top 10 ethics and compliance trends 2016
TRANSCRIPT
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Top Ten Ethics & Compliance Predictions and Recommendations for 2016
January 12, 2015
© 2016 NAVEX Global, Inc. All Rights Reserved.
www.navexglobal.com
P R E S E N T E D B Y
Vice President, Advisory Services NAVEX Global
Ed Petry, Ph.D.
Vice President, Advisory Services NAVEX Global
Andrew Foose, J.D.
© 2016 NAVEX Global, Inc. All Rights Reserved.
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Agenda
• Introductions & Overview
• Predictions & Recommendations
1. Addressing The Millennial Mindset
2. E&C Goes Global
3. Maturing Board Oversight Expectations
4. Politics Invades the Workplace
5. Increasing Prominence of Sports Scandals
6. Forging New Alliances With HR
7. New Whistleblower Initiatives
8. Anti-Bribery, Corruption and Third-Party Risk Management
9. Addressing Cynicism Head On
10. Expanding the Scope of E&C
• Q&A
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T R E N D # 1
The Rise of the Millennial Mindset
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• Millennials—born between 1975 and 1995—will comprise 75% of workforce by 2025
• Highly influential—others are adopting a “millennial state of mind”
• Some of the changes that can be traced to the millennial mindset include:
• Increasing skepticism that business will do the right thing when faced with a tough decision
• Far more emphasis on the importance of an organization’s social responsibility and environmental impact
• Changed expectations about how we learn and acquire information
Visit the Pew Research Center online and take their “How Millennial Are You?” quiz
Keeping Pace With a Changing Workforce
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1. Plan for change. Start innovating now
2. Assess learning styles for your organization. Adapt to employee’s preferred learning methods—including interactive online codes, training and policies
3. Don’t jump to conclusions. Studies with findings that suggest millennials are more likely to cross ethical lines can be misleading.
4. Expect to be surprised. Millennials often have a preference for face-to-face communications.
Key Steps For Organizations To Take
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T R E N D # 2
Transitioning to a More Global Center of Gravity for Ethics and Compliance
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U.S. No Longer Center of E&C Momentum
• Until E&C scandals began to implicate non-U.S. headquartered companies, E&C momentum was largely based in the U.S.
• Regulatory initiatives and best practices are now less likely to come from the U.S.
• U.K. Modern Slavery Act 2015
• ISO 19600
• European Court of Justice’s Safe Harbor judgment
• U.K. Anti-Corruption Plan
• Russian Federal Act on Data Protection
• These developments have broad application and often are replicated in other jurisdictions
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1. Get help to stay informed. Enlist the help of local legal liaisons to keep you up-to-date
2. Identify your organization’s obligations. Understand which provisions apply to you.
3. Keep key decision makers up-to-date. Prioritize developments that impact your organization
4. Keep an open mind. Work to overcome any “not created here” biases that may exist in your organization.
5. Develop targeted communications and training. Help those directly impacted by new regulations understand the implications.
Key Steps For Organizations To Take
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T R E N D # 3
Board Expectations for Ethics & Compliance Oversight Get More Specific, Uniform and Comprehensive
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April, 2015—U.S. Department of Health & Human Services, Office of Inspector General (OIG) released comprehensive set of guidelines: Practical Guidance for Health Care Governing Boards on Compliance Oversight
Guidance part of a broader trend to hold E&C programs—and boards—to more uniform standards
New Frameworks for Board Oversight
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Boards Will Be Expected to Know More & Do More
• April, 2015—U.S. Department of Health & Human Services, Office of Inspector General (OIG) released comprehensive set of guidelines: Practical Guidance for Health Care Governing Boards on Compliance Oversight
• Guidance part of a broader trend to hold E&C programs—and boards—to more uniform standards
• Boards need to take very specific and proactive roles relative to their compliance oversight duties
• Boards need to gain a better understanding of the adequacy and effectiveness of their organization’s E&C programs, set the right expectations and ask the right questions
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1. Jump-start your board’s engagement.
To meet their obligations, boards need to gain a better understanding of the adequacy and effectiveness of their organization’s E&C programs, set the right expectations and ask the right questions
Provide questions to your board and/or senior leadership to help them think through their roles and responsibilities related to the E&C program
• For a list of questions you can use, see our blog article “Real Guidance (Finally) On the Compliance Oversight Role of Boards”
Help your board take very specific and proactive roles relative to their compliance oversight duties
Key Steps For Organizations To Take
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2. Reassess your current board training
Find an approach that addresses unique board-related risk areas
Add a discussion of E&C risk areas that pertain specifically to board members
Help board members understand how to interpret E&C data
Develop a plan for how to “credit” board members for trainingthey receive and encourage them to share best practices from other organizations
Utilize specific expertise of board members and involve them in creating or facilitating board training
Key Steps For Organizations To Take
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3. Make the most of the space allotted in the report to the board
Don’t assume too much
Provide information on aspects of your E&C program beyond the helpline
“Don’t” data dump
“Do” use data to support the “why” and “how” of your overall effectiveness
Key Steps For Organizations To Take
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T R E N D # 4
Politics Invades the Workplace
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US’s 2016 election dominating news, social media and many employee conversations
Creates a unique set of compliance problems:
Campaign financing
Quid pro quo deals
Misuse of company resources
Inevitable clash of political views can lead to policy violations and discriminatory behavior
2016 Election Will Dominate Many Employee Conversations
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1. Review your code of conduct and policies. Make sure they’re clear and up-to-date about political contributions, political activity, and campaign financing.
2. Keep an eye on transparency initiatives. Look out for shareholder resolutions expanding political spending disclosures.
3. Over-communicate. Be clear about limits on using company resources for political activities.
4. Reinforce role-specific policies. This is particularly important with senior executives.
5. Be prepared to make hard decisions. Political issues and decisions are charged issues that can be very difficult to handle. Be ready.
6. Know when to say when. Guard against political discussions in the workplace that become derogatory and offensive.
Key Steps For Organizations To Take
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T R E N D # 5
The Wide World of Sports Scandals and How They Impact Our E&C Discussions
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Cause for public discussions of ethics
More attention has been given to behavior off the field
Bribery and corruption
Performance enhancing drugs
Personal transgressions and accountability
Violence, racism and drug use
Athlete safety and exploitation
Sports Scandals Provide Opportunity for More E&C Conversations
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1. In your E&C training and case studies, consider replacing Ken Lay (Enron) with Sepp Blatter (FIFA)
Employees more likely to connect and engage
Sports-related case studies bring home importance of culture–and highlight areas of dysfunction
2. Don’t plan any major U.S. initiatives for the second half of March or any meetings June 14-July 15, 2018
Americans spend nearly 700 million hours watching the college basketball championship games
Resulting in annual losses of $1.9 billion due to distracted and unproductive workers
Key Steps For Organizations To Take
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T R E N D # 6
Working With HR—Time to Try Again
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Better Alignment With E&C and HR Has Positive Ripple Effect • No corporate function has more opportunity to contact employees as
often as HR
Recruiting, hiring, on-boarding, performance reviews, promotions, investigations, discipline, reorganizations, terminations and exit interviews
HR is often the primary channel for reporting E&C concerns
• 24 years ago, U.S. Sentencing Guidelines for Organizations emphasized importance of the HR function in creating and maintaining an effective compliance program
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Coordination between HR and E&C is often strained by
Duplication of efforts
Inefficiencies
Fear that confidential employee information will not remain confidential
Turf battles
Everyone Wins When HR & Compliance Work Well Together
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1. First things first: bury the hatchet
2. Build (or re-build) trust
3. Recruiting and onboarding
4. Get on the same page with communications and training
5. Track all the channels used by your employees for reporting
6. Work with HR to incorporate E&C standards into performance management processes
7. Ensure consistent discipline
8. Get over it; no more turf battles
Key Steps For Organizations To Take
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T R E N D # 7
Renewed Focus On Boosting Whistleblower Rights and Squashing Retaliation
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Two legal developments that bear watching
U.S. Occupational Safety and Health Administration (OSHA) drafted guidelines to help organizations design programs to protect whistleblower rights
• Implement a retaliation response system
• Conduct anti-retaliation compliance training
• Monitor and audit
Berman v. Neo@Ogilvy LLC: Interpretation of “whistleblower”
Legal Developments Shine Spotlight on Whistleblowing & Retaliation
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1. Review and comment on the new OSHA guidelines
2. Implement a publicized retaliation response system, including a helpline/hotline and independent assessment of claims of retaliation
3. Develop anti-retaliation training
Key Steps For Organizations To Take
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T R E N D # 8
Getting Serious About Anti-Bribery and Corruption Efforts and Third-Party Risk Management
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Increase in respondents highly challenged by the issue of ABC
Management of third parties poses the greatest challenge
More than one-third of respondents do not formally identify high-risk third parties
ABC considerations too low a priority by companies preparing to acquire, or merge with, other corporations across borders
Lack of resources to manage ABC risk
ABC risk assessment is one of their companies’ top challenges
Third Party Risk Still a Blind Spot
Source: KPMG Anti-Bribery and Corruption Survey 2015
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1. Conduct a robust corporate risk assessment
2. Identify and address your company’s third-party risks
Scrutiny should increase as “red flags” surface
Understand business rationale for engaging with a third party
Ongoing monitoring of third party relationships
3. Review your ABC mitigation plan for completeness
4. Create or update written policies and procedures to address these risks—particularly the highest risks
5. Train third parties on your organization’s policies
6. Devise a plan to implement changes in demonstrable, documented stages
Key Steps For Organizations To Take
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T R E N D # 9
Cynicism, Fatigue and Compliance Pushback—A Problem We Can No Longer Ignore
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Employee Disengagement Creates Major Risk
• 37% of respondents thought employee cynicism was the top threat to the effectiveness of their E&C training programs
• Look for the signs (if you haven’t seen them already):
The silent elevator, eye-roll, snicker or harrumph
• Just as likely for leaders to lack engagement and just be going through the motions
• Compliance pushback most often seen with training and communications
• Lack of engagement/alignment can impact helpline usage
• Left unchecked, this can erode even your best efforts
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1. Don’t assume “it can’t happen here”
2. Focus on leadership at all levels
3. Start with the most egregious sources that fuel cynicism and compliance pushback: Insincerity, wasting employees’ time, inconsistency, lack of transparency
4. Re-position E&C office as a strategic ally, not just the people who say no
5. Pay attention to public sentiment and how it impacts your employees
Key Steps For Organizations To Take
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T R E N D # 1 0
Expanding the Scope of E&C: Is This the Year for Pushing Boundaries and Increasing Authority?
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Is the scope of our E&C programs too narrowly focused?
High-profile areas with clear E&C components are often over-looked as not “part of the job”
Cyber security, sustainability, marketing, advertising, philanthropy, human rights, community engagement
Long term goal, but look for short term opportunities
Thinking Outside the E&C Box
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1. Ask questions about who owns key risk areas. Confirm that E&C issues related to each risk area are being addressed
2. Find common ground. Corporate social responsibility, human rights, sustainability: it’s in everyone’s interest to make sure E&C issues related to these areas are identified and addressed
3. Pay attention to advertising, marketing and your values. Watch for disconnects between your core values and your marketing campaigns
Key Steps For Organizations To Take
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• The opportunity for E&C to influence the decisions of the organization are greater than ever before. As ethics and compliance professionals, we need to be ready to take on that responsibility.
• Position the E&C office strategically. Look for opportunities to broaden your influence. Find more, different and better ways to work with HR.
• Change your approach from addressing the needs of “millennials” to managing the “millennial mindset.”
• Don’t ignore the all-pervasive influence of sports, politics and other priorities of the public that influence perceptions about ethics.
• Cast a broad net for best practices and regulatory trends. We can’t afford to be parochial.
• Make third-parties and due diligence a priority.
• Identify and address the root causes of cynicism and compliance fatigue.
Key Takeaways & Ideas to Consider Implementing in 2016
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Have a Great 2016!
Ed Petry, Ph.D.Vice President, Advisory Services [email protected]
Andrew Foose, J.D.Vice President, Advisory [email protected]