Compliance considerations for post-pandemic hybrid working models
By Richard Levett, Paul Stokes & Jamie Onslow
Posted: 14th September 2021 07:54The past 18 months have brought massive change to virtually every workplace in the global economy, whether through significant workload increase, business shutdown and associated loss of employment or, as has been the case for many office-based roles, an overnight shift to working from home, with meetings taking place by videoconference and little if any face-to-face contact between workers and management for long periods.
Thankfully, it seems as though in many parts of the world the worst may now be behind us and global businesses are, cautiously, looking to rebalance their working models away from an enforced total or near total work-from-home approach into something different. Whilst there are some businesses who have expressed a desire to return to a five-day-in-the-office working week, many others have accepted that the old model is no longer fit for purpose and are looking for alternatives. Typically, this will involve a ‘hybrid’ blend of home and office working, although the specific balance to be struck by individual businesses remains a fraught question for many.
As business leaders ponder how to respond to these challenges, they should take time to consider how to adapt the firm’s existing risk mitigation frameworks to whatever new working model is ultimately agreed upon. In many cases, too little attention is being given to associated compliance issues, which may lead in time to poorly performing systems and controls and the increased possibility of compliance failings and, in the worst cases, action being taken by enforcement agencies.
Accordingly, we consider that the development of new working practices should involve consideration of the associated behavioural risks and ways to mitigate these as far as possible with systems and controls which are adapted to the new ways of working. Perhaps more than ever before, it will also be important to undertake regular reviews of the effectiveness of new approaches and to ensure that workers understand the compliance aspects of new working arrangements through effective training.
It is important that new working models and their attendant compliance mechanisms are endorsed by senior leadership, who are seen to ‘live the values’ espoused by the business. This is particularly relevant at present, with many workers not having had the opportunity for face-to-face contact with colleagues for many months and who understandably may be feeling distant from the business, its objectives and values.
Senior leadership figures can help unite workers by presenting an embodiment of the values of the firm and reminding them of what makes the business what it is. For many businesses, the question of ‘who are we?’ is, in part, answered by the response ‘we are people who know what is right and do the right thing’. By reinforcing that message as part of a firm’s ‘re-set’ as it evolves into post-pandemic operation, senior leaders will have both helped re-engage the workforce and also contributed to the firm’s defences against behavioural and associated legal and regulatory risks.
As well as re-engaging established employees who may feel disconnected from the business as a result of months away from the office, engagement by senior leadership is also key for another worker group, namely those who have joined the business during the work-from-home period. These employees may never have met co-workers, still less senior management, face-to-face and are accordingly at a higher risk of feeling disconnected with colleagues and the broader business over time. New joiners who have not benefited from the engagement and in-person contact on which many existing on-boarding processes are predicated may not adequately understand the firm’s culture and ethical values and may therefore be at a greater risk of falling short of the standards expected.
To help mitigate this risk, the leadership team should revisit how new joiners are inducted and in particular seek assurance that they are given sufficient help to feel that they are part of the business and understand its culture and standards, particularly if they will not routinely be physically present with colleagues and management in the office. One-on-one or small group meetings, either virtual or real, could usefully take place with appropriate members of management to help new joiners understand the ‘tone from the top’ on matters of firm ethics and culture from the start of their employment. It may also be beneficial to appoint ‘mentors’ for new joiners, in the form of trusted, long-serving members of staff, to ensure that new joiners do not feel detached from the business, at least until such time as they have been properly integrated into the firm.
Management will also need to be mindful of other pitfalls associated with hybrid working arrangements, including where they are not uniform across the business and some workers are permitted to work from home for a greater proportion of the week than others. Whilst there are numerous sound reasons for differing arrangements for workers in hybrid working systems, the compliance and risk aspects need consideration.
For instance, the same risk considerations associated with new joiners suggested above will apply, over time, to workers who are permitted to work remotely on a permanent basis. It will therefore be necessary to develop strategies to keep any fully remote workers engaged with the company’s cultural ethics, notwithstanding their physical absence from the office. This is a particular challenge for more permissive existing compliance approaches which rely on ‘nudging’ workers to make the right choices without removing other options or imposing sanctions for breaches. If longer term remote working is to be implemented, it may be appropriate to introduce a greater degree of prescription to restrict worker choices and to develop more stringent sanctions for rule breaches, in order to offset the associated risks.
Businesses should revisit their existing risk assessments before deciding upon new working models and ensure that identified behavioural risk areas are considered. For instance, it may be appropriate from a risk management perspective for ‘lower risk’ functions to work more from home than the office. It might not, however, be appropriate to extend the same arrangements to ‘higher risk’ functions, such as those dealing with suppliers or those responsible for winning and maintaining customer relationships.
Consideration should also be given to how best to equip those on the front line of risk management to the new challenges of long-term remote working. For instance, how will compliance and internal audit undertake effective monitoring, such as through the spotting of trends and ‘joining-the-dots’ without the close collaboration associated with working in physical proximity? How can the investigation of wrongdoing take place if the suspected wrongdoer does not work from the office? Can traditional line management be truly effective when the manager and worker are no longer in the office on the same days each week?
Answers to these questions will often not be straightforward and solutions will need to be developed sensitively. It is nevertheless important that business leaders take compliance issues into account as they contemplate new working models as we emerge from the COVID-19 pandemic. It will also in our view be critical to ensure that new working models and the compliance systems which accompany them are kept under close review as they become established and adjustments made as necessary.
Richard Levett (Partner)
D: +44 (0) 20 3837 1650
M: +44 (0) 7827 964 979
Richard’s practice is centred on complex and high value commercial litigation and arbitration, typically with an international element. He is also regularly instructed to act on matters involving business crime and regulatory and compliance issues. He has been involved in conducting investigations and numerous compliance and M&A due diligence exercises, drafting policies and procedures, delivering training and undertaking remedial activities for businesses in a range of sectors. He also acts for directors and other individuals faced with enforcement proceedings in the UK and abroad.
Paul Stokes (Associate)
D: +44 (0) 20 3837 1616
M: +44 (0) 7788 291 341
Paul advises clients across various sectors on a broad range of complex, high-value and often politically sensitive disputes. His practice includes litigation and commercial arbitration proceedings under various systems of law and most of the major institutional rules, including ICC, LCIA and SIAC. Paul spent a year working with the United Nations in international criminal tribunals in Phnom Penh (the Extraordinary Chambers of Court in Cambodia) and The Hague (the International Criminal Tribunal for the Former Yugoslavia).
Jamie Onslow (Business Intelligence Associate)
D: +44 (0) 20 3837 1621
M: +44 (0) 7786 020 881
Jamie is a member of Enyo Law’s in-house business intelligence unit, which is typically engaged in connection with complex, high value and multi-jurisdictional asset tracing exercises and provides support to the firm’s lawyers acting on disputes and business crime and compliance issues.