Post on 09-Jun-2018
ETHICAL LEADERSHIP REQUIRES A SEAT AT THE TABLE
Matthew PachmanVP, Compliance-Ethics and Business Practices
Freddie Mac
matthew_pachman@freddiemac.com
Erica Salmon ByrneAssistant General Counsel
Corpedia
esalmonbyrne@corpedia.com
symposium faculty
Today’s Schedule
Symposium Topics –� Writing/Rewriting the Code
� Process of Rewriting and Reviewing – Pitfalls to Avoid
50 Codes of Conduct Rated
� Each Code was rated by a panel
of experts from the Ethisphere
Council
� An aggregate score was derived
through application of the
following weighted subscores
� Public Availability (5%); Tone from the Top
(15%); Readability and Tone (20%); Non-
Retaliation (10%); Values & Commitments (10%);
Risk Topics (20%); Learning Aids (5%); Presentation and Style (15%).
Some Good Samples…
Graphic from Kellogg Code Context from GAP Code
Writing/Rewriting the Code
Overview:� Overall Structure and Design
� Overall Style and Language
� Integration with Other Aspects of the Compliance and Ethics Program
� Reporting, Discipline/Enforcement and Non-retaliation
� Risk Exposure
� Industry and Peer Best Practices
The Importance of Planning
Did you think about your costs and secure budget money?
Did you set realistic goals and milestones?
� Drafting
� Reviews� Legal, Human Resources, Communications, etc.
� CEO and senior executives
� The Board
Did you plan for printing and distribution?
� Hard copies
� Review of proofs
� Mail room
� Electronic version
� Web (.pdf, HTML), e-mail
Values Based vs. Rules Based
Rules
Policies
Values
Principles
Overall Structure and Design
How well structured and organized is the Code?
� Can be structured in a variety of ways:
� Alphabetical
� Thematic Coverage, “Our Workplace”, “Our Relationship”
� Should be organized in a way that fits the organization’s culture
Does the Code contain a mission statement or guiding
ethical principles?
� Common practice is to start the code with a values statement
� Statement must echo employees’ “real” values
� What kind of code do you want?
Overall Structure and Design
Does the Code articulate the tone from the top?
Is the CEO statement adapted to the company culture and
vocabulary or is it formulaic recitation?
� The CEO statement needs to be written in the CEO’s voice
� Personalized with some well-known experience
� Ideally, the CEO would help to draft the statement
� CEO’s association with the code is only part of setting the overall
tone from the top
More Helpful – Let’s Learn from Some Less Ideal Codes…
� Tone from the Top
Common Pitfalls
� Tone from the Top
Common Pitfalls
� Tone from the Top
Overall Structure and Design
Does the Code contain disclaimers/reminders?
� The Code does not alter an employee’s status
� Code should note that other organizational policies exist, and
can be added, deleted, or changed
� Managers and supervisors should be held to higher standards
� Compliance with the code is a condition of employment
� Make sure that this is part of the employment contract overseas?
Overall Structure and Design
Does the Code identify who is covered by the Code?
� Typically codes are developed for directors, officers & employees
� But, a company may have separate codes of ethics for different types of officers
� Multiple codes run the risk of inconsistent statement of expectations
� Can have a basic code of conduct that covers all officers along with more specific codes to different subsets of officers
� Need to consider application of the code to contractors, temporary employees, and vendors
Overall Structure and Design
Does the Code contain a listing of available resources for
obtaining guidance and for good faith reporting of suspected misconduct?
� Should identify ways in which employees can obtain guidance in
interpreting the requirements of the code or an organizational policy
� Identifying how an employee can make a good faith report of
suspected misconduct is essential
� Hotlines
� Notes to the board?
Overall Structure and Design
Does the Code contain a non-retaliation commitment?� Convincing employees that they will not suffer retaliation is one is one of
the more significant challenges
� A strong statement in the code is an important part of meeting that
challenge
� As a matter of regulation, retaliation is prohibited
Does the Code contain acknowledgment of receipt and
compliance form?� Common element is a final page that includes an acknowledgment of
receipt
Common Pitfalls
� Non-Retaliation Language
Section 22 of 22 Last page
Overall Structure and Design
Does the Code provide Q&A, examples or case studies?
Are topics communicated with expected behaviors/rules:
do’s and don'ts?
� Be judicious using dry recitations of “thou shalt nots.”
� The code has to be looked at as a teaching device
� Many employees are poor visual learners
� Q&A, hypothetical situations are excellent teaching devices
Common Pitfalls
� Learning Aids
Overall Style and Language
Overall Style of the Code:� Written in the active voice
� Write at a level that is easily
digested by the target
audience
� Style consistent with the
target audience and company
culture
� Standard grammar, spelling,
punctuation
Overall Style and Language
Overall Style of the Code:
� Concise and clear communication
� Content is constant throughout
� Easy and/or engaging to read
� How was translation done?
� Test-marketed?
Common Pitfalls
� Document Presentation
Common Pitfalls
� Document Presentation
Integration of the Code
Integration into the Compliance and Ethics Program:
� New hire training
� Periodic re-training of employees
� Performance evaluations
� Ethics activities
� Publicly available
Reporting, Enforcement and Non-retaliation
Reporting:
� “Snitch Rule” -- employees must report suspected violations
� Insufficient to have just an “open door” policy
� Must have misconduct reporting alternatives
� Clearly communicate the enforcement policy and local laws
� Enforcement mechanisms need to be clearly defined
Reporting, Enforcement and Non-retaliation
� Reporting
� 24/7/365 reporting tool
� Email reporting tool
� Non-English language
reporting tool
Risk Exposure
Code must respond to analyzed risks.
� Covers areas of risk
� Topics must match risk profile
� Consistent with…
� The Industry
� The Law
The Prosecutor’s Perspective on Codes
� Revised United State Sentencing Guidelines
� Effective compliance and ethics program requires more than
policies/procedures
� Entails a focus on organizational culture promoting abidance
with the law and ethical behavior
The Prosecutor’s Perspective cont…
� Justice Department (Thompson Memo)
� In determining whether to charge a corporation for the criminal
misconduct of its employees, prosecutors should consider “the
existence and adequacy of the corporation’s compliance
program.”