In the latest of our conversations with players in the corporate governance and compliance field, we catch up with Kathleen Edmond, chief ethics officer at retail giant Best Buy.

Readers can also visit our archive of Q&A interviews.

DETAILS

Edmond

As chief ethics officer for Best Buy, Kathleen Edmond develops and directs global vision for the company’s ethics and business conduct and is a key partner in the corporate social responsibility work. She helped build the company’s ethics office after joining the company in 2002.

With a background in employment law, a passion for teaching, and a solid retail background, Edmond’s foray into ethics was a result of her own enthusiasm for the topic. Best Buy’s ethics function originally came together to assure compliance with the requirements of Sarbanes Oxley, but Edmond grew the focus to be one of creating and sustaining an ethical business culture. Ultimately, she wants to help create a culture that rewards employees for thoughtful deliberation on issues involving ethics, integrity, and corporate responsibility.

Edmond oversees a matrixed structure that engages leaders from all over the world, and at all levels of the organization (from store leadership to the board of directors). She determines appropriateness of companywide ethics and corporate responsibility initiatives, oversees the company’s global confidential ethics reporting system, communicates Best Buy’s ethics and corporate responsibility standards to all employees and partners, provides counsel to leadership, and partners in problem resolution.

Prior to her role as ethics officer, Edmond held employment law positions with Best Buy and Musicland. She served as adjunct professor for the University of St. Thomas (business ethics) and William Mitchell College of Law (law). She also has extensive experience in social work and human resources/business management.

To read Kathleen Edmond’s Online Blog on ethics, click on the following link: http://www.kathleenedmond.com/.

COMPANY BASICS

Company:

Best Buy Co.

Headquarters:

Richfield, Minn.

2009 Sales (mil.)

$45,015.0

Employees

155,000

Website:

http://www.bestbuy.com

You’re the first chief ethics officer at Best Buy, correct? How did you end up in the job?

Yes. At Best Buy, we tend to grow things organically. When I came in, I came in as a contract employment attorney. In 2002, Sarbanes-Oxley passed. The Code of Business Ethics needed to be rewritten. I just kept volunteering. In addition to a law degree, I have my MBA with a concentration in business ethics, so I’ve worked in this space before. I also have a master’s degree in social work, so I have a background that kind of fit, and I had a lot of interest in it. So I kept raising my hand, and during 2002 and 2003 it became more and more of my role. I became the ethics officer, and then we went international, so it got to be a bigger enterprise deal. It just kept growing with the needs of the company.

Tell us about your primary responsibilities.

There are two overarching things that I need to accomplish. One is keeping ownership of ethics at the most fundamental level within each individual. It’s tempting to throw stuff over the wall, and people say, ‘Oh, it’s the ethics officer, it’s at corporate.’ That’s not true. If you’ve ever been to Best Buy, you know your opinion of Best Buy’s ethics is formed at the checkout with that blue shirt. It’s critical that people believe and know that they own this, and that they own the image and brand of the company.

The other part of it is tone at the top: making sure that I provide a voice that sometimes has to be challenging, sometimes has to take unpopular positions, and always maintains the trust of leadership to know I’ll give them an honest point of view and bring them bad news if it needs to get there. Those are the two key things I need to deliver.

Then there’s a bunch of tactical pieces—the whistleblower hotline, making quarterly reports to the audit committee, case management, training functions … I chair the ethics committee. I make sure ethics investigations across the enterprise aren’t just one-offs—that they have remedial action and accountability.

Can you tell us how Best Buy’s ethics and compliance function is structured?

We split our ethics and compliance functions. In fact, we had an ethics function before we had a compliance function, which tells you a little about the values of the company … I report to the enterprise general counsel, as does our chief compliance officer. We work closely together but we have differing functions. We don’t have regional CCOs. I’ll work with folks on the ground—that might be attorneys, or in some countries it’s HR—to help deliver the training and conduct investigations.

The other way we drive it down to the local leadership is through a group of about 20 to 30 people who volunteer to help do projects and training. We put together a library of short scenarios and questions that we deliver and have on a SharePoint site for all general managers to use in their weekly meetings.

Is the ethics function just you?

I’ve got a senior manager who helps with the tactical operational pieces. There’s also the ethics committee, which I chair, which consists of the heads of internal audit, loss prevention, the general counsel, compliance, HR, operations, and finance. That’s my team when an investigation comes up, and I coordinate. I think of my function as a lot like an air traffic controller. The ethics function is 155,000 employees.

What tools and techniques do you use for training, when you have 155,000 employees scattered around the world?

All employees get a new-hire orientation and Code training. At corporate it’s face-to-face; in the field it’s Web-based. We don’t do Code training every year; it feels repetitive and unnecessary. We try to figure out what people need to do their job.

At the store level … our folks need sales-practices training. We have folks attend a big consumer electronics convention every year in Las Vegas and before they go, they get one-on-one or small-group anti-trust training. When people go overseas, they get Foreign Corrupt Practices Act training. In the next few months, I’m doing face-to-face training with small groups of all our officers and our directors on the lessons learned from ethical failures in the last two years … So, it’s just-in-time training for the role that you have.

Talk to us about monitoring ethics and compliance, and making sure all this effort works.

How do you know it’s working? On the tactical parts, we use internal audit a lot. For example, internal audit has a regular routine of travel-and-entertainment audits. So if they find officers breaking policy, they bring it to HR or to me. We’ll team together to talk to the officer. Internal audit is useful in finding activities out of the norm.

In terms of how you monitor ethical behavior, that’s always a challenge. How do you capture or monetize prevention, or what hasn’t happened? I don’t know … But here, you’ll get challenged for not living the values. It’s part of the language we use. We talk about living the values that you can just see and hear.

What’s tougher for us, and for every company, is looking at what we reward. Are we promoting people that do live our values, in addition to being good at what they do? Or are we promoting people who violate our values? That’s tougher. Are we perfect? Absolutely not. But we continue to keep that on the radar just by asking those questions.

You write a blog about ethics issues. What’s that about?

The idea came from a former general manager of our largest store. He suggested starting a blog to communicate … I’ve been doing that for a couple of months, so it’s still relatively new.

The purpose for me is to tell stories. I want to put information out there—true stories—to give people the tools they need to be successful here, so they know what we expect and they know what will get them fired … It’s giving people guidelines in a pretty gray area. The other impetus for it was to communicate with a whole bunch of people, since we don’t have just one communication vehicle within the company.

That sounds like it can also be a bit risky.

Most employees think it’s cool and that it’s transparent; a few ask, “Why are you putting our dirty laundry out?”

The most concern I’ve gotten is from my colleagues in the ethics and compliance community. There are lots of Fortune 500 companies here, and we meet regularly. When I first showed them my blog, the room was silent. Many of them are lawyers, or come from an internal audit background. They said, “I could never do that. Aren’t you scared of it showing up in litigation?” But there’s risk in not doing stuff. In retail, some of the bigger risk is in staying still, so we’ve got to keep trying.

What’s keeping you up at night right now?

Right now my main focus is supporting the new CEO and making sure I give him information to shape his strategies and team. I’m also always looking for fresh ways of communicating. With 155,000 people and growing, how do we keep communicating in a way that’s relevant? For a lot of our folks, e-mail is old; they only communicate on Facebook. They don’t answer voicemail; you have to text them. So we’re adding a texting function to our whistleblower line so they can text me directly on my BlackBerry.

In the current economy, with the pressure on every company’s resources, I worry about each of us trying to cut corners to save in ways that we shouldn’t be. What are we rewarding? When we’re figuring out ways to bring in new revenue, are we doing it in ways that live our values? I’m writing up a true story about something that happened that had the potential for going off road. One of our first-line managers saw it, pushed back hard, and got us back on track.

Thanks, Kathleen.

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