Getting On Board: A Model for Integrating and Engaging New ...
ENGAGING YOUR BOARD - SCCE Official Site · Example Presentation to The Board ... of the ethics and...
Transcript of ENGAGING YOUR BOARD - SCCE Official Site · Example Presentation to The Board ... of the ethics and...
1/17/2014
1
ENGAGING YOUR BOARDErica Salmon ByrneEVP, Compliance and Governance SolutionsNYSE Governance Services
February 14, 2014
AGENDA
2
Presenting to the Board
Training for the Board
Example Presentation to The Board
Current Program Assessment and Update
Business Case for Compliance
Common Questions
1/17/2014
2
PRESENTING TO THE BOARD
3
Guideline standards and best practices regarding
Who delivers the report
How often the report is given
What is included in the report
How is the relationship between the “day to day” operational compliance personnel and the board memorialized?
Is the Audit Committee the right forum?
Do you have a “unique” governing structure?
JV or portfolio company
Private company
University or non‐profit
THE BOARD’S ROLE
4
BOARD OF DIRECTORS OVERSIGHT (USSG §8B2.1 (B)(2)(A))
The Guidelines recommend that an organization’s “governing authority” be knowledgeable about the content and operation of the ethics and compliance program, and that it exercise reasonable oversight of that program.
1/17/2014
3
BOARD INVOLVEMENT WITH COMPLIANCE“HAS THE BOARD DELEGATED RESPONSIBILITY FOR ETHICS AND
COMPLIANCE TO A COMMITTEE OF THE BOARD ?”
5
Source: World’s Most Ethical Company Dataset, Ethisphere Institute 2012
BOARD INVOLVEMENT WITH COMPLIANCE“DOES YOUR BOARD HAVE A ‘RED FLAG’ OR ALERT PROCESS TO
BRING ISSUES TO THE BOARD?”
6
Source: World’s Most Ethical Company Dataset, Ethisphere Institute 2012
1/17/2014
4
BOARD INVOLVEMENT WITH COMPLIANCE“HOW OFTEN DOES THE PERSON WITH OVERALL RESPONSIBILITY
FOR COMPLIANCE UPDATE THE BOARD?” [ALL ORGANIZATIONS]
7
11%
50%5%
19%
5%10%
Annually
Quarterly
Monthly
Ad Hoc
Never
Other
Source: ACC/Corpedia Bi‐Annual Survey 2011
BOARD INVOLVEMENT WITH COMPLIANCEFREQUENCY OF COMMUNICATION
Confidential 8
2011 2009 2007 2005
Quarterly 50% 48% 42% 39%
Ad Hoc 19% 21% 30% 28%
Annually 11% 48% 42% 39%
Other* 10% 10% ‐ ‐
Monthly 5% 6% 8% 11%
Never 5% 5% 8% 6%
*Other was not an available choice for the 2007 and 2005 surveys
2011 ACC Benchmarking Survey on Compliance Programs and Risk Assessments
CONFIDENTIAL
1/17/2014
5
BOARD INVOLVEMENT WITH COMPLIANCE“HOW OFTEN DOES THE PERSON WITH OVERALL RESPONSIBILITY
FOR COMPLIANCE UPDATE THE BOARD?” [WME HONORED
ORGANIZATIONS]
9
41%
42%
4%6% 6%
1%
> Than Quarterly
Quarterly
3 Times Annually
Bi‐Annually
Annually
Ad Hoc Only
Source: World’s Most Ethical Company Dataset, Ethisphere Institute 2012
BOARD INVOLVEMENT WITH COMPLIANCEROLE OF OPERATIONAL ETHICS/COMPLIANCE OFFICER WITH THE
BOARD
10
“Does the operational ethics/compliance officer participate in board presentations?”
Source: ACC/Corpedia Bi‐Annual Survey 2011
1/17/2014
6
BOARD INVOLVEMENT WITH COMPLIANCE“WHAT ASPECTS OF THE ETHICS AND COMPLIANCE PROGRAM
ARE REPORTED TO THE BOARD?” [ALL ORGANIZATIONS]
11
0%20%
40%60%
80%
Hotline Statistics
Investigation Reports
Training Information
Communication
Risk Assessment
Program Measurement
Culture Assessment Results
Source: ACC/Corpedia Bi‐Annual Survey 2011
BOARD INVOLVEMENT WITH COMPLIANCE“WHAT ASPECTS OF THE ETHICS AND COMPLIANCE PROGRAM
ARE REPORTED TO THE BOARD?” [WME HONORED
ORGANIZATIONS]
12
20%40%
60%80%
Hotline Statistics
Investigation Reports
Training Information
Communication
Risk Assessment
Program Measurement
Culture Assessment Results
Source: ACC/Corpedia Bi‐Annual Survey 2011
1/17/2014
7
ENGAGING THE BOARD ON RISK
13
TIMELY AND RELEVANT INFORMATION ON RISK
Risk Assessment Process
How the company audits the implementation of the
compliance program
Employee perception of compliance
ALIGNING YOUR PROGRAMEXPECTATIONS FOR THE BOARD AND THE ORGANIZATION
14
What information should the board be receiving?
Ethics and compliance metrics
Benchmarking
Training and regulatory updates
Program initiatives
What is the board’s role in communicating “tone from the top”
and ensuring engagement?
1/17/2014
8
TRENDS IN BOARD TRAINING
15
Boards are increasingly asking for
guidance on what a good compliance
program looks like
Companies are increasingly
asking the Board to review – or to
complete – the same code training
provided to employees
Online training for directors is becoming more common
However, board training is still hovering around an hour at
a majority of organizations
a1
ENGAGING YOUR BOARD
16
TOTAL HOURS SPENT TRAINING THE BOARD
Less Than One Hour
1 ‐2 Hours
3 ‐ 5 Hours
More Than Five Hours
2011 ACC Benchmarking Survey on Compliance Programs and Risk Assessments
47%
35%
12%
6%
1/17/2014
9
TRAINING FOR THE BOARD
17
THREE MAJOR TRAINING “BUCKETS”
Code of conduct
Summary
Access to training assets including the online program
Role and responsibilities of board
Relevant risk topics
Insider trading
Conflicts of interest
Anti‐corruption
Antitrust
COMMON RISK TOPICS COVERED IN BOARD TRAINING
18
25%
33%
53%
64%
36%
Other Anti‐Corruption Conflicts ofInterest
Code of Conduct Board OversightResponisbilities
Source: ACC‐Corpedia 2011 Compliance Program and Risk Assessment Benchmarking Survey
1/17/2014
10
ETHICS & COMPLIANCE PROGRAM UPDATE
Erica Salmon Byrne
Chief Ethics and Compliance Officer
OurCo, Inc.
19
ETHICS & COMPLIANCE PROGRAM UPDATE
Program assessment data
Reports
Case status and disposition
Culture survey results
Updated initiatives
Training and communication plan
2014 Plan
Outside expert presentation
20
1/17/2014
11
HELPLINE & REPORTING FOR Q1‐Q3 2013
21
39%
14%
6%3%
2%
15%
21%
Type of Report
HR Matters
Misuse ofAssets
HSE
Fraud
Accounting
Other law
Contact StatisticsQ1‐Q32013
Total Helpline Contacts 233
Anonymous Contacts 17%
Open Door Reports 158
Total Reports 391
REPORT CONTACT TRENDS
Contact Statistics 2010 2011 2012Q1‐Q32013
Total Helpline Contacts 174 208 217 233
Anonymous Contacts 29% 33% 31% 17%
Open Door Reports n/a n/a 73 158
Total Reports 174 208 290 391
22
1/17/2014
12
REPORT CONTACT TRENDS
23
0
50
100
150
200
250
300
350
400
450
2010 2011 2012 Q1‐Q3 2013
Open Door
Helpline
REPORT CONTACT TRENDS BY TYPE
Contact Statistics 2010 2011 2012Q1-Q3 2013
Human Resources Matters 61% 67% 56% 39%
Misuse of Assets (Theft, Disclosure of Confidential Information 12% 14% 8% 14%
Environmental Health and Safety 2% 2% 4% 6%
Corruption, Fraud & Bribery 2% 3% 2% 3%
Accounting, Auditing or Internal Controls 2% 5% 2% 2%
Other Law, Code or Policy Violation 19% 7% 16% 15%
Request for Guidance or Approval 2% 2% 6% 21%
24
1/17/2014
13
REPORTING METHOD TRENDS
34%
25%
12%
26%
3%
2010
Webform
In Person
Phone
Fax
22%
17%
51%
9%1%
Q1‐Q3 2013
25
CASE HANDLING
12%
22%
26%
16%
24%
19%
15%
34%
10%
22%
0%
5%
10%
15%
20%
25%
30%
35%
40%
ImmediateResponse w/Guidance
No Investigation orAction Warranted
Investigated,Corrective Action
Taken
Investigated, NoAction Warrented
Referred Contactto Resource
2011
2012
26
1/17/2014
14
CASE DISPOSITION
26%
14%
3%1%
56%
17%
24%
8%
2%
49%
‐10%
0%
10%
20%
30%
40%
50%
60%
No Action/Closed Counseling orDisciplinary Action
Termination Prosecution Other (Guidance,Approval,
Communication)
2011
2012
27
EMPLOYEE ENGAGEMENT SURVEY ‐ 2013SURVEY INCLUDED QUESTIONS AIMED AT MEASURING COMMITMENT AND ADHERENCE TO THE PRINCIPLES AND VALUES IN OUR CODE OF BUSINESS CONDUCT AND ETHICS, INCLUDING:
I know where to seek advice if I have questions about the ethics of a specific action?
I believe that all employees (including senior management) are held to the same ethical standards?
I believe that senior management behaves in an ethical manner?
I have not felt pressure to compromise values, company policy, or the law to achieve financial goals?
28
1/17/2014
15
EMPLOYEE ENGAGEMENT SURVEY ‐ 2013
29
27
23
31
15
43
50
47
34
20
18
16
28
7
7
5
15
3
2
2
8
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Know Where to Seek Advice
All Employees Treated Same
Senior Management is Ethical
Not Felt Pressure to Compromise
Srongly Agree Agree Neutral Disagree Strongly Disagree
EMPLOYEE ENGAGEMENT SURVEY TRENDS
18%
45%
20%
12%5%
2010
StronglyAgree
Agree
Neutral
Disagree
StronglyDisagree
15%
34%
28%
15%
8%
Q1‐Q3 2013
30
1/17/2014
16
EDUCATION
2010
2011
2012
2013
Code of Business Conduct and Ethics TrainingOnline course delivered to all employees worldwide: 20686Completion rate: 62% (but recordkeeping not clear). Limited follow‐up to ensure completion.
Code of Business Conduct and Ethics Training All employees worldwide: 20436In person for senior management. Enrolled: 312. Completion Rate: 99%Online course for remaining employees. Enrolled 20124. Completion Rate: 93%Reasons for completion rates: Tone at top and significant follow‐up
Virtually no Compliance or Ethics Education courses delivered. Reasons: Reduction in Force/general economic conditions.
Insider Trading for Managers. Employees enrolled: 1896. Completion percentage: 66%. Minimal follow‐up to ensure completion.
31
PROGRAM COMMUNICATION 2013
1Q2013
2Q2013
3Q2013
4Q2013
22 Feb – Intranet Feature, Test your Ethics IQ, Protecting Confidential Information of competitors, potential vendors26 Feb – CECO emails to managers and all employees regarding policies and Code training31 Mar – Intranet Banner re new Code training due 30 June
14 Apr – Intranet Feature, Ethics in Action, Credit card misuseJune – Intranet Corp News – Using File share correctly23 May – Intranet Feature, Test your Ethics IQ, Foreign Corrupt Practices Act30 May – Intranet Banner re new Code and completion of training7 June ‐ Annual Meeting – CEO and General Counsel remarks including ethics discussion
18 Jul – Intranet Feature, Test your Ethics IQ, Insider Information22 Aug – Intranet Feature, Ethics in Action, Employee and Vendor conflicts of interest3 Sep ‐ Quarterly Sales Meeting – CEO Speech including ethics discussion
24 Oct – Intranet Feature, Ethics in Action, CWT System cost error identified in Russia14 Nov – Intranet Feature, Test your Ethics IQ, gifts and conflicts of interest2 Dec ‐ Rollout of revised Code training including executive message and local manager discussion
32
1/17/2014
17
KEY INITIATIVES FOR FY13 Code of Business Conduct and Ethics Revision
Benchmark Codes of Other Companies
Engage Internal Partners – HR, Legal, Communications
Identify and Engage External Partners
Education and Communications Curriculum and Implementation Plan
Develop New Code Course to Coincide with Revised Code Rollout
Determine Subject Matter Curriculum for Specific Employee Groups
Deliver Education Course to Board
Engage Third Party Training Provider
Develop and Implement Communication Plan for Year
Compliance Policies
Review Current Policies and Identify Weakness and Gaps
Develop Plan for Updating Policies
Audit and Legal Committee and Full Board
Reserved Time at Every Meeting of the Committee
Full Board – Presentation at One Meeting Minimum
33
THREE YEAR PLAN
2014
Code of Conduct RevisionAnd RolloutCommunications*Education Curriculum*Policies*Board and Audit Committee*
2015
Risk AssessmentIncentivesEmployee Engagement SurveyRegional CE Committees
2016
Employee Engagement SurveyThird Party Program AssessmentRegional/Business CE Officers
34
1/17/2014
18
QUESTIONS TO ANTICIPATE FROM YOUR BOARD(IN ADDITION TO “HOW MUCH IS ALL OF THIS GOING TO COST?”)
35
“We’re no GE, we’re a bit player, why do we care about investing in this? Will the government even care about us since we’re smaller/private?”
Small fries get the bigger hammer
US Sentencing Commission data consistently shows small organizations taking convictions. In FY11, for example, 94% of the organizations convicted of a felony had less than 500 employees, 70% had less than 50 employees
Small orgs can’t weather the costs, reputational and otherwise, as well as large orgs
Issues like debarment from federal work can kill orgs
36
QUESTIONS TO ANTICIPATE FROM YOUR BOARD
1/17/2014
19
“Why are you talking about Sentencing Guidelines?”
It’s not just us talking about it, it’s what your local US Atty looks at when making the call on charging, what the SEC and other agencies consider as a framework, and it’s echoed in standards from the Federal Acquisition Regulation (FAR) to international standards like the UKBA and OECD
The guidelines provide a flexible framework for organizations of all sizes and scopes – it’s a valuable roadmap
37
QUESTIONS TO ANTICIPATE FROM YOUR BOARD
“We’ve had a hotline for years now and we never get any calls, doesn’t that mean we’re doing fine?”
It might also mean that no one knows about the hotline or that they are either scared to report ‐‐or feel it won’t matter
Surveys consistently show that 90% or more of employees prefer to report to their managers, supervisors or HR – the hotline is consistently an option that gets less than 10%.
38
QUESTIONS TO ANTICIPATE FROM YOUR BOARD
1/17/2014
20
“Everyone knows we are an ethical company and do the right thing. I talk about it all the time.”
While we are consistent in what we say from the top, getting the message to the grass roots is deceptively difficult and employee perception of the company culture and our commitment to it is actually as important as what we say and do at the top
The perception of company culture is local
39
QUESTIONS TO ANTICIPATE FROM YOUR BOARD
“Shouldn’t we focus all of the resources on [pick a topic], that seems to be the hot issue?”
What regulators are focused on today is important, but risks change and we need a robust program that focuses on reporting, asking questions and taking responsibility to create a culture that adapts to all possible compliance risks
Assessing individual risk topics, and the resources that should be brought to bear, is an integral part of any successful program – but you have to have the framework in place to do that
40
QUESTIONS TO ANTICIPATE FROM YOUR BOARD
1/17/2014
21
“How do we know that the company’s money is going to be well spent?”
Ethics and compliance is not a black box, there are metrics that can be used to gauge performance and benchmarking with peers to ensure best practices (including internal surveys and external benchmarking)
41
QUESTIONS TO ANTICIPATE FROM YOUR BOARD
Thank You