Getting Global Ethics and Compliance on the Same Page

A common business cliché is to get employees “all singing from the same hymnal,” but for compliance officers responsible for developing the company's code of conduct that phrase really does capture the task at hand.

It can be difficult enough to keep everyone focused on the same goals and working under the same set of values just inside a company's headquarters building. Extended to foreign lands with language, cultural, and political differences, the challenge can seem nearly impossible.

The solution, however, is fairly straightforward—it's all about communication and empowering the workforce, according to speakers on a panel discussion about building a single, global, ethical corporate culture at the Compliance Week West conference in Palo Alto, Calif. earlier this month.

“Corporations are people,” said Wayne Brody of LRN, an ethics, compliance, and governance consultant. “I'm hoping that line works better for me than it did for Mitt Romney,” he joked.

Brody explained that companies, and by extension their values, are the sum of the people who work for them. And for large, global companies that can be a massive group, all with a common goal. The workforce of Target is bigger than the nation of Belize, for example, and Wal-Mart's is bigger than Bolivia. At these companies there is the opportunity to leverage their enormous footprints to mold better companies for customers, investors, and employees, he said. The code of conduct is one of the tools that can drive that fundamental change, foster social mobility, and discourage corruption, said Brody.

Another cliché is that “actions speak loader than words,” and perhaps it is never truer than when applied to corporate leadership. It is necessary to ensure that a statement of values does not ring hollow and proves that the company is true to its word, no matter how far away its CEO or board may be.

Brody recalled when, as chief compliance officer for Arrow Electronics, for example, there was an investigation at a company outpost in Malaysia. Employees accused a manager of using his position to take advantage of women working on the assembly line.

After the man was fired, he argued that his contract didn't allow for such a termination and there was no evidence any law was broken. Brody recalled the response: “We don't care; let him sue.” The actions of the company lived up to the message it was communicating through its code of conduct and other channels.  News quickly travelled back to the victims and their colleagues on the shop floor and “it showed we meant what we said,” added Brody. “Culture is based on behavior. Behavior is based on values,” he said, giving a broader perspective. “Every manager has to see themselves as a chief values officer.”

In different cultures, what some consider a violation of ethics may be commonplace, while what one culture considers a minor transgression may be completely taboo. In some distressed economies, for example, minor theft is far more common than in developed economies. In China, what constitutes a conflict of interest is sometimes ambiguous and often unreported, given the deference shown to superiors. Religion, economic background, age, and gender all play a role. But these cultural differences should not confuse adapting a program with weakening it, explained Brody.

Everyone “shares basic human values,” Brody said. “The difference is that the prioritization varies dramatically around the world. Everybody knows about doing the right thing, but will they do it?”

The solution, he said, “is to clearly define corporate values” and provide sufficient clarity to help people make the right decision.

“One thing we face as a global company is in every culture and country everyone has their own idea of what's right,” said Jo Levy, global director of ethics and legal compliance for Intel. “We really promote the idea of ‘many cultures, one code.' We understand someone from India or China may come from a different culture, but when you walk through the door as an employee there is one set of Intel values.”

“Culture is based on behavior. Behavior is based on values. Every manager has to see themselves as a chief values officer.”

—Wayne Brody,

LRN

Page Motes, director of strategic programs office for global ethics and compliance at Dell, said the choice was made to position their company's values as “aspirational.” “We wanted to give our employees everywhere something that they could really grasp onto,” she said.

A starting point was posing the question: Does the word “thrive” work across the world? “How do people in Malaysia identify with thriving versus someone in Luxemburg,” is how she put it. “We found it was a concept people latched onto, so it was a nice place to start and then we could talk about values and how to win business the right way.”

Levy said Intel's original code of conduct dates back to the 1970s and set core values of integrity and honesty. Keeping those simple ideals relevant amid a global expansion has necessitated listening to the workforce, addressing their concerns, and earning their buy-in. To do so, the company conducts a global culture survey on annual basis among every business group. Are managers setting a tone of integrity? Are employees comfortable raising issues or reporting violations?

Building upon the feedback, open forums and site-to-site road shows are used to explain how investigations are handled, demystify anonymous hotlines, and assure the workforce that their issues don't “just go into a black box.”

Evangelizing Ethics

When it comes to executive leadership, CEOs and boards can be either a help or hindrance when it comes to evangelizing compliance and ethics, said panelists.

“The CEO might as well be on television for most employees,” Brody said. “They deal with their manager and boss, and maybe the boss's boss from time to time, but that's about it. So those people are the company and the face of the organization.”

GOOD ETHICS & COMPLIANCE

Below are two charts LRN's 2011-2012 Ethics & Compliance Leadership Survey Report.

The chart below ranks respondents' answers as to what they believe to be the most critical 2012 ethics and compliance program goals.

The following chart provides respondents' answers as to what they think are the principal benefits of promoting an ethical culture:

Source: LRN.

Motes said Dell is in a unique position because its founder and CEO, Michael Dell, whose last name is inescapably emblazoned on every product, has long made building an ethical culture a priority. It is just as important, however, that employees feel they too have personal ownership of the company's reputation for integrity. “We don't want to have any feelings that this is the CEO's job, she said. “We want every employee to have a stake.”

At Dell, the global push for an ethical, sustainable company is reinforced through compensation, promotions, and bonuses.

Managers are evaluated, through employee feedback, on whether or not they are “an inspiring leader.”

Levy said her company uses an “ethical leadership program” and a specialized education portal to encourage consistent behaviors.

It isn't just enough for managers to understand cultural differences, Motes said. It is equally important for them to keep the company apolitical on controversial matters. For example, during a company presentation they once used what was thought to be a generic map of India and Pakistan. It had to be pulled, at the last second, because the way it displayed a disputed border region nearly started an “uprising” among employees of both nations.

“That's a real-time example of making sure our employees feel we are not taking sides,” she said.

Motes said she views the efforts of social activists and labor leaders throughout the world not as a hindrance, as some do, but as important partners. They reveal an “uptick in interest in how we are living up to those values,” she said. “They want a lot of detail about our programs and code of conduct to make sure we evolve on issues like slavery and human trafficking. They are asking thoughtful questions and engaging with us.”

However, it all ultimately comes full circle back to employees.

“Engaged employees that embody the values of the companies in an authentic way are better brand ambassadors,” she said.