Yahoo CCO: On the Road With the Ethics Code

In the latest of our conversations with corporate governance and compliance officers, we talk with Dave Farrell, chief compliance officer of Yahoo, about the company’s interactive ethics campaign, “On the Road With the Code.”

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

DETAILS

Farrell

David Farrell joined Yahoo in June 2007 as the company’s first chief compliance officer and is responsible for developing and leading Yahoo’s Ethics and Compliance Organization.

Prior to joining Yahoo, Farrell’s professional experience included working in a number of senior legal and compliance positions at Sun Microsystems, where he created and led Sun’s corporate compliance and business conduct program as Sun’s first chief compliance officer.

Earlier in his career, Farrell served as corporate counsel at Hewlett-Packard, where he supported HP’s sales and marketing operations and several product groups. In previous years, he served as a U.S. Navy Lieutenant and Judge Advocate in Japan and San Francisco.

COMPANY BASICS

Company:

Yahoo

Headquarters:

Sunnyvale, CA

Employees

13,600

Website:

yahoo.com/

“On the Road With the Code”—clever. Who came up with that?

When I was hired to start a compliance function at Yahoo back in 2007, one of the first orders of business … was to develop a new Code of Ethics. What we had here previously was an off-the-shelf training module, licensed from a third party. A review of that determined that it was not something relevant to the company; the subject matter and the scenarios they went through just didn’t look like a typical day in the life of Yahoo in any way, shape, or form.

We wanted to make sure we developed a code and related training that would both cover the subject areas relevant to Yahoo, but also make sure it would be something that would resonate with the employees from a culture standpoint—something that they would find interesting, hopefully something that they would want to take as opposed to have to take.

So how did you get started?

We pulled together a bunch of different focus groups within the company … to determine what would be the best way to train folks. We decided that online training and interactive testing was the most effective way to make sure everybody in the company not only has access to the code, but that they’ve read it.

We already had it in our head that something of a game-type situation might be kind of fun and might appeal to a large percentage of the employee population. So we quickly gravitated to using some sort of Flash technology and avatars and things of that nature to get employees through the training. If you look at “On the Road With the Code,” it looks very much like a video game.

What were the nuts and bolts of getting it running?

One thing we did was to canvass who was out there who could help us roll out the program. We ended up choosing a company called The Network out of Atlanta. Out of all the folks we talked to, we thought they could best suit our purposes. We developed a great partnership with them, working together to come up with the ideas, testing the ideas against the focus groups, and then developing the training … We told them what subject areas we wanted, and that we wanted something Flash-based and interesting. They helped us write the scripts and were then able to turn that into the interactive training itself.

One of the other areas that we really focused on was making this an international experience and product, so we tested it with our employees not just in the United States but all around the world. So we had focus groups around the world, we worked with different employees around the world, different content experts—just to make sure we were getting the right tone, that it wasn’t too U.S.-centric, that it was something that would be relevant even to an employee that was a national of another country and was taking it in that country. To that end, we had it translated in five different languages.

The whole process probably took us about six months start to finish.

What specific subject areas are most relevant to Yahoo?

Some of the subject areas we cover are things we see that come up on a daily basis, such as conflicts of interest. We have a very well-educated workforce with great experience, so a lot of times those types of people are attractive to outside companies in terms of wanting our employees to serve on outside boards, or technical advisory boards.

In addition to the things that come up on a daily basis, we also look at areas like export controls and corruption—where even though they don’t come up frequently or at all, they’re the types of things you absolutely want to prevent from happening, because they create tremendous exposure for the company. We wanted to make sure that employees were aware of certain sets of laws and principles that guide how to do business, and that they need to pay attention to these no matter where they’re located in the world.

What sorts of interactive features does the training include?

We didn’t want to hit employees with a test at the end or just a bunch of questions, because the focus groups had all said that wasn’t particularly effective or well received. So what we tried to do was create different types of scenarios throughout the modules. At the end of the conflict-of-interest training, for instance, we had a type of game show, where people had to choose whether a particular scenario was a conflict or not a conflict.

Any obstacles encountered along the way?

An amazing number of issues come up when you’re doing something like this. Number one, it’s almost like directing a movie; you’re trying to make all the pieces fit together, and [make sure] that the content covers all the right areas.

YAHOO’S ROAD CODE

Below are some of the images Yahoo employees see while taking the company’s ethics training course.

Source: Yahoo.

The technology piece was particularly interesting and challenging to work on, because we had to make sure it would work with our systems and ensure when people took the test they would get credit for it. So we had to work with our learning management systems to make sure that they integrate well with this training, so that we could accurately track who is taking it and who isn’t, and make sure folks can actually access it from their PCs and Macs at work. Putting all that together was just a fascinating process.

How do you measure your success here?

Every time we rolled out the training in a different location, the number of ethics and compliance questions we received started going up considerably. That didn’t mean there were a number of issues and problems to report, so much as people were starting to ask the questions. In terms of creating awareness and getting people to recognize that there is a code of conduct they have to abide by, we think it was very successful.

In terms of global success, we came close to a 100 percent completion rate—99 percent, to be exact. The percentage who didn’t complete was attributed to people on leaves of absence. The success of the program was largely due to a big commitment pushed out by our executive management to support this and make sure people understood that it was part of their job description to make sure they knew they had to do this.

Any advice for companies that may want to adopt similar programs?

It’s certainly a larger investment in terms of time, particularly for the ethics and compliance people who are creating it, than if you were just buying one of the readily available off-the-shelf packages. You need to be prepared for that. But we thought there was a definite benefit to doing it, and I think that shows.

In terms of the cost of developing your own module versus purchasing an off-the-shelf product, I think it pays for itself pretty quickly. Once we’ve paid it off, we own it. We can make tweaks to it. So that was very important to us to own it and be able to modify it as time goes by, and that’s something else to consider.

Thanks, Dave.