going to be an easy choice. But if you make a payment and it's to someone on the sanction list, the U.S. government has made clear, you will be punished for violations of those U.S. laws.

And this fall, it's not effective yet, effective March, 2023, Lloyd's of London has announced that they will not honor cyber insurance obligations where the attack was made by a state actor. And typically what companies will do after they're hacked and they have to announce publicly is, they will say, "Well, we were a hacked by the Russian government and there's nothing we can do for it because it was a top military hacking unit in Russia. And whatever defenses we had in place, we couldn't defend us." Well, if you say that trying to cover your backside, you've just lost your insurance coverage. And if you make payments, you're not going to be able to get indemnity and that money back. So, you have to be very careful about what you publicly say now, if you want to have full cyber insurance.

It's, here I'm less certain about the answer, Susan. I just know that the questions have become much more important, much more difficult. But you've got to have these conversations in your corporation. You've got to practice hack drill. It's like you and I did fire drills or bomb drills in elementary school. You've got to have a drill, you've got to have a plan in place. You've got to be ready, if you're hacked. You've got to have experts who you can call, trusted advisors, whether they be legal, whether it be technical, whether they be compliance, whether they be cyber, to come in and help you get through such an attack.

But we're under... make no illusions that this Russian invasion has unleashed corporate attacks in a way we have never seen before. It's here to stay. And you as a U.S. corporation and U.S. compliance practitioner are going to have to deal with it.

Susan Divers:

Well, and what you're saying too is a perfect illustration of the interconnectedness, which I don't think we thought in those terms too much in the past. We had FCPA compliance and we had sanctions compliance and trade compliance and AML. We didn't really, at least, I didn't, to confess, sort of think about it as all connected. But if you're basically being held to ransom and it's a Russian or an ISIS hacker, then not only could you violate the sanctions laws, but you could violate anti-bribery laws too, inadvertently. To use a great expression, it's sort of a dog's breakfast in some ways, what compliance officers are faced with.

So, what's your advice, because it's a new risk environment and the risks are really big? They're national security risks, they're not just good governance and good business risks. What should compliance officers do? Let's end on a practical note of, how do you actually deal with the situation going forward?

Tom Fox:

No, I wonder if I should open my door, bring my three dogs back in, and say, "Hey guys, what do you do when I put a dog's breakfast down in front of you?" And they look up at me and say, "Well, we eat it, Tom." It's here to stay. And that means you have to deal with it. It all goes back to risk. What are your risks? Assess your risks. Yes, I understand you have a robust cyber defense protocol. You have a program, you have tested that program, you've run drills on that program.

Now, have you done that same with your prime supplier? Have you done that with your Tom Fox vendor who has access to the vendor invoice system so that I can input my invoice into your system for work I do? Have you checked down to that level to make sure that my defenses are hardened, someone using my system can't get in? You have to go through the same exercise you do from a corruption compliance, any money laundering compliance, trade control, and trade sanction compliance.

Assess your risk. How do you assess your risk? Where are you doing business? Who are you doing business with? How are you doing business? In all of those manners, are there any gaps in your defenses in those three areas? If you assess those risks and then if you find gaps, weaknesses, material deficiencies, whatever you choose to call them, remediate those. It is a process you have to go through. You can't do it... I'm going to look at our cyber defenses in our third party supply chain this afternoon. You can't do that. It is a process and you're going to have to put work into it.

But that's where you get the real results. Because once again, as we found, I think in the supply chain discussion we had, Susan, once you look at those sub-suppliers, who you're doing business with, where they're doing business, and how you're doing business, you may find inefficiencies from the business operations perspective. And you can correct or improve those business efficiencies and make your company more efficient, and hopefully at the end of the day, more profitable, when you began as a program to assess risk based upon a DOJ pronouncement or a DOT pronouncement. But it all starts with recognizing what your risks are. And only you can assess your risks.

Susan Divers:

And I like too, the way you've mapped it out, because it really, again, comes full circle back to sustainability, that the way you do business is just as important as what business you do. And if you truly keep on top of your risks and really reinvigorate the risk function, that should be, as you've pointed out, a dialogue with the board and with the top management. It shouldn't be a dialogue that compliance and audit and legal are having because it involves the strategic direction of the company. And it also involves the way the company is governed.

So with that takeaway, I think this is a conversation we could be having for at least another hour, if not more. But we're out of time. And so Tom, thank you so much for joining us. And your thoughts are so valuable, because I think it's easy in the ethics and compliance field to get fixated on, "How am my rolling out the training? What's my curriculum, how many hotline calls have I gotten?" And it's much more about, how do we actually live in this world? And how do we in fact, conduct business in a way that's ethical, compliant, and sustainable? So you've really taken us to that perspective. And I'm very grateful to you for doing that.

Tom Fox:

Susan, thank you, and I look forward to continuing this conversation.

Susan Divers:

Thank you, Tom. My name is Susan Divers and I want to thank you all for tuning into the Principled Podcast at LRN.

Outro:

We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcast, or wherever you listen. And don't forget to leave us a review.

 

 

Listen again: How to bring compliance benchmarking to life

How do you know if your ethics and compliance program is successful? How are you capturing data and comparing it to industry benchmarks, or tracking your own company’s trends over time? In this episode of LRN’s Principled Podcast host Emily Miner, director of Advisory Services at LRN, talks about benchmarking E&C data with her colleague Derek Clune, product manager of Data & Analytics. Listen in as the two explore how benchmarking practices come to life and the role AI plays in LRN's new Catalyst Reveal solution.

 

Featured guest: Derek Clune

Derek Clune has been working in the ethics and compliance space for over 5 years with an emphasis on data and analytics. As a Product Manager at LRN, Derek is responsible for the vision of LRN’s new data and analytics platform; Catalyst Reveal. His main goal is to provide E&C professionals with more actionable data to understand their E&C program effectiveness better. Derek’s team works to create products that offer best-in-class prescriptive interventions to improve E&C programs and ease the administrative burden.

 

Featured Host: Emily Miner

Emily Miner is a director of LRN’s Ethics & Compliance Advisory services. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.

 

Find the transcript for this season 8 episode at LRN.com.

S8E11 | Geopolitics are impacting workplace ethics and compliance programs

As the world emerges from a pandemic mindset, we find ourselves confronting new geopolitical realities with Putin's war in the Ukraine as well as increasingly fraught relations between the US and China. How is this geopolitical landscape changing the compliance landscape? In this episode of the Principled Podcast, host Susan Divers is joined by Tom Fox, the founder of the Compliance Podcast Network and aptly accredited “Voice of Compliance.” Listen in as the two discuss the impact of geopolitics on ethics and compliance, and what issues should be top-of-mind for E&C leaders in the near future.

To learn more, download a copy of Tom Fox's white paper Never the Same: Five Key Areas in Which Business Will Never Be the Same After the Russian Invasion.

 

Featured guest: Tom Fox

Tom Fox is literally the guy who wrote the book on compliance with the international compliance best-seller The Compliance Handbook, 3rd edition, which was released by LexisNexis in May 2022. Tom has authored 23 other books on business leadership, compliance and ethics, and corporate governance, including the international best-sellers Lessons Learned on Compliance and Ethics and Best Practices Under the FCPA and Bribery Act, as well as his award-winning series "Fox on Compliance."

Tom leads the social media discussion on compliance with his award-winning blog, and is the Voice of Compliance, having founded the award-winning Compliance Podcast Network and hosting or producing multiple award-winning podcasts. He is an executive leader at the C-Suite Network, the world’s most trusted network of C-Suite leaders. He can be reached at tfox@tfoxlaw.com.

 

Featured host: Susan Divers

Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.

Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.

Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative. 

Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. 

Principled Podcast Transcript

 

Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.

Susan Divers: General Pete Schoomaker made a remark some years ago that's always stayed with me. He said, "People like to think that life is an opera that unfolds over several acts, but it's really a rodeo. You never know what's coming out of the shoot." So much of the ethics and compliance sphere clearly demonstrates the truth of the general's remarks, especially recently. LRN's last two program effectiveness reports focused specifically on the impact of the pandemic on ENC programs. Now we have the war with Russia in the Ukraine and increasingly fraught relationships with China. How is the geopolitical landscape changing the compliance landscape?

Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Susan Divers, director of thought leadership and best practices at LRN. Today, I'm joined by Tom Fox, the founder of the Compliance Podcast Network and aptly accredited Voice of Compliance. In addition to his 30 plus years of legal experience, Tom is the author of the award-winning FCPA Compliance and Ethics blog, and The Complete Compliance Handbook now in its third edition, which is by far the best source for best practices in one place about ENC programs. We're going to be talking about the impact of geopolitics on ethics and compliance and what issues should be top of mind for ENC leaders in the near future. Tom, welcome.

Tom Fox: Susan, thanks. I have wanted to be on this podcast for a long time. I particularly enjoyed your reference about rodeos because in the great state of Texas, that's a college sport, rodeoing, so lots of rodeos and it's certainly an apt metaphor for what we're going to talk about today.

Susan Divers: Well, great, Tom and I really appreciate the opportunity to have any conversation with you, but particularly on the podcast. So Tom, first, generally, how do you see the ongoing war in the Ukraine as disrupting trade and the rules, both formal and informal, that have governed the world for the last 20 years and is the World Economic Forum vision of trade now dead?

Tom Fox: Susan, in addition to the rodeo metaphor you gave us, the most prescient comment I heard during the COVID-19 pandemic is that we've moved from disaster recovery to business interruption to, excuse me, to business resiliency, to business as usual. Literally now, we can have a weather event, we can have an economic event, we can have a geopolitical event, we can have any event and the requirement of a company is how do you respond? How do you respond tomorrow? Have you planned for this?

I think the type of thing that we saw with the Russian invasion, as tragic as that was, it's one more, it's just an event and we're going to talk about that in some detail. But every company has legal, ethical and business obligations around that event. I was also particularly struck by your reference to the World Economic Forum, and when I read that, it put a frown on my face. And it put a frown on my face because the World Economic Forum, in my mind, has been one of the biggest leaders for the global economy.

Since at least 1990 when I started paying attention to a global economic framework because I was in the energy industry and began to think about these issues on a global basis, the World Economic Forum and their symposiums, their position papers and really their raison d'etre was to talk about a global economy. Although I certainly thought we would have regional conflicts, as we have always had, I never thought we would, I guess my hope was that the global economy would help drive us towards a more integrated global community and that we wouldn't be put near a brink again of a global conflict. I don't pretend to say that's where we're going in Ukraine, but when you start talking about tactical nuclear weapons, that's a conversation we haven't had in this country since the '60s with seriousness.

The World Economic Forum, the world they envision, the world you and I grew up in professionally, I think that world is gone. We're moving to something else. I use the Russian invasion of Ukraine really as an ending point or an exclamation mark on trends that we have seen percolating probably 10, 5, 3 years that accelerated extraordinarily greatly in the COVID-19 pandemic up to the war in Ukraine and the disruption that that has caused really impacts businesses, and this is going to be something, I think, we're going to have to deal with literally on an ongoing basis forward. Lots, really, to unpack there, but I do have to acknowledge you for pointing out it was really the World Economic Forum that has led, I thought, the charge for a global economy and globalization and unfortunately, I think that world is now dead.

Susan Divers: I hear you and I feel the same way about the Forum. LRN participated in it quite actively until fairly recently, and the Forum really did an excellent job of helping global leaders cooperate, frame some of the rules and the practices. Maybe when the current situation resolves itself one way or another, there'll be an opportunity to do that again.

But getting a little bit more granular at this point. You've written about the impact of the Ukrainian war on the supply chain and certainly for business that's one area where the rubber really hits the road. Can you explain that a bit to our listeners?

Tom Fox: Sure. The Ukraine War, the Russian invasion of Ukraine, as I said, put a exclamation point on this. One of the key disruptions from COVID-19 was indeed supply chain. Here, I think for the first time, Susan, we started to look at geography as a risk. Geopolitical risk has been known for quite some time, but with the COVID-19, we have the swaths of the world that were unavailable to us because of the pandemic. As the pandemic raged through China and moved to India and moved to Africa, large parts of the global supply chain were literally shut down completely and they couldn't get back up, couldn't get running again. We saw, from COVID-19, a geographic risk that we have perhaps not considered as much before. This is different than an island that may worry about climate risk or flooding or fires in California or something like that. We had real geographic risk.

The Ukraine War really put an exclamation mark on geopolitical risk. What is the risk? What was the risk in 2019 of Russia invading Ukraine? Certainly there were discussions at the highest level of our government. Frankly, I don't think you and I, wasn't on our radar. Maybe if you read foreign policy, it was on your radar, but for the business practitioner, from the compliance professional, I don't think we were thinking about a Russian invasion and what that might do to either our supply chain or business partners or customers. Well now, if the Ukrainian grain cannot be put in the global food supply chain, that's a huge disruption. The question that I thought about is what would be the effect of the disruption of the global food chain on one of our former employers, Aecom, Halliburton, businesses that you and I have both been involved with, but we don't think of as having perhaps a food risk. Nevertheless, if grain is not available, what do those types of risks mean for employees in allegedly or apparently unrelated companies? Companies have to start thinking about these kinds of things in ways that we haven't done before.

I did a podcast earlier this week where someone said, "Look, the issue now is China and Taiwan." And he was absolutely right. That could be a military issue, could be a geopolitical issue. 82% of US semiconductors are made in Taiwan. That's a huge issue. Let's go back to our former employers who are now heavily invested in tech and actually use semiconductors as part of their manufacturing process. They're going to be impacted, let alone the US semiconductor industry and the US computer industry. That is something now that we have to consider. Are there any other geopolitical conflicts that could erupt, which might negatively impact our supply chains? And when I mean negatively, I mean you can't get your supplies out of those countries, whether it's a raw mineral, whether it's a extractive mineral, whatever it may be. Those types of issues now are more front and center than they ever have been.

From the business perspective, Susan, supply chains, since at least the late '70s or early '80s, the primary goal was efficiency. That was generally translated to just-in-time. It was seen because of the experience in the '60s where particularly in the auto industry, you had lengthy supply chains and actually large number of parts piling up in warehouses that was deemed to be inefficient. They wanted it just before they needed it. That led to just-in-time. That led to one or two suppliers. We found that sole suppliers or sole plus one suppliers has a risk. That risk is, if they're in a geographic area that's wiped out by COVID, if they're in a geopolitical area that is no longer available to us, then we, as a company, have a problem with our supply chain.

Certainly there are many industries that have been offshored outside of the United States. From our industry and service, or rather service industry folks like us, to manufacturing, to everything in between. That is now trying to be reshored on American soil. Can we do it? Yes. Can we do it tomorrow? Probably not. Can we do it in time for Christmas? Probably not. We're going to have to retrain, we're going to have to retool. We may have to allow greater immigration to get people in to do those jobs and it brings up an entire series of questions. It brings up economic questions. How much more is it going to cost to reshore? How much more does it cost and pay an American wage as opposed to a Philippine, Bangladeshi or other wage? Or you name the country outside the United States where the wages are disparate.

All of those issues are now in play in a way that certainly they were percolating around and percolating along in the second half of the last decade. COVID-19 accelerated those conversations, particularly around just-in-time and sole source suppliers. But now, I don't know how much of the globe Russia consists of. I think at one point, it was 12%. That's not available to us as a supply chain partner now and Russian partners are not available to us as supply chain partners. Now, what happens if China is not available to us as a supply chain partner or Taiwan because of an armed conflict with China. How is that going to play? Or can we even get semiconductor chips out of Taiwan if they're in an armed conflict with China? All of these issues are now front and center and I think every company has to be looking at their supply chain, who's in their supply chain.

Then obviously, this ties into things that were not deemed to be connected to all of these issues before, such as conflict minerals. Conflict minerals required you as a company to determine or any of the minerals you're buying, the four Ts, I think, coming out of countries primarily in Africa under conflict. This was the first time companies had really taken a deep dive, not to their direct suppliers, but to their sub-suppliers and they found out we don't exactly know who all of our sub-suppliers are. Obviously the Uyghur Forced Labor Prevention Act has huge impact on supply chains and hopefully, we can talk about that at some length in a little bit, but all of these issues on supply chain, it's elevated the discussion of the corporate supply chain, I hope, to where it properly belongs, in the board of directors level.

But for the people that we deal with, the CCOs and compliance professionals, I think it should be a part of an equal conversation because what are the risks? I was going to say implications, but what are the risks of moving your supply chain, reshoring it? It's a change so the risks change. It may not be an FCPA risk because you may be in the United States, but almost every state in the US has an anti-corruption law and a state anti-corruption law. I had to look at it one time, 37 states do. That's not that you can't bribe our state government officials, every state says that, but 37 with regular commercial private or private anti-bribery laws. When was the last time you, as a compliance professional, had to assess that issue, that risk? Lots of new risks and you, as a compliance professional, need to be a part of those discussions so you can begin preparing your corporation for those eventualities.

Susan Divers: Well, that's a perfect example, or I should say it's an example on steroids of how you have to respond to the risks that face you today and hopefully, tomorrow, try to look around corners. I remember, I think it was in the 2020 guidance that DOJ put out. They said that you can't let your program be a snapshot in time or go on cruise control. That's one of the biggest traps I see people fall into. You ask them what their risks are and it's kind of like what the risks were last year. With this environment and with what you just outlined in terms of supply chain, there's going to be a lot for compliance teams to do. How should people be addressing that right now? I know we'll talk later about sanctions and anti-money laundering being the new FCPA as Deputy Attorney General Monaco said recently, but what's your advice today in terms of how to think about those risks?

Tom Fox: Susan, you hit it exactly on the head. Assess your risks when your business changed. You reference the 2020 update to the Evaluation of Corporate Compliance Programs. That's where the first time the Department of Justice formally said, it's not an annual risk assessment. It's not a biennial, all-encompassing $100,000 risk assessment. It's an assessment when your business changed. The beauty of the timing of that statement, it was June, 2020, everyone's risk had changed because we were working from home. It didn't mean your risk increased or decreased, they changed. How do you assess working from home or how did you assess working from home from a compliance perspective? Once you made that assessment and then you found there were actually new risks, then you had to put a risk mitigation strategy in place, then you monitored that strategy to determine its effectiveness and then you used that information to upgrade your compliance program.

The formula is in place for all of these things, but it starts with exactly what you said, Susan, assess your risks if your business has changed and everyone's business has changed literally, particularly in the supply chain. You've got to know who your suppliers are. From the business perspective, who can supply us is paramount. Pricing is going to be paramount. But from the compliance perspective, where are they getting those? If you're a clothing manufacturer, how many of your suppliers are coming out of Bangladesh and how many of those suppliers are violating any sort of fair trade or human rights laws? Even what's the safety, as we know from the Plaza collapse a few years back in Bangladesh. You have to know who's in your supply chain to a level and degree that you didn't previously think about unless you were in conflict minerals.

But the beauty of that is that if you make that assessment down into your sub-suppliers from your supply chain, you as a business will be stronger. You will see, number one, if there are inefficiencies in our supply chain, but two, if there's a disruption, you'll be able to mitigate that if a disruption occurs because you can move to another supplier because you know where the parts are coming in from and hopefully, you'll be able to have prior knowledge or planning around that.

But think of a weather event. In 2021, I was living in Houston. It hit seven degrees. That was the first time we'd had single-digit weather in Texas since 1890. Well, we can't prepare for that, yeah! This is a town that had gone through two 500-year floods and 1,000-year flood over the past 18 months. We had a wildfire north of Houston. We'd never had a wildfire in Houston, Texas in my lifetime. All of that's to say is that things have changed. I don't pretend to say I know which way it's going, I just know that you have to be there. You have to have assessed those risks and have a plan in place if you can't utilize all the way down in your supply chain, but that gives you the opportunity to be more business efficient and if a catastrophe does occur, you're more quickly able to respond. Starts with a risk assessment, put a risk management strategy in place, monitor that strategy, and then improve your compliance program as information becomes available to you.

Susan Divers:I totally agree with that, Tom and I want to relate it back a little bit to a point you raised earlier too, which is this gives you an opportunity to make sure that you're dealing with ethical sub-suppliers and that your whole supply chain meets spec. I think I've seen in the past, in my long years as an ethics and compliance lawyer, and before that as more of a specialist on FCPA that a lot of times, people don't know who their sub-suppliers are and the first they find out is when there's fraud or potential bribery issue or diversion or a theft of intellectual property. It does give you an opportunity to get a more solid grip on your suppliers and make sure that they are the right people that you're dealing with.

Let's turn from that, which is I think a very good segue to the issue of economic sanctions. There's really been a quantum leap in that area, even it was starting before Russia, I think, with the sanctions on Huawei and the heating up of tension in the US-China relationship, but now it's on a completely different level and that really, I think, has to be top of list for companies when they review their ENC programs. Can you talk about that and give us some guidance?

Tom Fox: Sure. Once again, Susan, let me use the Russian invasion as the exclamation mark because under the Trump administration, we saw an exponential increase in the use of trade and economic sanctions. I had several friends in that space and every once in a while, I'd email them, "Well, we had three changes today. What do you expect this afternoon?" The point being that the prior administration saw those as legitimate and important tools for US national security. That has only increased now on steroids because of the Russian invasion. What the Trump administration's use of those tools did was it elevated the discussion of the trade compliance director in a corporation to the board of director level. It may have elevated them within the compliance function or generally within the C-suite because people now had to call trade compliance and say, "Anything new today?" Well, the sanctions that have come out after the Russian invasion have been all encompassing.

Now, I looked before this podcast, I think we're on our seventh round of sanctions and more to come. That's seven rounds from the United States. That doesn't even count the UK and Western Europe who have equally sanctioned Russia. Many US multinational companies are also subject to UK or EU trade sanction directives. You need to be cognizant of those. But the current trade sanctions that have been levied, and when I say there's still more to come, we haven't gotten to the nuclear option, which is secondary sanctions. If we get to secondary sanctions, that's an entire level of trade and economic sanctions literally that we have not seen since World War II.

Discussion though, around trade sanctions, and once again, I've talked to several of our colleagues who have that as their specific compliance remit and their specialization is they now feel elevated within the corporation. They feel that the issues they've been dealing with, their professional careers are now being discussed literally at the board of directors level because of these huge potential fines and penalties, the huge visibility. As important as these legal restrictions are, Susan, it's actually the reputational damage.

Just think about the companies that either drag their feet about leaving Russia or were slow or less than somebody's idea of we need to be out of there. They were excoriated in the press for doing business in Russia after this invasion. Those conversations have largely on by the wayside because I think most US companies are out of Russia now, but the reputational damage for the violation of trade sanctions or even some sort of norm or standard now costs more than perhaps even the finer penalty would've cost. It's really a huge change for our colleagues. It's an important change because now, those issues are being evaluated together with supply chain at the board level in a way they have not been previously evaluated.

You may now need to look, you need to call your trade director of trade compliance about issues in your supply chain. You need to call your director of trade compliance about where are we doing business? How are we doing business? Who are we doing business with? Who's our customer base? Are we selling with commission sales agents, company employees or distributors? If we're using distributors, are they reselling our products into Iran? Are they reselling our products into a country that's exporting to Russia? All of those issues now, I think, are being discussed at the highest level of a company. But for me, Susan, the real beauty of this discussion is finally, I think, the silos are coming down within a corporation and you're seeing a much more holistic approach to many of these issues that we'd not seen previously.

Once again, if I could go back to the DOJ's June, 2020 update to the Evaluation of Corporate Compliance Programs as presaging all of this, they said in that document compliance must have access to all data silos within a company because compliance needs to know what everyone's doing so compliance can do its job. Well, that turned out to be true, but it turned out to be true much broader. I think the DOJ was onto something when they said that, and I think now, companies are realizing you have to have this holistic approach. Trade sanctions and export control sanctions are here to stay.

The other insight from the Trump administration use of them and the Biden administration use of them is they're administration agnostic. They're not going to go away and if 2024, we have a Republican administration, they are probably going to continue those and they're not going away. If there's a Democratic administration, they're not going away. They're probably going to continue those. Sanctions, trade sanctions, export control sanctions are here to stay. They're probably going to get more robust. And until Russia pulls out of Ukraine, I think companies have to take these very, very seriously, both for a potential legal finer penalty, but even more important is in the commerce or the business place of public opinion.

Susan Divers: I totally agree with everything you've said and you've made a very articulate vision of what a major challenge is for compliance teams. The only thing I would add is, it's interesting to me, that this can affect small and medium-sized companies that don't think in these terms and may not even really be very sophisticated.

When I was looking a couple of months ago, I came across a case involving a false eyelash manufacturer who was importing what turned out to be false eyelashes that sourced in North Korea. I mean, it was a Chinese supplier, but the sub-supplier was North Korean and they got in trouble. As you know, it doesn't really matter if you don't know. That's no defense and they paid a fine for that. It was a good reminder that trade sanctions can affect everyone and that you really, hopefully, have to have that on your radar.

Let's take an interesting topic off of this, which is have the enhanced sanctions started to really impact whistleblowers? I mean, we know that FCPA enforcement has certainly inspired a lot of whistleblowers, as well as SOX and other areas such as that. But what about trade sanctions and what about AML and what we're seeing?

Tom Fox: That's been, I don't want to say it was an unintended consequence, but one of the most interesting outcomes or aspects of the Russian invasion. For the first probably 30 days, the most ubiquitous picture of the Russian invasion was a yacht steaming away because it was a Russian oligarch's yacht and they were trying to steam to a port where the US couldn't come in and forfeit them because of trade sanctions and sanctions put on the Russian oligarchs. But here's what happened. On January 1st of 2021, US Congress overrode President Trump's veto of the National Defense Authorization Act. In that bill, there was something called the AML law of 2020. The AML law of 2020 was the first update to our anti-money laundering laws and trade sanctions laws since the Patriot Act passed in the wake of 911. As part of that change, a bounty program for whistleblowers was put in place similar to the SEC bounty program put in place in Dodd-Frank.

That Department of Treasury money laundering or anti-money laundering bounty program applies to those Russian yachts because if a yacht is seized and sold, the person who reported it can be eligible for up to 30% of the proceeds of that sale. This created an entire cottage industry of marine yacht hunters who knew and they are working with law firms to actively, and when they find one in a port that the US can get jurisdiction over, these law firms notify the DOJ and then the DOJ does whatever they need to do to try to get seizure of that yacht in a foreign country. That was viewed as hugely popular and the American public is cheering them on in a way whistleblowers have never been cheered on in our lifetimes.

I remember I interviewed a woman whose law firm specializes in whistleblowing and I said sort of in an offhand manner, "Are you telling me that whistleblowing is sexy?" Her response is, "You mean, it hasn't always been that way?" No, it hadn't. But now, it was seen as directly in the interest of the United States, particularly our national security for these whistleblowers to come forward. As important as whistleblowing is to the SEC, I don't think it had ever been considered a national security issue.

That ties to what the Department of Treasury has announced publicly that they expect US corporations to be in on the fight of trade and economic sanctions and money laundering by self-reporting. I had had a little trouble tying self-reporting of your own violation to the fight against national security. But what the Treasury Department argued was, come to us, tell us if you find people within your organization violating trade sanctions or economic sanctions and we'll give you credit for that, that may be a declination up to it, including a declination. The DOT has truly tried to incentivize companies to be a part of this fight and that is now the same for whistleblowing.

Whistleblowers are now seen. There's one other document called US Strategy on Combating Corruption, which came out in December, 2021. In that document, the Biden administration pointed to whistleblowers as a component of the fight against bribery and corruption, which that document elevated to national security status. Now, we have whistleblowers who before the Russian invasion, certainly were a part of the legal landscape and part of the compliance landscape, but now they're being told, you are a part of our national security interest and you are a part of our national security fight and if you bring us this information in the form of blowing the whistle, you will be rewarded.

The US public is saying, you go. You go find those yachts. You go find those people who are doing business with those that are not in the national security interest of the United States and we'll support that. That's, in my mind, just a huge psychological change. Susan, I know you have written and said more about whistleblowing and how to treat whistleblowers than about anybody and I know this is something that you've been talking about for a long, long time, but I really see this as a true shift in the way whistleblowers are thought of in the United States.

Susan Divers: Well, I'm glad you brought that point out because I think that's true. Tying it furthermore to the impact of corruption on national security, I think is an idea whose time has come and we're going to do a whole other podcast on that as part of this series so I won't get into it a lot. But the concept of corruption as a victimless crime has been around as long as I've been practicing, which is a long time. It's not a victimless crime. I don't need to convince you. But it basically corrodes good governance, it corrodes social structures, it makes it harder for the poor. I mean, if I can go bribe my way, get a MRI ahead of everybody else in some less developed country, I'm jeopardizing the other people who can't afford that in that country and I'm also corroding ethics and good governance, but it hasn't been seen that way in the past, either by the government really or in the corporate community, and so we'll get into that more in the next podcast.

But that's fascinating to tie the whistleblowing into that and it has the additional benefit of being true, if you will. I have to say, I love the image of the yacht hunters. It's one of the first things I read when I open The Wall Street Journal in the morning to see if there's some oligarch's yacht that's being towed away or whatever, but it's definitely an idea whose time has come.

Tom Fox: For those of you who think our ever new ideas, I think if you look back in history, that was called piracy and or rading by English-

Susan Divers: Letters of marque.

Tom Fox: Yes, exactly. Letters of marque. It's an old concept, but it's equally valid today.

Susan Divers: Well, let's close off this session because we're going to do another podcast and talk more about anti-corruption and sustainability. But one of the things I was curious about is how does all of this tie in to the level of transparency that we're seeing in international trade, in commerce? Our chairman of the board, Dov Seidman, whom I know you know of and know has written a lot in the past about radical transparency and how does that tie in to what we've been talking about?

Tom Fox: Susan, let me go back to 2015 and the Volkswagen emission testing scandal. I read a speech by the head of the German Manufacturer's Council, so the German trade group for manufacturers. In that speech he said, "The answer is compliance and transparency." One, be in compliance, but two, be transparent about it. That is how we, as a German industry, will get through this. Volkswagen has done what they've done. We can't stop that or do anything about that, but we, the rest of German manufacturing, can be in compliance and can be transparent about that compliance. That really struck me at the time and it stuck with me since then.

The transparency, the radical transparency that Dov talks about is even more important in 2022 because of things like the Business Roundtable Statement on the Purpose of a Corporation. How many stakeholders are there now? Previously, there have been only shareholders, but now you have multiple stakeholders. It can be your employees, it can be your third parties. It can be those localities where you do business and that's where that radical transparency is so critical because they may not own shares and they may not be able to vote, but they can vote with their pocketbook. The radical transparency allows you to demonstrate to stakeholders who are going to vote with their pocketbook that we do business ethically and we are in compliance, and that you can and should do business with us because our values are what your values are. That's, to me, the power of radical transparency and it's the ability to demonstrate to those who are not regulators. Because remember, if you're fined for a regulatory violation, that's seen as a below the line sunk cost. Just the cost of doing business.

Tell me how much my fine is and I can reserve for it, whatever it is. What I cannot reserve for is if 5, 10, 25 or 50% of my customer base chooses not to buy my products because I've been found to have violated sanctions or I've been found to have used Uyghur labor in product site sourced out of China, or you name the issue. That's not a bottom line cost. That's a top of the line cost. That's a cost you can never get back because you can't reserve for non-sales. It's a cost you can't anticipate, you can't reserve for, you can't mitigate the risk because once you don't have sales, you don't have sales. To me, that concept of transparency, that concept of doing business ethically, in compliance and that concept of radical transparency all really protects you and allows you as a corporation to say, "This is what we stand for. This is why we're proud to sell a product to you and hopefully, you're proud to buy a product from us."

Susan Divers: Well, you're right and that really tees up the heart of sustainability. Sustainability isn't one giant checklist after another. It's what are we really doing and how are we doing it? What you're also saying too is, and it ties with things Dov said in the past, that we live in an age of radical transparency where anyone can go on Twitter, I guess, if they pay the $8 now or post on Facebook or Instagram or wherever and expose concerns. And with the incredible increase in sanctions and money laundering controls, it's just a further reason, if anyone needed one, why you have to get your house in order and you have to make sure that you are dealing with those risks effectively and of course, walk the walk as well as talk the talk.

We are running out of time, unfortunately, but I'm excited to mention again that we're going to continue this conversation in an upcoming podcast. It's been such a pleasure having you today, and I know we could keep talking for another couple of hours, but we'll have further opportunities in the future.

Tom Fox: I always have way too much fun when you and I sit and chit chat, whether it's over a lunch, a coffee, or a podcast, so thank you, Susan.

Susan Divers: Oh, I feel the same way, Tom. My name is Susan Divers and I want to thank you all for tuning into the Principled Podcast by LRN.

Outro:  We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance and global organizations by helping them foster winning, ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts or wherever you listen. And don't forget to leave us a review.

 

S8E10 | How KFC crafted an award-winning training program

Training presents an opportunity to not only educate workers, but also inspire their growth. But how can you do that in a way that feels energizing rather than exhausting? On this episode of the Principled Podcast, LRN Learning Manager Leah Hodge explores how to create engaging training with Rachel Donley, the Head of Learning & Performance Enablement for the KFC US market, a division of Yum! Brands. Listen in as the two talk about KFC’s Shift Supervisor training program, which has been receiving lots of industry recognition—winning gold at this year’s Brandon Hall Awards and being selected as a finalist for the Learning Technologies Awards—and improving leadership capability across the KFC US system of restaurants.  

 

Featured guest: Rachel Donley

Rachel Donley is a learning leader, instructional designer, gamification proponent, and strategic business partner. With 13 years of experience in the learning industry and 22 years of experience in the retail and food service industries, Rachel’s learning solutions have earned eight Brandon Hall awards. She was named a 30 under 30 Learning Leader in the inaugural Learning 2010 program and awarded the Brandon Hall Rising Star Award in 2017. Rachel holds a Master of Education in learning design from Bowling Green State University in Ohio and currently leads a team of seven to deliver learning and performance solutions to KFC’s 4100 US-based restaurants.

 

Featured host: Leah Hodge

Leah Hodge brings more than 17 years of instructional design experience to the corporate learning and development space. As a learning manager and expert in strategic partnerships at LRN, she fosters relationships with clients to analyze their training needs with an eye on elevating the learner experience. She is passionate about designing and implementing creative bespoke solutions that get learners excited about their development, taking them on a journey beyond just checking-the-box completion—including blended learning, gamification, video and animation, and onboarding learner journeys.   

Principled Podcast Transcript

Intro:

Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.

Leah Hodge:

Training presents an opportunity to not only educate workers, but also inspire their growth. But how can you do that in a way that feels energizing rather than exhausting? Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Leah Hodge, learning manager here at LRN. And today I'm joined by Rachel Donley, the head of learning and performance enablement for the KFC US market, a division of Yum! Brands. We're going to be talking about KFC's Shift Supervisor Training program, a project that we worked on together. And the whole program has been receiving lots of industry recognition, winning gold at this year's Brandon Hall Awards and being selected as a finalist for the Learning Technologies Awards. More importantly, the program has improved capability across KFC and their numerous franchises, setting the foundation for a new global best practice. Rachel, thanks for coming on the Principled Podcast today. I know there are lessons for others here and I'm excited to share your story.

Rachel Donley:

Awesome. Thank you for having me.

Leah Hodge:

Great. First question, for those who aren't familiar with this KFC story, let's start at the beginning. What were the business needs supporting this training?

Rachel Donley:

Yeah, thank you. Great question and I think it's really important to start out by understanding a little bit more about the shift supervisor role at KFC. Now, this is our entry level management role for the restaurants and a majority of higher level restaurant managers get promoted from within, from the supervisor role. So this junior hourly manager not only leads the teams during each shift, but they're in charge of everything that happens in the restaurant, including guest concerns, overseeing guest service and really culture, the team member experience. They really set the tone and really impact the culture on each shift in the restaurant. So this shift supervisor role really sets the foundation for KFC's management skillsets and capabilities throughout not only this role but for all future roles these shifts may be promoted into. So knowing that overview and background about what we're trying to accomplish for these roles in general, there was really a few other things that drove us to tackle and go after this training curriculum.

The one was we simply needed a new one. Prior to this training rolling out, the only KFC corporate-provided training for shift supervisors was a very outdated, lengthy, really like old-school, 30 plus minute e-learning curriculum. And so there wasn't a lot of real-world application.

And so it was very important and very needed that we updated this content so that not only it was more relevant, but it was also fits the modern learner. So I think that's the second piece and business need that we had here. Was to really look at our shift supervisor population today and say, "What does our shift supervisor demographics, generations, and the current industry across our restaurants, what do they really need? What does our modern learner need?" Some of that is based on research just across the board for current modern learners across any industry. And then some of that was really specific to the restaurant setting and really needing to grab their attention quickly, making sure that we're flexible, that we're mobile so that we can make sure that this shift supervisor role that gets pulled in many different directions when they're in the restaurant, also has a way to learn that fits what their everyday experience is in the restaurant and it makes it easier for them to learn as well.

We also had a need with this training and one of our goals was to create consistency across our different restaurants. Because the older LMS 20, 30-minute e-learning courses were so outdated, KFC did not mandate that anyone was taking it. And this really resulted in a very inconsistent training and skillset building experience across our systems. A lot of restaurants or larger franchisees had created their own shift supervisor training programs to fill that gap, but some of the smaller organizations or some of the ones without those resources really didn't have a lot of training available.

Now at some of our smaller organizations and restaurants, they may not have the resources or the necessarily ability to be able to craft their own training programs to fill the gap. And so again, this was driving a really inconsistent capability across our shift supervisor population. So one of the goals with this was not only updating, meeting the current learners where they're at, but also making sure that we were really level setting those foundational skillsets, behaviors and core competencies for shift supervisors across the entire US system. Regardless of which restaurant you're at, every shift would receive the same basic set of skills to make sure that they can be successful in role.

And then I think the last thing is just like with any other training that we provide at KFC US, we also want to make sure that we're looking at business metrics and are we making a positive impact on the things that we would expect this learning to help drive? And so for shift supervisor, because they touch so much of our restaurants and so many of the pieces of our operations, we're really looking at how is this increasing like team member and restaurant engagement and culture? How is this increasing worker performance across different guest metrics and what's that meaning from a culture turnover and people perspective?

Leah Hodge:

Thanks for that Rachel. We really had a lot of goals to achieve with this training and I think we achieved that definitely. And so what I'd like to do now is dig into those design principles that were behind the Shift Supervisor Training. And I love... I'm biased. I love that the one outcome we had was that simulated game. Can you talk about how KFC chose that format?

Rachel Donley:

Yeah, absolutely. That's my favorite part as well. I think games and simulations in general just allow us to provide a level of behavioral practice that really isn't...  can't happen and it needs other type of like LMS delivered learning context. If anyone's familiar with the KFC US system, we're across the entire country, different time zones, close to 4,000 restaurants, and we just don't have necessarily the setup to deliver some kind of simulated experience and hands on, a face to face across the system. So when we're thinking about delivering something that's scalable and can be taken at any time by anyone in any time zone, we're really looking at something that's through the LMS and really games and simulations let us get as close to the learner environment as possible and really simulate assessing and letting the learner practice what they've learned in a safe and controlled environment.

Now, we'll never specifically match an exact restaurant set up layout or experience in the game in a simulation, but we got really, really, really close. And this is so important, we all know from a learning transfer perspective, it's really important to make the learning and have them apply what they learned as close to the real world as possible. And I think that it just cannot be understated how much games and simulations can really be a force to seed what people have learned, start to apply it before they get into an environment, well, that has a lot going on. And especially if you think about shift supervisors, they're managers, they're leading a team, they're leading guest experience. We would much rather at KFC US, we would much rather have our shift supervisors learn, fail and try again, and practice in a game and a simulation environment than do that in front of a team member and a guest when that can really impact one of their experiences.

So it's super important for us, the kind of gaming methodology and something we really, really lean into. It also allows us to track the experience as well. So again, we need something scalable. It's hosted on our LMS. It only marks complete if they pass the game. And it is quite challenging for a reason because this is where we want to again, really push them and have them start to apply some of the behaviors they've learned. But again, it lets us track that on our operations scorecard. And so when we report on our completion metrics, not only are we reporting on did they take this course, but we're also reporting on did they pass this assessment, essentially is what the game is, and demonstrate these skills and behaviors to the maximum that you were able to do in this gamified environment.

Leah Hodge:

I agree, we achieved a lot with this simulated game. And if you think about it, it can be so daunting for somebody stepping from a team member role into their first leadership position. And to have that opportunity to practice in a simulated environment had to really help them feel more comfortable as they stepped into their role and stepped into the restaurant and their new role. So you talked about some of the learning elements that you prioritized for this training. Were there any other elements that come to mind?

Rachel Donley:

Yeah, and I think when you're designing a game, a simulation, I think what we designed was both really, it was a mix of the two. There's a lot of different decisions and approaches you can take and a few things come to mind that we really focused on when we were making this to make sure our ultimate goal of providing as much challenge in practice to the learners as possible was achieved. And so one of that is obviously kind of the realism. This is not a game in a sense of a cartoon or going through a Monopoly game board, although I think there's use for that too in some situations. In partnership with you, Leah, we built an actual restaurant environment in this simulated game. And so our learners are walking around in a form of the restaurant in both the back of the restaurant where they cook things, and in the front where they interact with guests, and outside where they interact with our facilities and our guests also in the parking lot.

So it was really important that we made this really as much as we could feel like, "Yep, you're on shift, you're in the restaurant, let's do this." Part of that ambiance was also using some different elements to create this almost immersive experience. We used music and sound effects to bring to life some of the nonverbal or not overly avert things and triggers that you have when you're in any environment. Like the clock strikes three o'clock and you hear a fryer beep, and those are things that in the real restaurant helps shift supervisors and the team know that it's time to do something or take action.

Well, obviously in our simulated environment, we needed to make sure that the learners had those non-overt triggers as well so they could make decisions just like they would in the restaurant. So we use sound effects, music, we use character movement as the teams are moving around throughout the restaurant so that they would get those clues or, "Oh, the cashier needs to talk to me. She just walked up to me." We used a clock to track the time because in a busy restaurant environment, a lot of actions and decisions are based on time as well. So that really helped to really ground the game into what we were trying to accomplish realistically.

And then as you know, we broke it into three levels to make each level progressively more challenging. Because we had such a large scope of what we wanted to assess and let the learner practice, that allowed us to break it up, gradually get more and more difficult as we went, but not overwhelm the learner. And I think it also in level one, the first level, I think it also really helped them to get used to the game environment too. They were like, "Okay, this is where I'm at. I've kind of practiced. I know how to move around. I'm ready to go."

Now, one of the other things that we looked at was the scoring, which I think brings in the gamification elements as well. Just like in a real restaurant, decisions that a shift supervisor or other manager make have consequences. So we used scoring to simulate the consequences. Now that maybe a recognition as in like, "Yep, you made the right decision." If you decided to cook the right amount of chicken, then your score went up. And so that was not only a level of realism and to help the learner understand the real-world implications of their decisions, but it was a way to also provide feedback. And again, that could be great feedback. Yes, you answer the right question. So we really didn't have that traditional, "Yes, that's the correct answer." It was, "Oh great, my score went up. Great. I did answer that question correctly. I'm getting the hang of it."

And in some cases they made a poor decision and their score went down. And I know we waited those quite a bit, depending on the real-world severity. If there was a decision that led to a safety concern, they almost failed the game right away. Whereas if it was kind of a minor in the real world, you could really recover from this decently easily, then the scoring impact wasn't as weighted. So again, we're trying to really help the learner understand those real-world consequences of their decision making. And that also really lent itself into the real-time feedback. We know that learners learn best with active participation and experiencing it and getting feedback. We know they learn really well from trial and error and failing and learning from your mistakes. And so we really thought through in the simulation games, how can we make sure that the learner is still immersed in the experience but fully understands what their decisions or the upcoming decisions, what those impacts have, what their feedback on their performance is, where they're doing well, and where there might be some opportunities for some additional learning for them.

And I know we built that into the feedback not only throughout the course where we would have exclamation points pop up or a mentor character would pop up that says, "Hey, okay, we need to make sure we focus on this." But I know we were really specific too in the end of the game, especially if you did not pass. Because again, it does not mark complete unless you hit a passing score. But depending on how low below the passing score they went, we provided some more specific direction of, "Hey learner, you may want to take a look at this and this. Talk to your coach about it, think through it a little bit more and then play the game again because these were the areas that you struggled with today."

I think the last thing that I want to call out that we also really looked at was this blended learning approach. I know we're talking a lot about the game, the simulation specifically, but all around this game is a really blended approach of e-learning courses, infographics, videos, mini games that I would almost kind of say are more knowledge check. There was a very large amount of time spent in this learner curriculum, is on discussion activities and practice shifts with their coach in the restaurant. So even though we have a really robust amount of things that we're delivering at scale for every restaurant, there's really a lot of weight in this curriculum on that hands-on practice and learning alongside your manager or another trained shift supervisor. And as you said earlier, it's really all about getting them prepared to be in the restaurant. So really what we're doing throughout this blend is getting them closer and closer to being able to do this on the job on their own.

Leah Hodge:

I think that's really so many elements that went into the development of this training. And I think that's a good call out too at the end about the blended learning approach because they go through so much robust blended learning to prepare themselves for this new role. And the simulated game was almost like a culmination of everything they learned and it was their last step on their journey before stepping into their role. They're testing themselves through this game, but also, I see it as a reward and an opportunity to get really excited about the role before stepping into the role.

The next question I have for you is, I mentioned at the top of this episode that KFC's training has not only received industry-wide recognition, but also improved training across the business significantly with this program. What results stand out to you as signs of real success?

Rachel Donley:

Yeah, well, I think one of them that you mentioned is industry recognition. Obviously we're really jointly proud of winning two gold Brandon Hall Awards for this learning curriculum. Most recently games and simulations in 2022. And then of course best custom content in 2019. And obviously we've maintained and kept up the curriculum between that as well. And then obviously being really proud of being a finalist for the Learning Technologies Award too.

I think more specific inside of the KSC system, there's a few different areas that I would say are really good successes and wins for us. I think most immediately were like, do our franchisees, do our partners out there in the field and our shift supervisors, the learners, are they feeling like this is meeting their needs? Is this serving what we set out to start to do? As some may know, KFC's about 97, 98% franchised. So the restaurants that we own as a corporation is a very small amount of the KFC restaurants that you see across the country. And so we really partner very closely with our franchisees. We have franchisee advisory boards, we meet with them regularly and they help us to craft what some of our strategies are going forward.

When we asked our advisory board that supports learning about not only this program but the outcomes, some of the things they said were, it was a breath of fresh air, they were excited to launch it. They said their shift supervisors in their restaurants are feeling like this is really an investment in them and their growth. And if you think about how much team member engagement matters to our business bottom line, that's huge to get a whole population of leaders to feel that way. And the teams like how we've paced and sequenced this training schedule. So there's more self-directed deadlines to hold themselves accountable. It's really focused on that in restaurant shoulder-to-shoulder piece, is kind of the bigger bulk of this training schedule. So they're feeling like it really fits them. And so I'd say that that lets us know that we really hit the mark on that. Meeting those shift supervisors with what they needed and making sure that we fit the modern learner that's in our restaurant.

Now I also think that there's some data we could look at that says, has this been a success? And I would say that it has. Not only kind of when we first rolled this out, did we have franchisees really starting to adopt this training and starting to use it. So now we're starting to see that there's a really consistent learning and skillset foundation across our restaurants. Remember some franchisees were doing their own thing, some didn't really have a lot of resources. We started when we first rolled it out to see really wide adoption. And one of the results of that, and one of the benefits was that we were able to add this to our operations scorecard.

Now we have a scorecard for each restaurant that basically holds in some of the key business metrics for them and it lets each restaurant know how they're performing and maybe where they have opportunities for growth. Obviously there's guest experience metrics on there as well, but one of the metrics we have is a training metric. So have you completed the training that we know is going to be beneficial to the roles in your restaurant? And because of the success of the launch, because of the wide-scale adoption of this, we're able to get this training added to the scorecard. And what that really sends is a really strong message to the business that alongside of some of these important guest metrics is also learning.

It's also like taking this training is going to be so beneficial to the running of your restaurants and the ultimate success of your guest experience and your teams, that we're actually saying we're going to start tracking it and requiring it for everybody across the system. So that was a huge win. Let us get more visibility and start to compare that to some other metrics as well. I talked a little bit about how shifts touched so much across the business that we would expect to see some guest experience metrics, maybe some engagement impact as well. And we've started those correlations and we've definitely seen a positive correlation between several guest experience metrics and team member engagement metrics and the completion of this training. So that's a huge win too, to show that really the time and the effort that we all put into making this the best training we could for shifts is really paying off in a business in a really very specific business way.

The other thing that I'll mention that I think was a really big win and positive impact on our business is this curriculum was the first time that we did almost like a learner experience platform, if you will. And I don't want to say that it was fully to bright, like maybe some of the other learner experience platforms people are used to. But it was the first time really KFC US looked at our LMS and said, "How can we have, when the learners come in, a different experience than the default LMS experience? And how can we make it super clear that all of these blended things, because again, not all of it is in the LMS, how can we make it super clear that how we recommend you take these blended things? In what order?" And really take some of that burden off of the manager and the trainer and put a little bit on the learner that it's so easy to navigate through this and know what to do at what time, that I'm not continuously needing to ask my coach, my manager, my trainer, what to do. So I think that was a really big win and a really good jumping off point for other curriculums too.

We now have a completely different learner experience when they go in to take training across all of our curriculums, not just for shift supervisor. And this was really the curriculum that led us to stop, pause, think about that, pilot that very different way of engaging with learners when they first log in and let us get some feedback. Let us hear that that was really something our learners valued and let us to kind of expand that across the business, across the rest of training.

Leah Hodge:

I think that's really exciting how you were able to get the franchisees buy in and get them excited about it and how the popularity of that LMS learning page has taken off. And so that's a great segue into my next question and that is, how would you say KFC's training has evolved since launching the Shift Supervisor program? Are there any recent developments that you're excited about that you can share with me today?

Rachel Donley:

I think one was definitely the learner experience really shifting. Since then, we've been able to not only do it on a smaller scale for individual curriculums, but we've switched some of our learning ecosystem technology in the backend and that's allowed us to merge our learner experience platform with our internal communications platform. And so instead of having one place for everyone to go to get their news and communication and resources and another place to go for learning, the LMS, now everybody just goes to one place, one source of truth. And this has completely revolutionized the learner and quite frankly, the restaurant employee experience. It's made it so much simpler for everyone to know where to go. It's made it simpler on the backend as well from reporting and maintaining systems. So I think that's a journey that really started with Shift Supervisor and is been just like I said, completely changed how learners interact and made it so much more user friendly for our teams.

The other thing that I'll mention that's really exciting is this Shift Supervisor model, this blended approach mixing different types of modalities, including games and simulations, including on the job hands-on type of practice, it's become the foundation, the model for all of the leadership training. So we just recently launched an AUM and RGM training curriculum, and that is for the next level of leaders above shift supervisors. So if they were going to move up in the business, that completely matches the model for Shift Supervisor, the flow, including the gains and simulations. It was so successful and it did such a great job preparing our shifts for their role that we were able to transfer that learning and transfer that model over into really the next stage of leadership learning. And I anticipate that we will continue to do that as we go forward and modify and maintain these curriculums.

I think also prior to shift, we had dipped our toes in the gamification area and simulations, but this was the first time we really, really leaned on it heavily across a good part of a curriculum. And I think it was almost a way to get our system for the first time really utilizing games and simulations in a bigger way for learning.

And so what I think it's also done is created an appetite for more. We recently did a learning listening tour across our system just to level set and make sure that we know what's working and maybe what we need to work on as a learning function. And one of the biggest call outs from it was, we want more games and simulations. So it's no surprise right to us, but our teams like to take training that they also enjoy. And so I think it's also created some validation and really like a new platform. So when we go back to start a new curriculum or talk to our franchisees, when we talk now about, "Hey, we really want to lean on gains and simulations," there's really no discussion anymore because everybody knows how value added that is and how much our teams really enjoy it. So I think it's almost created a due standard of learning for KFC as well.

Leah Hodge:

That's really amazing. And I know that the two of us we could spend all day talking about Shift Supervisor Training and how it's been scalable for assistant manager, the AUM role, RGM roles, but unfortunately we're out of time for today. So Rachel, I just want to thank you for joining me on this episode and congratulations again on delivering such an impactful training program to the organization. I hope we hear more from KFC soon.

Rachel Donley:

Thank you. I appreciate the conversation today. And thank you Leah and everybody over there for your partnership on this.

Leah Hodge:

My pleasure. My name is Leah Hodge, and I want to thank you all for listening today to the Principled Podcast by LRN.

Outro:

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