The Ethisphere 2021 World’s Most Ethical (WME) companies awards and reports are out. Over the next few posts, I will be examining these reports and information. We will look at three reports issued in conjunction with the 2021 World’s Most Ethical Companies; leading practices on managing a global workforce effectively, leading practices on managing third-parties risks, and leading practices in effective training and communications in a compliance program. (All available here.) In today’s edition, I review leading practices on managing a global workforce effectively (the Report). There are four general areas I will focus on: mergers and acquisitions (M&A), incentives, global steering committees and compliance liaisons.
In the area of M&A, the report noted that there has been a “12-point increase over five years in the number of recognized companies that solicit input from ethics and compliance on decisions related to business development, such as mergers, divestitures, or entries into new markets. As the report noted, the trend is “understandable. There are significant examples of situations where a company “bought a problem” and paid a significant price for their failure to include ethics and compliance in the diligence process on a merger. Regulators and investors are understandably pressuring companies to make sure that their acquisitions are vetted appropriately or, if there are limitations on the diligence that can be done, that the acquired entity is swiftly and thoroughly integrated into the company’s existing program.” Some of the key areas were noted to be requesting staffing or budget for additional coverage; identifying members of the acquired company’s ethics and compliance team to retain; and planning for learning management system transitions; looking at case management system integration and identifying third party supplier risk or overlap with the acquired entity.
Incentives for compliance while disincentivizing non-compliance through discipline has long been a hallmark of an effective compliance program. Most companies have long practiced disciplinary actions but have struggled with how to incentivize compliance. However, the Report notes the WME companies are increasingly focused “on disciplinary calibration across business units.” Equally important, some of the “most interesting evolutions have been on the incentive side of the equation.”
Incentives “can take the form of peer- and manager-led recognition programs that recognize and celebrate employees observed doing the right thing or going above the call of duty in support of the ethics and compliance program. These are often tied to certificates, plaques, department- or company-wide recognition by leadership, or monetary gifts. Incentive and awards programs that are tailor-built to your operating environment and culture will resonate best with employees.”
Perhaps even more progressively, the Report states, we are “seeing ethics and compliance metrics used as part of managers’ evaluation process, including whether managers are utilizing the tools the ethics function has provided to help them discuss ethics and compliance issues, how soon team members complete their training (as opposed to overall completion rates), and more.” Moreover, there is an increase in ethics and compliance teams “partnering with other control functions to develop “scorecards” for managers that reflect not only ethics and compliance data but also data from HR, audit, finance or procurement, IT, and safety. This may take the form, for example, of expense report audit results, phishing test failures, turnover rates, near-miss numbers, and case management data. Layered together, it often provides a more complete picture of a manager’s commitment to the company’s values and key control processes.”
In the area of a global compliance oversight committee, the Report noted there is an increasing best practice of “leveraging a network of control functions and leaders across the world to reach employees effectively.” These committees are “cross-functional planning roundtables where ethics and compliance teams have the opportunity to share insights and identify trends with what we colloquially refer to as “sister control functions.” In the current environment, these planning conversations will be even more critical as functions like HR, audit, and IT are increasingly important partners to an effective program in a remote or virtual work environment.”
Such a committee should have a diverse set of skills from a wide set of corporate disciplines. The Report suggested such functions as, “Finance, audit, operations, human resources, sales, procurement, and strategy or development teams comprise a strong foundation.” It went on to note, “The benefits of expanding committee membership horizontally are twofold. First, this cross-functional team will bring unique expertise into their respective risk areas and provide a two-way window into the culture and methods of their teams. Second, soliciting input on initiatives throughout the year—training, communications, employee surveys—across the organization increases the odds of these efforts being well received by their intended audiences.”
One of the most interesting findings of companies which had been awarded WME status was their use of liaison programs to expand the reach of the corporate compliance function. Other names for this concept include compliance ambassadors or compliance ombudsmen. The Report specifically noted, “these are not regional compliance personnel, although those are increasingly also a feature of a global program. Instead, these are individuals outside the compliance or legal function who serve as ambassadors for the program, assisting with disseminating messaging and directing employees to guidance. In order for a liaison program to work well, liaisons have to be selected carefully and equipped with the right information to do their jobs.”
Whatever you might call these types of initiatives, they can use a variety of communication tools and methods to spread the message of compliance across your global workforce. The Report noted, “liaisons include annual in-person meetings, monthly or even weekly compliance all-hands calls, lunch-and-learn sessions, as well as virtual resource repositories for sharing best practices and templates. Increasingly, companies are incorporating liaison service into performance evaluation processes and high-potential employee selection processes to provide outstanding lower-level employees with the opportunity to interact with the program early in their career.”
Much of the information in this year’s WME awards and reports will be discussed in Ethisphere’s 2021 Global Ethics Summit, which will be held virtually April 13-15. Readers of this blog will receive a 15% discount to Ethisphere’s Global Ethics Summit For more information and registration details click here. Use the code tomfox15 for your discount.
Join us tomorrow where I continue my exploration of the 2021 WME information with Erica Salmon Byrne, Executive Vice President and Chair of Business Ethics Leadership Alliance (BELA), Ethisphere, as we take a deep dive into leading practices on third parties.
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