Ethics & Compliance. Who Are We? Susan Du Becker. Ruth Steinholtz. Lawyer no more Engineer Business & Cultural SME Star Trek Fan!

Transcription

1 Ethics & Compliance SCCE European Conference April 2 nd, 2017 Susan Du Becker Cisco Systems BV A Tale of Two Worlds Ruth Steinholtz AretéWork LLP Who Are We? Ruth Steinholtz Susan Du Becker Ethics, values & culture guru Recovering Lawyer Wrote the book on Ethics ambassadors European, Road cyclist Lawyer no more Engineer Business & Cultural SME Star Trek Fan! 1

2 The Cart without the Horse? Striking the Perfect Balance Process Tools Structure Policies Regulatory Input Industry Standards Ethics, Attitude, Beliefs, Values, People The Culture 2

3 Ethics is EVERYONES S responsibility Compliance is an outcome Not an approach Getting the balance right Compliance Ethics, Culture & Values 3

4 Exercise: Where is your department/company on the culture-compliance continuum? Culture & Values Compliance How are decisions made? Does your programme favour rules or principles? Guiding Principles Perspective 1 One way to do it There is NO one right or wrong way 4

5 Cisco Story - Framework & Methodology Underpinned By Guiding Principles - Defining Ownership - Structure & Guidance - Assigning Responsibility & Accountability Business Focused Risk based Framework - scalable, - consistent Cisco s Compliance Framework Elements of an Effective Compliance Program Third Party Relationships Anti-Corruption & Bribery Data Protection/ Privacy Import/Export Compliance Risk Assessment Targets are aligned to YOUR business Financial Responsibility Antitrust & Competition Enforcement, Discipline & Incentives Program Governance & Resources Compliance Communications Policies & Processes Cisco Compliance Compliance Training Investigations & Response Product Regulatory Labor & Employment Insider Trading Ongoing Risk Assessment Monitoring & Auditing Environment, Health & Safety Conflict of Interest Enterprise Records & Information Management Intellectual Property 5

6 Cisco Story Ethics CoBC Compliance Risk Management Internal Audit Policies & Guidelines Anti-Bribery & Corruption Conflict of Interest Travel, Expenses Tools Education, Communications Investigations Remediation & Resolution External Audit Compliance Program Outcome Audit Committee / Board / Authority Structure & Guides Function / Division / Business Unit input Risk Assessment / Audit / Investigations Effective Compliance Program Ethics & Culture Market Influence / Global & Local regulatory / Environment 6

7 Guiding Principles Perspective 2 Another View There is NO one right or wrong way What are Values? A shorthand way of describing our individual and collective motivations and what is important to us. They are the drivers of our aspirations, intentions and sometimes, our behaviours. 7

8 Culture is the way we do things around here and influences and, is influenced by: Systems Humans, especially leaders Policies and Procedures Culture Values Context, Societal Norms Law & Regulation Intrinsic Motivation Values Extrinsic Motivation Rules 8

9 What do I mean by a culture and values approach? Compliance Assumptions bad people do bad things What are these? Deterrence & threats of punishment work best Detailed rules and procedures are necessary to ensure everyone does the right thing, values statements are additional. Punishment is key Compliance is a cost We need a large compliance department to ensure compliance. Culture & Values Assumptions Most people want to do the right thing but context, situation, cognitive & behavioral factors can lead them astray A strong, positive, ethical culture that minimises ability to rationalise is the best approach. Of course, controls for the sociopaths. Strong ethical values that are truly lived will be more inspirational and effective. Rules are important but are often too complicated. Just culture and open & transparent communication creates improvement. Blame drives behaviour underground. A strong ethical culture is good for business Ethics is everyone s responsibility so embed it directly in the business, i.e.. Ethics ambassadors. Behavioural ethics (economics + psychology) 18 9

10 What does this mean for communications? What is your relationship with the rest of the business, and why does it matter? 10

11 A culture of collective secrecy existed within the engine development department of Volkswagen Where do you start to focus on values and culture? Measure/understand the culture Pick appropriate core values Inspire/involve/motivate people Do not to demotivate them Start with people who are creating/influencing the culture Ethics ambassadors Consciously vs. unconsciously 11

12 Regulators are increasingly focusing on culture So, how can we measure and explain our culture in this context? Exercise 12

13 Exercise: Measuring and Reading Culture Stages in the Development of Organizational Consciousness Service Making a difference Internal Cohesion Transformation Self-esteem Relationship Survival Positive Focus Excessive Focus Service To Humanity And The Planet Social responsibility, future generations, long-term perspective, ethics, compassion, humility Strategic Alliances and Partnerships Environmental awareness, community involvement, employee fulfillment, coaching/mentoring Building Corporate Community Shared values, vision, commitment, integrity, trust, passion, creativity, openness, transparency Continuous Renewal and Learning Accountability, adaptability, empowerment, teamwork, goals orientation, personal growth High Performance Systems, processes, quality, best practices, pride in performance. Bureaucracy, complacency Belonging Loyalty, open communication, customer satisfaction, friendship. Manipulation, blame Financial Stability Shareholder value, organisational growth, employee health, safety. Control, corruption, greed 13

14 What Employees Value at different levels of consciousness Levels of Consciousness Service Making a difference Internal cohesion Transformation Self-esteem Relationship Surviving Primary Motivations Opportunities to serve others and care for the well-being of the Earth s life support systems Opportunities to leverage your contribution by collaborating with other like-minded individuals Opportunities for personal growth and development to support you in living your life purpose Opportunities and challenges by being made accountable for projects and processes Opportunities to grow professionally with support, feedback and coaching Opportunities to work in a congenial atmosphere where people care and respect each other A safe working environment and pay and benefits that are sufficient to take care of family Entropy and (Ethical) Culture Risk Cultural Entropy Most employees are. Potentially limiting values showing up in current culture Culture Risk 10% or less Highly Engaged Low Risk 11% to 20% Engaged Relatively Low Risk 21% to 30% Becoming Disengaged Bureaucracy, Hierarchy, Confusion Medium Risk 31% to 40% Disengaged Bureaucracy, Hierarchy, Confusion, Control, Short-term focus, Silo-mentality, Long hours 41% or more Highly Disengaged Bureaucracy, Short-term focus, Hierarchy, Blame, Control, Confusion, Information Hoarding, Silo-mentality High Risk Very High Risk 14

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16 Flexlite (53) Level 7 Personal Values Current Culture Values Desired Culture Values Level 6 Level 5 Level 4 Level 3 Level 2 Level 1 PL= 10-0 IRS (P)= IRS (L)= PL= 4-7 IROS (P)= IROS (L)= PL= 11-0 IROS (P)= IROS (L)= Matches 1. honesty 27 Level 5 1. blame (L) 27 Level 2 1. customer satisfaction 31 Level 2 PV - CC 0 CC - DC 1 PV - DC 2 2. commitment 24 Level 5 3. accountability 20 Level 4 2. long hours (L) 24 Level 3 3. profit 23 Level 1 2. accountability 26 Level 4 3. continuous improvement 24 Level 4 4. adaptability 18 Level 4 4. bureaucracy (L) 22 Level 3 4. commitment 20 Level 5 5. reliability 18 Level 3 5. control (L) 21 Level 1 5. quality 15 Level 3 6. responsibility 18 Level 4 6. cost reduction 20 Level 1 6. teamwork 15 Level 4 7. trust 17 Level 5 7. productivity 20 Level 3 7. cooperation 14 Level 5 8. fairness 16 Level 5 8. short-term focus (L) 18 Level 1 8. employee fulfillment 14 Level 6 9. caring 15 Level 2 9. manipulation (L) 15 Level 2 9. employee recognition 14 Level humor/fun 15 Level continuous improvement 14 Level information sharing 13 Level power (L) 14 Level respect 13 Level 2 Black Underline = PV & CC Orange = CC & DC P = Positive L = Potentially Limiting I = Individual O = Organizational Orange = PV, CC & DC Blue = PV & DC (white circle) R = Relationship S = Societal Plot Copyright Barrett Values Centre August 2008 Values 2008 Compliance & the Enterprise 16

17 Enablement Strategy - What - How - Where Operations - Staff - Mobility - Tools Purpose - Company identity - Mission Statements - What/Who are you? Culture Culture - Continuous - Drives how alignment we work - Creates a clear line of sight -with Creates - Purpose together; our the purpose, shapes understanding drive ethically, towards goals, your from where we are to where emotionally, of metrics, the impact your policies strategically goals of our product with we want to portfolio go, together. and operations impact Portfolio - What are you selling/doing/buying Goals - What do you want? - How do you want to get there? Metrics - Measure of Success Ethics ambassadors for global reach and input be creative & develop material culture bearers provide the local perspective Communicate & train listen ethical decisionmaking coach 17

18 What do Regulators Look for? Culture Walking the Talk? Empowerment are you? Communications The 360 View Tone from the Top support from the middle Polling does the company hear, listen and understand the employees? Are you focused on the right priorities - learning and education? Effective Compliance Program (Compliance activities) Critical meetings Involvement, Collaboration & Interaction? Reporting lines & Visibility & Autonomy ease of use, respect of the function? Compliance function Stature are you a Partner, Support or a seen as a necessary evil? Controls Due Diligence, Investigations, Audit, Compliance Program, Remediation planning Corporate / Local the 360 Dilemma Understand YOUR business Don t Over Pivot Communicate Are you Global or local Listen to your outfield Respect differences Keep your program simple Use Tools such as Risk Assessments to verify Clarity of roles Ownership & Accountability Champions at executive level Don t forget middle management Stakeholder relationships Metrics & Reporting 18

19 Exercise Cultural risk and culture change over time Bank: Current Culture Evolution cost consciousness 2. profit 3. accountability 4. community involvement 5. client driven 6. process driven 7. bureaucracy (L) 8. results orientation 9. client satisfaction 10. silo mentality (L) 3 matches Entropy 25% 1. cost consciousness 2. accountability 3. client driven 4. client satisfaction 5. results orientation 6. performance driven 7. profit 8. bureaucracy (L) 9. teamwork 10. community involvement 4 matches 1. client driven 2. accountability 3. client satisfaction 4. cost consciousness 5. community involvement 6. performance driven 7. profit 8. achievement 9. being the best 10. results orientation 4 matches 1. accountability 2. client driven 3. client satisfaction 4. community involvement 5. achievement 6. cost consciousness 7. teamwork 8. performance driven 9. being the best 10. delivery 5 Matches Entropy 19% Entropy 17% Entropy 14% 19

20 Bank: Current Culture Evolution accountability 2. client driven 3. client satisfaction 4. cost consciousness 5. community involvement 6. achievement 7. teamwork 8. employee recognition 9. being the best 10. performance driven 6 matches 1. accountability 2. client satisfaction 3. client driven 4. teamwork 5. brand reputation 6. being the best 7. achievement 8. commitment 9. community involvement 10. cost consciousness 6 matches 1. accountability 2. client driven 3. client satisfaction 4. brand reputation 5. achievement 6. teamwork 7. environmental awareness 8. commitment 9. being the best 10. cost consciousness 6 matches Entropy 14% Entropy 11% Entropy 13% Cultural Entropy Evolution 30% 25% 20% 15% 10% 5% 25% 19% 17% 14% 13% 13% 11% 10% Entropy reduced or stayed the same every year. Entropy reduction led to improved performance through increased employee engagement increased revenues, productivity, share price, etc. Working toward entropy of 10% will result in healthy functioning of the organisation and improved staff morale. 0% Cutlural Entropy Entropy risk bands 0-10% Healthy functioning 11-20% Some problems 21-30% Significant problems 31-40% Serious situation 41%+ Critical situation 20

21 Wrap Up What have we learned Culture is vital to overall strategy and performance Source: EY Culture and Boards at a glance Survey of 100 board members of FTSE 350 companies. 21

22 Any Change to your view?: Where is your department/company on the culture-compliance continuum? Culture & Values Compliance How are decisions made? Does your programme favour rules or principles? Key Takeaways Ethical Behaviours Take values seriously Understand your culture, culture risk, nurture + Strategy, Process, Assessment & Roadmap Relatable Policies Defined program Follow Up Control, Audit & Investigation, Cooperate w/business/functions Get the right balance & think long term Compliance Structures 22