Driving the Elusive Tone at the Middle: GE s Risk #CW PDF Free Download

Driving the Elusive Tone at the Middle: GE s Risk Roll-Up @ComplianceWeek #CW2017

Speaker Todd A. Smith Senior Director, Compliance GE Renewable Energy @ComplianceWeek #CWE2017

GE is a 125 year old company, started by Thomas Edison GE: A Digital Industrial Company $123.7B IN REVENUE, 295,000+ PEOPLE OPERATING IN 180 COUNTRIES 2016 REVENUES POWER AVIATION OIL & GAS $26.3B RENEWABL E ENERGY $26.8B 57K 45K $9.0B* 34K $18.3B $4.7B 53K EMPLOYEES EMPLOYEES 12K* EMPLOYEES 54K 10K EMPLOYEES EMPLOYEES EMPLOYEES HEALTHCAR E TRANSPORTATIO N $12.9B EMPLOYEES ENERGY CONNECTIONS & LIGHTING $15.1B 11 years in a row Hydro Offshore Wind Onshore Wind LM Wind Power 2017 General Electric Company - All rights reserved *2016 figures. Excludes LM Wind Power Data 3

Compliance Program

GE s Compliance Program Founding Member 1986 Inaugural Corporate Award 2010 11 years in a row (2017) Top 10 ü Benchmarked around the globe as best in class ü Recognized by US DOJ for strength of program 5

This was not always the case GE in the 1980 s. 6

Compliance Organization q q q Infrastructure ~300 business compliance leaders Corporate investigations team Includes former prosecutors closely involved in integrity programs Corporate HQ compliance team dedicated executives Business Teams ü Regulatory relations ü Build the business culture Policy owners Policies & procedures Domain expertise Lead initiatives across GE q q Policy owners / coordinators for every S&L policy Region / Country Corporate GGO (Global Growth Operations) leaders, 12 compliance leaders + country resources Region / Country Leaders Identify pole / country trends EWS on country specific regs Lead & relate with regulators q ~600 ombuds contacts globally q Corporate Audit Staff: compliance-related audits/reviews across businesses Corporate Ombuds Company wide ombuds system Collect & review trends Global tool Compliance Leads Ombuds Risk Area Focals 7

GE Compliance Program... Key Elements Clear Policies & Expectations All Employees Own Compliance Leaders Drive the Program Simple Compliance is Better Compliance Leveraging Metrics & Data Analytics Keeping Training Fresh Focus on JVs/Remote Sites Facilitating Speak Up Culture Open Reporting, Risk Roll Up Aligned to Business Risks Boots on the Ground Visible & Active Real Life Videos: Sharing Lessons 8

GE s Code of Conduct: The Spirit & The Letter

GE Code of Conduct The Spirit (Ethics) Helps us to do the right thing GE code of conduct The Letter (Compliance) Our guide to doing it right GE integrity policies 10

The Spirit & The Letter Our guide to doing the right thing that establishes the policies and standards that all GE employees must commit to follow. At the heart of GE s culture is our non-negotiable commitment to acting with integrity GE s integrity strengthens customer relationships and helps us stand out in the marketplace Our success depends on our commitment to obeying both the spirit and the letter of the law The Spirit & The Letter is a simple guide to help employees do the right thing, and to do things right Read it carefully to know what is expected of you and act immediately if you have an integrity concern How do I know if it is the right thing to do? ü How would this decision look to others within our company and externally? ü Am I willing to be held accountable for this decision? ü Is this consistent with The Spirit & The Letter? 11 2017 General Electric Company - All rights reserved

Culture the critical risk mitigant Culture attitudes, values, goals and practices Influence how people behave Culture doesn t just happen... leaders build it Culture not rulebooks determines how employees behave 13

Culture & Leadership Tone at the Top Core Principle of GE Integrity Culture = Leadership Engagement Leadership engagement is the heart of GE Integrity program Business leaders own compliance culture Leaders engagement (what they say & do) is most important influence on employees I have worked for GE for 30 years and always have taken comfort and confidence in the core pillars of our culture and values things like meritocracy, diversity, inclusion, and integrity.... You can count on the GE culture staying true to these principles for generations to come. Our core company values are unassailable. John Flannery, GE CEO we don t make the human resources people responsible for integrity; we don t make the lawyer responsible for integrity. We make the business leaders, the CEO, the general manager and the sales leader; those are the people responsible for integrity 14

Clear & Simple Mandates Leaders Must Follow Ensure employees understand that business results are never more important than ethical conduct and compliance with GE policies Create an open environment in which every employee feels comfortable raising concerns Personally set the example for integrity, not just through words, but more importantly, through actions Know the policies that apply to you and your team and regularly talk about compliance Document and escalate any employee s expressed concern Take prompt corrective action to address identified compliance weakness 15

ECI Survey 1 Open Reporting A 2016 global survey of employees from public, private and non-profit sectors 33% 59% 36% Observed Misconduct Reported Misconduct Experienced Retaliation Open reporting: Best indicator of health of culture, positive or otherwise 1 Results of the Ethics & Compliance Initiative 2016 Global Business Ethics Survey 13,000 employee responses across 13 countries 16

GE Open Reporting GE s reputation is one of our most valuable assets... every employee is responsible for integrity and empowered and expected to raise integrity concerns. An employee s willingness to raise concerns is critical to being able to foster a culture of integrity. If employees are not comfortable doing so, without fear of retaliation, significant integrity concerns can go undetected. Concerns will be investigated objectively by a person or team of people with the right expertise. Appropriate remedial action will be taken when warranted, and feedback will be provided to the concern raiser (unless anonymous). Why this matters More important now than ever because Global regulators demand it Find small problems and fix them early Whistleblowing statutes Key information Allegations or concerns about potential or existing violation of law, regulation or GE policy must be reported by contacting your manager, HR, compliance, legal, audit or Ombuds GE offers several channels for raising concerns: Managers Human Resources leaders Compliance leaders Auditors Company legal counsel Next level of management Business or region GE ombudsperson Integrity helpline GE Corporate ombudsperson The GE Board of Directors 17

Sample Open Reporting Metrics 100 Open reporting count Reporting channels 2016 Anonymous rate Policy concerns only Policy 9%; 9%; HR Leadership 50 Policy 26%; Compliance professional 56%; Ombuds 88% Policy Non Policy Integrity Non Policy 53% 39% 2014 2015 2016 Top Policy Concerns 2016 24 Open reporting region 2016 50 2014 2015 Q1 2016 Reporting by P&L & Days to Close 1; IPP 1; CL 1; FEP 4; Controllersh ip 20 16 Japan per 1000 employees 3; COI 12 8 4 ASEA N ANZ KR ID VN MY SG PH 6 PS GPS SPS DP Others 18

Engaging the Middle... Risk Roll-Up ü The RRU is a bottom-up risk assessment ü Not a spectator sport requires manager & employee engagement ü Strong ROI: 1-2 hours/year to help identify unknown unknowns ü Managers drive the RRU ü Managers trained (1 hr) ü Managers tailors content to each team ü All materials, translations, etc. are prepared for the managers ü Only works if your leadership makes it a priority 20

Clear & Simple Process... All at One Website 21

Risk Roll-Up Process: GE Power 2016 Managers pick only 3/16 S&L topics relating to the most significant risks in their operations Compliance Mobile App Risk Roll-Up Screen Each topic has: Ø 1 video Ø 1 real life Power Miss Ø 1-pager on topic basics Managers can certify completion via mobile app Any Q not answered by manager will be answered by subject matter expert Leader Communications Drive the Commitment 22

Risk Roll-Up Metrics: GE Power 2016 Target Population: 37,000 Manager Population: 6076 Employee input also results in: ü Removal of unnecessary process ü Identification of gaps ü Cash out reductions ü Better product and worker safety ü Reinforcement of a speak up culture Target Completion: 99% 23

Risk Roll-Up Results: GE Power 2016 The RRU drives tone @ the top and the middle The RRU makes managers face of compliance to employees The RRU drives unknown unknowns issues to top The RRU requires managers to learn compliance in order to teach it The RRU results provides top management a company risk assessment 24

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Driving the Elusive Tone at the Middle: GE s Risk #CW2017