Principled: Recent Episodes
LRN
LRN’s Principled brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to learn valuable strategies and receive actionable advice from our community of business leaders and workplace change-makers.
This episode of the Principled Podcast, join Amy Hanan, LRN’s Chief Marketing Office and Lance King, Head of Group Compliance at Virgin Media O2, as they examine how organizations can empower leaders to champion ethics and compliance, discussing what it takes to build high performing compliance teams, manage regulatory risks, and how to develop effective relationships from shop floor to the C-Suite.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
As AI technology evolves, businesses face challenges in ethical implementation. In this episode of the Principled Podcast, Amy Hanan, Chief Marketing Officer at LRN, talks with Justin Garten, LRN’s Senior Director of AI and Data Science, about the AI Implementation Principles brought forth by the White House and Department of Labor.
With experience at Mantium and Google, Justin shares insights on balancing innovation with ethical caution, fostering social innovation, and establishing clear AI governance. Tune in to discover strategies for mitigating AI’s impact on workers, aligning with regulations, and preparing for AI’s future.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
In this episode of the Principled Podcast, host Amy Hanan, LRN's Chief Marketing Officer at LRN, is joined by Ayumi Kijima, Head of Group Compliance at ORIX, headquartered in Tokyo. This episode examines the evolving landscape of global compliance programs in Japan and internationally and how organizations like ORIX Group are shaping them to meet the challenges of a rapidly changing business environment while staying true to their core values.
Get a copy of the Japan edition of LRN's 2024 Ethics & Compliance Program Effectiveness Report.
In this episode of the Principled Podcast, host Frances Ibekwe, LRN's Senior E&C Advisor and Barrister, is joined by Gaby Gray, Head of Legal at Alliance Pharma, to explore insights from LRN's 2024 Ethics & Compliance Program Effectiveness Report, with a focus on the UK region. As organizations worldwide face escalating risks, the report underscores the pivotal role of values-based E&C programs in mitigating these challenges. Drawing from global data and insights from over 1,400 E&C professionals, they discuss the effectiveness of such programs in risk reduction and driving positive business outcomes. Tune in as they delve into the evolving landscape of E&C programs in the UK, examining practical best practices for implementation and offering valuable insights for navigating ethical challenges and achieving compliance excellence both locally and globally.
Get a copy of the UK edition of LRN’s 2024 Ethics & Compliance Program Effectiveness Report.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
The US Department of Justice Criminal Division has been increasingly vocal about what makes organizations’ ethics and compliance programs effective. This input on program effectiveness takes the form of guidance to prosecutors about what questions to ask when companies negotiate to resolve DOJ investigations into corporate wrongdoing on favorable terms. What does this guidance on program effectiveness mean in practice for E&C professionals? In this episode of LRN’s Principled Podcast, host Susan Divers speaks with John Michelich, who retired last November after 35 years as a federal prosecutor with the Department of Justice’s Criminal Division. Listen in as they explore how the DOJ evaluates E&C programs, as well as best practices for companies settling misconduct investigations.
For a full transcript of this podcast, visit the episode page at LRN.com
Explore our blog collection for additional resources on Program Effectiveness.
In the nearly 10 years of running our annual program effectiveness research, LRN has had the good fortune to discuss trends in E&C with leaders from across the world. The Middle East is one such region. How do business practices differ in this region compared to other parts of the world? Who are the like-minded professionals that E&C leaders can connect with in the Middle East? In this episode of LRN’s Principled Podcast, host Amy Hanan is joined by Elvis Angyiembe, the co-founder of the Middle East and Africa Compliance Association (MEACA). Listen in as they discuss Elvis’s experience working in the Middle East for various multinational companies, what led him to start MEACA, and what the E&C priorities are for companies in the Middle East.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Amid the escalating severity and frequency of new risks worldwide, Ethics and Compliance (E&C) initiatives are doubling down on efforts to mitigate these risks. This critical focus is underscored in LRN's latest 2024 Ethics & Compliance Program Effectiveness Report, which draws insights from over 1,400 E&C professionals globally. Our findings reveal that values-driven programs not only prove most effective but also exhibit a robust correlation with risk reduction and enhanced business outcomes. In light of this evolving risk landscape, how are E&C programs in regions such as the Middle East adapting? Furthermore, what do the everyday practices of global best standards entail for programs operating within this region?
In this episode of the Principled Podcast, host Eric Morehead, is joined by Elvis Angyiembe, the co-founder of the Middle East and Africa Compliance Association—or MEACA. Elvis joined us last season to discuss what the E&C priorities are for companies in the Middle East. Today, they discuss key findings from the global edition of the 2024 Ethics & Compliance Program Effectiveness Report and how they apply to programs in that region.
Get a copy of the Global edition of LRN's 2024 Ethics & Compliance Program Effectiveness Report.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
The intensifying severity and frequency of new risks worldwide have heightened the focus of Ethics and Compliance (E&C) programs on risk mitigation efforts more than ever. LRN's 2024 Ethics & Compliance Program Effectiveness Report presents comprehensive global data and insights from over 1,400 E&C professionals to underscore this trend. Our research emphasizes the effectiveness of values-based programs, which exhibit a strong correlation with reduced risk and improved business outcomes. Given this increasingly complex risk landscape, how are E&C programs in the Asia Pacific region, particularly in Singapore, adapting? Furthermore, what do these global best practices entail for programs in this region in their day-to-day operations?
In this episode of the Principled Podcast, Eric Morehead, LRN's Director of Advisory Services Solutions, discusses the key insights from the Singapore edition of the 2024 Ethics & Compliance Program Effectiveness Report with Jarrod Baker, Partner at Deloitte Southeast Asia, exploring their implications for regional programs.
With escalating risks becoming more severe and frequent globally, Ethics and Compliance (E&C) initiatives are intensifying their focus on risk mitigation. LRN's 2024 Ethics & Compliance Program Effectiveness Report, drawing insights from over 1,400 E&C professionals worldwide, underscores this trend. Our research indicates that values-driven programs not only exhibit superior effectiveness but also demonstrate a robust correlation with diminished risks and improved business performance.
Amidst this evolving risk landscape, how are E&C programs adapting? What are the prevailing strategies, and how do they manifest in everyday program operations?
In this episode of the Principled Podcast, host Emily Miner discusses key findings from the North America edition of the 2024 Ethics & Compliance Program Effectiveness Report with Global Head of Integrity & Compliance Legal at Snap.
Get a copy of the North America edition of LRN's 2024 Ethics & Compliance Program Effectiveness Report.
As new risks increase in severity and frequency around the world, E&C programs are focused on their risk mitigation efforts. This is a key theme of LRN’s brand-new 2024 Ethics & Compliance Program Effectiveness Report, which features global data and insights from more than 1,400 E&C professionals. According to our research, values-based programs are not only the most effective but also correlate strongly with reduced risk and better business outcomes. So how are E&C programs in regions like Germany evolving in response to this increasingly complex risk landscape? And what do these global best practices look like for programs in that region on a day-to-day basis? In this episode of the Principled Podcast, host France Ibekwe discusses key findings from the German edition of the 2024 Ethics & Compliance Program Effectiveness Report with Gernot Tölle, the head of legal & compliance at VITA34 AG.
Get a copy of the German edition of LRN's 2024 Ethics & Compliance Program Effectiveness Report.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
In this episode of the Principled Podcast, host Frances Ibekwe, LRN's Senior E&C Advisor and Barrister, is joined by Gaby Gray, Head of Legal at Alliance Pharma, to explore insights from LRN's 2024 Ethics & Compliance Program Effectiveness Report, with a focus on the UK region. As organizations worldwide face escalating risks, the report underscores the pivotal role of values-based E&C programs in mitigating these challenges. Drawing from global data and insights from over 1,400 E&C professionals, they discuss the effectiveness of such programs in risk reduction and driving positive business outcomes. Tune in as they delve into the evolving landscape of E&C programs in the UK, examining practical best practices for implementation and offering valuable insights for navigating ethical challenges and achieving compliance excellence both locally and globally.
Get a copy of the UK edition of LRN’s 2024 Ethics & Compliance Program Effectiveness Report.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
As the speed of innovation and regulation continues to accelerate, the importance of learner engagement is at an all-time high, especially to help reduce organization risk. How do organizations prioritize communications is a strategy for improving learning and engagement
In this week’s episode of the Principled Podcast, host Dave Hansen, global advocacy marketing director at LRN discusses how to develop effective training and communications that move the needle towards engaged learning with Stephanie Hoyt, education and communications manager for enterprise compliance at BD.
Get a copy of the global edition of LRN’s 2024 Ethics & Compliance Program Effectiveness Report.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
As geopolitical events, new technology, and regulatory developments increase the severity and frequency of risks, E&C programs are focused on their risk mitigation efforts. At LRN, a central lesson from over 10 years of primary research is that values-based programs are not only the most effective, but also correlate strongly with reduced risk and better business outcomes. But how exactly are E&C programs evolving in response to this increasingly complex risk landscape? And what do global best practices look like going into 2024? In this episode of the Principled Podcast, host Amy Hanan discusses key findings from the 2024 global edition of LRN’s annual Ethics & Compliance Program Effectiveness Report with Juliana Rodrigues, the global chief compliance officer at Coty.
Get a copy of the global edition of LRN’s 2024 Ethics & Compliance Program Effectiveness Report.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
The meaning of work has shifted, and employees across generational divides are demanding a reset. Data from a special edition of Edelman's 2023 Trust Barometer—the Trust at Work report—notes that trust in “my employer” is higher than that of most institutions out there. But employees are expecting more, and their influence in the workplace is rising. How can companies leverage trust and adapt their own practices to better address employee concerns? On the season 10 finale of the Principled Podcast, host Emily Miner discusses key findings from the 2023 Trust at Work report with David M. Bersoff, the head of research at Edelman Trust Institute. Listen in as the two explore how employers can strengthen trust in the workplace and beyond.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Download the 2023 Trust at Work report.
In an episode of the FCPA Compliance Report, host Tom Fox dives into the topic of program effectiveness with Susan Divers, director of thought leadership and best practices at LRN. Listen in as the two unpack the latest findings and best practices from the Global Standards Edition of LRN’s Ethics & Compliance Program Effectiveness Report. Susan shares her expertise on the vital role of E&C programs, emphasizing the importance of continuous training and integration into HR systems. She also advocates a shift from rules to values, fostering personal responsibility and accountability.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Get a free copy of LRN's E&C Program Effectiveness Report – Global Standards Edition.
Amid all the conversations about artificial intelligence in the marketplace, there is a growing focus on the ethics behind AI technologies. How do we ensure the responsible development of generative AI tools? What role do we play in the ethical deployment of AI-oriented business initiatives? In this episode of the Principled Podcast, host Emily Miner examines these questions with Rob Katz, the vice president of product management for responsible AI and tech at Salesforce. Listen in as the two discuss what ethical AI means in practice and how organizations can better integrate ethics into the development of their products, technologies, and services.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
For more information on responsible AI, check out these Principled Podcast episodes:
- Handle with care: ChatGPT and generative AI risk
- What does responsible AI and machine learning look like for business leaders?
Read the National Institute of Standards in Technology’s AI Standards.
Read Salesforce’s AI Acceptable Use Policy.
Environmental, social, and governance, or ESG, has been in the news a lot lately—particularly the “E” when it comes to new and evolving regulations. There’s been a greater push in the United States for transparency and disclosure of data regarding businesses’ environmental impact, driven largely by the Securities and Exchange Commission and the National Advertising Division of the Better Business Bureau. In fact, California is expected to soon be the first US state to require company reporting related to environmental impact. So, what does this all mean for companies that are working to become more sustainable? How do you even begin to report on emissions and environmental impact? In this episode of LRN’s Principled Podcast host Eric Morehead explores how transparency plays a crucial role in corporate sustainability with Andrea Peters, the senior counsel of Interface.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Check out the LRN blog for more ESG thought leadership.
Keeping the focus on the human element of ethics and compliance can help E&C programs move from “cop” to “coach.” But what does that look like in practice? In this episode of the Principled Podcast, host Susan Divers talks about the importance of humanizing ethics and compliance with Adam Balfour, the author of Ethics & Compliance for Humans. Listen in as the two discuss best practices that Adam has used over the course of his E&C career, managing regional and global ethics and compliance programs as well as leading areas of global risk management and privacy.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Get a copy of Ethics & Compliance for Humans by Adam Balfour.
We’ve officially wrapped season 10 of the Principled Podcast and are taking a break for the holidays. Stay tuned for more conversations on culture, ethics, and compliance in the coming calendar year.
Happy holidays!
The meaning of work has shifted, and employees across generational divides are demanding a reset. Data from a special edition of Edelman's 2023 Trust Barometer—the Trust at Work report—notes that trust in “my employer” is higher than that of most institutions out there. But employees are expecting more, and their influence in the workplace is rising. How can companies leverage trust and adapt their own practices to better address employee concerns? On the season 10 finale of the Principled Podcast, host Emily Miner discusses key findings from the 2023 Trust at Work report with David M. Bersoff, the head of research at Edelman Trust Institute. Listen in as the two explore how employers can strengthen trust in the workplace and beyond.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Download the 2023 Trust at Work report.
Artificial intelligence has become the topic du jour—from national news outlets to trade publications. The very term can elicit feelings of uncertainty and dissonance about how it will be applied in our daily lives. One thing is certain: AI will transform the way we do business. With such innovative technology comes the responsibility to use it wisely and ethically. In this episode of the Principled Podcast, host Susan Divers discusses how organizations can approach AI in a responsible and ethical way with Jim Byrne, the vice president for ethics and business conduct at Lockheed Martin.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
There is a lingering misconception that ethics and compliance programs are too US-centric, when in fact they are largely global in nature. What trends and best practices have emerged to underscore the growing reach of E&C? In an episode of the Corruption, Crime, and Compliance podcast, host Michael Volkov dives into the topic of program effectiveness with Susan Divers, director of thought leadership and best practices at LRN. Listen in as the two unpack the latest findings and best practices from the Global Standards Edition of LRN’s Ethics & Compliance Program Effectiveness Report.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Download the LRN E&C Program Effectiveness Report – Global Standards Edition.
The interdependence of our global business environment and the reach of regulators’ actions has contributed to generally accepted principles for E&C program design, implementation, and impact. This episode of the Principled Podcast dives into the business ethics practices in the Nordic region. Listen in as host Emily Miner explores key findings from the 2023 Nordic Ethics & Compliance Survey—and what they mean for E&C leaders in and outside the region—with Niina Ratsula, the co-founder of the Nordic Business Ethics Initiative.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Download the 2023 Nordic Ethics & Compliance Survey.
The worldwide surge in start-up culture, from venture capital and angel investors to equity structures and fundraising rounds, has transformed business today. But why have so many well-funded start-ups—like FTX and Theranos—imploded in a cloud of scandal? In this episode of the Principled Podcast, host Susan Divers discusses the role of ethics in start-up companies with Tammy Mah-Fraser, an executive director for Alberta Innovates, and Shai Dubey, an assistant professor and distinguished faculty fellow at the Smith School of Business at Queen's University Ontario. Listen in as the three examine how entrepreneurs, investors, and funders can better integrate ethics and compliance at the beginning of their business endeavors.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
As LRN expands globally, we have the good fortune of meeting leaders in ethics and compliance in new places around the world. The Middle East is one such region, largely due to a recent merger of the Compliance Learning business unit from Thomson Reuters. How do business practices differ in this region? Who are the like-minded professionals that E&C leaders can connect with in the Middle East? In this episode of LRN’s Principled Podcast, host Amy Hanan is joined by Elvis Angyiembe, the co-founder of the Middle East and Africa Compliance Association (MEACA). Listen in as they discuss Elvis’s experience working in the Middle East for various multinational companies, what led him to start MEACA, and what the E&C priorities are for companies in the Middle East.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Are you an E&C professional based in the Middle East? Take this 10-minute survey and share your experiences for LRN’s 2024 E&C Program Effectiveness research. Results will be published in February.
Since 2014, LRN has published an annual Ethics & Compliance Program Effectiveness Report that reflects the input of ethics, compliance, and legal professionals from around the world. These reports aim to identify key differentiators that make some E&C programs more effective than others—especially in the midst of global risks and crises. But the risk landscape has shifted dramatically over the last few years; we’ve experienced the COVID-19 pandemic, worldwide political upheaval, and the start of the war in Ukraine. How are E&C programs weathering these challenges? What changes have they made to adapt, and what global trends are emerging as a result? In this episode of LRN’s Principled Podcast, LRN Advisory colleagues Emily Miner and Susan Divers discuss key findings from a special Global Standards Edition of LRN’s E&C Program Effectiveness Report.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Download the LRN E&C Program Effectiveness Report – Global Standards Edition.
Take this 10-minute survey and share your experiences for LRN’s 2024 E&C Program Effectiveness research. Results will be published in February.
Amid all the conversations about artificial intelligence in the marketplace, there is a growing focus on the ethics behind AI technologies. How do we ensure the responsible development of generative AI tools? What role do we play in the ethical deployment of AI-oriented business initiatives? In this episode of the Principled Podcast, host Emily Miner examines these questions with Rob Katz, the vice president of product management for responsible AI and tech at Salesforce. Listen in as the two discuss what ethical AI means in practice and how organizations can better integrate ethics into the development of their products, technologies, and services.
For a full transcript of this podcast and bios of our host and guest, visit the episode page at LRN.com.
Read the National Institute of Standards in Technology’s AI Standards.
Read Salesforce’s AI Acceptable Use Policy.
Although governance may not be a flashy topic in the world of upstart entrepreneurs, overlooking it can cause billions of dollars of loss for otherwise savvy investors. In this episode of the Principled Podcast, host Susan Divers discusses why good governance matters with Bruce Karpati, partner and global chief compliance officer at the private investment firm Kohlberg Kravis Roberts & Co. (KKR). Listen in as the two explore how governance plays a crucial role in the way KKR selects its portfolio companies and manages them.
For a full transcript of this podcast, visit the episode page at LRN.com.
Guest: Bruce KarpatiBruce Karpati joined KKR in 2014 and serves as the firm's global chief compliance officer and counsel. Prior to joining KKR, he was the chief compliance officer of Prudential Investments, the mutual fund and distribution business of Prudential Financial. Mr. Karpati was previously the national chief of the SEC's asset management unit which he co-founded. In this role, he supervised a staff of 75 attorneys, industry experts, and other professionals. Mr. Karpati joined the SEC as a staff attorney in 2000, was promoted to branch chief in 2002, assistant regional director in 2005, and co-chief of the SEC's Asset Management unit in 2010. In 2007, he founded the SEC's hedge fund working group, a cross-office initiative to combat securities fraud in the hedge fund industry. Mr. Karpati also serves as an adjunct professor at Fordham University Law School. He began his career in private practice at Dechert LLP. Mr. Karpati earned his JD cum laude from the University at Buffalo Law School, and his bachelor's degree cum laude in International Relations from Tufts University.
Host: Susan DiversSusan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program. Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
A company code of conduct should reflect the character, culture, and values of an organization, serving as a foundation for its ethical culture. The best codes are designed as useful resources for employees, providing guidance on ethical decision-making and access to detailed information and resources. But how can organizations ensure their codes are structured effectively to meet these needs? In an episode of the FCPA Compliance Report, host Tom Fox dives into the topic of code effectiveness with Jim Walton, director of Advisory Services at LRN and leader of LRN’s code of conduct practice. Listen in as the two unpack the latest findings and best practices from LRN’s 2023 Code of Conduct Report.
For a full transcript of this podcast, visit the episode page at LRN.com.
Listen and subscribe to the FCPA Compliance Report through the Compliance Podcast Network or wherever you get your podcasts.
Guest: Jim WaltonJim Walton is a member of LRN’s Ethics & Compliance Advisory Services team with over 25 years of professional experience in corporate, institutional, and government settings—spanning the fields of ethics and compliance; environment, health, and safety; and energy management.
Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics and compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third-party due diligence reviews; and helping managers at all levels become better ethical leaders.
Jim is a Certified Compliance and Ethics Professional.
Host: Tom FoxTom Fox is literally the guy who wrote the book on compliance with the international compliance best-seller The Compliance Handbook, 3rd edition, which was released by LexisNexis in May 2022. Tom has authored 23 other books on business leadership, compliance and ethics, and corporate governance, including the international best-sellers Lessons Learned on Compliance and Ethics and Best Practices Under the FCPA and Bribery Act, as well as his award-winning series "Fox on Compliance."
Tom leads the social media discussion on compliance with his award-winning blog, and is the Voice of Compliance, having founded the award-winning Compliance Podcast Network and hosting or producing multiple award-winning podcasts. He is an executive leader at the C-Suite Network, the world’s most trusted network of C-Suite leaders. He can be reached at tfox@tfoxlaw.com.
A lot of press coverage tends to conflate environmental, social, and governance initiatives exclusively with environmental stewardship and climate change. While the “E” of ESG is certainly important, organizations that overlook the “S” and “G” could open themselves up to other crises such as human rights violations and data breaches. In this episode of LRN’s Principled Podcast, host Susan Divers discusses best practices for integrating governance and social impact considerations into ESG strategy with Sony Group’s Global Ethics & Compliance Strategy Leader, Kathleen Franklin.
For a full transcript of this podcast, visit the episode page at LRN.com.
Guest: Kathleen FranklinKathleen Franklin is the Global Ethics & Compliance Strategy Leader for the Sony Group Companies, where she is responsible for promoting a culture of ethics and devising enterprise-wide solutions for critical risk areas. She also acts as the chief compliance officer for Sony Corporation of America and its operating subsidiaries. Prior to joining Sony, Kathleen was a partner and co-chair of the Corporate Governance Group for Boies, Schiller and Flexner, LLP.
Kathleen is also a member of the board of directors of Bank OZK (NASDAQ:OZK) where she serves on the Risk Committee. Bank OZK is headquartered in Little Rock, Arkansas, conducts banking operations through 240 offices in Arkansas, Georgia, Florida, North Carolina, Texas, South Carolina, New York and California, and has approximately 27 billion in assets.
Kathleen graduated magna cum laude from Siena College, Loudonville, New York, where she received a Bachelor of Science degree in Business Administration. She graduated magna cum laude from Albany Law School of Union University and earned an LL.M in Taxation from New York University School of Law.
Host: Susan DiversSusan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program. Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
ChatGPT and other generative AI tools have caused a sensation in the marketplace. Some are heralding AI as the best innovation to come along since the internet, while others are fearful of its unforeseen, large-scale impact. For the E&C practitioner, what are the major risks and mitigation strategies that need to be in place? On this episode of LRN’s Principled Podcast, host Susan Divers explores the current and evolving risk landscape surrounding ChatGPT and generative AI with Jonathan Armstrong, a partner at the legal compliance firm Cordery.
For a full transcript of this podcast, visit the episode page at LRN.com.
Guest: Jonathan ArmstrongJonathan Armstrong is an experienced lawyer based in London with a concentration on compliance and technology. His practice includes advising multinational companies and their counsel on risk and compliance across Europe. Cordery gives legal and compliance advice to household name corporations on prevention, training, and cure—including internal investigations and dealing with regulatory authorities. Jonathan has handled legal matters in more than 60 countries involving cybersecurity and ransomware, investigations of various shapes and sizes, bribery and corruption, corporate governance, ethics code implementation, reputation, supply chain, ESG, and global privacy policies. Jonathan has been particularly active in advising multi-national corporations on their response to the UK Bribery Act 2010 and its inter-relationship with the US Foreign Corrupt Practices Act (FCPA).
Jonathan qualified as a lawyer in the UK in 1991 and has focused on technology and risk and governance matters for more than 20 years. He is regarded as a leading expert in compliance matters. Jonathan has been selected as one of the Thomson Reuters stand-out lawyers for 2023 —an honor bestowed on him every year since the survey began. In April 2017, Thomson Reuters listed Jonathan as the 6th most influential figure in risk, compliance and fintech in the UK. In 2016 Jonathan was ranked as the 14th most influential figure in data security worldwide by Onalytica. In 2019 Jonathan was the recipient of a Security Serious Unsung Heroes Award for his work in Information Security. Jonathan is listed as a Super Lawyer and has been listed in Legal Experts from 2002 to date.
In July 2023 Jonathan was appointed to the New York State Bar Association Presidential Task Force on Artificial Intelligence. Jonathan sits on the Task Force with leading practitioners, regulators, judges and academics to develop frameworks for the use and control of AI in the legal system.
Guest: Susan DiversSusan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program. Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
Environmental, social, and governance, or ESG, has been in the news a lot lately—particularly the “E” when it comes to new and evolving regulations. There’s been a greater push in the United States for transparency and disclosure of data regarding businesses’ environmental impact, driven largely by the Securities and Exchange Commission and the National Advertising Division of the Better Business Bureau. In fact, California is expected to soon be the first US state to require company reporting related to environmental impact. So, what does this all mean for companies that are working to become more sustainable? How do you even begin to report on emissions and environmental impact? In this episode of LRN’s Principled Podcast host Eric Morehead explores how transparency plays a crucial role in corporate sustainability with Andrea Peters, the senior counsel of Interface.
For a full transcript of this podcast, visit the episode page at LRN.com.
Guest: Andrea PetersAndrea Peters is senior counsel for Interface, Inc., a global commercial flooring company (NASDAQ: TILE). In her role, she provides legal support for the company’s global operations, including Research & Development, Sales, Marketing, Procurement, Tax and Human Resources, and she also manages Interface’s global compliance program. Andrea has over 26 years of legal experience, over two-thirds of which comes from working in-house at companies such as Interface, CAN Capital, The Weather Channel, the General Electric Company and GAMBRO Healthcare.
Andrea earned her J.D. from the Vanderbilt University School of Law and her Bachelor of Arts degree in Advertising from the Pennsylvania State University, where she was the student marshall (valedictorian) for the College of Communications.
Andrea resides in Atlanta with her 10-year-old daughter. She has gone sky diving twice, bungee jumping once, and ziplining once. She enjoys cooking, wine and travel. When she retires, Andrea plans to go back to college to audit all of the hard but interesting classes without worrying about writing papers or taking exams.
Host: Eric MoreheadEric Morehead is a member of LRN’s Advisory Services team and has over 20 years of experience working with organizations seeking to address compliance issues and build effective compliance and ethics programs. Eric conducts program assessments and examines specific compliance risks, he drafts compliance policies and codes of conduct, works with organizations to build and improve their compliance processes and tools, and provides live training for Boards of Directors, executives, managers, and employees.
Eric ran his own consultancy for six years where he advised clients on compliance program enhancements and assisted in creating effective compliance solutions. Eric was formally the Head of Advisory Services for NYSE Governance Services, a leading compliance training organization, where he was responsible for all aspects of NYSE Governance Services’ compliance consulting arm.
Prior to joining NYSE, Eric was an Assistant General Counsel of the United States Sentencing Commission in Washington, DC. Eric served as the chair of the policy team that amended the Organizational Sentencing Guidelines in 2010. Eric also spent nearly a decade as a litigation attorney in Houston, Texas where he focused on white-collar and regulatory cases and represented clients at trial and before various agencies including SEC, OSHA and CFTC.
Keeping the focus on the human element of ethics and compliance can help E&C programs move from “cop” to “coach.” But what does that look like in practice? In this episode of the Principled Podcast, host Susan Divers talks about the importance of humanizing ethics and compliance with Adam Balfour, the author of Ethics & Compliance for Humans. Listen in as the two discuss best practices that Adam has used over the course of his E&C career, managing regional and global ethics and compliance programs as well as leading areas of global risk management and privacy.
For a full transcript of this podcast, visit the episode page at LRN.com.
Guest: Adam BalfourAdam Balfour is on a mission to help make ethics and compliance more relatable and relevant for his fellow human beings. He likes to design ethics and compliance programs that employees can actually relate to, engage with and find useful. Originally from Scotland, Adam worked for a number of years as an attorney for two international law firms in New York before moving to Nashville, Tennessee to work for Bridgestone. He is an active member in the ethics and compliance community, a co-editor of the "Compliance and Ethics: Ideas & Answers" newsletter together with Joe Murphy, Jeff Kaplan, and Rebecca Walker, and CCEP certified. His first book, Ethics & Compliance for Humans, was published by CCI Press and is available now.
Host: Susan DiversSusan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
The US Department of Justice Criminal Division has been increasingly vocal about what makes organizations’ ethics and compliance programs effective. This input on program effectiveness takes the form of guidance to prosecutors about what questions to ask when companies negotiate to resolve DOJ investigations into corporate wrongdoing on favorable terms. What does this guidance on program effectiveness mean in practice for E&C professionals? In the season 10 premiere of LRN’s Principled Podcast, host Susan Divers speaks with John Michelich, who retired last November after 35 years as a federal prosecutor with the Department of Justice’s Criminal Division. Listen in as they explore how the DOJ evaluates E&C programs, as well as best practices for companies settling misconduct investigations.
For a full transcript of this podcast, visit the episode page at LRN.com
Guest: John MichelichJohn Michelich is a retired career prosecutor, who has served at the state, federal, and international levels for 45 years. A native of Illinois, John received his undergraduate education at Illinois Wesleyan University and then attended Drake University Law School in Des Moines, Iowa. For 10 years, John served as Assistant State’s Attorney and First Assistant State’s Attorney in Springfield, Illinois, where he prosecuted all types of state criminal felony violations including armed robbery, aggravated sexual assault and capital murder.
In 1988, John moved to Washington, DC where he began his 35-year career as a prosecutor with the US Department of Justice, Criminal Division. As a federal prosecutor, John has handled a wide variety of cases including child pornography and obscenity, narcotics distribution and all types of white-collar criminal cases. John served for 30 years as a prosecutor with the Fraud Section of the Criminal Division where he handled numerous cases including health care fraud, bank fraud, telemarketing fraud, commodities and securities fraud and violations of the Foreign Corrupt Practices Act. Because Washington DOJ lawyers are traveling prosecutors, John has handled grand jury proceedings or jury trials in more than two dozen federal districts nationwide from Guam and Hawaii to Puerto Rico, and California to New York. Over his long career, John has tried dozens of jury trials to verdict.
In 1998, the Justice Department sent John on loan to the United Nations’ International Criminal Tribunal for the Former Yugoslavia, also known as the War Crimes Tribunal, in the Hague, Netherlands, where he handled investigations and Tribunal proceedings involving crimes against humanity and serious breaches of the Geneva Convention that occurred during the Yugoslavian civil war.
For over 40 years, John has been an active instructor of Trial Advocacy and has appeared regularly on the faculty of the NITA Trial Practice course offered at Georgetown University Law Center. In addition, John has served as an Adjunct Professor at Georgetown, teaching Trial Practice courses to third-year law students. In his retirement, John is available as a legal consultant to trial lawyers to advise them in preparation for jury trials and to consult with corporate counsel concerning internal investigations and to advise them on how to approach the government when there are allegations of wrongdoing, especially foreign bribery.
John is licensed to practice in the states of Illinois and Iowa, and several federal courts, and is a licensed Solicitor of the Senior Courts of England and Wales.
Host: Susan DiversSusan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
Generative AI is on the agenda of most every company right now. Business leaders are grappling with how to use it in products, services, and in workflows. Managers and their teams are wondering if artificial intelligence is coming for their jobs. Regulators are trying to wrap their arms around it as its potential for misuse is high. If you’re concerned about corporate ethics, culture, and compliance, what is your role in the responsible development and deployment of AI-oriented business initiatives? On the Principled Podcast, host Jen Üner talks about responsible AI with Dr. Seth Dobrin, Ph.D. and President of the Responsible AI Institute. Listen in as the two unpack what “responsible AI” means and how business leaders can move forward in this rapidly changing landscape that is surely as monumental a shift as the invention of the Internet.
For a transcript of this podcast, visit the episode page at LRN.com.
Visit the Articles page at LRN.com for more thought leadership on ethical AI and machine learning.
Guest: Seth Dobrin, Ph.D. Dr. Seth Dobrin is a globally recognized leading expert in AI. He is the former president and current executive board member of the Responsible AI Institute. Previously, he was IBM's global chief AI officer, where he led the company's AI strategy.
Dr. Dobrin is also a sought-after speaker and advisor on AI. He believes that AI has the potential to solve some of the world's most pressing problems, but that it is important to use AI responsibly. He advocates for the development of ethical AI guidelines and for the responsible use of AI by governments and businesses.
Host: Jen Üner Jen Üner was the Strategic Communications Director for LRN, where she captained programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
Building a winning culture of ethics and compliance requires efficiency and effectiveness in all aspects of a program—including training, communications, and a code and conduct. But how do you ensure these elements all work together to create a meaningful and intentional learning experience? While also contributing to desired business outcomes? In this episode of LRN’s Principled Podcast, host Carolyn Grace explores why a deep understanding of curriculum design is essential to developing an effective program. Listen in as she speaks with Erick Sawyer, the chief ethics and compliance officer of Inhabit, (recently rebranded from Inhabit IQ), and Damien DeBarra, the leader of Curriculum Design and Communication Strategy in LRN’s Advisory group, about the learning curriculum they created by leveraging Inhabit’s code of conduct.
For a transcript of this podcast, visit the episode page at LRN.com.
Visit the Advisory page at LRN.com for more information on our curriculum design and communication strategy services.
Guest: Erick Sawyer As Inhabit’s chief ethics and compliance officer, Erick Sawyer leads the company’s day-to-day compliance operations to ensure Inhabit is in compliance with various regulatory requirements and employees are in adherence with internal procedures and policies. Erick creates strategic programs that are paired with tactical plans to positively impact customers and employees across the software ecosystem. Prior to joining Inhabit, Erick held various roles in legal, compliance, quality, and learning and development in the financial services industry. He has focused his career on bridging the gap between people and process to drive a culture of ethics and compliance, protecting the brand and reputation of leading organizations.
Guest: Damien DeBarra Damien DeBarra brings more than 20 years’ experience to the instructional design and strategic workforce planning spaces. As the Leader in Curriculum Design and Communication Strategy at LRN, he focuses on creating training solutions that ensure business buy-in and connect hiring practices to day-one learning roll-outs. In the last few years, Damien has helped organizations such as United Airlines, Sun Life Financial, SITEL, Astellas, MFS Investments, and SAP create 90-day action plans for their solutions and develop supporting communication strategies. He has worked with over 200 clients in areas ranging from retail to pharmaceuticals, call centers to nuclear plant manufacturing. Prior to LRN, Damien spent more than nine years as the Learning Solutions Director and Head of Instructional Design at Interactive Services. He has also worked as an instructional designer at NCALT, Electric Paper, and Epic. Damien received his BA from Maynooth University.
Host: Carolyn Grace Carolyn Grace is a content writer on LRN's global marketing team and co-producer of the Principled Podcast. She specializes in writing compelling stories about ethics and compliance that resonate across business segments, industries, and personas while hitting critical KPIs for traffic and engagement. Topics she frequently covers include ESG, data privacy and protection, DEI, the role of boards of directors and leadership, corporate training and e-learning, and ethical corporate culture.
Prior to joining LRN, Carolyn was a writer and content strategist at Thinkso Creative, a boutique creative agency in New York City. At Thinkso, she wrote internal and external communications for clients in technology, nonprofit, law, logistics, and financial services sectors. Before that, Carolyn conducted trend research and cultural strategy at Horizon Media, specializing in entertainment, travel, media and technology, health and wellness, and food and beverage categories. Carolyn graduated magna cum laude from the University of Pennsylvania with a B.A. in American History and French Studies and a minor in Journalism.
Engagement is a hot topic in the ethics and compliance space—it impacts training, communications, and overall program effectiveness. But driving engagement gets tricky when you have a global presence or employee populations with different working conditions and technologies. How can E&C professionals foster engagement in a way that resonates with everyone—and even makes it fun? In this episode of LRN’s Principled Podcast, host Dave Hansen talks with Kerry Ferwerda, the ethics and compliance manager for Europe at NSG Group, about how to plan a successful corporate ethics and compliance week. Listen in as the two discuss ideas and best practices around event content, communication, and participation.
For a transcript of this podcast, visit the episode page at LRN.com.
Want to connect with your E&C peers? Apply here to join LRN co:lab, our award-winning community of ethics, compliance, legal, HR, and L&D professionals.
Guest: Kerry Ferwerda Kerry Ferwerda is the ethics and compliance manager for Europe at NSG Group, one of the world’s largest manufacturers of glass and glazing products for architectural and automotive. it is also a leading supplier of technical glass products within its Creative Technology division. NSG has principal operations around the world with sales in over 100 countries.
A passionate advocate for doing business the right way, Kerry has worked within ethics and compliance for the past 10 years. During this time, Kerry has led E&C education initiatives across the group, operating across the business lines to develop and implement education programs that deliver value and embed a strong company culture.
Prior to joining ethics and compliance, Kerry worked within the group’s Automotive Glass Replacement business unit for 12 years, gaining a wealth of experience in roles across multiple departments and functional disciplines—including Finance, Operations, Supply Chain, IS, and Customer Service.
Kerry holds a BSc (Hons) in Information Technology for Business from Aston University, Birmingham, UK.
Host: Dave Hansen Dave Hansen is the global advocacy marketing director at LRN, an organization focused on ethics and compliance solutions that help people around the world do the right thing. His team drives LRN's customer obsession by building community, deepening customer engagement, and finding meaningful opportunities for collaboration. Dave is passionate about learning, having spent most of his career within higher education or training. He loves sharing customer stories and best practices in the name of continuous improvement. Dave is a proud dad, coffee enthusiast, drummer, and scuba diver. In his spare time, he enjoys cooking and reading!
Ethics and compliance practitioners are often thinking about ways to engage their employees and motivate them to live their values, rather than doing the minimum required by the rules. But how can you make engagement real on a global scale when you’re dealing with a truly global workforce? In this episode of LRN’s Principled Podcast, host Susan Divers discusses how E&C professionals can make their international programs resonate through localization with John Toy, the chief of ethics and sustainability at GlobalFoundries. Listen in as the two talk about John’s approach to this problem, which can be summed up in two words: enterprise engagement.
For a transcript of this podcast, visit the episode page at LRN.com.
Download LRN's 2023 Ethics & Compliance Program Effectiveness Report for more best practices.
Guest: John Toy John Toy is the chief ethics and sustainability officer at GlobalFoundries (GF), a global leader in feature-rich semiconductor manufacturing. In this role, John leads the company’s ethics and compliance program, which he designed and implemented, in addition to GF’s environmental, social, and governance (ESG) functions. Previously, John held various positions in human resource (HR) leadership for the company, including global talent acquisition and global learning and organizational development leader.
Prior to GF, John was employed by medical device maker Boston Scientific Corporation. His professional experience includes leading all aspects of HR at an ~800 employee operations facility; leading a global initiative to transform HR service delivery to include creation of service support centers in Hungary and Canada; and the creation and leadership of an internal HR Service Excellence function. John also led training and development for Global Operations, where he established the function and an integrated network of training representatives from each of the company’s manufacturing facilities in the US, Costa Rica, Ireland, and the Netherlands.
Before his corporate roles, John was previously engaged in private legal practice with a focus on labor and employment matters. John has appeared before state and federal courts and several administrative bodies, including the NY Division of Human Rights and the National Labor Relations Board. He is a graduate of Albany Law School of Union University, and of the State University of New York at Binghamton, where he studied Industrial and Labor Relations.
Host: Susan Divers Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Does learning actually occur as a result of ethics and compliance training, or are employees just paying lip service when they take courses? How can you tell the difference? Today, the E&C community is focused on program impact and effectiveness rather than checking boxes—in part because regulators have made it clear that E&C programs must show impact from their activities. On the season 9 finale of the Principled Podcast, Susan Divers discusses how compliance teams can ensure they’re getting the right insights to improve their programs with Kristi Kevern, the senior managing director at Dell Technologies. Listen in as Kristi shares how her team collects and analyzes data to better manage and enhance Dell’s E&C program—particularly in the training area.
For a transcript of this podcast, visit the episode page at LRN.com.
Guest: Kristi Kevern Kristi Kevern is an innovative thought leader with 20+ years of experience in internal controls design, implementation, management, and assurance. At Dell Technologies, Kristi drives enterprise-wide risk management and governance activities, conceptualizes and implements global programs aimed at mitigating FCPA, AML, SOX, ESG and other key risks, turns findings into fixes with post-investigation remediation, and experiments with AI/ML for further prevention and insights using data. Prior to Dell, Kristi served as a founding member of the Coca-Cola Company’s Ethics Office, where she investigated allegations of fraud and served as ethics advisor to the credit union. As a former Big 4 manager at PricewaterhouseCoopers LLP, Kristi led assurance and attestation engagements for Fortune 500+ clients. Kristi is a recipient of TRACE International's Innovation Award, and she has led Dell Technologies to an Ethisphere World’s Most Ethical Company designation 10 times. She is membership chair of the Conference Board’s Global Business Conduct Council and a frequent speaker at conferences and universities. Kristi graduated with honors from Auburn University and is a Certified Public Accountant residing in Austin, Texas.
Host: Susan Divers Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
As the regulatory environment continues to evolve and organizations adapt, it is becoming increasingly important for ethics and compliance professionals to break down department silos. But how do you do that effectively when there are so many stakeholders involved? How do you develop a stronger network of assurance partners inside your organization? On this episode of LRN’s Principled Podcast, host Dave Hansen talks about the impact of cross-functional collaboration on program effectiveness with Tony Tocco, the chief ethics and compliance officer and assistant corporate secretary of DT Midstream.
For a transcript of this podcast, visit the episode page at LRN.com.
Guest: Tony Tocco Anthony M. Tocco (Tony) is the chief ethics and compliance officer and assistant corporate secretary at DT Midstream. He is responsible for overseeing the development and implementation of effective programs and processes to promote an ethical culture and compliance with applicable laws and regulations. He also provides board governance and support responsibilities as the assistant corporate secretary.
Tony joined DT Midstream as part of the business unit spin from DTE where he began as the manager of Audit Services in 2001 as a result of the merger with MCN Energy Group. In 2002, he was promoted to assistant general auditor and subsequently performed as interim general auditor for a period. During this time, Tony directed the development and implementation of the independent centralized testing center for Sarbanes-Oxley Act compliance and supporting corporate governance policies and procedures.
Prior to joining DTE Energy, Tony held leadership positions in the MCN Energy Internal Audit department and Michigan Consolidated Gas Company’s Corporate Security & Investigations department. In total, Tony has approximately 30 years of compliance related experience in the utility and energy industry. Tony also has four additional years of compliance experience working for the Department of Defense in reviewing and auditing defense contracts and also established the internal audit department for a major Michigan public university.
Tony earned a Bachelor of Science degree in accounting from Detroit College of Business, an MBA from Wayne State University, and a Master of Science degree in security administration from the University of Detroit-Mercy. Tony is a Certified Compliance and Ethics Professional (CCEP), a Certified Internal Auditor (CIA) and a Certified Fraud Examiner (CFE).
Tony is a member of the Ethics and Compliance Institute (ECI), the Society for Corporate Compliance and Ethics (SCCE), the Institute of Internal Auditors (IIA), the Association of Certified Fraud Examiners (ACFE) and the Society for Corporate Governance.
Tony also has lectured for the Institute of Internal Auditors, the Society for Corporate Compliance and Ethics, the Compliance and Ethics Officer Association, Compliance Week and the University of Detroit-Mercy. Tony is a former chairperson for the Ethics and Compliance Officer Association Utility Industry Group, which is comprised of approximately 70 utility companies. Tony serves on the CCEP Exam Writing Committee and is on the Board of Big Brothers Big Sisters of Metropolitan Detroit as development committee chair.
Host: Dave Hansen
Dave Hansen is the global advocacy marketing director at LRN, an organization focused on ethics and compliance solutions that help people around the world do the right thing. His team drives LRN's customer obsession by building community, deepening customer engagement, and finding meaningful opportunities for collaboration. Dave is passionate about learning, having spent most of his career within higher education or training. He loves sharing customer stories and best practices in the name of continuous improvement. Dave is a proud dad, coffee enthusiast, drummer, and scuba diver. In his spare time, he enjoys cooking and reading!
Modern slavery is on the rise, and criminal organizations are becoming more sophisticated about it. According to the International Labor Organization more than 28 million people experienced forced labor in 2021. That’s equivalent to the entire population of Australia. What can be done about it? How can ethics and compliance professionals make a difference? In this episode of LRN’s Principled Podcast, LRN Global Head of Segments, Matt Plass, talks with Jacob Sims from the International Justice Mission in Cambodia, who has been working actively to address modern slavery in southeast Asia. Listen in as the two discuss how Jake’s work as county director combines investigators, lawyers, social workers, and programmatic and operational staff in the fight against violent labor exploitation.
For a transcript of this podcast, visit the episode page at LRN.com.
Guest: Jacob Sims Jacob Sims has worked on human rights and development challenges facing Southeast Asia for over a decade—spanning issues from governance in the Philippines to internal displacement in Northern Myanmar to labor rights in Cambodia. He currently serves as country director of International Justice Mission (IJM) Cambodia where he leads a team of investigators, lawyers, social workers, programmatic and operational staff in the fight against violent labor exploitation. Concurrently with his role at IJM, he serves as a non-resident fellow at Duke University’s Kenan Institute, a leading research center working to understand and address real-world ethical challenges facing individuals, organizations, and societies worldwide. Sims’ team at IJM mounted one of the earliest programmatic responses to the human trafficking epidemic emerging within scamming compounds in Cambodia and have helped facilitate the rescue of over 100 individuals to date. In recent months, analysis from Sims on the emerging global phenomenon has featured in The Economist, The Guardian, LA Times, Al Jazeera, VICE World News, Sydney Morning Herald, ProPublica, Channel News Asia, amongst many others.
Host: Matt Plass Matt Plass is the global head of segments at LRN. He was formerly chief executive officer with Interactive Services, where he led the executive team responsible for bringing Interactive Services’ award-winning integrity, ethics, and compliance learning solution to market. Matt has an extensive background in e-learning, blended learning, classroom education and learning design for adult audiences and has engaged with numerous Fortune 500 organizations in the design of learning solutions for global audiences. He provides advanced learning expertise to partners, and is a regular speaker at learning and development conferences. Matt led Interactive Services through its acquisition by LRN in 2020. He lives in Devon, England.
There are certain people you meet in your professional career that continue to have an impact on you and your industry, long after that initial meeting. For Principled Podcast host Meredith Hunt, that person is Mary Shirley, the former head of Integrity and Compliance Education at Fresenius Medical Care (now head of compliance for Masimo) and co-host of the Great Women in Compliance podcast. On this episode, the two discuss how ethics and compliance professionals can better amplify their peers and build community, using guidance from Mary’s book Sending the Elevator Back Down. They also explore themes from Mary’s upcoming book on how E&C leaders can make the most impact on their programs with limited resources.
For a transcription of this podcast, please visit the episode page at LRN.com.
Guest: Mary Shirley Mary Shirley is a New Zealand-qualified lawyer with 18 years of ethics and compliance experience that includes working for data privacy and antitrust regulators, in-house and private practice/consultancy across five countries and four regions of the world.
Mary co-hosts the Great Women in Compliance Podcast, which aims to create a platform for the outstanding achievements of women in the field and sharing ideas and provide learning opportunities for everyone in compliance.
She co-authored the book Sending the Elevator Back Down: What We’ve Learned from Great Women in Compliance (CCI Press, 2020) and has a second book highlighting trailblazing and innovative ideas to level up compliance programs, coming out later in 2023.
She has been bestowed the honor of being named a Compliance Week Top Mind 2019, Trust Across America 2020 Top Thought Leader in Trust, and Excellence in Compliance Awards 2022 Mentor of the Year.
Host: Meredith Hunt Meredith Hunt came to LRN in early 2023 as a formidable compliance generalist, with experience in quality management, project management, regulatory compliance, policy drafting, and compliance program implementation and management. As a self-proclaimed compliance “nerd,” Meredith works as an ethics and compliance specialist on LRN’s Advisory team. In this capacity, she leads LRN’s code of conduct assessment and benchmarking practice and advises clients on how to incorporate code of conduct best practices. Meredith also manages client projects across a range of industries, including code of conduct development and E&C program evaluations.
Generative AI is on the agenda of most every company right now. Business leaders are grappling with how to use it in products, services, and in workflows. Managers and their teams are wondering if artificial intelligence is coming for their jobs. Regulators are trying to wrap their arms around it as its potential for misuse is high. If you’re concerned about corporate ethics, culture, and compliance, what is your role in the responsible development and deployment of AI-oriented business initiatives? On the Principled Podcast, host Jen Üner talks about responsible AI with Dr. Seth Dobrin, PhD and President of the Responsible AI Institute. Listen in as the two unpack what “responsible AI” means and how business leaders can move forward in this rapidly changing landscape that is surely as monumental a shift as the invention of the Internet.
For a transcription of this podcast, please visit the episode page at LRN.com.
Guest: Seth Dobrin, PhDDr. Seth Dobrin is a globally recognized leading expert in AI. He is currently the president of the Responsible AI Institute. Previously, he was IBM's global chief AI officer, where he led the company's AI strategy.
Dr. Dobrin is also a sought-after speaker and advisor on AI. He believes that AI has the potential to solve some of the world's most pressing problems, but that it is important to use AI responsibly. He advocates for the development of ethical AI guidelines and for the responsible use of AI by governments and businesses.
Host: Jen ÜnerJen Üner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
Building a winning culture of ethics and compliance requires efficiency and effectiveness in all aspects of a program—including training, communications, and a code and conduct. But how do you ensure these elements all work together to create a meaningful and intentional learning experience? While also contributing to desired business outcomes? In this episode of LRN’s Principled Podcast, host Carolyn Grace explores why a deep understanding of curriculum design is essential to developing an effective program. Listen in as she speaks with Erick Sawyer, the chief ethics and compliance officer of Inhabit, (recently rebranded from Inhabit IQ), and Damien DeBarra, the leader of Curriculum Design and Communication Strategy in LRN’s Advisory group, about the learning curriculum they created by leveraging Inhabit’s code of conduct.
For a transcription of this podcast, please visit the episode page at LRN.com.
Guest: Erick SawyerAs Inhabit’s chief ethics and compliance officer, Erick Sawyer leads the company’s day-to-day compliance operations to ensure Inhabit is in compliance with various regulatory requirements and employees are in adherence with internal procedures and policies. Erick creates strategic programs that are paired with tactical plans to positively impact customers and employees across the software ecosystem. Prior to joining Inhabit, Erick held various roles in legal, compliance, quality, and learning and development in the financial services industry. He has focused his career on bridging the gap between people and process to drive a culture of ethics and compliance, protecting the brand and reputation of leading organizations.
Guest: Damien DeBarraDamien DeBarra brings more than 20 years’ experience to the instructional design and strategic workforce planning spaces. As the Leader in Curriculum Design and Communication Strategy at LRN, he focuses on creating training solutions that ensure business buy-in and connect hiring practices to day-one learning roll-outs. In the last few years, Damien has helped organizations such as United Airlines, Sun Life Financial, SITEL, Astellas, MFS Investments, and SAP create 90-day action plans for their solutions and develop supporting communication strategies. He has worked with over 200 clients in areas ranging from retail to pharmaceuticals, call centers to nuclear plant manufacturing. Prior to LRN, Damien spent more than nine years as the Learning Solutions Director and Head of Instructional Design at Interactive Services. He has also worked as an instructional designer at NCALT, Electric Paper, and Epic. Damien received his BA from Maynooth University.
Host: Carolyn GraceCarolyn Grace is a content writer on LRN's global marketing team and co-producer of the Principled Podcast. She specializes in writing compelling stories about ethics and compliance that resonate across business segments, industries, and personas while hitting critical KPIs for traffic and engagement. Topics she frequently covers include ESG, data privacy and protection, DEI, the role of boards of directors and leadership, corporate training and e-learning, and ethical corporate culture.
Prior to joining LRN, Carolyn was a writer and content strategist at Thinkso Creative, a boutique creative agency in New York City. At Thinkso, she wrote internal and external communications for clients in technology, nonprofit, law, logistics, and financial services sectors. Before that, Carolyn conducted trend research and cultural strategy at Horizon Media, specializing in entertainment, travel, media and technology, health and wellness, and food and beverage categories. Carolyn graduated magna cum laude from the University of Pennsylvania with a B.A. in American History and French Studies and a minor in Journalism.
How do you move your ethics and compliance program along the journey from basic to best in class? How do you keep momentum amid a major business disruption and downturn? And how do you make progress on the holy grail of compliance objectives—a speak-up culture? In this episode of LRN’s Principled Podcast, host Emily Miner is joined by Gail Lehman, the EVP, general counsel, and secretary at Hexcel Corporation. Listen in as Gail shares how this high-tech materials manufacturing company has evolved its compliance program over the past five years and what that’s meant for the company’s culture.
For a transcription of this podcast, please visit the episode page at LRN.com.
Guest: Gail LehmanGail Lehman is the executive vice president, general counsel, and corporate secretary at Hexcel Corporation, having joined Hexcel in January of 2017. Hexcel is headquartered in Stamford, Connecticut. Gail oversees the legal and trade compliance functions for this NYSE public company, a leading global producer of advanced composites for commercial aerospace, space and defense, and various industrial markets. She is also the leader of Hexcel’s Sustainability program at a corporate level. Gail serves as a trusted strategic advisor to the board, chief executive officer, and business teams. Upon joining the company, Gail restructured the legal and trade functions to align with Hexcel’s business teams and operational objectives. She re-engineered the Code of Business Conduct program, redrafting the code and rolling out specially tailored “speak up” ethics training and messaging across all global locations. She collaborates with other senior leaders and teams to drive Hexcel’s sustainability efforts and major growth, strategic and commercial activities, including mergers and acquisitions, cyber incident readiness, and contracting with the company’s critical customers and suppliers.
Prior to joining Hexcel, Gail served as chief administrative officer, general counsel, and corporate secretary at Noranda Aluminum Holding Corporation. Prior to Noranda, Gail was vice president, general counsel, and corporate secretary at both Hawker Beechcraft Corporation and Covalence Specialty Materials Corporation. Earlier she rose through the ranks of the law department at Honeywell International. She began her career at the law firm of Lowenstein, Sandler in Roseland, NJ after serving a federal judicial clerkship in the District Court in New Jersey.
Gail has a degree in psychology from Rutgers College, a graduate degree in educational psychology from Rutgers Graduate School of Education, and a law degree with high honors from Rutgers University School of Law. She has served on several non-profit boards, including currently for the Women’s Business Development Council in Stamford, Connecticut.
Host: Emily MinerEmily Miner is a vice president in LRN’s ethics and compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact.
Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Do hotlines really work? According to the 2019 Global Business Survey conducted by the Ethics and Compliance Initiative, only 6% of E&C complaints went to hotlines, compared to 51% to direct supervisors and the remainder to higher management or human resources. So why are so many E&C programs—not to mention boards of directors—relying principally on hotline data to assess company culture and compliance? In this episode of LRN’s Principled Podcast, Susan Divers talks about reimagining hotlines with Scott Sullivan, the chief integrity and compliance officer at Newmont Corporation. Listen in as Scott shares how his team reinvented Newmont’s hotline channel and reporting process to separate the wheat from the chaff and gain meaningful information.
For a transcript of this podcast, please visit the episode page at LRN.com.
Guest: Scott SullivanScott Sullivan is the Chief Integrity & Compliance Officer of Newmont Corporation, the world’s leading gold company. Newmont has approximately 15,000 employees and 15,000 contractors and has 12 operating mines and 2 non-operated JVs in 9 countries. Mr. Sullivan oversees, develops, implements, and manages Newmont’s integrity and compliance program including ethics, anti-bribery, corporate investigations, and global trade compliance. Previously, Mr. Sullivan was the Chief Ethics & Compliance Officer of a global manufacturer of fluid motion and control products with approximately 17,000 employees operating in 55 countries. Mr. Sullivan has written and contributed numerous articles on compliance programs, anti-bribery/FCPA, export controls, economic sanctions, and other ethics and compliance topics to a variety of publications. Mr. Sullivan is also a frequent local, national, and international speaker, moderator, and conference organizer on compliance, anti-bribery/FCPA, export controls, and economic sanctions.
Host: Susan DiversSusan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
When it comes to driving ethical behavior in organizations, many ethics and compliance programs are beginning to focus more on leveraging company values than relying primarily on rules. But what does taking a values-based approach look like in practice, especially if you’re a multinational organization? How do talk about it with a wide range of employee populations? In this episode of LRN’s Principled Podcast, Susan Divers is joined by Gabriela Del Castillo, the chief ethics and compliance officer at Arca Continental, to discuss the importance of creating a respectful workplace and the role that E&C plays in developing ethical culture.
For a transcript of this podcast, please visit the episode page at LRN.com.
Guest: Gabriela Del CastilloGabriela Del Castillo is the global chief ethics and compliance officer of Arca Continental, the second-largest Coca-Cola bottler in Latin America—and one of the largest in the world. She leads the construction of the company’s corporate sustainability through the management of ethical and compliance risks. In addition, she designs mitigation strategies—including policies, controls, and procedures—as well as communication and training initiatives for Arca’s ethics and compliance program. Gabriela also serves as the secretary of the Audit and Corporate Practices Committee for the organization’s board of directors.
Prior to joining Arca, Gabriela was the regulatory affairs corporate manager at the food and beverage services company Empresas Polar. In this role, she helped the organization adopt risk management and compliance processes to anticipate risks and opportunities in the regulatory and legal fields. She also designed strategies to minimize costs or capture savings, based on a deep understanding of the company’s operations and stakeholders. Before that, Gabriela worked as a legal analyst for Siderúrgica del Orinoco, C.A. SIDOR, a Venezuelan steel corporation.
Gabriela earned a master's degree in international legal studies from Georgetown University and graduated magna cum laude from Universidad Central de Venezuela. She also received a marketing and innovation diploma from Instituto de Estudios Superiores de Administración IESA in 2017.
Host: Susan DiversSusan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
Rewards and recognition are key tools for building an ethical workplace culture. Leveraging these creates a positive feedback loop and reinforces stated goals and standards. But what does successfully engaging employees through rewards and recognition structures look like in practice? How can these efforts catalyze values in action? In this episode of the Principled Podcast, Dr. Arieana Thompson, ethical culture advisor at LRN, discusses rewards and recognition structures with Alyssa Menard-Szacilo, a global strategic customer success manager at Alteryx. Listen in as the two explore how effective rewards and recognition structures foster ethical culture and inspire values-aligned behaviors in the workplace.
For a transcript of this podcast, please visit the episode page at LRN.com.
Guest: Alyssa Menard-SzaciloAlyssa Menard-Szacilo is an accomplished global customer success manager at Alteryx with extensive experience in data analytics and customer experience. She holds a master’s degree in sociology from the University of Colorado and a bachelor's degree in psychology and criminal justice from Norwich University.
Alyssa has played a key role in driving customer engagement and delivering measurable value to clients. She is committed to helping others succeed and is highly regarded by her colleagues and peers. In the last year Alyssa has received the Rookie of the Quarter and the Global Newcomer of the Year awards.
Overall, Alyssa is a highly skilled and dedicated global customer success manager, committed to delivering exceptional results for clients and helping organizations achieve their goals. She brings a unique combination of expertise, experience, and passion to every project she undertakes, making her a valuable asset to her clients.
Host: Arieana Thompson, PhDDr. Arieana Thompson believes in positively transforming the modern-day workplace through thought-provoking, evidence-based insights.
Arieana is a subject matter expert in executive leadership, succession management, ethics and compliance (E&C), wellness cultures, and employee growth. Arieana has experience advising in internal and external settings and professional speaking. Arieana is a Certified Positive Intelligence Coach (CPQC), helping leaders and individuals to cultivate self-awareness, harness natural strengths, and reduce stress.
As a scientist-practitioner, Arieana researches and publishes well-being, culture, and leadership thought pieces in industry and peer-reviewed academic journals. These publications enable executives to create and sustain values-led, profitable, and creative companies.
The benefits of civility in the workplace are well documented. Operating through a lens of courtesy, integrity, and respect helps align teams, lift productivity, and reduce risk. But how to create a workplace environment that prizes these things when so much of society has become so... uncivilized? How can we maintain our own composure in this trying environment, and is it important? In this episode of the Principled Podcast, host Jen Uner explores the value of thoughtful communications with Shana Fried and Marie Corchado-Stewart, two key compliance executives at the global pharmaceuticals company AbbVie. Listen in as Shana and Marie share how their E&C program addresses thoughtful communications and equips employees for success in a time of considerable change both inside the organization, and outside of it.
For a transcript of this podcast, please visit the episode page at LRN.com.
Guest: Shana FriedShana Fried is AbbVie’s ethics and compliance officer for enterprise compliance, policies, and governance. She leads AbbVie’s compliance team supporting R&D, corporate functions, and operations, EED&I, policy standards, training, governance, and communications.
Shana joined AbbVie in 2014. A passionate advocate for patients and people, Shana has worked in both the legal and compliance teams to partner with business stakeholders on strategies to deliver products that bring value for patients. Before joining AbbVie, Shana spent nine years as an attorney in the Life Science Transactions practice group of Reed Smith LLP.
Shana holds a Juris Doctorate from Rutgers University. She is married and has two sons, and enjoys traveling, and being an advocate for social justice causes.
Guest: Marie Corchado-StewartMarie Corchado-Stewart is AbbVie’s director of standards, training and equity, equality, diversity and inclusion in the Office of Ethics and Compliance (OEC). She is responsible for AbbVie’s corporate compliance training, policies, and EED&I efforts in the OEC.
Marie joined AbbVie in 2006 and has held various roles, all within the Office of Ethics and Compliance. This has afforded her the opportunity to work cross-functionally with various functions within the organization and gain a deep appreciation for the diversity of thought, background and experiences needed to bring life-changing therapies to patients.
Marie holds a master's degree in industrial organization psychology from Chicago School of Professional Psychology. In her free time, she enjoys traveling, cooking and spending quality time with family and friends.
Host: Jen ÜnerJen Üner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
How does the largest global security and defense company, with 116,000 employees worldwide, ensure the highest standards for its ethics and compliance program? This is particularly challenging amid an environment of increased regulation, geopolitical conflict, and economic uncertainty. In this episode of the Principled Podcast, host Susan Divers explores this question with Jim Byrne, Lockheed Martin’s vice president for ethics and business conduct. Listen in as the two discuss how Lockheed Martin uses “force multipliers” to empower employees to create an inclusive culture, own their ethical workplace, and act when something is amiss.
For a transcript of this podcast, please visit the episode page at LRN.com.
Guest: Jim ByrneThe Honorable James M. Byrne currently serves as Vice President, Ethics & Business Conduct, for Lockheed Martin Corporation. He is responsible for the strategic direction and operational excellence of Lockheed Martin’s award-winning domestic and international ethics program and execution of the Corporation’s compliance training across the enterprise. Jim is also on the Corporate Vice Presidents Contributions Committee of Lockheed Martin, established and authorized to review and approve large charitable contributions. Prior to rejoining Lockheed Martin, he served as the Deputy Secretary of the United States Department of Veterans Affairs (VA) where he led modernization initiatives and served as the chief operating officer of the federal government’s second-largest Cabinet department, with some 385,000 employees in VA medical centers, clinics, benefits offices, national cemeteries, and other facilities throughout the country. Previously, Mr. Byrne served as VA’s General Counsel, leading VA’s nationwide team of nearly 800 attorneys, paralegals, and staff who support VA’s mission and priorities by providing sound legal expertise, representation, and, as needed, critical problem-solving skills and risk-management advice to the Secretary and other senior VA leaders.
Before arriving at VA, Mr. Byrne served as Associate General Counsel and Chief Privacy Officer at Lockheed Martin Corporation. He also served for several years on the board of directors for Pacific Architects and Engineers (PAE) when it was a wholly owned subsidiary of Lockheed Martin. Prior to joining Lockheed Martin, Mr. Byrne served in the career Federal Senior Executive Service as Deputy Special Counsel with the Office of the United States Special Counsel, and as both the General Counsel and Assistant Inspector General for Investigations with the Office of the Special Inspector General for Iraq Reconstruction. Soon after the invasion of Iraq in 2003, Mr. Byrne was recalled to active duty for 18 months with the U.S. Marine Corps in support of the Global War on Terrorism. Lieutenant Colonel James Byrne was assigned as the Officer-in- charge of the Marine Liaison Office at the then-National Naval Medical Center in Bethesda, Maryland. Colonel Byrne led teams of Marines, stationed in DC-metro-area military hospitals and Aberdeen Proving Grounds, Maryland, who were responsible for supporting injured and deceased Marines, Sailors, and their families.
Mr. Byrne has over 25 years of experience in the public sector, including service as a forward deployed Marine Corps Infantry Officer and a U.S. Department of Justice international narcotics prosecutor. Mr. Byrne’s professional honors include several DOJ awards and The Drug Enforcement Administration (DEA) Administrator’s Award for Exceptional Service. He is also a recipient of the Secretary of Defense Medal for the Global War on Terrorism and several military decorations, including the Meritorious Service Medal.
Mr. Byrne also currently serves as a Proxy Holder – Outside Board Director for Rancher Government Solutions, a company that delivers secure and certified open source and cloud-native software for the United States Government adopting DevSecOps across the IT landscape. His past professional engagements include director and advisory board positions on several startup companies, and service on the U.S. Department of Homeland Security Data Privacy & Integrity Advisory Committee and the International Association of Privacy Professionals Board of Directors (Chairman). Jim is very active in his church and community and prioritizes mentoring veterans. He currently volunteers on the American Association of Suicidology Board of Directors, the Navy - Marine Corps Relief Society Advisory Board, Veterans Moving Forward Board of Directors, Maternal Mental Health Leadership Alliance Board of Directors, Victor Bravo Board of Directors and the Give an Hour Executive Board.
Mr. Byrne is a Secretary of the Navy Distinguished Midshipman Graduate of the U.S. Naval Academy, where he received an engineering degree and, ultimately, held the top leadership position of Brigade Commander. Mr. Byrne later earned his Juris Doctorate from Stetson University College of Law in St. Petersburg, Florida, where was awarded a public service fellowship. He started his legal career as a judicial law clerk to the Honorable Malcolm J. Howard, U.S. District Court, Eastern District of North Carolina.
Host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
There are clear challenges for the road ahead in 2023—economic headwinds, geopolitical conflict, supply chain disruption, stakeholder activism, increased scrutiny by government regulators. How exactly are E&C programs navigating these risks, and how are they evolving in response? In this episode of the Principled Podcast, host Emily Miner talks about how values can sustain ethical performance—the essential element of effective E&C programs—and absorb the shocks of unanticipated business realities with her colleague, Susan Divers. Listen in as the two draw insights from the 2023 edition of LRN’s annual Ethics & Compliance Program Effectiveness Report, which is available now to download.
Get the 2023 Ethics & Compliance Program Effectiveness Report.
Guest: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Host: Emily MinerEmily Miner is a director in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact.
Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
For a transcript of this podcast, please visit the episode page at LRN.com.
Corporate boards are feeling more pressure than ever from a variety of stakeholders—government prosecutors and regulators, institutional investors, corporate activists, consumers, and others seeking responsible change in an ever-changing global economy. As the concept of both corporate and individual accountability continues to expand, how can boards adapt their approach to governance and oversight to meet these increasingly complex expectations? In this episode of LRN’s Principled Podcast, host Susan Divers is joined by Michael Volkov, the CEO of the Volkov Law Group and author of the recent white paper “Directors Dancing on the Head of a Pin: Corporate Boards Face Escalating Risks and Enforcement Challenges.” Listen in as they discuss the global challenges corporate boards are facing in 2023, and the steps they can take to meet regulatory pressures.
Guest: Michael VolkovMichael Volkov specializes in ethics and compliance, white collar defense, government investigations, and internal investigations. Michael devotes a significant portion of his practice to anti-corruption, sanctions, trade, antitrust, and AML compliance and defense. He regularly assists clients on FCPA, UK Bribery Act, AML, OFAC, Export-Import, Securities Fraud, and other issues.
Michael has extensive trial experience and has developed a problem-solving approach to serve client needs. He has extensive contacts in the federal government and on Capitol Hill. Given his broad government experience, he represents clients in federal and state court, before the Justice Department and other federal agencies, and on Capitol Hill.
Prior to launching his own law firm, Mr. Volkov was a partner at LeClairRyan (2012-2013); Mayer Brown (2010-2012), Dickinson Wright (2008-2010); Deputy Assistant Attorney General in the Department of Justice (2008); Chief Counsel, Subcommittee on Crime, Terrorism and Homeland Security, House Judiciary Committee (2005-2008); and Counsel, Senate Judiciary Committee (2003-2005); Assistant US Attorney, United States Attorney's Office for the District of Columbia (1989-2005); and a Trial Attorney, Antitrust Division, United States Department of Justice (1985-1989).
Mr. Volkov resides in Washington, D.C., San Diego, California, and Marsala, Italy, with his wife and six children. He and his wife enjoy traveling, the arts, and philanthropic activities. Mr. Volkov is an avid tennis player.
Host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
For a transcript of this podcast, please visit the episode page at LRN.com.
The Federal Acquisition Regulation, or FAR, is the primary guidance followed by federal agencies—including NASA, the Department of Defense, the General Services Administration, and all others when acquiring goods and services. It’s also a regulation with its own set of compliance requirements for government contractors. How does FAR differ from other regulatory guidance, and what do government contractors need to know to ensure they have an effective program in place? On the Principled Podcast, host Jen Üner talks with LRN colleague Eric Morehead about why the FAR compliance program requirements matter to broader E&C program effectiveness, and how government contractors can implement those requirements in practical ways.
Guest: Eric MoreheadEric Morehead is a member of LRN’s Advisory Services team and has over 20 years of experience working with organizations seeking to address compliance issues and build effective compliance and ethics programs. Eric conducts program assessments and examines specific compliance risks, he drafts compliance policies and codes of conduct, works with organizations to build and improve their compliance processes and tools, and provides live training for Boards of Directors, executives, managers, and employees.
Eric ran his own consultancy for six years where he advised clients on compliance program enhancements and assisted in creating effective compliance solutions.
Eric was formally the Head of Advisory Services for NYSE Governance Services, a leading compliance training organization, where he was responsible for all aspects of NYSE Governance Services’ compliance consulting arm.
Prior to joining NYSE, Eric was an Assistant General Counsel of the United States Sentencing Commission in Washington, DC. Eric served as the chair of the policy team that amended the Organizational Sentencing Guidelines in 2010.
Eric also spent nearly a decade as a litigation attorney in Houston, Texas where he focused on white-collar and regulatory cases and represented clients at trial and before various agencies including SEC, OSHA and CFTC.
Host: Jen ÜnerJen Üner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
For a transcript of this podcast, please visit the episode page at LRN.com.
How can organizations find ways to engage employees and ensure that compliance training content resonates with them, particularly in fast-paced work environments? In this episode of the Principled Podcast, host Susan Divers talks with Craig Huckelbridge and Lyndsey Conrad from Autodesk, a California-based tech company that is well known for its AutoCad design software as well as regular wins at the Academy Awards for the visual effects it enables for major Hollywood movies. Listen in as Craig and Lyndsey describe how they leverage gamification and gameshow techniques to get their employees’ engines revved up for competition, learning, and collaboration.
Guest: Craig HuckelbridgeCraig Huckelbridge is the Sr. Director of Legal Compliance & Litigation for Autodesk, Inc. Craig’s team is responsible for all aspects of Autodesk’s compliance and ethics program—including compliance with anti-corruption, conflicts of interest, gifts and entertainment, fair competition, and trade compliance laws and policies. His team also manages commercial and IP litigation matters for Autodesk. Prior to joining Autodesk, Craig was a member of Jones Day’s Antitrust & Competition Law practice group, where he represented companies in merger reviews, government investigations, and antitrust litigation and counseling. Craig began his legal career at Cooley LLP, where his practice focused primarily on antitrust and unfair competition litigation. Craig received a B.A. in economics and political science from Northwestern University and earned his J.D. from the Duke University School of Law.
Guest: Lyndsey ConradLyndsey Conrad is the Director of Legal Compliance for Autodesk, Inc. and a member of Craig’s team. She manages Autodesk’s Code of Business Conduct and related trainings, as well as its global anti-corruption, third-party risk, and conflict of interest programs. Before joining Autodesk, Lyndsey was a Partner at Husch Blackwell LLP, where her practice focused on government regulatory litigation, internal investigations, compliance, and white-collar crime. Her dedication to compliance came when she became a member of Husch Blackwell’s pro bono Human Trafficking Legal Clinic, where she represented victims of commercial sex trafficking and forced labor trafficking in cases referred to the firm by law enforcement, prosecutors, and partnering nonprofit agencies. Lyndsey got her legal start as a Law Clerk to the then-Chief of the Tenth Circuit Court of Appeals. She earned a B.S. in Biology from UCLA and her J.D. from UC College of the Law, San Francisco.
Host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative. Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
For a transcript of this podcast, please visit the episode page at LRN.com.
What is the most effective way to help employees make ethical and compliant decisions regardless of the different situations they face? Should they consult a lengthy list of rules and try to find one that fits the situation? Or can they be trusted to apply critical principles that embed company values? In this episode of the Principled Podcast, host Susan Divers talks with Dana McMahon, the vice president and chief compliance officer of Stryker, about how her team works to empower and help its employees live the medical device company’s mission and values. Their secret? Simplicity.
Guest: Dana McMahonDana McMahon leads global compliance, privacy, and enterprise risk at Stryker. Prior to her current role, Dana served as Chief Legal Counsel and led a global legal and compliance team advising on regulatory and quality, manufacturing and supply, technology and cybersecurity, commercial and government contracting, and privacy.Dana has 20 years of experience in the life sciences industry. She joined Stryker in 2017 from Novo Nordisk, where she served as Assistant General Counsel. During her 14-year career at Novo Nordisk, Dana held several positions of escalating responsibility within the legal team, overseeing support to the commercial, regulatory, clinical, medical affairs, compliance, and government affairs organizations. Dana has worked extensively on matters related to product development and commercialization, market access and compliance. Previously, Dana worked in private practice at O’Melveny in New York City.Dana received her law degree from New York University School of Law and her bachelor’s degree from Hamilton College.
Host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative. Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
For a transcript of this podcast, please visit the episode page at LRN.com.
Engagement is a hot topic in the ethics and compliance space—it impacts training, communications, and overall program effectiveness. But driving engagement gets tricky when you have a global presence or employee populations with different working conditions and technologies. How can E&C professionals foster engagement in a way that resonates with everyone—and even makes it fun? In this episode of LRN’s Principled Podcast, host Dave Hansen talks with Kerry Ferwerda, the ethics and compliance manager for Europe at NSG Group, about how to plan a successful corporate ethics and compliance week. Listen in as the two discuss ideas and best practices around event content, communication, and participation.
Guest: Kerry FerwerdaKerry Ferwerda is the ethics and compliance manager for Europe at NSG Group, one of the world’s largest manufacturers of glass and glazing products for architectural and automotive. it is also a leading supplier of technical glass products within its Creative Technology division. NSG has principal operations around the world with sales in over 100 countries.
A passionate advocate for doing business the right way, Kerry has worked within ethics and compliance for the past 10 years. During this time, Kerry has led E&C education initiatives across the group, operating across the business lines to develop and implement education programs that deliver value and embed a strong company culture.
Prior to joining ethics and compliance, Kerry worked within the group’s Automotive Glass Replacement business unit for 12 years, gaining a wealth of experience in roles across multiple departments and functional disciplines—including Finance, Operations, Supply Chain, IS, and Customer Service.
Kerry holds a BSc (Hons) in Information Technology for Business from Aston University, Birmingham, UK.
Host: Dave HansenDave Hansen is the global advocacy marketing director at LRN, an organization focused on ethics and compliance solutions that help people around the world do the right thing. His team drives LRN's customer obsession by building community, deepening customer engagement, and finding meaningful opportunities for collaboration. Dave is passionate about learning, having spent most of his career within higher education or training. He loves sharing customer stories and best practices in the name of continuous improvement. Dave is a proud dad, coffee enthusiast, drummer, and scuba diver. In his spare time, he enjoys cooking and reading!
For a transcript of this podcast, please visit the episode page at LRN.com.
Building an effective ethics and compliance program from scratch, or after a restructuring or merger, is not an easy task. How do you structure the program and empower people throughout to do the right thing? In this episode of LRN’s Principled Podcast, host Susan Divers talks with Luz María Zea Cabrera, the chief compliance officer at Frontera Energy, about how to build an E&C program from the ground up. Listen in as Luz María shares her approach to creating an ethical and sustainable culture and getting buy-in from the wider organization.
Guest: Luz María Zea CabreraLuz María Zea Cabrera is a lawyer and Commercial Law specialist from the Pontificia Universidad Javeriana of Colombia, LLM from Georgetown University. She is married and has two children.
Luz María has extensive and diverse experience in ethics, compliance, and management. For more than 20 years, she has led legal teams in Colombia, the Andean region, and Europe in multinational companies. For more than 10 years, she has structured and executed business integrity programs with local, regional, and global scope.
As a compliance officer in oil and gas companies, she has led the design and implementation of the Corporate Integrity System, a risk prevention system for money laundering, financing of terrorism, financing of the proliferation of weapons of mass destruction, corruption, and privacy protection.
For Luz María, the most important thing about an entity's compliance program is that it is understood and owned by everybody in the organization, that it is lived by all as a reflection of the corporation’s culture and as an exercise of their own personal values, and that individuals proudly act as Integrity Influencers at all times and before all stakeholders.
Host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative. Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
For a transcript of this podcast, please visit the episode page at LRN.com.
Ethics and compliance practitioners are often thinking about ways to engage their employees and motivate them to live their values, rather than doing the minimum required by the rules. But how can you make engagement real on a global scale when you’re dealing with a truly global workforce? In this episode of LRN’s Principled Podcast, host Susan Divers discusses how E&C professionals can make their international programs resonate through localization with John Toy, the chief of ethics and sustainability at GlobalFoundries. Listen in as the two talk about John’s approach to this problem, which can be summed up in two words: enterprise engagement.
Guest: John ToyJohn Toy is the chief ethics and sustainability officer at GlobalFoundries (GF), a global leader in feature-rich semiconductor manufacturing. In this role, John leads the company’s ethics and compliance program, which he designed and implemented, in addition to GF’s environmental, social, and governance (ESG) functions. Previously, John held various positions in human resource (HR) leadership for the company, including global talent acquisition and global learning and organizational development leader.
Prior to GF, John was employed by medical device maker Boston Scientific Corporation. His professional experience includes leading all aspects of HR at an ~800 employee operations facility; leading a global initiative to transform HR service delivery to include creation of service support centers in Hungary and Canada; and the creation and leadership of an internal HR Service Excellence function. John also led training and development for Global Operations, where he established the function and an integrated network of training representatives from each of the company’s manufacturing facilities in the US, Costa Rica, Ireland, and the Netherlands.
Before his corporate roles, John was previously engaged in private legal practice with a focus on labor and employment matters. John has appeared before state and federal courts and several administrative bodies, including the NY Division of Human Rights and the National Labor Relations Board. He is a graduate of Albany Law School of Union University, and of the State University of New York at Binghamton, where he studied Industrial and Labor Relations.
Host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
For a transcript of this podcast, please visit the episode page at LRN.com.
There are clear challenges for the road ahead in 2023—economic headwinds, geopolitical conflict, supply chain disruption, stakeholder activism, increased scrutiny by government regulators. How exactly are E&C programs navigating these risks, and how are they evolving in response? In this episode of the Principled Podcast, host Emily Miner talks about how values can sustain ethical performance—the essential element of effective E&C programs—and absorb the shocks of unanticipated business realities with her colleague, Susan Divers. Listen in as the two draw insights from the 2023 edition of LRN’s annual Ethics & Compliance Program Effectiveness Report, which is available now to download.
Get the 2023 Ethics & Compliance Program Effectiveness Report.
Guest: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Host: Emily MinerEmily Miner is a director in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact.
Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
For a transcript of this podcast, please visit the episode page at LRN.com.
In this episode of the Principled Podcast, host Susan Divers continues her conversation from Episode 11 with Tom Fox, the founder of the Compliance Podcast Network, on the changing geopolitical landscape and its impact on E&C. Listen in as the two discuss how anti-corruption is a key component of ESG, the consequences of compliance in cybersecurity, and the growing interconnectedness of risks. You can listen to Episode 11 here.
To learn more, download a copy of Tom Fox's white paper Never the Same: Five Key Areas in Which Business Will Never Be the Same After the Russian Invasion.
Guest: Tom FoxTom Fox is literally the guy who wrote the book on compliance with the international compliance best-seller The Compliance Handbook, 3rd edition, which was released by LexisNexis in May 2022. Tom has authored 23 other books on business leadership, compliance and ethics, and corporate governance, including the international best-sellers Lessons Learned on Compliance and Ethics and Best Practices Under the FCPA and Bribery Act, as well as his award-winning series "Fox on Compliance."
Tom leads the social media discussion on compliance with his award-winning blog, and is the Voice of Compliance, having founded the award-winning Compliance Podcast Network and hosting or producing multiple award-winning podcasts. He is an executive leader at the C-Suite Network, the world’s most trusted network of C-Suite leaders. He can be reached at tfox@tfoxlaw.com.
Host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Training presents an opportunity to not only educate workers, but also inspire their growth. But how can you do that in a way that feels energizing rather than exhausting? On this episode of the Principled Podcast, LRN Learning Manager Leah Hodge explores how to create engaging training with Rachel Donley, the Head of Learning & Performance Enablement for the KFC US market, a division of Yum! Brands. Listen in as the two talk about KFC’s Shift Supervisor training program, which has been receiving lots of industry recognition—winning gold at this year’s Brandon Hall Awards and being selected as a finalist for the Learning Technologies Awards—and improving leadership capability across the KFC US system of restaurants.
Learn more about LRN’s custom learning experiences.
Guest: Rachel DonleyRachel Donley is a learning leader, instructional designer, gamification proponent, and strategic business partner. With 13 years of experience in the learning industry and 22 years of experience in the retail and food service industries, Rachel’s learning solutions have earned eight Brandon Hall awards. She was named a 30 under 30 Learning Leader in the inaugural Learning 2010 program and awarded the Brandon Hall Rising Star Award in 2017. Rachel holds a Master of Education in learning design from Bowling Green State University in Ohio and currently leads a team of seven to deliver learning and performance solutions to KFC’s 4100 US-based restaurants.
Host: Leah HodgeLeah Hodge brings more than 17 years of instructional design experience to the corporate learning and development space. As a learning manager and expert in strategic partnerships at LRN, she fosters relationships with clients to analyze their training needs with an eye on elevating the learner experience. She is passionate about designing and implementing creative bespoke solutions that get learners excited about their development, taking them on a journey beyond just checking-the-box completion—including blended learning, gamification, video and animation, and onboarding learner journeys.
Most of us have heard the phrase, “If you see something, say something.” But what does that look like when someone witnesses bad behavior in the workplace? How can companies help their employees be active bystanders in the face of misconduct? In this episode, LRN colleagues Felicity Duncan, senior instructional designer, and Kristen Motzer, learning director, share their expertise on bystander intervention training and how organizations can effectively give employees the knowledge and skills they need to step in and help their coworkers. Listen in as the two share insights from their latest course development for the training library at LRN.
Access LRN’s 3-year DEI curriculum today to learn more.
Guest: Kristen MotzerKristen Motzer is an experienced leader in values-driven, empathetic behavior change. As Learning Director for the LRN Library she oversees course content development and online, blended, and facilitated learning experiences. She has expertise in human-centered learning design and has developed and managed education and learning programs at institutions such as NYU Langone Health, NeuroLeadership Insitute, Stanford University, Xavier University, and the Cleveland Clinic. Kristen holds a BA from Wright State University and an MA from Carnegie Mellon University and resides in Chicago.
Host: Felicity DuncanDr. Felicity Duncan believes that training and communication interventions have the power to transform behavior, including driving people toward more ethical treatment of those around them.
Felicity graduated with a Ph.D. in Communication from the University of Pennsylvania. After teaching at the college level for several years, she transitioned to workplace education to have a bigger impact on working adults by providing them with the training they need to truly thrive in their roles. At LRN, she is focused on developing high-impact, behaviorally focused content for the LRN Library. Her most recent project saw her working with the Library team to create a powerful new DEI Program that includes not only LRN’s world-class Inspire courses but also a set of microlearning assets designed to support, reinforce, and guide behavior change.
Over the last few years, federal regulators have provided detailed guidance on what they expect to see in E&C programs when it comes to misconduct inquiries or investigations. What do these recent reports, policies, and guidance mean for compliance professionals? In this episode of the Principled Podcast, LRN Director of Thought Leadership and Best Practices Susan Divers is joined by Jon Drimmer, a partner at the law firm Paul Hastings. Listen in as the two discuss the recent guidance from the US Department of Justice as well as DOJ policy impacting corporate compliance programs and ethical culture. To learn more, download the 2022 Ethics & Compliance Program Effectiveness Report.
Guest: Jon DrimmerJonathan C. Drimmer is a partner in the Investigations and White Collar Defense practice and is based in the Washington, D.C. office of Paul Hastings. He resolves complex cross-border problems with the benefit of having sat in every chair at the table: senior legal officer for a global 500 company, federal prosecutor, and seasoned advocate. He is a recognized international expert on anticorruption and business and human rights, and is a frequent speaker, author, and commentator on issues related to both topics.Before joining Paul Hastings, he was Deputy General Counsel and Chief Compliance Officer of Barrick Gold, one of the world’s largest mining companies, with operations on five continents. The compliance program he built at Barrick has served as an industry standard, and elements of it have largely been duplicated by numerous other companies inside and outside of the extractive sector.Mr. Drimmer has directed hundreds of investigations around the world related to anti-corruption, human rights, AML and export controls, tax controversies, environmental incidents, public disclosures, fatalities and health and safety injuries, sexual harassment and discrimination, and other areas. He has represented companies and individuals in numerous government enforcement proceedings in the U.S. and overseas, in relation to FCPA and bribery claims, human rights issues, and a wide array of other matters. He has participated in dozens of major disputes in the U.S., Canada, and abroad, including transnational torts, anti-corruption claims, environmental cases, international arbitrations, tax disputes, construction claims, and land controversies.He previously served in the Justice Department as Deputy Director of the Criminal Division’s Office of Special Investigations, where he led cross-border investigations, first-chaired numerous prosecutions, and argued federal appeals. He was a partner at an Am Law 100 law firm in Washington, D.C., a former Bristow Fellow in the Office of the U.S. Solicitor General, and a judicial clerk on the U.S. Court of Appeals for the Ninth Circuit. Mr. Drimmer served on the board of directors of the Voluntary Principles on Security and Human Rights Initiative from 2012-2014, and again from 2015-2017. He served on the board of TRACE International from 2012 until 2018, and currently sits on the board of the TRACE Foundation. He has also taught international law courses at Georgetown University Law Center for nearly 20 years.
Host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
For a transcript of this podcast, please visit the episode page at LRN.com.
We’ve officially wrapped season eight of the Principled Podcast and are taking a break for the holidays. Stay tuned for more conversations on culture, ethics, and compliance in the coming calendar year.
Happy holidays!
It’s no secret that writing a code of conduct doesn’t change your company culture overnight. It’s important to develop training that educates your employees on what’s included in your code, and how those elements apply to their day-to-day work. But how can you do that in a way that makes your code dynamic and accessible? On this Principled Podcast episode, host Jim Walton talks to Chris Dunstan, the Chief Compliance Officer & Group General Counsel at SPX FLOW, about how the company tailored its code of conduct training to better reflect the responsibilities of employees, while also keeping the material interactive and connected to its evolved brand. The training has received enthusiastic industry recognition, winning gold at this year’s Brandon Hall Awards for Best Advance in Compliance Training. More importantly, the training has reached a record-high completion rate across SPX FLOW’s global offices.
Featured guest: Chris DunstanChris Dunstan is a versatile legal leader with an aptitude for legal operations, strategy, and optimizing the intersection of business and the law. He is the Chief Compliance Officer & Group General Counsel at SPX FLOW, a diversified manufacturer of industrial equipment with operations in more than 30 countries. In this role, he manages the global litigation docket and compliance program and leads a team responsible for all commercial legal activities for multiple product portfolios. Prior to joining SPX FLOW, Chris was the general counsel at Lucifer Lighting and spent more than a decade working as the senior litigation counsel for Ericsson.
Chris has spent much of his career helping both public and private companies navigate complex legal issues in dynamic, highly regulated industries such as telecommunications, consumer products, and industrial equipment manufacturing. He always strives to share his deep functional expertise in high-stakes litigation, IP protection and licensing, foreign and domestic regulatory compliance (FCPA / UK Bribery Act / GDPR / CCPA), and commercial transactions.
Featured host: Jim WaltonJim Walton is a member of LRN’s Ethics & Compliance Advisory Services Team – with over 25 years of professional experience in corporate, institutional and government settings, spanning the fields of ethics and compliance; environment, health and safety; and energy management.
Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics & compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third-party due diligence reviews; and helping managers at all levels become better ethical leaders.
Jim is a Certified Compliance and Ethics Professional.
For a transcript of this podcast, please visit the episode page at LRN.com.
As today’s societal issues continue to mount, employees are turning to the workplace as one of the safer spaces for debate and a primary source of community. In fact, data from a special edition of Edelman's 2022 Trust Barometer—specifically analyzing trust in the workplace—notes that 78% of employees trust their employer over other established institutions and connections. So, how can companies leverage trust and adapt their own practices to better address employee concerns? In this episode of the Principled Podcast, host Emily Miner explores key findings from the Trust in the Workplace report with David M. Bersoff, the Head of Research at the Edelman Trust Institute. Listen in as the two discuss what drives trust and how employers can strengthen trust in—and beyond—the workplace.
Get a copy of the Edelman's Trust in the Workplace special report.
Read our blog post on takeaways from this report.
Featured guest: David M. Bersoff, Ph.D.As the Head of Research for the Edelman Trust Institute, Dr. Bersoff is the lead researcher on all of Edelman's trust-oriented thought leadership, including the Edelman Trust Barometer. He also leads the Institute's research-based collaborations.Prior to joining Edelman in 2016, David spent 18 years as a consumer insights and marketing strategy consultant at The Futures Company. In his last 5 years with the organization, he served as its Chief Insights Officer and was a member of its global board of directors. In that role, he ran the Global Insights Group and drove the research, data analysis, IP creation and product development strategy for all of their syndicated consumer insights offers – Yankelovich MONITOR, Multicultural MONITOR, Global MONITOR, Health and Wellness MONITOR, Financial Services MONITOR, and the TRU Youth MONITOR. In addition to his background in IP development and insights product management, David has also served as a trusted advisor and marketing/brand strategy consultant to major clients in industries as diverse as financial services, automotive, media, professional organizations, energy, and the military.Prior to entering the consulting world, David spent 12 years engaged in social science research at various Ivy League institutions, including 4 years as an assistant professor of social psychology and research methodology at the University of Pennsylvania.
Featured host: Emily MinerEmily Miner is a director in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact.
Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
For a transcript of this episode, visit https://blog.lrn.com/islands-of-civility-a-special-edelman-report-on-trust-in-the-workplace
In this episode of the Principled Podcast, host Susan Divers continues her conversation from Episode 11 with Tom Fox, the founder of the Compliance Podcast Network, on the changing geopolitical landscape and its impact on E&C. Listen in as the two discuss how anti-corruption is a key component of ESG, the consequences of compliance in cybersecurity, and the growing interconnectedness of risks. You can listen to Episode 11 here.
To learn more, download a copy of Tom Fox's white paper Never the Same: Five Key Areas in Which Business Will Never Be the Same After the Russian Invasion.
Featured guest: Tom FoxTom Fox is literally the guy who wrote the book on compliance with the international compliance best-seller The Compliance Handbook, 3rd edition, which was released by LexisNexis in May 2022. Tom has authored 23 other books on business leadership, compliance and ethics, and corporate governance, including the international best-sellers Lessons Learned on Compliance and Ethics and Best Practices Under the FCPA and Bribery Act, as well as his award-winning series "Fox on Compliance."
Tom leads the social media discussion on compliance with his award-winning blog, and is the Voice of Compliance, having founded the award-winning Compliance Podcast Network and hosting or producing multiple award-winning podcasts. He is an executive leader at the C-Suite Network, the world’s most trusted network of C-Suite leaders. He can be reached at tfox@tfoxlaw.com.
Featured host: Susan DiversSusan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Principled Podcast TranscriptIntro:
Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Susan Divers:
Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Susan Divers, Director of Thought Leadership and Best Practices at LRN. Today, I'm continuing my conversation from episode 11 with Tom Fox on the changing geopolitical landscape and its impact on ethics and compliance. If you haven't listened to that episode yet, we highly encourage you to do so. Tom is the founder of the Compliance Podcast Network and the author of the award-Winning FCPA Compliance and Ethics Blog, as well as the Complete Compliance Handbook, which is in its third edition. Tom, welcome back to Principled Podcast.
Tom Fox:
Thank you, Susan.
Susan Divers:
Tom, in our last episode, we talked about the impact of the war in the Ukraine on compliance and ethics. And specifically on the challenges that's imposed or brought to the fore for companies and specifically for their compliance teams who hopefully have a real seat at the table in terms of dealing with those challenges and mitigating those risks. But one of the topics that underlies what we were talking about is that of conducting your business in a fair, transparent, and sustainable manner. And I'm really struck by some of the things you were saying about the need to be transparent and the need to walk the walk and talk the talk. Because if you fail to do so, we live in an age of radical transparency and easy access to social media, and moreover, it's the right thing to do.
So with that as the background, anti-corruption has long been a focus for regulators. I mean, it's probably defined yours and my careers in a lot of regards. But only recently have some people started talking about it, and you're one and I'm one, as a major component of ESG. Could you explain for our listeners how that works and the role of anti-corruption in ESG?
Tom Fox:
Sure. So ESG, in my mind, Susan, the power of ESG is that it has brought together disparate strands that have existed in every corporation for some lengthy period of time. But brought them together in a way that someone is looking at them holistically. So, I'll pick on E because that perhaps is the easiest. As a compliance officer, I never looked at environmental issues in our company. That was somebody else's responsibility.
Susan Divers:
Me either. Right.
Tom Fox:
Didn't mean there wasn't environmental compliance, but it meant that I wasn't looking at that from the compliance perspective. Now, whether it's the Chief Sustainability Officer, whether it's the Board of Directors, whether there's a Board ESG Committee, somebody's connecting compliance to environmental. And so that in and of itself is, to me, the most powerful reason to have a robust ESG program. But anti-corruption in ESG, in my opinion, Susan, I've always seen it directly in the G.
Susan Divers:
Me too.
Tom Fox:
Number one, it's a good governance issue. Number two, it is a Board of Director's issue. Number three, it's illegal and regulatory issue.
But now Susan, I'm beginning to see it and have tried to articulate, that I see it in the S component as well as sustainability. Part of it is around one of the topics we touched on our last podcast of radical transparency, that if you do business ethically and in compliance, and if there's a question raised about a supplier, a customer, a distributor, a someone you've done business with in today's era of modern social media, that you can respond to that in a way that won't hurt your business from the public perception perspective. Leaving completely aside the regulatory perspective. So, I see ABC or anti-corruption compliance now, Susan, as directly within the S of ESG as well. And I also see it in the E. So to me, it sort of bleeds across all aspects of ESG and is a key component of a best practices ESG program.
Susan Divers:
Yeah, and I'm glad you articulated it so clearly for people, because I think there's a tendency perhaps, to silo ethics and compliance and sustainability. And they really are part and parcel of the same thing. And I'm going to quote from your recent white paper in support of that. "As a fundamental threat to the rule of law, corruption hollows out institutions, corrodes public trust, and fuels popular cynicism towards effective accountable governance." And that's, I think, a quote from the U.S. Strategy on Countering Corruption. Can you talk for us and link together how anti-corruption, anti-money laundering, and sanctions all are part and parcel of the same thing and relate to ESG? I think that'd be helpful for our listeners?
Tom Fox:
So Susan, the statement you read interests me for a couple of reasons. That came out of the U.S. Strategy on Countering Corruption, and it was aimed at national governments, so national governance. And I think it's absolutely correct that corruption, money laundering, all fuel cynicisms towards effective, accountable national governance. But Susan, as you were reading that, it struck me, that is equally true about corporate governance, or the G in ESG. Because violations of the rule of law, corruption, money laundering, they all corroded trust in our corporations, and indeed fuel cynicism towards effective accountable corporate governance.
The United Nations estimates that $3 trillion is lost to the global economy annually because of bribery and corruption. The United States Department of Treasury estimates that $2 trillion is lost annually because of money laundry. That's $5 trillion taken out of the global economy that could be used for a wide variety of other ways, reasons to help countries and people that's not available to them.
So having an effective anti-corruption and anti-money laundering strategy as well as trade sanctions, I think, are directly a part of ESG. They're certainly all in the G. We've talked about how they relate to sustainability. But money laundering and trade sanctions are as invidious, in my mind, as corruption is.
After 9/11, we saw a spike in the first real spike in FCPA cases starting sort of circa '04. And it was said that corruption led to crime, which led to terrorism. And there was really a belief that corruption had a direct line to the terrorism that impacted the United States directly on 9/11.
And now we see how corruption leads to erosion of trust in governance. But governance is not just corporate governance, it's democratic governance and democratic institutions. And certainly the Russian invasion of Ukraine put another exclamation mark on that. Whatever Russia is, it's not a democracy. And it is, if you want to see evidence of the invidiousness of corruption, you only need to look at a Russian army, their failures in Ukraine, how they've treated the people of Ukraine all wrapped up in an anti-democratic form. And that all speaks to the G. And when you read that line or that quote from my white paper, it struck me, that really works on multiple levels of governance.
Susan Divers:
Well, and you raise a good point too, that it's in the corporate governance area because if you... I've said this so many times, but it's worth repeating. If you have a code of conduct and you have training and you have policies, and you have an E&C team, that doesn't mean you have an ethical company, particularly if your leadership is engaging in sexual harassment or they're dealing with people who are banned because they're under sanction or they're violating anti-money laundering controls because it's a big account and they want the commission. That just means that your program is basically window dressing.
So for corporations and for E&C professionals, it seems to me that making sure that you're doing business in an ethical, compliant way is part of and parcel of being sustainable. And part of demonstrating that trust that is essential, if you're going to do business effectively, as we've talked about. We talked last time a little bit about how the Biden administration has basically shifted the view of anti-corruption enforcement. And I think that bears reemphasizing, 'cause I thought that was such an interesting point that you raised about that in the last podcast. Do you mind repeating that?
Tom Fox:
Sure. So in December, 2021, the Biden administration release our U.S. Strategy on Countering Corruption. Once again, this did not come about because of the Russian invasion of Ukraine, but it occurred during the run up to it. And it's one of the things that I think the Russian invasion have put an exclamation point on as to why business will never be the same in certain areas.
You and I have been in the anti-corruption field for a long time. As of December, 2021, our fight is now a national security fight. And they elevated anti-corruption and the fight against corruption to a national security issue. When something becomes a national security issue of the United States, that means resources are made available for that fight.
The strategy released by the Biden administration was the internal U.S. Government Strategy. It didn't impact our former employers or us today directly. But what it did was say, "The U.S. is going to enhance the global fight against corruption. They're going to work with foreign partners, foreign prosecutors, foreign departments of justice or ministries of justice to bring to justice people who engage in bribery and corruption, people engage in money laundering in a way they haven't done before."
Interestingly, there was a section on journalists and the fourth state and a specific acknowledgement that exposes, business exposes by journalists all the way from blood money of the story of Theranos to the Paradise Papers, to the Panama Papers, to the Paradise Papers, all exposed bribery and corruption, all exposed money laundering, all exposed sham corporations, all exposed fraud. And for the first time, we have the U.S. Government saying, "We're going to work to try to encourage good journalism to help expose these, because we can't do all of this on our own." And newspapers have a vital role to play, and reporters have a vital role to play. So, we have the fourth estate now being openly discussed by the United States.
We have government agencies that had never concerned themselves with anti-corruption, now being tasked with anti corruption. And I would point you to NATO. NATO's been around most of our lives. No, well, I guess all of our lives.
Susan Divers:
Yeah.
Tom Fox:
It's a key component of what I see as U.S. Security interests. But I've never heard NATO and anti-corruption in the same breath before. Well, now NATO is charged with enforcing anti-corruption statutes for its suppliers. It's suppliers are not all U.S. companies. NATO's a 23 member, I think, organization. So any country can have suppliers to NATO. Well, now they have to comply with U.S. anti-corruption laws probably in the form of the FCPA.
So, we have a greater scope, a greater reach, we have greater resources in the form of prosecutors or investigators. But the U.S. is acknowledging and saying, "This is part of our overall fight." And in part one of our episodes, Susan and I talked about the Department of Treasury saying that U.S. corporations are a part of the fight against money laundering. Well, I think the Department of Justice has come pretty close to saying that U.S. corporations are a part of the fight against bribery and corruption. And because it's a national security issue, we want you to come to us. We will incentivize you to come in and self-disclose, once again, even if it's within your organization.
I think that this means more funds, a wider remit for government agencies that have not had this remit before. And when you start talking about the press as a key part or a key whistleblower within the context of overall whistle blowing programs, I think that's an acknowledgement that is long overdue.
Susan Divers:
I totally agree with you. And I think it also sort of ups the ante, because when you couple that with DOJ's recent re-emphasis and added emphasis on personal responsibility and liability for misconduct, it's in a sense saying, "If you go out and you bribe or you violate anti-money laundering or you do business with people on the sanctioned list, or you help oligarchs move their yachts, you're not just committing an economic crime. You're doing something that violates the U.S. National Security interests." And I think that's something for boards and executives to really think about, especially in light of the recent absolutely horrible Lafarge cement case where they were bribing ISIS in order to keep their Syrian cement factory open.
It's an interesting dynamic. Let's leave that and let's talk about cybersecurity, because that's another major risk area for companies. And it directly plays into the area of sanctions in AML as well as others. What are you seeing in that space as a result of the war in the Ukraine and the risks that's created?
Tom Fox:
So once again, Susan, cybersecurity, cyber attacks, cyber hacks have been with us for some period of time. I think Target was probably the first one that got the attention of most of us in the compliance community. But certainly within the cyber community, this was well known. But what the Russian invasion of Ukraine has done is, here I have to cite to Brandon Daniels, CEO of Exiger who said, "We are now under permanent non-kinetic warfare.", meaning we are permanently under attack by our enemies in the cyberspace. Every company is subject to attack. It can be a state actor or it could be rogue groups. It could be criminal groups. So, that's sort of point one. We are all under attack now and we have to harden our defenses.
But point number two is that what you sort of raise at the end, Susan, you're attacked, you're hacked. You want to get the key so you can unlock your documents. You make a payment. Who are you making that payment to? They're probably not going to say, "My name is Thomas Robert Fox. My bank account at Chase is..." They're going to give you a false name and some sort of drop account that you don't know, or you may not know who the end user is. Well, in 18 months or 24 months, when you get a little knock at the door from the Department of Treasury, which says, "You've just paid ISIS." Or, "You've just paid Russia. We'd like to ask you some questions under oath." The point being that if you don't know who you're paying, you may be paying someone who's on the sanctions list. You may be paying rogue agents or agents rather from Cuba, from North Korea. You may be paying agents from China.
And so, cybersecurity is tied to money laundering and trade sanctions because of the potential payments. As a business, you're in an extraordinarily difficult position because you may have not had hardened defenses. And you may be at risk for losing your data or having it put out on the dark web. And that's not going to be an easy choice. But if you make a payment and it's to someone on the sanction list, the U.S. government has made clear, you will be punished for violations of those U.S. laws.
And this fall, it's not effective yet, effective March, 2023, Lloyd's of London has announced that they will not honor cyber insurance obligations where the attack was made by a state actor. And typically what companies will do after they're hacked and they have to announce publicly is, they will say, "Well, we were a hacked by the Russian government and there's nothing we can do for it because it was a top military hacking unit in Russia. And whatever defenses we had in place, we couldn't defend us." Well, if you say that trying to cover your backside, you've just lost your insurance coverage. And if you make payments, you're not going to be able to get indemnity and that money back. So, you have to be very careful about what you publicly say now, if you want to have full cyber insurance.
It's, here I'm less certain about the answer, Susan. I just know that the questions have become much more important, much more difficult. But you've got to have these conversations in your corporation. You've got to practice hack drill. It's like you and I did fire drills or bomb drills in elementary school. You've got to have a drill, you've got to have a plan in place. You've got to be ready, if you're hacked. You've got to have experts who you can call, trusted advisors, whether they be legal, whether it be technical, whether they be compliance, whether they be cyber, to come in and help you get through such an attack.
But we're under... make no illusions that this Russian invasion has unleashed corporate attacks in a way we have never seen before. It's here to stay. And you as a U.S. corporation and U.S. compliance practitioner are going to have to deal with it.
Susan Divers:
Well, and what you're saying too is a perfect illustration of the interconnectedness, which I don't think we thought in those terms too much in the past. We had FCPA compliance and we had sanctions compliance and trade compliance and AML. We didn't really, at least, I didn't, to confess, sort of think about it as all connected. But if you're basically being held to ransom and it's a Russian or an ISIS hacker, then not only could you violate the sanctions laws, but you could violate anti-bribery laws too, inadvertently. To use a great expression, it's sort of a dog's breakfast in some ways, what compliance officers are faced with.
So, what's your advice, because it's a new risk environment and the risks are really big? They're national security risks, they're not just good governance and good business risks. What should compliance officers do? Let's end on a practical note of, how do you actually deal with the situation going forward?
Tom Fox:
No, I wonder if I should open my door, bring my three dogs back in, and say, "Hey guys, what do you do when I put a dog's breakfast down in front of you?" And they look up at me and say, "Well, we eat it, Tom." It's here to stay. And that means you have to deal with it. It all goes back to risk. What are your risks? Assess your risks. Yes, I understand you have a robust cyber defense protocol. You have a program, you have tested that program, you've run drills on that program.
Now, have you done that same with your prime supplier? Have you done that with your Tom Fox vendor who has access to the vendor invoice system so that I can input my invoice into your system for work I do? Have you checked down to that level to make sure that my defenses are hardened, someone using my system can't get in? You have to go through the same exercise you do from a corruption compliance, any money laundering compliance, trade control, and trade sanction compliance.
Assess your risk. How do you assess your risk? Where are you doing business? Who are you doing business with? How are you doing business? In all of those manners, are there any gaps in your defenses in those three areas? If you assess those risks and then if you find gaps, weaknesses, material deficiencies, whatever you choose to call them, remediate those. It is a process you have to go through. You can't do it... I'm going to look at our cyber defenses in our third party supply chain this afternoon. You can't do that. It is a process and you're going to have to put work into it.
But that's where you get the real results. Because once again, as we found, I think in the supply chain discussion we had, Susan, once you look at those sub-suppliers, who you're doing business with, where they're doing business, and how you're doing business, you may find inefficiencies from the business operations perspective. And you can correct or improve those business efficiencies and make your company more efficient, and hopefully at the end of the day, more profitable, when you began as a program to assess risk based upon a DOJ pronouncement or a DOT pronouncement. But it all starts with recognizing what your risks are. And only you can assess your risks.
Susan Divers:
And I like too, the way you've mapped it out, because it really, again, comes full circle back to sustainability, that the way you do business is just as important as what business you do. And if you truly keep on top of your risks and really reinvigorate the risk function, that should be, as you've pointed out, a dialogue with the board and with the top management. It shouldn't be a dialogue that compliance and audit and legal are having because it involves the strategic direction of the company. And it also involves the way the company is governed.
So with that takeaway, I think this is a conversation we could be having for at least another hour, if not more. But we're out of time. And so Tom, thank you so much for joining us. And your thoughts are so valuable, because I think it's easy in the ethics and compliance field to get fixated on, "How am my rolling out the training? What's my curriculum, how many hotline calls have I gotten?" And it's much more about, how do we actually live in this world? And how do we in fact, conduct business in a way that's ethical, compliant, and sustainable? So you've really taken us to that perspective. And I'm very grateful to you for doing that.
Tom Fox:
Susan, thank you, and I look forward to continuing this conversation.
Susan Divers:
Thank you, Tom. My name is Susan Divers and I want to thank you all for tuning into the Principled Podcast at LRN.
Outro:
We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcast, or wherever you listen. And don't forget to leave us a review.
How do you know if your ethics and compliance program is successful? How are you capturing data and comparing it to industry benchmarks, or tracking your own company’s trends over time? In this episode of LRN’s Principled Podcast host Emily Miner, director of Advisory Services at LRN, talks about benchmarking E&C data with her colleague Derek Clune, product manager of Data & Analytics. Listen in as the two explore how benchmarking practices come to life and the role AI plays in LRN's new Catalyst Reveal solution.
Featured guest: Derek Clune Derek Clune has been working in the ethics and compliance space for over 5 years with an emphasis on data and analytics. As a Product Manager at LRN, Derek is responsible for the vision of LRN’s new data and analytics platform; Catalyst Reveal. His main goal is to provide E&C professionals with more actionable data to understand their E&C program effectiveness better. Derek’s team works to create products that offer best-in-class prescriptive interventions to improve E&C programs and ease the administrative burden.
Featured Host: Emily Miner Emily Miner is a director of LRN’s Ethics & Compliance Advisory services. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Find the transcript for this season 8 episode at LRN.com.
As the world emerges from a pandemic mindset, we find ourselves confronting new geopolitical realities with Putin's war in the Ukraine as well as increasingly fraught relations between the US and China. How is this geopolitical landscape changing the compliance landscape? In this episode of the Principled Podcast, host Susan Divers is joined by Tom Fox, the founder of the Compliance Podcast Network and aptly accredited “Voice of Compliance.” Listen in as the two discuss the impact of geopolitics on ethics and compliance, and what issues should be top-of-mind for E&C leaders in the near future.
To learn more, download a copy of Tom Fox's white paper Never the Same: Five Key Areas in Which Business Will Never Be the Same After the Russian Invasion.
Featured guest: Tom Fox Tom Fox is literally the guy who wrote the book on compliance with the international compliance best-seller The Compliance Handbook, 3rd edition, which was released by LexisNexis in May 2022. Tom has authored 23 other books on business leadership, compliance and ethics, and corporate governance, including the international best-sellers Lessons Learned on Compliance and Ethics and Best Practices Under the FCPA and Bribery Act, as well as his award-winning series "Fox on Compliance."
Tom leads the social media discussion on compliance with his award-winning blog, and is the Voice of Compliance, having founded the award-winning Compliance Podcast Network and hosting or producing multiple award-winning podcasts. He is an executive leader at the C-Suite Network, the world’s most trusted network of C-Suite leaders. He can be reached at tfox@tfoxlaw.com.
Featured host: Susan Divers Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Principled Podcast Transcript
Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Susan Divers: General Pete Schoomaker made a remark some years ago that's always stayed with me. He said, "People like to think that life is an opera that unfolds over several acts, but it's really a rodeo. You never know what's coming out of the shoot." So much of the ethics and compliance sphere clearly demonstrates the truth of the general's remarks, especially recently. LRN's last two program effectiveness reports focused specifically on the impact of the pandemic on ENC programs. Now we have the war with Russia in the Ukraine and increasingly fraught relationships with China. How is the geopolitical landscape changing the compliance landscape?
Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Susan Divers, director of thought leadership and best practices at LRN. Today, I'm joined by Tom Fox, the founder of the Compliance Podcast Network and aptly accredited Voice of Compliance. In addition to his 30 plus years of legal experience, Tom is the author of the award-winning FCPA Compliance and Ethics blog, and The Complete Compliance Handbook now in its third edition, which is by far the best source for best practices in one place about ENC programs. We're going to be talking about the impact of geopolitics on ethics and compliance and what issues should be top of mind for ENC leaders in the near future. Tom, welcome.
Tom Fox: Susan, thanks. I have wanted to be on this podcast for a long time. I particularly enjoyed your reference about rodeos because in the great state of Texas, that's a college sport, rodeoing, so lots of rodeos and it's certainly an apt metaphor for what we're going to talk about today.
Susan Divers: Well, great, Tom and I really appreciate the opportunity to have any conversation with you, but particularly on the podcast. So Tom, first, generally, how do you see the ongoing war in the Ukraine as disrupting trade and the rules, both formal and informal, that have governed the world for the last 20 years and is the World Economic Forum vision of trade now dead?
Tom Fox: Susan, in addition to the rodeo metaphor you gave us, the most prescient comment I heard during the COVID-19 pandemic is that we've moved from disaster recovery to business interruption to, excuse me, to business resiliency, to business as usual. Literally now, we can have a weather event, we can have an economic event, we can have a geopolitical event, we can have any event and the requirement of a company is how do you respond? How do you respond tomorrow? Have you planned for this?
I think the type of thing that we saw with the Russian invasion, as tragic as that was, it's one more, it's just an event and we're going to talk about that in some detail. But every company has legal, ethical and business obligations around that event. I was also particularly struck by your reference to the World Economic Forum, and when I read that, it put a frown on my face. And it put a frown on my face because the World Economic Forum, in my mind, has been one of the biggest leaders for the global economy.
Since at least 1990 when I started paying attention to a global economic framework because I was in the energy industry and began to think about these issues on a global basis, the World Economic Forum and their symposiums, their position papers and really their raison d'etre was to talk about a global economy. Although I certainly thought we would have regional conflicts, as we have always had, I never thought we would, I guess my hope was that the global economy would help drive us towards a more integrated global community and that we wouldn't be put near a brink again of a global conflict. I don't pretend to say that's where we're going in Ukraine, but when you start talking about tactical nuclear weapons, that's a conversation we haven't had in this country since the '60s with seriousness.
The World Economic Forum, the world they envision, the world you and I grew up in professionally, I think that world is gone. We're moving to something else. I use the Russian invasion of Ukraine really as an ending point or an exclamation mark on trends that we have seen percolating probably 10, 5, 3 years that accelerated extraordinarily greatly in the COVID-19 pandemic up to the war in Ukraine and the disruption that that has caused really impacts businesses, and this is going to be something, I think, we're going to have to deal with literally on an ongoing basis forward. Lots, really, to unpack there, but I do have to acknowledge you for pointing out it was really the World Economic Forum that has led, I thought, the charge for a global economy and globalization and unfortunately, I think that world is now dead.
Susan Divers: I hear you and I feel the same way about the Forum. LRN participated in it quite actively until fairly recently, and the Forum really did an excellent job of helping global leaders cooperate, frame some of the rules and the practices. Maybe when the current situation resolves itself one way or another, there'll be an opportunity to do that again.
But getting a little bit more granular at this point. You've written about the impact of the Ukrainian war on the supply chain and certainly for business that's one area where the rubber really hits the road. Can you explain that a bit to our listeners?
Tom Fox: Sure. The Ukraine War, the Russian invasion of Ukraine, as I said, put a exclamation point on this. One of the key disruptions from COVID-19 was indeed supply chain. Here, I think for the first time, Susan, we started to look at geography as a risk. Geopolitical risk has been known for quite some time, but with the COVID-19, we have the swaths of the world that were unavailable to us because of the pandemic. As the pandemic raged through China and moved to India and moved to Africa, large parts of the global supply chain were literally shut down completely and they couldn't get back up, couldn't get running again. We saw, from COVID-19, a geographic risk that we have perhaps not considered as much before. This is different than an island that may worry about climate risk or flooding or fires in California or something like that. We had real geographic risk.
The Ukraine War really put an exclamation mark on geopolitical risk. What is the risk? What was the risk in 2019 of Russia invading Ukraine? Certainly there were discussions at the highest level of our government. Frankly, I don't think you and I, wasn't on our radar. Maybe if you read foreign policy, it was on your radar, but for the business practitioner, from the compliance professional, I don't think we were thinking about a Russian invasion and what that might do to either our supply chain or business partners or customers. Well now, if the Ukrainian grain cannot be put in the global food supply chain, that's a huge disruption. The question that I thought about is what would be the effect of the disruption of the global food chain on one of our former employers, Aecom, Halliburton, businesses that you and I have both been involved with, but we don't think of as having perhaps a food risk. Nevertheless, if grain is not available, what do those types of risks mean for employees in allegedly or apparently unrelated companies? Companies have to start thinking about these kinds of things in ways that we haven't done before.
I did a podcast earlier this week where someone said, "Look, the issue now is China and Taiwan." And he was absolutely right. That could be a military issue, could be a geopolitical issue. 82% of US semiconductors are made in Taiwan. That's a huge issue. Let's go back to our former employers who are now heavily invested in tech and actually use semiconductors as part of their manufacturing process. They're going to be impacted, let alone the US semiconductor industry and the US computer industry. That is something now that we have to consider. Are there any other geopolitical conflicts that could erupt, which might negatively impact our supply chains? And when I mean negatively, I mean you can't get your supplies out of those countries, whether it's a raw mineral, whether it's a extractive mineral, whatever it may be. Those types of issues now are more front and center than they ever have been.
From the business perspective, Susan, supply chains, since at least the late '70s or early '80s, the primary goal was efficiency. That was generally translated to just-in-time. It was seen because of the experience in the '60s where particularly in the auto industry, you had lengthy supply chains and actually large number of parts piling up in warehouses that was deemed to be inefficient. They wanted it just before they needed it. That led to just-in-time. That led to one or two suppliers. We found that sole suppliers or sole plus one suppliers has a risk. That risk is, if they're in a geographic area that's wiped out by COVID, if they're in a geopolitical area that is no longer available to us, then we, as a company, have a problem with our supply chain.
Certainly there are many industries that have been offshored outside of the United States. From our industry and service, or rather service industry folks like us, to manufacturing, to everything in between. That is now trying to be reshored on American soil. Can we do it? Yes. Can we do it tomorrow? Probably not. Can we do it in time for Christmas? Probably not. We're going to have to retrain, we're going to have to retool. We may have to allow greater immigration to get people in to do those jobs and it brings up an entire series of questions. It brings up economic questions. How much more is it going to cost to reshore? How much more does it cost and pay an American wage as opposed to a Philippine, Bangladeshi or other wage? Or you name the country outside the United States where the wages are disparate.
All of those issues are now in play in a way that certainly they were percolating around and percolating along in the second half of the last decade. COVID-19 accelerated those conversations, particularly around just-in-time and sole source suppliers. But now, I don't know how much of the globe Russia consists of. I think at one point, it was 12%. That's not available to us as a supply chain partner now and Russian partners are not available to us as supply chain partners. Now, what happens if China is not available to us as a supply chain partner or Taiwan because of an armed conflict with China. How is that going to play? Or can we even get semiconductor chips out of Taiwan if they're in an armed conflict with China? All of these issues are now front and center and I think every company has to be looking at their supply chain, who's in their supply chain.
Then obviously, this ties into things that were not deemed to be connected to all of these issues before, such as conflict minerals. Conflict minerals required you as a company to determine or any of the minerals you're buying, the four Ts, I think, coming out of countries primarily in Africa under conflict. This was the first time companies had really taken a deep dive, not to their direct suppliers, but to their sub-suppliers and they found out we don't exactly know who all of our sub-suppliers are. Obviously the Uyghur Forced Labor Prevention Act has huge impact on supply chains and hopefully, we can talk about that at some length in a little bit, but all of these issues on supply chain, it's elevated the discussion of the corporate supply chain, I hope, to where it properly belongs, in the board of directors level.
But for the people that we deal with, the CCOs and compliance professionals, I think it should be a part of an equal conversation because what are the risks? I was going to say implications, but what are the risks of moving your supply chain, reshoring it? It's a change so the risks change. It may not be an FCPA risk because you may be in the United States, but almost every state in the US has an anti-corruption law and a state anti-corruption law. I had to look at it one time, 37 states do. That's not that you can't bribe our state government officials, every state says that, but 37 with regular commercial private or private anti-bribery laws. When was the last time you, as a compliance professional, had to assess that issue, that risk? Lots of new risks and you, as a compliance professional, need to be a part of those discussions so you can begin preparing your corporation for those eventualities.
Susan Divers: Well, that's a perfect example, or I should say it's an example on steroids of how you have to respond to the risks that face you today and hopefully, tomorrow, try to look around corners. I remember, I think it was in the 2020 guidance that DOJ put out. They said that you can't let your program be a snapshot in time or go on cruise control. That's one of the biggest traps I see people fall into. You ask them what their risks are and it's kind of like what the risks were last year. With this environment and with what you just outlined in terms of supply chain, there's going to be a lot for compliance teams to do. How should people be addressing that right now? I know we'll talk later about sanctions and anti-money laundering being the new FCPA as Deputy Attorney General Monaco said recently, but what's your advice today in terms of how to think about those risks?
Tom Fox: Susan, you hit it exactly on the head. Assess your risks when your business changed. You reference the 2020 update to the Evaluation of Corporate Compliance Programs. That's where the first time the Department of Justice formally said, it's not an annual risk assessment. It's not a biennial, all-encompassing $100,000 risk assessment. It's an assessment when your business changed. The beauty of the timing of that statement, it was June, 2020, everyone's risk had changed because we were working from home. It didn't mean your risk increased or decreased, they changed. How do you assess working from home or how did you assess working from home from a compliance perspective? Once you made that assessment and then you found there were actually new risks, then you had to put a risk mitigation strategy in place, then you monitored that strategy to determine its effectiveness and then you used that information to upgrade your compliance program.
The formula is in place for all of these things, but it starts with exactly what you said, Susan, assess your risks if your business has changed and everyone's business has changed literally, particularly in the supply chain. You've got to know who your suppliers are. From the business perspective, who can supply us is paramount. Pricing is going to be paramount. But from the compliance perspective, where are they getting those? If you're a clothing manufacturer, how many of your suppliers are coming out of Bangladesh and how many of those suppliers are violating any sort of fair trade or human rights laws? Even what's the safety, as we know from the Plaza collapse a few years back in Bangladesh. You have to know who's in your supply chain to a level and degree that you didn't previously think about unless you were in conflict minerals.
But the beauty of that is that if you make that assessment down into your sub-suppliers from your supply chain, you as a business will be stronger. You will see, number one, if there are inefficiencies in our supply chain, but two, if there's a disruption, you'll be able to mitigate that if a disruption occurs because you can move to another supplier because you know where the parts are coming in from and hopefully, you'll be able to have prior knowledge or planning around that.
But think of a weather event. In 2021, I was living in Houston. It hit seven degrees. That was the first time we'd had single-digit weather in Texas since 1890. Well, we can't prepare for that, yeah! This is a town that had gone through two 500-year floods and 1,000-year flood over the past 18 months. We had a wildfire north of Houston. We'd never had a wildfire in Houston, Texas in my lifetime. All of that's to say is that things have changed. I don't pretend to say I know which way it's going, I just know that you have to be there. You have to have assessed those risks and have a plan in place if you can't utilize all the way down in your supply chain, but that gives you the opportunity to be more business efficient and if a catastrophe does occur, you're more quickly able to respond. Starts with a risk assessment, put a risk management strategy in place, monitor that strategy, and then improve your compliance program as information becomes available to you.
Susan Divers:I totally agree with that, Tom and I want to relate it back a little bit to a point you raised earlier too, which is this gives you an opportunity to make sure that you're dealing with ethical sub-suppliers and that your whole supply chain meets spec. I think I've seen in the past, in my long years as an ethics and compliance lawyer, and before that as more of a specialist on FCPA that a lot of times, people don't know who their sub-suppliers are and the first they find out is when there's fraud or potential bribery issue or diversion or a theft of intellectual property. It does give you an opportunity to get a more solid grip on your suppliers and make sure that they are the right people that you're dealing with.
Let's turn from that, which is I think a very good segue to the issue of economic sanctions. There's really been a quantum leap in that area, even it was starting before Russia, I think, with the sanctions on Huawei and the heating up of tension in the US-China relationship, but now it's on a completely different level and that really, I think, has to be top of list for companies when they review their ENC programs. Can you talk about that and give us some guidance?
Tom Fox: Sure. Once again, Susan, let me use the Russian invasion as the exclamation mark because under the Trump administration, we saw an exponential increase in the use of trade and economic sanctions. I had several friends in that space and every once in a while, I'd email them, "Well, we had three changes today. What do you expect this afternoon?" The point being that the prior administration saw those as legitimate and important tools for US national security. That has only increased now on steroids because of the Russian invasion. What the Trump administration's use of those tools did was it elevated the discussion of the trade compliance director in a corporation to the board of director level. It may have elevated them within the compliance function or generally within the C-suite because people now had to call trade compliance and say, "Anything new today?" Well, the sanctions that have come out after the Russian invasion have been all encompassing.
Now, I looked before this podcast, I think we're on our seventh round of sanctions and more to come. That's seven rounds from the United States. That doesn't even count the UK and Western Europe who have equally sanctioned Russia. Many US multinational companies are also subject to UK or EU trade sanction directives. You need to be cognizant of those. But the current trade sanctions that have been levied, and when I say there's still more to come, we haven't gotten to the nuclear option, which is secondary sanctions. If we get to secondary sanctions, that's an entire level of trade and economic sanctions literally that we have not seen since World War II.
Discussion though, around trade sanctions, and once again, I've talked to several of our colleagues who have that as their specific compliance remit and their specialization is they now feel elevated within the corporation. They feel that the issues they've been dealing with, their professional careers are now being discussed literally at the board of directors level because of these huge potential fines and penalties, the huge visibility. As important as these legal restrictions are, Susan, it's actually the reputational damage.
Just think about the companies that either drag their feet about leaving Russia or were slow or less than somebody's idea of we need to be out of there. They were excoriated in the press for doing business in Russia after this invasion. Those conversations have largely on by the wayside because I think most US companies are out of Russia now, but the reputational damage for the violation of trade sanctions or even some sort of norm or standard now costs more than perhaps even the finer penalty would've cost. It's really a huge change for our colleagues. It's an important change because now, those issues are being evaluated together with supply chain at the board level in a way they have not been previously evaluated.
You may now need to look, you need to call your trade director of trade compliance about issues in your supply chain. You need to call your director of trade compliance about where are we doing business? How are we doing business? Who are we doing business with? Who's our customer base? Are we selling with commission sales agents, company employees or distributors? If we're using distributors, are they reselling our products into Iran? Are they reselling our products into a country that's exporting to Russia? All of those issues now, I think, are being discussed at the highest level of a company. But for me, Susan, the real beauty of this discussion is finally, I think, the silos are coming down within a corporation and you're seeing a much more holistic approach to many of these issues that we'd not seen previously.
Once again, if I could go back to the DOJ's June, 2020 update to the Evaluation of Corporate Compliance Programs as presaging all of this, they said in that document compliance must have access to all data silos within a company because compliance needs to know what everyone's doing so compliance can do its job. Well, that turned out to be true, but it turned out to be true much broader. I think the DOJ was onto something when they said that, and I think now, companies are realizing you have to have this holistic approach. Trade sanctions and export control sanctions are here to stay.
The other insight from the Trump administration use of them and the Biden administration use of them is they're administration agnostic. They're not going to go away and if 2024, we have a Republican administration, they are probably going to continue those and they're not going away. If there's a Democratic administration, they're not going away. They're probably going to continue those. Sanctions, trade sanctions, export control sanctions are here to stay. They're probably going to get more robust. And until Russia pulls out of Ukraine, I think companies have to take these very, very seriously, both for a potential legal finer penalty, but even more important is in the commerce or the business place of public opinion.
Susan Divers: I totally agree with everything you've said and you've made a very articulate vision of what a major challenge is for compliance teams. The only thing I would add is, it's interesting to me, that this can affect small and medium-sized companies that don't think in these terms and may not even really be very sophisticated.
When I was looking a couple of months ago, I came across a case involving a false eyelash manufacturer who was importing what turned out to be false eyelashes that sourced in North Korea. I mean, it was a Chinese supplier, but the sub-supplier was North Korean and they got in trouble. As you know, it doesn't really matter if you don't know. That's no defense and they paid a fine for that. It was a good reminder that trade sanctions can affect everyone and that you really, hopefully, have to have that on your radar.
Let's take an interesting topic off of this, which is have the enhanced sanctions started to really impact whistleblowers? I mean, we know that FCPA enforcement has certainly inspired a lot of whistleblowers, as well as SOX and other areas such as that. But what about trade sanctions and what about AML and what we're seeing?
Tom Fox: That's been, I don't want to say it was an unintended consequence, but one of the most interesting outcomes or aspects of the Russian invasion. For the first probably 30 days, the most ubiquitous picture of the Russian invasion was a yacht steaming away because it was a Russian oligarch's yacht and they were trying to steam to a port where the US couldn't come in and forfeit them because of trade sanctions and sanctions put on the Russian oligarchs. But here's what happened. On January 1st of 2021, US Congress overrode President Trump's veto of the National Defense Authorization Act. In that bill, there was something called the AML law of 2020. The AML law of 2020 was the first update to our anti-money laundering laws and trade sanctions laws since the Patriot Act passed in the wake of 911. As part of that change, a bounty program for whistleblowers was put in place similar to the SEC bounty program put in place in Dodd-Frank.
That Department of Treasury money laundering or anti-money laundering bounty program applies to those Russian yachts because if a yacht is seized and sold, the person who reported it can be eligible for up to 30% of the proceeds of that sale. This created an entire cottage industry of marine yacht hunters who knew and they are working with law firms to actively, and when they find one in a port that the US can get jurisdiction over, these law firms notify the DOJ and then the DOJ does whatever they need to do to try to get seizure of that yacht in a foreign country. That was viewed as hugely popular and the American public is cheering them on in a way whistleblowers have never been cheered on in our lifetimes.
I remember I interviewed a woman whose law firm specializes in whistleblowing and I said sort of in an offhand manner, "Are you telling me that whistleblowing is sexy?" Her response is, "You mean, it hasn't always been that way?" No, it hadn't. But now, it was seen as directly in the interest of the United States, particularly our national security for these whistleblowers to come forward. As important as whistleblowing is to the SEC, I don't think it had ever been considered a national security issue.
That ties to what the Department of Treasury has announced publicly that they expect US corporations to be in on the fight of trade and economic sanctions and money laundering by self-reporting. I had had a little trouble tying self-reporting of your own violation to the fight against national security. But what the Treasury Department argued was, come to us, tell us if you find people within your organization violating trade sanctions or economic sanctions and we'll give you credit for that, that may be a declination up to it, including a declination. The DOT has truly tried to incentivize companies to be a part of this fight and that is now the same for whistleblowing.
Whistleblowers are now seen. There's one other document called US Strategy on Combating Corruption, which came out in December, 2021. In that document, the Biden administration pointed to whistleblowers as a component of the fight against bribery and corruption, which that document elevated to national security status. Now, we have whistleblowers who before the Russian invasion, certainly were a part of the legal landscape and part of the compliance landscape, but now they're being told, you are a part of our national security interest and you are a part of our national security fight and if you bring us this information in the form of blowing the whistle, you will be rewarded.
The US public is saying, you go. You go find those yachts. You go find those people who are doing business with those that are not in the national security interest of the United States and we'll support that. That's, in my mind, just a huge psychological change. Susan, I know you have written and said more about whistleblowing and how to treat whistleblowers than about anybody and I know this is something that you've been talking about for a long, long time, but I really see this as a true shift in the way whistleblowers are thought of in the United States.
Susan Divers: Well, I'm glad you brought that point out because I think that's true. Tying it furthermore to the impact of corruption on national security, I think is an idea whose time has come and we're going to do a whole other podcast on that as part of this series so I won't get into it a lot. But the concept of corruption as a victimless crime has been around as long as I've been practicing, which is a long time. It's not a victimless crime. I don't need to convince you. But it basically corrodes good governance, it corrodes social structures, it makes it harder for the poor. I mean, if I can go bribe my way, get a MRI ahead of everybody else in some less developed country, I'm jeopardizing the other people who can't afford that in that country and I'm also corroding ethics and good governance, but it hasn't been seen that way in the past, either by the government really or in the corporate community, and so we'll get into that more in the next podcast.
But that's fascinating to tie the whistleblowing into that and it has the additional benefit of being true, if you will. I have to say, I love the image of the yacht hunters. It's one of the first things I read when I open The Wall Street Journal in the morning to see if there's some oligarch's yacht that's being towed away or whatever, but it's definitely an idea whose time has come.
Tom Fox: For those of you who think our ever new ideas, I think if you look back in history, that was called piracy and or rading by English-
Susan Divers: Letters of marque.
Tom Fox: Yes, exactly. Letters of marque. It's an old concept, but it's equally valid today.
Susan Divers: Well, let's close off this session because we're going to do another podcast and talk more about anti-corruption and sustainability. But one of the things I was curious about is how does all of this tie in to the level of transparency that we're seeing in international trade, in commerce? Our chairman of the board, Dov Seidman, whom I know you know of and know has written a lot in the past about radical transparency and how does that tie in to what we've been talking about?
Tom Fox: Susan, let me go back to 2015 and the Volkswagen emission testing scandal. I read a speech by the head of the German Manufacturer's Council, so the German trade group for manufacturers. In that speech he said, "The answer is compliance and transparency." One, be in compliance, but two, be transparent about it. That is how we, as a German industry, will get through this. Volkswagen has done what they've done. We can't stop that or do anything about that, but we, the rest of German manufacturing, can be in compliance and can be transparent about that compliance. That really struck me at the time and it stuck with me since then.
The transparency, the radical transparency that Dov talks about is even more important in 2022 because of things like the Business Roundtable Statement on the Purpose of a Corporation. How many stakeholders are there now? Previously, there have been only shareholders, but now you have multiple stakeholders. It can be your employees, it can be your third parties. It can be those localities where you do business and that's where that radical transparency is so critical because they may not own shares and they may not be able to vote, but they can vote with their pocketbook. The radical transparency allows you to demonstrate to stakeholders who are going to vote with their pocketbook that we do business ethically and we are in compliance, and that you can and should do business with us because our values are what your values are. That's, to me, the power of radical transparency and it's the ability to demonstrate to those who are not regulators. Because remember, if you're fined for a regulatory violation, that's seen as a below the line sunk cost. Just the cost of doing business.
Tell me how much my fine is and I can reserve for it, whatever it is. What I cannot reserve for is if 5, 10, 25 or 50% of my customer base chooses not to buy my products because I've been found to have violated sanctions or I've been found to have used Uyghur labor in product site sourced out of China, or you name the issue. That's not a bottom line cost. That's a top of the line cost. That's a cost you can never get back because you can't reserve for non-sales. It's a cost you can't anticipate, you can't reserve for, you can't mitigate the risk because once you don't have sales, you don't have sales. To me, that concept of transparency, that concept of doing business ethically, in compliance and that concept of radical transparency all really protects you and allows you as a corporation to say, "This is what we stand for. This is why we're proud to sell a product to you and hopefully, you're proud to buy a product from us."
Susan Divers: Well, you're right and that really tees up the heart of sustainability. Sustainability isn't one giant checklist after another. It's what are we really doing and how are we doing it? What you're also saying too is, and it ties with things Dov said in the past, that we live in an age of radical transparency where anyone can go on Twitter, I guess, if they pay the $8 now or post on Facebook or Instagram or wherever and expose concerns. And with the incredible increase in sanctions and money laundering controls, it's just a further reason, if anyone needed one, why you have to get your house in order and you have to make sure that you are dealing with those risks effectively and of course, walk the walk as well as talk the talk.
We are running out of time, unfortunately, but I'm excited to mention again that we're going to continue this conversation in an upcoming podcast. It's been such a pleasure having you today, and I know we could keep talking for another couple of hours, but we'll have further opportunities in the future.
Tom Fox: I always have way too much fun when you and I sit and chit chat, whether it's over a lunch, a coffee, or a podcast, so thank you, Susan.
Susan Divers: Oh, I feel the same way, Tom. My name is Susan Divers and I want to thank you all for tuning into the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance and global organizations by helping them foster winning, ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts or wherever you listen. And don't forget to leave us a review.
Training presents an opportunity to not only educate workers, but also inspire their growth. But how can you do that in a way that feels energizing rather than exhausting? On this episode of the Principled Podcast, LRN Learning Manager Leah Hodge explores how to create engaging training with Rachel Donley, the Head of Learning & Performance Enablement for the KFC US market, a division of Yum! Brands. Listen in as the two talk about KFC’s Shift Supervisor training program, which has been receiving lots of industry recognition—winning gold at this year’s Brandon Hall Awards and being selected as a finalist for the Learning Technologies Awards—and improving leadership capability across the KFC US system of restaurants.
Featured guest: Rachel Donley Rachel Donley is a learning leader, instructional designer, gamification proponent, and strategic business partner. With 13 years of experience in the learning industry and 22 years of experience in the retail and food service industries, Rachel’s learning solutions have earned eight Brandon Hall awards. She was named a 30 under 30 Learning Leader in the inaugural Learning 2010 program and awarded the Brandon Hall Rising Star Award in 2017. Rachel holds a Master of Education in learning design from Bowling Green State University in Ohio and currently leads a team of seven to deliver learning and performance solutions to KFC’s 4100 US-based restaurants.
Featured host: Leah Hodge Leah Hodge brings more than 17 years of instructional design experience to the corporate learning and development space. As a learning manager and expert in strategic partnerships at LRN, she fosters relationships with clients to analyze their training needs with an eye on elevating the learner experience. She is passionate about designing and implementing creative bespoke solutions that get learners excited about their development, taking them on a journey beyond just checking-the-box completion—including blended learning, gamification, video and animation, and onboarding learner journeys.
Principled Podcast Transcript Intro:
Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.
Leah Hodge:
Training presents an opportunity to not only educate workers, but also inspire their growth. But how can you do that in a way that feels energizing rather than exhausting? Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Leah Hodge, learning manager here at LRN. And today I'm joined by Rachel Donley, the head of learning and performance enablement for the KFC US market, a division of Yum! Brands. We're going to be talking about KFC's Shift Supervisor Training program, a project that we worked on together. And the whole program has been receiving lots of industry recognition, winning gold at this year's Brandon Hall Awards and being selected as a finalist for the Learning Technologies Awards. More importantly, the program has improved capability across KFC and their numerous franchises, setting the foundation for a new global best practice. Rachel, thanks for coming on the Principled Podcast today. I know there are lessons for others here and I'm excited to share your story.
Rachel Donley:
Awesome. Thank you for having me.
Leah Hodge:
Great. First question, for those who aren't familiar with this KFC story, let's start at the beginning. What were the business needs supporting this training?
Rachel Donley:
Yeah, thank you. Great question and I think it's really important to start out by understanding a little bit more about the shift supervisor role at KFC. Now, this is our entry level management role for the restaurants and a majority of higher level restaurant managers get promoted from within, from the supervisor role. So this junior hourly manager not only leads the teams during each shift, but they're in charge of everything that happens in the restaurant, including guest concerns, overseeing guest service and really culture, the team member experience. They really set the tone and really impact the culture on each shift in the restaurant. So this shift supervisor role really sets the foundation for KFC's management skillsets and capabilities throughout not only this role but for all future roles these shifts may be promoted into. So knowing that overview and background about what we're trying to accomplish for these roles in general, there was really a few other things that drove us to tackle and go after this training curriculum.
The one was we simply needed a new one. Prior to this training rolling out, the only KFC corporate-provided training for shift supervisors was a very outdated, lengthy, really like old-school, 30 plus minute e-learning curriculum. And so there wasn't a lot of real-world application.
And so it was very important and very needed that we updated this content so that not only it was more relevant, but it was also fits the modern learner. So I think that's the second piece and business need that we had here. Was to really look at our shift supervisor population today and say, "What does our shift supervisor demographics, generations, and the current industry across our restaurants, what do they really need? What does our modern learner need?" Some of that is based on research just across the board for current modern learners across any industry. And then some of that was really specific to the restaurant setting and really needing to grab their attention quickly, making sure that we're flexible, that we're mobile so that we can make sure that this shift supervisor role that gets pulled in many different directions when they're in the restaurant, also has a way to learn that fits what their everyday experience is in the restaurant and it makes it easier for them to learn as well.
We also had a need with this training and one of our goals was to create consistency across our different restaurants. Because the older LMS 20, 30-minute e-learning courses were so outdated, KFC did not mandate that anyone was taking it. And this really resulted in a very inconsistent training and skillset building experience across our systems. A lot of restaurants or larger franchisees had created their own shift supervisor training programs to fill that gap, but some of the smaller organizations or some of the ones without those resources really didn't have a lot of training available.
Now at some of our smaller organizations and restaurants, they may not have the resources or the necessarily ability to be able to craft their own training programs to fill the gap. And so again, this was driving a really inconsistent capability across our shift supervisor population. So one of the goals with this was not only updating, meeting the current learners where they're at, but also making sure that we were really level setting those foundational skillsets, behaviors and core competencies for shift supervisors across the entire US system. Regardless of which restaurant you're at, every shift would receive the same basic set of skills to make sure that they can be successful in role.
And then I think the last thing is just like with any other training that we provide at KFC US, we also want to make sure that we're looking at business metrics and are we making a positive impact on the things that we would expect this learning to help drive? And so for shift supervisor, because they touch so much of our restaurants and so many of the pieces of our operations, we're really looking at how is this increasing like team member and restaurant engagement and culture? How is this increasing worker performance across different guest metrics and what's that meaning from a culture turnover and people perspective?
Leah Hodge:
Thanks for that Rachel. We really had a lot of goals to achieve with this training and I think we achieved that definitely. And so what I'd like to do now is dig into those design principles that were behind the Shift Supervisor Training. And I love... I'm biased. I love that the one outcome we had was that simulated game. Can you talk about how KFC chose that format?
Rachel Donley:
Yeah, absolutely. That's my favorite part as well. I think games and simulations in general just allow us to provide a level of behavioral practice that really isn't... can't happen and it needs other type of like LMS delivered learning context. If anyone's familiar with the KFC US system, we're across the entire country, different time zones, close to 4,000 restaurants, and we just don't have necessarily the setup to deliver some kind of simulated experience and hands on, a face to face across the system. So when we're thinking about delivering something that's scalable and can be taken at any time by anyone in any time zone, we're really looking at something that's through the LMS and really games and simulations let us get as close to the learner environment as possible and really simulate assessing and letting the learner practice what they've learned in a safe and controlled environment.
Now, we'll never specifically match an exact restaurant set up layout or experience in the game in a simulation, but we got really, really, really close. And this is so important, we all know from a learning transfer perspective, it's really important to make the learning and have them apply what they learned as close to the real world as possible. And I think that it just cannot be understated how much games and simulations can really be a force to seed what people have learned, start to apply it before they get into an environment, well, that has a lot going on. And especially if you think about shift supervisors, they're managers, they're leading a team, they're leading guest experience. We would much rather at KFC US, we would much rather have our shift supervisors learn, fail and try again, and practice in a game and a simulation environment than do that in front of a team member and a guest when that can really impact one of their experiences.
So it's super important for us, the kind of gaming methodology and something we really, really lean into. It also allows us to track the experience as well. So again, we need something scalable. It's hosted on our LMS. It only marks complete if they pass the game. And it is quite challenging for a reason because this is where we want to again, really push them and have them start to apply some of the behaviors they've learned. But again, it lets us track that on our operations scorecard. And so when we report on our completion metrics, not only are we reporting on did they take this course, but we're also reporting on did they pass this assessment, essentially is what the game is, and demonstrate these skills and behaviors to the maximum that you were able to do in this gamified environment.
Leah Hodge:
I agree, we achieved a lot with this simulated game. And if you think about it, it can be so daunting for somebody stepping from a team member role into their first leadership position. And to have that opportunity to practice in a simulated environment had to really help them feel more comfortable as they stepped into their role and stepped into the restaurant and their new role. So you talked about some of the learning elements that you prioritized for this training. Were there any other elements that come to mind?
Rachel Donley:
Yeah, and I think when you're designing a game, a simulation, I think what we designed was both really, it was a mix of the two. There's a lot of different decisions and approaches you can take and a few things come to mind that we really focused on when we were making this to make sure our ultimate goal of providing as much challenge in practice to the learners as possible was achieved. And so one of that is obviously kind of the realism. This is not a game in a sense of a cartoon or going through a Monopoly game board, although I think there's use for that too in some situations. In partnership with you, Leah, we built an actual restaurant environment in this simulated game. And so our learners are walking around in a form of the restaurant in both the back of the restaurant where they cook things, and in the front where they interact with guests, and outside where they interact with our facilities and our guests also in the parking lot.
So it was really important that we made this really as much as we could feel like, "Yep, you're on shift, you're in the restaurant, let's do this." Part of that ambiance was also using some different elements to create this almost immersive experience. We used music and sound effects to bring to life some of the nonverbal or not overly avert things and triggers that you have when you're in any environment. Like the clock strikes three o'clock and you hear a fryer beep, and those are things that in the real restaurant helps shift supervisors and the team know that it's time to do something or take action.
Well, obviously in our simulated environment, we needed to make sure that the learners had those non-overt triggers as well so they could make decisions just like they would in the restaurant. So we use sound effects, music, we use character movement as the teams are moving around throughout the restaurant so that they would get those clues or, "Oh, the cashier needs to talk to me. She just walked up to me." We used a clock to track the time because in a busy restaurant environment, a lot of actions and decisions are based on time as well. So that really helped to really ground the game into what we were trying to accomplish realistically.
And then as you know, we broke it into three levels to make each level progressively more challenging. Because we had such a large scope of what we wanted to assess and let the learner practice, that allowed us to break it up, gradually get more and more difficult as we went, but not overwhelm the learner. And I think it also in level one, the first level, I think it also really helped them to get used to the game environment too. They were like, "Okay, this is where I'm at. I've kind of practiced. I know how to move around. I'm ready to go."
Now, one of the other things that we looked at was the scoring, which I think brings in the gamification elements as well. Just like in a real restaurant, decisions that a shift supervisor or other manager make have consequences. So we used scoring to simulate the consequences. Now that maybe a recognition as in like, "Yep, you made the right decision." If you decided to cook the right amount of chicken, then your score went up. And so that was not only a level of realism and to help the learner understand the real-world implications of their decisions, but it was a way to also provide feedback. And again, that could be great feedback. Yes, you answer the right question. So we really didn't have that traditional, "Yes, that's the correct answer." It was, "Oh great, my score went up. Great. I did answer that question correctly. I'm getting the hang of it."
And in some cases they made a poor decision and their score went down. And I know we waited those quite a bit, depending on the real-world severity. If there was a decision that led to a safety concern, they almost failed the game right away. Whereas if it was kind of a minor in the real world, you could really recover from this decently easily, then the scoring impact wasn't as weighted. So again, we're trying to really help the learner understand those real-world consequences of their decision making. And that also really lent itself into the real-time feedback. We know that learners learn best with active participation and experiencing it and getting feedback. We know they learn really well from trial and error and failing and learning from your mistakes. And so we really thought through in the simulation games, how can we make sure that the learner is still immersed in the experience but fully understands what their decisions or the upcoming decisions, what those impacts have, what their feedback on their performance is, where they're doing well, and where there might be some opportunities for some additional learning for them.
And I know we built that into the feedback not only throughout the course where we would have exclamation points pop up or a mentor character would pop up that says, "Hey, okay, we need to make sure we focus on this." But I know we were really specific too in the end of the game, especially if you did not pass. Because again, it does not mark complete unless you hit a passing score. But depending on how low below the passing score they went, we provided some more specific direction of, "Hey learner, you may want to take a look at this and this. Talk to your coach about it, think through it a little bit more and then play the game again because these were the areas that you struggled with today."
I think the last thing that I want to call out that we also really looked at was this blended learning approach. I know we're talking a lot about the game, the simulation specifically, but all around this game is a really blended approach of e-learning courses, infographics, videos, mini games that I would almost kind of say are more knowledge check. There was a very large amount of time spent in this learner curriculum, is on discussion activities and practice shifts with their coach in the restaurant. So even though we have a really robust amount of things that we're delivering at scale for every restaurant, there's really a lot of weight in this curriculum on that hands-on practice and learning alongside your manager or another trained shift supervisor. And as you said earlier, it's really all about getting them prepared to be in the restaurant. So really what we're doing throughout this blend is getting them closer and closer to being able to do this on the job on their own.
Leah Hodge:
I think that's really so many elements that went into the development of this training. And I think that's a good call out too at the end about the blended learning approach because they go through so much robust blended learning to prepare themselves for this new role. And the simulated game was almost like a culmination of everything they learned and it was their last step on their journey before stepping into their role. They're testing themselves through this game, but also, I see it as a reward and an opportunity to get really excited about the role before stepping into the role.
The next question I have for you is, I mentioned at the top of this episode that KFC's training has not only received industry-wide recognition, but also improved training across the business significantly with this program. What results stand out to you as signs of real success?
Rachel Donley:
Yeah, well, I think one of them that you mentioned is industry recognition. Obviously we're really jointly proud of winning two gold Brandon Hall Awards for this learning curriculum. Most recently games and simulations in 2022. And then of course best custom content in 2019. And obviously we've maintained and kept up the curriculum between that as well. And then obviously being really proud of being a finalist for the Learning Technologies Award too.
I think more specific inside of the KSC system, there's a few different areas that I would say are really good successes and wins for us. I think most immediately were like, do our franchisees, do our partners out there in the field and our shift supervisors, the learners, are they feeling like this is meeting their needs? Is this serving what we set out to start to do? As some may know, KFC's about 97, 98% franchised. So the restaurants that we own as a corporation is a very small amount of the KFC restaurants that you see across the country. And so we really partner very closely with our franchisees. We have franchisee advisory boards, we meet with them regularly and they help us to craft what some of our strategies are going forward.
When we asked our advisory board that supports learning about not only this program but the outcomes, some of the things they said were, it was a breath of fresh air, they were excited to launch it. They said their shift supervisors in their restaurants are feeling like this is really an investment in them and their growth. And if you think about how much team member engagement matters to our business bottom line, that's huge to get a whole population of leaders to feel that way. And the teams like how we've paced and sequenced this training schedule. So there's more self-directed deadlines to hold themselves accountable. It's really focused on that in restaurant shoulder-to-shoulder piece, is kind of the bigger bulk of this training schedule. So they're feeling like it really fits them. And so I'd say that that lets us know that we really hit the mark on that. Meeting those shift supervisors with what they needed and making sure that we fit the modern learner that's in our restaurant.
Now I also think that there's some data we could look at that says, has this been a success? And I would say that it has. Not only kind of when we first rolled this out, did we have franchisees really starting to adopt this training and starting to use it. So now we're starting to see that there's a really consistent learning and skillset foundation across our restaurants. Remember some franchisees were doing their own thing, some didn't really have a lot of resources. We started when we first rolled it out to see really wide adoption. And one of the results of that, and one of the benefits was that we were able to add this to our operations scorecard.
Now we have a scorecard for each restaurant that basically holds in some of the key business metrics for them and it lets each restaurant know how they're performing and maybe where they have opportunities for growth. Obviously there's guest experience metrics on there as well, but one of the metrics we have is a training metric. So have you completed the training that we know is going to be beneficial to the roles in your restaurant? And because of the success of the launch, because of the wide-scale adoption of this, we're able to get this training added to the scorecard. And what that really sends is a really strong message to the business that alongside of some of these important guest metrics is also learning.
It's also like taking this training is going to be so beneficial to the running of your restaurants and the ultimate success of your guest experience and your teams, that we're actually saying we're going to start tracking it and requiring it for everybody across the system. So that was a huge win. Let us get more visibility and start to compare that to some other metrics as well. I talked a little bit about how shifts touched so much across the business that we would expect to see some guest experience metrics, maybe some engagement impact as well. And we've started those correlations and we've definitely seen a positive correlation between several guest experience metrics and team member engagement metrics and the completion of this training. So that's a huge win too, to show that really the time and the effort that we all put into making this the best training we could for shifts is really paying off in a business in a really very specific business way.
The other thing that I'll mention that I think was a really big win and positive impact on our business is this curriculum was the first time that we did almost like a learner experience platform, if you will. And I don't want to say that it was fully to bright, like maybe some of the other learner experience platforms people are used to. But it was the first time really KFC US looked at our LMS and said, "How can we have, when the learners come in, a different experience than the default LMS experience? And how can we make it super clear that all of these blended things, because again, not all of it is in the LMS, how can we make it super clear that how we recommend you take these blended things? In what order?" And really take some of that burden off of the manager and the trainer and put a little bit on the learner that it's so easy to navigate through this and know what to do at what time, that I'm not continuously needing to ask my coach, my manager, my trainer, what to do. So I think that was a really big win and a really good jumping off point for other curriculums too.
We now have a completely different learner experience when they go in to take training across all of our curriculums, not just for shift supervisor. And this was really the curriculum that led us to stop, pause, think about that, pilot that very different way of engaging with learners when they first log in and let us get some feedback. Let us hear that that was really something our learners valued and let us to kind of expand that across the business, across the rest of training.
Leah Hodge:
I think that's really exciting how you were able to get the franchisees buy in and get them excited about it and how the popularity of that LMS learning page has taken off. And so that's a great segue into my next question and that is, how would you say KFC's training has evolved since launching the Shift Supervisor program? Are there any recent developments that you're excited about that you can share with me today?
Rachel Donley:
I think one was definitely the learner experience really shifting. Since then, we've been able to not only do it on a smaller scale for individual curriculums, but we've switched some of our learning ecosystem technology in the backend and that's allowed us to merge our learner experience platform with our internal communications platform. And so instead of having one place for everyone to go to get their news and communication and resources and another place to go for learning, the LMS, now everybody just goes to one place, one source of truth. And this has completely revolutionized the learner and quite frankly, the restaurant employee experience. It's made it so much simpler for everyone to know where to go. It's made it simpler on the backend as well from reporting and maintaining systems. So I think that's a journey that really started with Shift Supervisor and is been just like I said, completely changed how learners interact and made it so much more user friendly for our teams.
The other thing that I'll mention that's really exciting is this Shift Supervisor model, this blended approach mixing different types of modalities, including games and simulations, including on the job hands-on type of practice, it's become the foundation, the model for all of the leadership training. So we just recently launched an AUM and RGM training curriculum, and that is for the next level of leaders above shift supervisors. So if they were going to move up in the business, that completely matches the model for Shift Supervisor, the flow, including the gains and simulations. It was so successful and it did such a great job preparing our shifts for their role that we were able to transfer that learning and transfer that model over into really the next stage of leadership learning. And I anticipate that we will continue to do that as we go forward and modify and maintain these curriculums.
I think also prior to shift, we had dipped our toes in the gamification area and simulations, but this was the first time we really, really leaned on it heavily across a good part of a curriculum. And I think it was almost a way to get our system for the first time really utilizing games and simulations in a bigger way for learning.
And so what I think it's also done is created an appetite for more. We recently did a learning listening tour across our system just to level set and make sure that we know what's working and maybe what we need to work on as a learning function. And one of the biggest call outs from it was, we want more games and simulations. So it's no surprise right to us, but our teams like to take training that they also enjoy. And so I think it's also created some validation and really like a new platform. So when we go back to start a new curriculum or talk to our franchisees, when we talk now about, "Hey, we really want to lean on gains and simulations," there's really no discussion anymore because everybody knows how value added that is and how much our teams really enjoy it. So I think it's almost created a due standard of learning for KFC as well.
Leah Hodge:
That's really amazing. And I know that the two of us we could spend all day talking about Shift Supervisor Training and how it's been scalable for assistant manager, the AUM role, RGM roles, but unfortunately we're out of time for today. So Rachel, I just want to thank you for joining me on this episode and congratulations again on delivering such an impactful training program to the organization. I hope we hear more from KFC soon.
Rachel Donley:
Thank you. I appreciate the conversation today. And thank you Leah and everybody over there for your partnership on this.
Leah Hodge:
My pleasure. My name is Leah Hodge, and I want to thank you all for listening today to the Principled Podcast by LRN.
Outro:
We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance and global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more, and if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen, and don't forget to leave us a review.
In September, the Department of Justice Fraud Section announced a new policy direction on corporate misconduct, clearly stating that personal accountability for employees, executives, and directors was their number one priority. The revised DOJ policy clearly states that an organization’s compensation and benefits program must be aligned to its values and ethical culture. So, what does this mean for compliance? In this episode of the Principled Podcast, host Susan Divers discusses how to implement a meaningful performance management system that meets DOJ objectives with Stephanie Ragan, a Certified Compliance and Ethics Professional (recently of SOFEC) and now solo practitioner after 14 years as a compliance specialist and manager in the oil and gas industry.
Featured guest: Stephanie Ragan As an experienced, well-rounded compliance and ethics specialist, Stephanie has recently struck out on her own by launching Ragan Export Compliance, a consulting company focused on providing services and guidance for regulatory compliance. A subject matter expert in trade compliance for the past 10 years, she holds both a Masters of Science in Regulatory Trade Compliance and a degree in International Trade Management. Her credentials include special certifications as a Certified United States Export Compliance Officer (CUSECO), a Certified Compliance & Ethics Professional (CCEP) and an FCPA Expert (FCPA Blog).With a passion for developing efficient, integrated and automated compliance systems and programs, Stephanie’s philosophy is that the intentional integration of compliance and ethics elements within an organization is at the core of every successful business model; and through making compliance accessible and approachable to all stakeholders, the value of a company’s culture is significantly increased.
Featured host: Susan Divers Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Susan Divers: Last September, the Department of Justice Fraud Section announced a new policy direction on corporate misconduct. And they clearly stated that personal accountability for employees, executives, and directors was the department's number one priority.
And as part of that, the revised policy that DAG, Lisa Monaco put out that day makes clear that an organization's compensation and benefits program must be aligned to its values and ethical culture. That means that positive behavior, for example, turning down a tainted business opportunity should be an essential factor in evaluating performance.
And that there should be financial penalties, real financial penalties for misconduct. So what does that mean for compliance professionals? Hello, and welcome to another episode of LRN's DAG, Lisa Monaco. I'm your host, Susan Divers, director of thought leadership and best practices at LRN.
Today I'm joined by Stephanie Ragan, a certified compliance and ethics professional, and most recently of Sofec, an oil and gas provider that's global in its operations. Stephanie has just left Sofec and is now consulting on her own after 14 years of a compliance specialist and a manager in the oil and gas industry.
We're going to be talking about implementing a meaningful performance management system that meets DOJ objectives and how you go about that. Stephanie, thanks for joining me on Principled Podcast.
Stephanie Ragan: Thanks for having me, Susan.
Susan Divers: It's my pleasure. Interestingly, one of the questions we ask in LRN's annual program effectiveness survey is about organizations using ethical behavior as a significant factor in compensation, bonuses, hiring and promotion. And last year 69% of the over, I think it was about 1200 ENC programs that we surveyed, indicated that they required that an employee's ethical behavior be evaluated as part of their annual performance review.
And we found that top rated programs were much more likely with 88% including such criteria. But Stephanie, as you know, with all things compliance, the devil is in the details. So I'd really like to hear about how you implemented your program that does just that at Sofec. And I'm sure our listeners would love to profit from your experience and your wisdom on this subject. So let's start at the beginning, how did you start this initiative or how did it start and how did you get support for it?
Stephanie Ragan: Well, sure. So coming from a company like Sofec, we just celebrated our 50th year and we have a lot of mature programs and some that are still coming along. And our compliance program was one of our newer initiatives. We started it in about 2011.
And it was interesting to see that when we formalized that department and all of our programs, policies, everything that helped sustain it, there was a need to measure it against other overhead type departments like HR, HSE and quality. So looking toward those types of departments for direction to see how we could measure effectiveness of programs and tie that back to our professional performance goal setting efforts that we do on an annual basis was a challenge for us.
And we decided that as the new kid on the block, we could look at what worked for everybody and what didn't. And we decided that it would be necessary to look at what weight we needed to hold within the organization for each of our compliance initiatives.
So for a starting point for our listeners, I would suggest that you look at the way your organizations measure performance. And if there is already an existing HSSEQ component or HR component, that you should also be including a compliance and ethics representation. And that should be a key area of focus for your personnel to align with your company culture and your company code and business operations.
Susan Divers: That makes a great deal of sense. And I want to pick up on one thing you said in particular, which is that the ENC program needs to have equal status and weight with other similar programs, whether it's HR or audit or security or health and safety. And that's actually in the 2020 guidance from the Department of Justice as well.
Because one of the questions prosecutors will ask or are told to ask companies accused of misconduct is, "Does your ENC program have equal status and resources?" So the approach you took fits very nicely with that. Let's talk about how you actually went about it. How did you enlist support? How long did it take? And what did you do in the end to get it up and running?
Stephanie Ragan: Well, you know it takes a village to have any kind of success. And our compliance and ethics global team really took on this call to bring compliance and ethics to the forefront, it having an equal say in the performance measurements that we do in the company.
And we were able to within the last few years, convince our management that along with performance measurement, which was a key area of concern, we needed to have regular meetings, at least an annual meeting, to be able to confer as a team globally and to discuss ideas, work on program development and get training initiatives ironed out.
Kind of plan out our year as a whole so that globally we could have a cohesive plan that aligned everyone, didn't leave anyone behind from a planning standpoint for all of our entities, and made sure all personnel were covered by local compliance and ethics designees that could administrate and cover those programs as we rolled them out.
So this was very well taken on. And again, we leaned back into HR and HSE were having these types of annual meetings and conferences internally in the company. So we wanted to say, again, we need to make sure compliance and ethics is represented. It was well received and management was very supportive.
So in 2019, we had our first global gathering. And at that point, we all discussed how we measured and where we had gaps in measuring those compliance and ethics performance areas. And we figured that the global initiative of tying it into your bonus, your compensation that's measured annually by HR, that we needed to partner with them as well.
So we were able to utilize the great guidelines that were out by the Department of Justice that came out in 2018, 2020. And then similarly, we had more guidelines come out again this September. These types of guidelines were helpful in getting the highest levels of buy-in. So using that as leverage, we were able to place value on measuring those individual participation to show evidence of a effective compliance program. And we were able to also work with legal.
And I think that that's something that anyone who's struggling with finding a way to tie their individual performance metrics for users to compliance and ethics, that having your legal team work with you, if that's not already part of your compliance and ethics team and working with HR to jointly explain to senior management why the Department of Justice guidelines are so helpful and necessary to pay attention to.
No one wants to have those types of individual penalties pointed back toward them. And letting them know what the enforcement and penalty details could entail, it can be a little scary and overwhelming for them, but it lets them know the weight of importance. So moving on, our CNE team wanted to then, after we had our senior buy-in, determine specific ways to quantify a compliance and ethics participation that was acceptable.
So we developed a way to be able to measure and do a cumulative total for each employee throughout the year. And with the help and guidance of our compliance council, our general compliance council, which oversees all of our compliance and ethics initiatives from a senior level, and our chief compliance officer who's over our entire group, performance matrix was developed.
So we determined what KPIs and metrics were most valuable to our company and also how participating in training and completing mandatory training assigned on time or early would be a key indicator that our personnel were engaged in in meeting their CNE goals.
Now that was our initial concern that the training and focusing on training, on time training completion wouldn't be enough, but that's a great baseline. So if you are not measuring that, start there. And we also decided though that's a minimum expectation, that other avenues of participation engagement could then be easily added.
This was a chance also for our CNE team to promote all of the tools and the outreach that we had been developing to engage individuals in our annual Compliance Week program, our local newsletters, which we could insert quizzes and different activities for them to complete, optional live and virtual training sessions, surveys, quizzes, and use of compliance videos and slides in their operational meetings and team meetings.
And then it gave us an opportunity also for people that really went above and beyond to be recognized and have that tied back into their performance goals as a metric to, so our compliance champions who always went above and beyond, or personnel who brought forward potential compliance and ethics issues that were helping make formative changes to our program could also be recognized.
That sounds like a lot to keep track of and could be really overwhelming for our listeners that have a new compliance program, limited resources, budget constraints, but there are a lot of great tools and support out there like LRN that is a great content provider and provides support with measuring that on time participation and a lot of other value that you can add into your program.
Let's face it, at a minimum, any functioning compliance program is at least checking the box with mandatory compliance and ethics training like anti-corruption or your company code training, general CNE program awareness. So if you start with training as your first building block to measurement, it'll be less of a shock and easily accepted because your population and your personnel are already participating in those training initiatives.
Susan Divers: That's a great story. And the way that you worked with other people in the company to identify where you were going to start with the criteria I think is very powerful for people who are grappling with this subject.
And I know it's not just companies that are new or small, it's an area that I think a lot of people are still trying to chart their way. And also using the Department of Justice guidance strategically to help management understand why this is a risk that really needs to be managed.
I think there is emphasis when you look at the guidance, it's important to realize that it's out there in part to help people like you and your team actually implement it by putting it under an official seal, if you will. So well done. Hey, tell us now, how is it working and are there any tweaks that you would make at this stage?
Stephanie Ragan: Well, the great news is we've certainly seen improvement. So we've seen results of greater participation across the board in all of our areas. So whether it's people participating in Compliance Week because they know it ties back to their performance or they attend training that they would've otherwise blown off or not considered taking because it wasn't mandatory.
And that is really energizing us to continue to grow the program and continue to find ways to reach people. And we've seen a lot of participation because of this initiative of tying it to performance goals in areas and regions where maybe culturally it wasn't important before to participate in compliance and ethics initiatives.
But now they understand because they have something that's tangible material that ties back to their actual individual performance and they want to succeed in that area. So in general, it's helped us create different types of communications. We've been able to go and create management reports to provide managers live specific data on how each of their team members are performing throughout the year.
Some managers reach out for that quarterly or semi-annually, but everyone reaches out for it toward the end of the year when they're wrapping up their performance evaluations. And it's great to have that kind of tool. So I do recommend that you work on creating something as simple as an Excel spreadsheet that can start capturing data to keep good records regarding the performance of your personnel.
And also, if ever you are audited by a government authority, it's a great tool to provide your training records and say, "We're not just checking the box, we are going above and beyond by tracking every engagement with compliance and ethics." So also following that, we're able to use those participation records to quantify a score for each person.
Now, it doesn't necessarily have to be a numeric score. Some companies may want to do it that way. We aligned with what our HR teams were already using, which is kind of a scale one to five, either unsatisfactory and then failed to meet expectations. You either met expectations, exceeded expectations, or you did outstanding work.
So because that was already in use in our system, it was a language everybody understood and we created what fell into each category for our measurements on the compliance and ethics side. And again, we don't have to reinvent the wheel, you can use what you have and work smarter, not harder. But tracking the progress is really important.
So if you can assign something that you can put a value against, then you can develop statistics over time and track trends within the organization. We did have a lot of discussion across the board about how much weight should be given to compliance and ethics performance compared to HSE or HR.
So again, we fought to have equal footing because we preach in our company code of, we have a culture of compliance, we have our compliance code that gives guidelines on how to operate in every aspect and provides best business practices for everyone. So there was no reason to sell ourselves short or give ourselves a discount and say, "We don't want to be considered equally."
Even though some companies may need to tweak that based on what their own business practices are, it should have some alignment with your culture and your code. And that way people understand it and can buy into it on an individual basis and an organizational basis.
So looking forward in 2023, and this is largely in response to the new DOJ guidelines that you mentioned earlier, which came out September 15th, that does focus a lot on enforcement. So again, we have that leverage to push and say, "This is important. You don't want to be in trouble because this is how it can affect you as an individual."
And that does garner a lot of attention and response from senior management, which is great. We don't want to scare anyone, but we want to make sure they understand the weight of their actions or inactions. But our tweaks moving forward would include tiered measurements, and that aligns with the Department of Justice newest guidelines so that you have different measurements and expectations for managers and supervisors and executives.
And I think you should really look at that as three different categories, general personnel, people who have an influence over them, managers and supervisors, and then the people at the top. So your executives are going to be viewed differently if enforcement actions are ever taken. So you might as well prepare and have your program mirror that type of focus internally.
We also have a lot of questions that come up then from managers that say, "What are my roles? What do I need to do to earn my points or to get a good rating?" And we always encourage them to infuse and integrate compliance and ethics into their team talks, their safety minutes that they have at a beginning of a meeting, replace some of those with compliance moments.
And we make those tools available easily so that they can download it from our [inaudible 00:19:23] and they have full access to short videos, to content that we can pull from different training providers or that we've developed internally. That just makes it easier if they have one stop shopping, they can go to your compliance site.
And if you don't have that type of setup, don't worry. Companies can always make it available by emailing that out to managers and just having kind of the library available to them. And as you develop and tweak your offerings, let people know.
It's good to self-advertise within the organization so that send an email out to all of your managers and say, "Hey, we have a new video available if you want to share it with your teams." And let those managers come back to you and let you know how they used them and what the feedback is, because that's just going to help build the program and continue your process improvement.
As the DOJ recommendations indicate, effective compliance program always points to individual emphasis for that compliance and ethics participation and compensation. And I think we can agree that those personnel who embrace and make an effort to incorporate compliance and ethics into their work are more likely to report potential issues, be less likely to become bad actors by breaking rules intentionally or unintentionally. And generally, they're going to support the best practices and the compliance and ethics program in the organization.
Susan Divers: Well, we would certainly agree with that. And our research at LRN shows overwhelmingly over the years that I've been here, which are now six, that a culture of compliance that involves employees at as many levels as possible and helps them by giving them materials, you mentioned making it easy for managers to talk about ENC, that that is the best defense to misconduct and it's not how many times you reinvent in your code of conduct.
But I do want to mention one other thing that you talked about early on, which is data points and having something that shows exactly where a particular individual is in their ENC journey, whether it's training or touchpoints. We've actually just redone major parts of our platform and we're very excited about it because there's a part that we're rolling out this month called Reveal, which is advanced data metrics from the training experience.
And it shows what courses, what subjects people struggle with the most, how much time employees spend on a given subject and a lot of other very relevant data. It's very powerful and it allows you to benchmark against yourself and against other companies in your area. That's something everybody is very focused on.
And using that in conjunction with your performance review system can really drive change. And then I'd also mention managing that data is important. We also are including a tool that we've had for some time called Disclosures where we're asking people to tell us when they attest to the code of conduct or when they roll out. You can use it to track how many times they roll out an ethical moment or other times when they talk about ethics and compliance.
So the idea is to make it as easy as possible for the compliance team to track that. But we're starting to run out of time, so I want to talk quickly about what are the pitfalls. Because obviously this is a terrific program that has gained traction and is broadening and improving as you go along. But what are the pitfalls to avoid? And then I want to talk about your new company and your new initiative too.
Stephanie Ragan: Well, first of all, the biggest pitfall that you can have is to not do anything or to be stymied and overwhelmed. So don't overthink or over design any initial measuring system. Remember that look to the offerings and tools that are made available to your personnel already. So start with finding the easiest way to measure what you're already doing.
And you can always scale up as part of your continuous process improvement efforts. And then again, as you saw for development of our program, we could not have done this if we had worked in a silo. You have to engage and partner with HR and other stakeholders in the organization to find a way to infuse that measurement of your ethics and compliance participation.
And be sure to include that there is a way to acknowledge excellent contributors. Because that drives people and excites them to participate more. So it can be an incentive for good behavior and make it specific to a task or event that's not evergreen. You can change this around and continue to improve it as years go on and set goals for your compliance and ethics team to be able to continue to develop every year something different to bring more users on board.
Susan Divers: That makes a great deal of sense. And again, congratulations. That's a major accomplishment. And it sounds like the program was very well designed for your business and your particular culture and your risks. So let's turn to the future now with your own business, Ragan Export Compliance.
What kinds of clients will you be aiding in the development of their ENC programs? I know you have deep experience in the oil and gas industry and are a certified FCPA expert and have the export control function as well. What are you going be focusing on and what risks do you see developing for exporters in particular as they seek to adhere to the DOJ guidance?
Stephanie Ragan: Well, thank you for asking about that, Susan. At Ragan Export Compliance, I'll be providing trade compliance support and guidance focused on export or import compliance plans. And large focus now is technology. So we'll be helping develop technology control plans.
And also because I do have a background coming from the last five years of doing the certified compliance and ethics professional from SCCE, I also can help develop the corporate compliance program enhancements for any industry, which can include developing training programs, conducting training, auditing, risk manages, strategies, due diligence and screening ,vendor management systems.
And if a system needs overhaul, that's something that people sometimes forget. They develop a compliance program and then put it on the shelf, but it really does need continuous review, especially in the light of recent and constant regulatory changes and updates.
To get back to your question about what risks do I see developing from an export angle, I do see two areas where exporters can pay additional attention, especially considering the current international policies and issues that are going on in the world. The enhanced due diligence is needed now as part of your program to identify military end users or MEUs.
And this is primarily in China, Russia, Venezuela, and Burma. But it's a good habit to get into looking at that and incorporating, identifying military end users and uses as part of your, know your customer and screening system for your full supply chain. And then the second area where there can be some additional attention paid would be that your program includes a really strong level of control for not just your physical shipments, but technology.
That's a blindside for a lot of exporters, importers, and just USPPIs in general because they don't realize how wide the definition for technology is when you look at the regulations. So for example, the EAR definition of technology for Department of Commerce for controlled technology is any specific information that relates to development, use or production of controlled items, those technologies would also be controlled.
So pretty much any information that relates to those items, because the development use or production is so broad. And the ownness of that comes back to the exporter. Whenever regulations are vague, it puts more pressure on the exporter to understand and have systems in place to be able to address potential violations.
And then because of regulatory changes, a lot of stagnant compliance programs can be a real risk for companies because they may not realize it's something that they have always been able to export. For example, certain valves or stainless steel items, things that were pretty innocuous for a large part, didn't need licenses up until recently when regulations changed.
And now they fall into this large basket categories like 2B999 ECCN numbers, which I know might sound scary and very technical to people listening that don't have a real firm grasp on the ECCN, but there's a lot of guidance out there, and that's what we hope to provide and be able to help navigate at Ragan Export Compliance.
So finally, just in general, I would say that my advice to our listeners today is just to continually evaluate your compliance program and make sure that your CNE engagement measurement that we've discussed today become truly effective ways to ensure that your organization is on the path to executing best practices and avoiding any regulatory infractions. If you follow the guidelines and reach out for help when needed, you won't go wrong.
Susan Divers: Well, thanks Stephanie. I certainly agree with everything you've said and want to emphasize your point about don't fall into the trap of stagnant compliance. A lot of times I think it's easy to rely on backward looking metrics and saying, "Well, last year we trained 340 people, and this year we hope to do more."
It's important to really keep evaluating what are the new risks that we're facing, and are the procedures that we have in place adequate for those new risks? And certainly that's consistent with the guidance too. So unfortunately, we've run out of time, but I want to thank you very much for spending these minutes with us and giving us the benefit of your insights. I hope you'll come back and speak to us again soon. Maybe we can do a session on export control. And we wish you all the best in your new venture.
Stephanie Ragan: Thank you, Susan.
Susan Divers: My name is Susan Divers and I want to thank you all for tuning in to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning, ethical cultures, rooted and sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode Guidance from the US Department of Justice, particularly the recent 2020 memorandum, stresses that a company’s compliance program must reflect and evolve with its risks—and should not be a snapshot or on cruise control. But in assessing those risks, it’s helpful to see what other companies in the same area or circumstances have done to meet them. Collective action and coordination can be very useful in dealing with common risks. So, when is benchmarking and a collective approach to risk helpful? And when can it backfire? In this episode of the Principled Podcast, LRN Director of Advisory Services Emily Miner continues the conversation from Episode 6 about benchmarking with her colleague Susan Divers. Listen in as the two discuss the benefits and limitations of benchmarking, and how organizations can ensure they benchmark their E&C programs effectively.
Featured guest: Susan Divers Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Featured Host: Emily Miner Emily Miner is a director of LRN’s Ethics & Compliance Advisory services. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Emily Miner: Guidance from the US Department of Justice, particularly the recent 2020 memorandum, stresses that a company's compliance program must reflect and evolve with its risks and should not be a snapshot or on cruise control. But in assessing those risks, it's helpful to see what other companies in the same area or circumstances have done to meet them. Collective action and coordination can be very useful in dealing with common risks. So when is benchmarking and a collective approach to risk helpful, and when can it backfire?
Hello, and welcome to another episode of LRN's Principled podcast. I'm your host, Emily Miner, director of Advisory Services at LRN. Today I'm continuing my conversation from episode six about benchmarking with my colleague Susan Divers, our director of Thought Leadership and Best practices. We're going to be talking about the benefits and the limitations of benchmarking and how organizations can ensure they benchmark their E&C programs effectively.
Susan brings more than 30 years experience in both the legal and E&C spaces to this topic area with subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance. Susan, thanks for coming on the Principled podcast.
Susan Divers: Oh, Emily, it's always nice to talk with you.
Emily Miner: So Susan, before we get started, let's kind of define benchmarking and summarize the conversation that I had in our last podcast with our colleague Derek. So benchmarking means comparing what you do as an organization in this case to a usually large number of comparable organizations or individuals. And most often, this is done in a quantitative way, although there are also opportunities to benchmark qualitatively.
And at LRN, we've been using benchmarks for a number of years now through our research reports. We've conducted major panel research on the role of ethical culture in an organization and in organization's risk of misconduct. So looking at how that varies across countries, across industries. We conduct every year research into ethics and compliance program effectiveness research that you lead and that you and I collaborate on. And we've been doing that for, oh gosh, coming up on, I don't know, maybe eight years now. That's been given us a insightful look into Ethics & Compliance Program best practices, and how they've evolved over time. We've also conducted research on codes of conduct, analyzing nearly 150 publicly listed codes of conduct from the top listed companies around the world and looking at similarities and differences and best practices in that space.
But we have a brand new product at LRN that we're launching later this month that I know we're all really excited about called Catalyst Reveal, which is a platform that will, as it's name suggests, reveal insights to our clients about their ethics and compliance program, things like course level data training, data, employee sentiment, ethical culture. It will also give our clients the ability to see how their results along these metrics compare with other organizations in the LRN client universe. So looking at by industry, by company size, and a few other comparable filters.
So with that exciting launch as our backdrop, I wanted to talk to you as an expert and a thought leader in this space about benchmarking compliance programs, when to do it, when not to do it, et cetera. So let me turn it over to you, Susan, and let's start with the benefits. What are the benefits of benchmarking in ethics and compliance program?
Susan Divers: Sure, Emily, I'd be happy to talk about that. In thinking about this topic, there are really three really good functions that benchmarking is appropriate for. And then there are some where it's not so appropriate and we can talk about all of that. But starting with what it's very appropriate for, the first is if you're setting up a program, you need to figure out kind of what are the basics that you need to do at the outset. And it can be very helpful particularly if it's a new program, and it usually is if it's setting it up to be able to say your management, "We have to have a code. We have to have policies. We have to have audit. And we have to have training" and those are kind of the four basic pillars and being able to make that case. That's very basic, but it can be very helpful in terms of people who are struggling to get started in what we all know is a really complicated area.
So that's kind of the first setting where benchmarking I think can be very helpful. And then the second is you've got your program and you're up and going. Now, no two companies are alike, no two industries are alike, and I can get into that a little bit later, but it's helpful to know if you're mainstream or not. Like for example, our Ethical Pulse Culture check lets you sort of get an idea from a short questionnaire embedded in our platform in Reveal whether your culture is really out of whack or pretty much along the same lines as mainstream. And again, that's really helpful because it can show you an area where you're maybe excelling and it's good to take credit for that and scale it, or it can show you an area where you're deficient and it's good to know about that too.
And then the last is, and this is where for example Ethisphere has done a lot of really good work, best practices. People are constantly innovating. I'm always amazed at how ethics and compliance programs are changing and getting better. And we can talk about that a little bit, and Reveal's going to be very helpful there. But benchmarking can give you ideas that can be very valuable for enhancing your program. So those are sort of the three big areas where I think benchmarking can be extremely helpful.
Emily Miner: Yeah, thanks Susan. And on that last point that you shared, that's really resonating because if nothing else, benchmarking or surveying what other companies are doing out there with respect to ethics and compliance and different facets of that, it gives you as an ethics and compliance professional just an idea of what's possible. Maybe there's a new approach to communicating with your employees that you haven't thought of that might work for your organization.
I'm at the SCCE's Compliance & Ethics Institute right now, and there was a session yesterday about one particular organization's sort of their evolution of their compliance program following some significant trust that was lost in the organization to senior leader misconduct. One of the things that they talked about was having employees around the globe put on skits that they turned into videos that dealt with ethics moments and how the actors, which were the employees of the organizations, would kind of get famous around the world for their skits. It was a very lighthearted way of communicating very serious topics that resonated for this particular organization. But a lot of people in the room were asking questions, "Oh, well, how could I put together a skit like that? Did you write the script or did the employees come up with it and this and that?" Just that it's a way of sharing ideas and fostering innovation across the industry that can be really exciting and powerful.
Susan Divers: Yeah, that's a great example, but maybe it's time to talk a little bit about the limits of benchmarking too because that's a good illustration of the point that benchmarking's good for the three things we just talked about. Setting up, making sure that you're in the mainstream and not at either end, or maybe you want to be excelling and then getting ideas and best practices. What it's not good for is saying, "Hey, we met the criteria." And the reason is there isn't a criteria. In fact, there was a quote two days ago or so from the CEO of Advanced Micro Devices, and she said, I quote, "It's like running a different company every two years."
So the point I'm trying to make here is that your program has to be based on your risks, and those risks can change dramatically, I mean, certainly in the semiconductor area, and that's what she was talking about. The risks have changed, they basically changed radically with all the changes with China and the export sanctions and the war in the Ukraine. So it's not enough to say, "Hey, I'm doing what everybody else is doing in that area."
And secondly, the other big problem is comparing apples to apples. I picked three consumer companies to sort of illustrate this. One is Walmart, which obviously is a big consumer company. Another is PepsiCo, another is Mondelez. And if you look at all three, they all have really different risk profiles. They may be in the same area generally, but Walmart's much bigger than the other two. Walmart had a major scandal a number of years ago where they wound up paying, I think it was 137 million in 2019 because in order to get permits for their stores in Latin America, particularly Mexico, their lawyers were actually paying bribes. When you think about it, that should have been something that they were sensitive to on their risk profile and both training and auditing the local lawyers. Also, there was some lawyers on their teams internally. That was a risk and they failed to mitigate it.
PepsiCo is bottling, and so do Mondelez has plants, but it's not quite the same level of regulatory intensity as setting up a store, hiring people, environmental health. So I use that example because I'm trying to pick an industry and say, "Well, if you compared yourself to one, you might miss some of the particular risks that you have."
One of the also things to bear in mind, and you alluded to it when we started, is that DOJ has never recommended benchmarking in all of the guidance. In fact, they've said things that kind of contradict benchmarking if you were using it to say, "Hey, we met the norm." They've said, "You don't want to be on cruise control," and that's because things change. And they've also said, "You don't want to just take a snapshot of your program at a given time." And that's kind of what the CEO of Advanced Micro Devices was saying too. And that's because any time you're looking backwards rather than forwards, you could miss the iceberg that's looming up ahead and going to sink the Titanic. So at any rate, I think benchmarking can be very useful, but you have to use it for the right purposes and you have to bear in mind the limitations.
Emily Miner: Right. Absolutely. It's never the be all end all. It's one data point that we should be collecting and looking at in some situations and not others. And in those situations, it's one of many that we should be considering when we're thinking about program effectiveness.
Susan Divers: Yeah, it's an element. Yep, absolutely.
Emily Miner: So let's kind of tease this out a little bit more. Where do you see benchmarking being helpful? I know that you gave those three scenarios, but maybe if you could pick out a concrete example to share against any of those three scenarios to illustrate how it can be helpful or when it can backfire.
Susan Divers: Sure. Well, let's pick another consumer company, Anheuser-Busch. This is a great example because it illustrates how benchmarking can be used very effectively to drive a best practice. Anheuser-Busch had a very prominent CECO who has very recently left to go to the Department of Justice in the last couple of months. When he was there, he set up an internal data analytics program that was able to pull data from their own systems, payments, SAP of course, onboarding and pick out red flags without, if you will, human intervention. In other words, he was able to take a number of data streams from various parts of the company and meld them together. And because he was very good CECO, he was able to figure out what some of the risk signs were or the red flags.
What it did is it enabled Anheuser to manage its third parties, which if you think about it, beer distribute, beer companies have a lot of third parties. And then they could focus in on those companies, those third parties where there were red flags. They didn't have to audit everybody to the same degree of intensity. And that approach of internal data analytics was a best practice that was gathering steam, sorry. But once Matt really took it to the next level and showed how it could be done, then it really became mainstream in the E&C area. And Matt's now at DOJ. So if you're going to go in and have tense talks with regulators, being able to talk about what you're doing in benchmarking is important. And it takes us back to Reveal where Reveal is a really powerful tool that we've developed that will enable you to see red flags or predictive factors. And again, remember looking backwards doesn't really help you because it doesn't tell you if there's a big iceberg about to sink the Titanic.
But looking forward and saying, gosh, the data that's coming in from Asia on attempts to pass courses or on our Ethical Pulse Culture check or other features is worrying. It's nothing specific that we know about at this point, but it indicates that, I'm just picking on Asia randomly, it indicates that we need to spend some time in Asia figuring out what's going on.
So that's really an excellent use of benchmarking and that's a good story as to how understanding what best practices are emerging and adapting them then for you, because nobody could simply take Matt's system of third party analytics and plug it into their company and come up with the same results. It has to be tailored and it has to be specific. But that's a really good example of what DOJ is talking about in this area where they say you have to tailor it to your risks. So does that make sense?
Emily Miner: Yeah, absolutely. It's a great example with Anheuser-Busch and the system that they set up. I want to kind of talk about specific types of data that we collect in ethics and compliance or can collect, because I feel like the kind of two most common ones that organizations want to benchmark are training completion rates, that's a metric that is easy to collect and is often one that is shared, and hotline. "Oh, my hotline reports. How does this compare?" And the hotline providers will publish annual benchmarking reports on hotline.
So we've got course completions, we've got hotline data, but we also collect other data points, or there are other places where we could to think about program effectiveness. I'd love to hear from you, as you think about the universe of ethics and compliance data, where do you think kind of benchmarking holds water and where does it not?
Susan Divers: That's a great question, Emily, and I'm glad you asked it. Let's start with the hotline because that's a really good example in a lot of ways of two of the pitfalls. One of the major pitfalls that we touched on is are you comparing apples to apples or apples to potatoes? A company, let's take Starbucks for example, they have 300,000, relatively young, many of them first job employees. And are they going to call the hotline if they see something or worried about something? The odds are probably no even though they've got a big kind of young and engaged workforce because they're inexperienced. Most of their employees, I was talking to their CECO last week, and most of their employees really haven't worked extensively in the workplace. So Starbucks might have really low hotline numbers.
Another company that's largely unionized, on the other hand, because unionized workers generally know about the hotline and they know about formal complaint processes, they'll have high hotline usage compared to other companies. Let's just pick a slightly ridiculous example, but a big manufacturer of clothing like the Gap or something. You'll have unionized workers in the plants, but Booz Allen is a consulting company. Are you going to compare hotlines between Booz Allen and the Gap? That really is an apples to potatoes comparison.
So I think hotline benchmarking, and I know most of my colleagues in the E&C area would agree is very, very difficult because you'd have to really know what the workforces are to try to get an idea. And then secondly, it can be driven by other factors such as when I was at AECOM, we deployed a lot of people in the Middle East and the conditions were harsh. So our hotline complaints would go up when people were under stress, but another company might not have that circumstance.
Emily Miner: Yeah, that's such a great point about when you're using benchmarking and you're considering using benchmarking, you have to be really thoughtful about what that benchmark pool is made up of. The union example is such a great one because even within the same industry, you compared the Gap to Booz Allen, but even within the manufacturing industry, for example, not all manufacturing company has a unionized workforce. So you can think, "Oh, well it's manufacturing, so it's comparable," but it might not be depending on the workforce dynamics. That level of insight isn't always available when we're benchmark data sources.
Susan Divers: We forgot one thing that both of us know, which is I think the last stat I saw was more than 90% of meaningful issues are not raised through the hotline, they're raised in conversations with managers. So I've never been a fan of hotline benchmarking.
Emily Miner: Yes, absolutely.
Susan Divers: But to turn to training completions, that's an interesting one too. Again, it really depends. If you're using an old fashioned training provider whose library consists of 45 minute or even longer lectures, sort of Soviet style on the evils of sexual harassment, first, it's probably not very effective. And secondly, a lot of people won't complete a 45 minute course just because it's long. If the training is repetitive and hectoring, they'll drop out. Whereas the kinds of courses that we have and that we emphasize are very engaging, they tend to be shorter, they tend to be more microburst learning.
So again, what are you comparing? Do you have a lot of employees on the shop floor? Well, it's hard for them. They can't really just take a break, sit down at their laptop and open up a course on antitrust. So again, I think training completions can be tricky. It doesn't mean it isn't interesting to see that data, but figuring out, again, whether you're making an apples to apples or an apples to potato comparison, I think is really important. And then secondly, remember, it's retrospective looking. It's not telling you anything about what's coming around the corner.
Emily Miner: Mm-hmm. One thing that we've focused on in this discussion is comparing ourselves to other organizations. I mean, that was how I even defined benchmarking at the outset, but there's also internal benchmarking, comparing your own performance year over year or whatever the period of time is. When you were just talking about training completion, it made me think about that internal comparison, less so with training completion because I think it tends to be high, a lot of companies mandate it so there can be penalties for not completing training. So if it's high for that reason alone whether or not it's good or relevant to employees or they liked it or whatever.
But thinking about metrics like pass/fail rates or number of attempts or test outs or some of those more nuanced training related data points and comparing against yourself year over year and seeing what has changed and what might be the result of that. I mean, maybe you noticed in year one that it was taking the majority of your employees or a significant minority of your employees more attempts than you wanted to answer certain questions correctly related to a certain risk topic. And so then as a result, you rolled out some focused communication and maybe you targeted specific groups of people where you noticed were particularly struggling for additional manager led conversations or whatever. And then in year two, does that pass rate or attempt rate improve? That's a helpful metric because you're comparing apples to apples, you're comparing yourself and you're able to connect it back directly to specific interventions that you may have need to make improvements in that area.
So I just wanted to point out that benchmarking can be done internally as well. It's not always an external exercise even though that does tend to be how we talk about it.
Susan Divers: Well, and you're exactly right, and that's where it gets really valuable because first you can make sure that you're comparing apples to apples. For example, if you've just done a merger and suddenly your population of employees has doubled, well obviously then you know that you've got a much different comparison year over year, but you can break that down and you can make those comparisons by manipulating the data.
Secondly, your Ethical Culture pulse survey is a really good tool year over year adjusted for employee population size. And if we've got new people coming in the company, a merger for example. And it can be proactive. It can, again, spot trends as you were just saying that indicate that you may need to spend more time with people. But the beauty of internal benchmarking, particularly the way Reveal has set that up for our clients and made it easy is that you can get genuine insights looking at what happened last year, what happened this year and you know some of the reasons why there may have been a change. Whereas if you're comparing yourself to, I don't know, Ernst & Young, you don't. You don't have visibility in terms of their numbers. So internal benchmarking, I think you're right to stress that. And it's a very, very valuable tool.
Emily Miner: I've done, as you know, a lot of work with organizations evaluating and assessing their ethical culture. The trend that I've noticed with those clients that we've done this type of work year over year over year is that the benchmark, the external benchmark just grows. It's important kind of in year one and maybe year two, but after that it ceases to be relevant and the companies don't really care what it is anymore because it's also they're not shooting for the benchmark. The benchmark is often the average and they want to be above average. And so it's more about competing with yourselves and how did we improve against our own performance last year?
And so that's just been interesting to observe. I think as companies get more robust in their use of data and their tools and how it informs their strategy in some areas like ethical culture for example, that external comparison just becomes less relevant over time.
Susan Divers: That's a really good point too. And that gets back to the Department of Justice saying, "Don't put your program on cruise control." And I do remember, I think it was 15 years ago when benchmarking was much more trendy and before people really thought through the limitations, someone was bragging that they had benchmarked their program against Boeing. Boeing then subsequently had major meltdowns left, right, and center most specifically and tragically the 737 MAX where people died. And so running around saying, "Hey, my program benchmarks well against Boeing" may not have been really a compliment to the program in the end. But it also misses the point which you're making, which is you have to look at your program and what's gaining traction with your people and where the proactive red flags are emerging because that's what enables you not to be Boeing, not to pick on Boeing, but it's a good example.
Emily Miner: So Susan, let's wrap up by offering some recommendations to organizations that are thinking about program effectiveness, how they measure that. They want to have those benchmarks. Maybe they fall into those three scenarios that you outlined at the beginning. What recommendations or best practices would you offer to those organizations, to your peers?
Susan Divers: Well, the first one is be really smart about it and avoid comparing apples to potatoes. And to do that, you have to really think it through. What are we comparing to whom and how similar are they? I really, again, think that's most useful for kind of like, "Are we in the mainstream? Or is there something maybe we forgot?" If it turns out that everybody in your industry has suddenly amended their training curriculum to train about trade controls in the wake of the Ukraine war and you haven't, well, that's a helpful benchmark.
But I think the main ones that are valuable are what we were talking about with best practices and data analytics and the creative use of data analytics that are tailored to that particular company is a great example of that. And then the second one as you pointed out which I think is equally valuable and really essential too, is internal benchmarking up to a point where you're able to see what direction things are going in. And again, it's more in the nature of red flags rather than a way of saying, "Hey, we met the requirement, we're good." It's, "How are people doing this year compared to last? What does that tell me about where I need to focus my resources?"
Emily Miner: Mm-hmm. Mm-hmm. Yeah, Susan, thank you so much. And thank you for joining me on this episode. We are out of time for today. So to everyone out there listening, thank you for listening to the Principled Podcast by LRN. It was a pleasure to talk with you, Susan.
Susan Divers: Oh, it's always a pleasure to talk to you, Emily.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen and don't forget to leave us a review.
What you'll learn in this podcast episode Over the last few years, federal regulators have provided detailed guidance on what they expect to see in E&C programs when it comes to misconduct inquiries or investigations. What do these recent reports, policies, and guidance mean for compliance professionals? In this episode of the Principled Podcast, LRN Director of Thought Leadership and Best Practices Susan Divers is joined by Jon Drimmer, a partner at the law firm Paul Hastings. Listen in as the two discuss the recent guidance from the US Department of Justice as well as DOJ policy impacting corporate compliance programs and ethical culture.
Featured guest: Jon Drimmer Jonathan C. Drimmer is a partner in the Investigations and White Collar Defense practice and is based in the Washington, D.C. office of Paul Hastings. He resolves complex cross-border problems with the benefit of having sat in every chair at the table: senior legal officer for a global 500 company, federal prosecutor, and seasoned advocate. He is a recognized international expert on anticorruption and business and human rights, and is a frequent speaker, author, and commentator on issues related to both topics.
Before joining Paul Hastings, he was Deputy General Counsel and Chief Compliance Officer of Barrick Gold, one of the world’s largest mining companies, with operations on five continents. The compliance program he built at Barrick has served as an industry standard, and elements of it have largely been duplicated by numerous other companies inside and outside of the extractive sector.
Mr. Drimmer has directed hundreds of investigations around the world related to anti-corruption, human rights, AML and export controls, tax controversies, environmental incidents, public disclosures, fatalities and health and safety injuries, sexual harassment and discrimination, and other areas. He has represented companies and individuals in numerous government enforcement proceedings in the U.S. and overseas, in relation to FCPA and bribery claims, human rights issues, and a wide array of other matters. He has participated in dozens of major disputes in the U.S., Canada, and abroad, including transnational torts, anti-corruption claims, environmental cases, international arbitrations, tax disputes, construction claims, and land controversies.
He previously served in the Justice Department as Deputy Director of the Criminal Division’s Office of Special Investigations, where he led cross-border investigations, first-chaired numerous prosecutions, and argued federal appeals. He was a partner at an Am Law 100 law firm in Washington, D.C., a former Bristow Fellow in the Office of the U.S. Solicitor General, and a judicial clerk on the U.S. Court of Appeals for the Ninth Circuit. Mr. Drimmer served on the board of directors of the Voluntary Principles on Security and Human Rights Initiative from 2012-2014, and again from 2015-2017. He served on the board of TRACE International from 2012 until 2018, and currently sits on the board of the TRACE Foundation. He has also taught international law courses at Georgetown University Law Center for nearly 20 years.
Featured Host: Susan Divers Susan Divers is the director of thought leadership and best practices with LRN Corporation. She brings 30+ years’ accomplishments and experience in the ethics and compliance arena to LRN clients and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance, and sharing substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008. She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Susan Divers: Good afternoon. From time to time, but particularly in the last few years, federal regulators have provided detailed guidance on what they expect to see in ethics and compliance programs when companies present them as a defense to misconduct inquiries or investigations. What do the recent flurry of reports, policies and guidance mean for compliance professionals? How should they be applied to improve E and C programs?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Susan Divers, director of thought leadership and best practices at LRN. And today, I'm joined by Jon Drimmer, a partner at the international law firm of Paul Hastings. We're going to talk about the recent DOJ guidance and policy impacting corporate compliance programs and ethical culture, and hopefully help everyone understand what it is and how they should apply it to their programs. Jon is a real expert, as well as a friend in this space. He has the unusual distinction of serving in three of the principal seats that affect ethics and compliance, once as a federal prosecutor at DOJ, another time as a chief ethics and compliance officer and deputy general council for a large mining company, and now as an ethics and compliance advocate with a leading law firm. Jon, thanks so much for joining me at Principled Podcast.
Jon Drimmer: Thanks, Susan. It's great to be with you.
Susan Divers: Super. Well, let's jump right in. Last week, we saw a new policy come out of the Department of Justice that both Lisa Monaco and also Ken Polite have talked about with great emphasis. We've also seen the report come out of the sentencing commission about their 30 years of accomplishments. And we've also seen some major guidance in the last two years. Can you put it in perspective for us and talk about how it fits together, and how they interplay. And then we can jump in and start figuring out what they mean.
Jon Drimmer: Yeah. No, happy to do it. So let me take each one in sequence. So what we saw come down from the deputy attorney general was a new policy memo. And in essence, what that means is policies are, they are the rules that apply to federal prosecutors and prosecuting entities around the country. They are the standards that are going to be applied. Guidance, which is something that we see come out in a number of different ways through formal guidance as well as through statements and speeches and other informal approaches, this is basically how those rules are interpreted, how prosecutors should be thinking about the application of those policies as they're applied to any given circumstance. And then finally, reports, and you mentioned the sentencing commission's 30 year look back, those are more general. And they do tend to come out for transparency purpose, they're often retrospective, like the sentencing commission report. But they generally talk about how these rules have been applied. So policies are the rules, the guidance effectively aids in their interpretation, and the reports generally are a bit of a look back as to how they have been applied to date.
Susan Divers: That's really helpful. It really helps me put all of those in perspective. Talk a little bit more than about the policies and the guidance. Are they mandatory? Are they voluntary?
Jon Drimmer: Well, for prosecutors, they're mandatory. So when you look at the policies, this is effectively how prosecutors are to approach any given situation. It is a directive to them in terms of how it is they should go about doing their jobs. And I'll tell you it's critical. It's critical for chief compliance officers to understand those types of initiatives, those types of emphases. It's critical to prosecutors as well, as they get that direction in terms of what they should be focusing on. So really, it's a very important part of the process and helping to shape how investigations are run and scoped from the government's end, and what can be expected on the company side as well for chief compliance officers.
Susan Divers: But it's not technically a rule, if I'm correct. But it sounds like you strongly recommend that ethics and compliance professionals pay great attention to it.
Jon Drimmer: Yeah, yeah. No, that's fair. It's not a regulation. It isn't something that goes through a formal regulatory process. It's not the equivalent of a law. It's a direction. It's a directive that's basically given. And so it doesn't have the force of law, but it is a very important set of instruments to understand the relevant DOJ policies, the justice manual. So yeah, that's a fair assessment. I do strongly recommend understanding it in detail, but it isn't technically a law or regulation.
Susan Divers: And if I understand correctly, and I've been in this situation myself too as a chief ethics compliance officer, if there's a misconduct inquiry or investigation, and 95% of those are resolved without prosecution or probably more, basically, you'll be asked to come in and meet with the Department of Justice prosecutors, possibly the SEC too, and part of that is talking about your ethics and compliance program. Can you put that in context and explain why they want you to do that, and how you should do it?
Jon Drimmer: Yeah, absolutely. So what they're really looking for is a discussion of A, what the compliance program was at the time of the incident in question, and where it is today at the time of charging. It's really both time periods are really quite important to them. And they want to understand how with a compliance program the issue or event might have occurred. But they also want to understand what changes have been made to improve its effectiveness since that time period. And often, given the way that investigations go and timelines, there may be a good bit of time between the original incident and the time a formal compliance program presentation is ultimately made. And in making that presentation, the guidance, the policies, these are incredibly important in shaping the factors that you're ultimately going to present on.
But the real tip is not just presenting on the formal approach, the formal program, the policies, procedures. But how do you know they are working in practice? And that has been a huge emphasis from the government in the last couple of years, and one that ethics and compliance professionals should take heed of. It's not just a matter of rolling out the program, but with the rollout, including those steps to validate its effectiveness in mitigating the relevant risks it's designed to address.
Susan Divers: I want to get into that in more depth in just a second. But before we leave sort of setting the scene for why this is so important. So if you go in and you meet with the Department of Justice and its prosecutors, and you do a good job, a credible job, of presenting your ethics and compliance program, and it's clear that it's a strong program, and you've got hopefully evidence of effectiveness, what's the consequence of that?
Jon Drimmer: Well, at the end of the day, I mean, the most significant issue is monitors. And if you've been involved in an issue that violates a federal law, federal criminal law, and the question is: Are you sufficiently capable of addressing your compliance issues going forward without day to day regular oversight from a monitor? That is a critical inquiry, and so number one, an effective compliance program and design and implementation is really important for a monitor. It's also important in charging decisions. It can be important in terms of disgorgement and fines and penalties as well. It's taken into account in the federal sentencing guidelines. So in the end, an effective compliance program really is a critically important part of a resolution process for a DOJ investigation.
Susan Divers: So that's basically why ethics and compliance programs, if I understand correctly, came into being. It's really to mitigate the impact of misconduct investigations, and hopefully allow the company to go forward with it's E and C program. We won't talk about monitors today. That can be another podcast. But that's something that you want to avoid, generally.
Jon Drimmer: Yeah. You generally want to avoid that, yeah. I mean, look, there's another element we probably won't get into today as well, that you and I have talked about extensively, and that is how programs ultimately help shape the values and culture of a company, so aside entirely from proactively mitigating relevant risks, affirmatively driving a culture that does increase productivity, increase retention, increase morale, that's a critical component of a compliance, an ethics and compliance program as well. It does dovetail a bit with culture of compliance, which is something that is important to demonstrate when you're in front of the government. It's something the government is increasingly emphasizing. There's a positive aspect that isn't just preventing potential problems from happening that are associated with ethics and compliance programs, as you've written about quite persuasively.
Susan Divers: Well, you too. And I'm glad you reminded everybody of that because that is a critical reason for having an effective ethics and compliance programs. So let's leave the sort of rewards and penalties side and start talking about: What are the prosecutors and the Department of Justice leadership really saying in this plethora of policies, guidance that's come out in the last couple of years? What are the key messages?
Jon Drimmer: Yeah. I would say in reading through the recent speeches, the policies, coupled with the guidance, I think we can take away several messages. And two of them are, number one, there is this enormous focus on program effectiveness, and I can't say that enough. And as I read the memo from the deputy attorney general colloquially calling the Monaco memo, I see as a major sub theme, and as a former chief compliance officer, this absolute drive towards the effectiveness of programs. And just to take a step back for a minute, in some ways, this is how the sentencing commission's report actually becomes relevant in this discussion, and the 30 year look back report was issued roughly at the same time as the DAG memo.
And if you look at the report, a few interesting statistics jump out. And these again, this is focusing on companies that actually went through a court sentencing, so it isn't settlements, which is typically how corporate resolutions are resolved. But 2021 was the first year that more than half of the companies sentenced under the guidelines had a compliance and ethics program. And the previous high was 2018, when it was about 28%. But in 30 years, since 1992, only 11 companies have had a reduction by a court because their compliance program was effective. That's .5% of all of the companies sentenced, and most of those are actually small companies. So most of the time, for those companies that are going through the process, they aren't getting credit for having an effective program.
And with the Monaco Memo, if you actually look at a lot of what policies are ultimately looking to drive, it does center around effectiveness, driving performance, driving commitment through a focus on individuals. And so it talks about producing information in a timely way, focusing on individuals because that is what incentivizes effective performance. For chief compliance officers, it might mean if you're going to do an investigation, a thorough investigation, you do have to include that within your scope, the focus on individual culpability to a degree that you might not have before.
The same is true with ephemeral messaging, which is a big emphasis in the recent memo. Ephemeral messaging has been part of their calculus for several years now. But here, they do want to focus on whether the company policies regarding ephemeral messaging are effective. Is the company capturing messaging that's occurring on company related devices? Are we allowing personal devices? If so, are they limited to certain apps that are capturing company business related discussions? Is there training? Is there auditing? Are there other steps on ephemeral messaging? So they really want to see not just: Are there policies? But are they effective? And those are just two examples. But if you do dig into what's behind a lot of these policy announcements in the memo, it really is looking to drive effective programs.
Susan Divers: Well, I want to dig in a little bit. And just to clarify by ephemeral messaging, you mean that if we have senior execs using What's App to communicate, rather than company systems that are subject to discovery, then we might have a problem.
Jon Drimmer: Yeah. It can be company, it can be teams messaging, it can be What's App on company issued devices or personal devices. It's any of the messaging systems that are used to communicate that ultimately may not ordinarily be retained by the company in the way that email is.
Susan Divers: So that's an area that the policy makes clear, compliance officers ought to really take a hard look at and may need to make some changes, or at least provide some clarity. I want to get information effectiveness more in a minute too. But just to deal with the other very specific granular recommendation that I saw in the Monaco Memo, it was that you really have to have an incentive system that's aligned to ethics and compliance. And by that, it's both positive and negative. In other words, you have to reward ethical behavior as part of your system of incentives, whether it's bonuses, compensation, promotions. And you have to penalize misbehavior, whether it's bonuses, compensation, promotions, but also claw backs. Can you talk about that a little bit?
Jon Drimmer: Yeah, yeah. It really was fairly prescriptive, as you say, in terms of, in ways that I think should make chief compliance officers happy. That's the stuff that we always advocate for with human resources and with executives. Hey, we want ethics. We want ethics and compliance included in hiring decisions and promotions and bonus frameworks and performance commitments. And that's really what helps integrate ethics and compliance into business operations and prioritize it along with operational considerations, so that should be welcome news for chief compliance officers.
The claw back aspect, which is the stick, that's the carrot, this is the stick, it's interesting. They really emphasize it's not good enough just to have claw back provisions that are theoretically applicable, that are present in policies and are never applied. They want to see them applied in cases where there is appropriate individual culpability. And that may mean applied in different ways. They're clearer that there is no uniform approach to a claw back provision, but it isn't good enough just to have it as a policy. You need to talk about it. You need to train on it. And you need to actually implement it in appropriate situations, which is part of the focus on the individual responsibility and again, driving effectiveness.
Susan Divers: That's a very good segue into effectiveness. I do want to emphasize what you said, which is this is something that ethics and compliance professionals need to pay attention to. And it should be a welcome development to have that kind of accountability and importance placed on ethics and compliance considerations. But it's: What do you do about it, as you said, if you've got claw back? I think the SEC says that about 50% of publicly traded companies have claw back, but you have to use it. Otherwise, you're probably worse off if you have it as a tool and then you don't use it if you've got senior level misconduct.
Jon Drimmer: Yeah, I think that's right. But better to have it than not have it, and if you've got it, you've actually got to apply it, is kind of what they're signaling. But look, this is hard. I mean, it is really hard when you are doing investigations of your own people. As a chief compliance officer, this was the least favorite part of my job is doing investigations into people I work with, people I knew, people who in other aspects of my job, I had to trust. I had to trust them in terms of implementing or overseeing certain aspects of the program. And when you have to do an investigation into them, it feels lousy. It screams out for why independence is important. And those particular instances is just a matter of investigative integrity, but it's a lousy part of the job. And applying a claw back provision to senior executives who you have worked with, who you have traveled with, whatever it is, it's a lousy part of the job, but they are saying it is an important part and a part that has to be applied in practice.
Susan Divers: Yeah. I agree with you. That is really the worst part of being a chief ethics and compliance officer, for sure. Let's dive deeper into effectiveness. As I've gotten to know you and worked with you on thought leadership, I've always been extremely impressed with you focus when you're a chief ethics and compliance officer on effectiveness. And I remember some of the things you did, even including short pulse surveys in your investigations to get feedback from employees, so that's just one example. But can you talk about what do we really mean by effectiveness in terms of ethics and compliance programs? What should we be measuring? What should we be looking at? And where should the focus be?
Jon Drimmer: Yeah. I mean, really what effectiveness means is: Are the goals of any particular element of your program being achieved? Are you meeting the goals that you have set out for that particular element of the program? So for instance, your goal might be to roll out a new training, and to roll it out to 90% of everybody on a mapped basis. That isn't going to get into effectiveness. Effectiveness is: How well do they retain the critical aspects of the content that is being conveyed? And that can be done through surveys, that can be done through tests, et cetera. But when we're talking about effectiveness here, again, it isn't just about roll out, it isn't just about robustness and good faith commitment to implementing a program. But is it working in practice? How do you know it? How do you test it? How do you validate it? Often, that's done through KPIs and through metrics. I personally like surveys, sentiment survey, I've always liked surveys as a way of getting information.
And beyond that, it brings employees into the program when they are talking to you, providing information about their own experiences. I think that's a very effective way to do it. I think 360s in terms of reviews that include ethics compliance is another important part, so you do again get perspectives of employees on individual performance, particularly for supervisors, from an ethics and compliance standpoint. I think you need to look at audit results. I think you need to look at investigations. I think you need to look at a number of different factors that all indicate on a lag indicating basis, what is working and what isn't working. But I think that should be a relentless focus, personally. And I think for every element of your program, you should be looking at multiple ways to try to assess. Is what I'm doing actually working to the degree that I want it to, and in the way that I want it to? And if not, you have to make an adjustment. That's what effectiveness is about.
Susan Divers: That's a really good definition. I think one of the traps people can fall into easily is to focus on activities rather than impact. And I like your phrasing of it as a relentless focus on effectiveness. I mean, one of the things we're just doing is rolling out a short, I think it's 10 question ethical culture pulse survey that comes up at the end of a code of conduct course. And it asks questions about respect and trust and organizational justice, which as you know are key elements of an ethical culture. So always trying to get at perceptions and concerns and to the degree that you can measure how that's playing out, I think is really essential to effectiveness.
I want to talk about in a minute how non US companies are affected by all this, and also the most common mistakes you've seen people make in your long and in depth, varied career. But before we get there, I was just looking at some of the DOJ material, and I see that Matt Galvin has joined the team. And now I think there's at least three or four former chief ethics and compliance officers. And Matt came for Anheuser, and he has a particular focus on data analytics. What are you seeing in terms of using data analytics for effectiveness? And what do you recommend in that area?
Jon Drimmer: I think that's a great hire. I think it'll be great for Matt, and I think that's a great hire for the government, really bringing in somebody who ran a compliance program and who has had a very substantial focus on data analytics. And at AB InBev, the Brew Right program that he put together is one that's usually been held up as an industry leader. I mean, I do think data analytics is critically important. One of the challenges with data analytics that you have to always get around is making sure that your data is good, that things are being recorded and described in like manners that allows for apples to apples comparison. And you have to understand what to do with that information. And so it's not enough to run the analytics, but when you get the analytics back, you have to have a program in place, resources in place, to act on it.
And so thinking through holistically what the data is, where it's coming from, how you're going to act on it, depending on what you get is all a really important part of the equation to think about ahead of time before you just start collecting and running. Look, it's critically important. It's been something that's been emphasized for years as a key way of identifying effectiveness, as well as potential risks that you might not otherwise see, and trends, and patterns. So it really is a very important part of a program with the caveat that you've got to make sure that your data is really good and that you know what you're going to do with it on the back end. But that's a great hire, and I'm sure it's really going to advance compliance thinking in the government around the use of data.
Susan Divers: I think that's a good way to characterize the importance of data metrics and particularly stressing that it's not enough to have them and get the insights, you have to act on them. It's similar to risk analysis and risk assessment. It's great that you're running a yearly risk assessment, but are you factoring those results into your training or your policies? So that's part of that focus on effectiveness. Talk to me a little bit, Jon, if you would, about we've been talking about the Department of Justice. It does seem to me that what DOJ does in areas like this has a lot of impact on international companies. It's not limited to the US. And you're in a great position to discuss that a bit, if you would.
Jon Drimmer: Yeah, sure. Of course. No, absolutely. Look, and to be clear, when the government emphasizes things like data and benchmarking and metrics and KPIs, I can't applaud them enough for bringing in someone like Matt, who has seen it on the ground, has put into place a great program to really help educate. And that's going to be true for US and non US companies. The government focuses on violations of the law, where there is jurisdiction, where there's something that will touch the US, or you have US companies or US issuers. But if you're a foreign company and you're doing business in the United States, or you're listed on a US exchange, the US laws very well may apply to you. The FCPA certainly very well may apply to you. And some of the biggest settlements, again just sticking with the FCPA, have been with non US companies in the last two years.
And I don't want to limit this to the FCPA because the memo from Lisa Monaco, it's not limited to the FCPA, but it will extend to throughout the criminal division. And so whether it's antitrust, or healthcare fraud, or other areas that the criminal division might oversee, this is going to apply to companies regardless of whether they're US or non US, depending on the jurisdictional components, so it's a very important part for all companies doing business in the United States, not just US companies.
Susan Divers: And I think sometimes people forget how broad that actually is. People sort of think, "Okay, there's US companies, there's French companies, there's Indian companies," but if you're doing business here, or you're using the banking system, then you are basically within the ambit of US jurisdiction if you commit bribery violations, or antitrust, or sanctions violations, or whatever they happen to be. So it really is a very broad net. And I think for that reason, I think the guidance has driven the evolution of ethics and compliance programs globally, not just in the US. Is that your sense too?
Jon Drimmer: Yeah. Yeah. No question about it. I think if you look around the world, whether it's the UK, or France, or throughout Latin America, for those governments that have formally put out either guidances, or they've integrated into their laws what compliance programs ought to look like, I mean, it really looks a lot like what the Department of Justice and the SEC have put out, which of course is premised on a sentencing guidelines foundation. But really, it is driving global compliance processes and programs around the world, even for those companies that don't touch the US, even in their home jurisdictions. It's driving very similar approaches and ways of thinking about compliance.
Susan Divers: Yes. And I think if anybody needs proof of that, they should read the Glencore CPA settlement, which I was just looking at, which is a huge fine for anti bribery for basically a non US company. But we're starting to run out of time. I could do this all day, as you know. But let's wrap up with: Given your unique perspective, having sat in all of the key positions, what are the most common mistakes you see people make in ethics and compliance programs? And if you can relate some of those to the guidance, that would be great.
Jon Drimmer: Yeah, sure. Look, I mean, I think first and foremost, it isn't really understanding and looking to integrate into programs what drives an ethical culture. And we talked before about the absolute importance of organizational justice as one of the key drivers in thinking about how that should get integrated into your program. And another is managerial modeling. And truthfully, what people seem to often forget is that most employees look at their supervisors, and maybe their supervisors' supervisors as the company. They look at them as management. And so focusing on, quote, unquote, tone from the top, and the most senior leaders of a company, to the exclusion of direct supervisors, middle managers, I think is often a mistake. And so driving behaviors expected of managers is critically important. I think people also ignore the absolute singular importance of confidence in internal reporting mechanisms and hotlines, which is often a proxy for whether your culture of compliance is strong, and whether organizational justice exists, whether managerial modeling is occurring.
But I think beyond that, we've talked about the focus on effectiveness. And I think too often, you do see compliance programs that really are driving towards activities and robustness and metrics and numbers that don't take into account. Is it really working in practice? And I do think that has to be, especially in light of the guidance, which talks about culture, it talks about effectiveness, it focuses on effectiveness, I think that's got to be a critical emphasis for any program. And I think a lot of programs aren't sufficiently mature in that particular aspect, which may be why this guidance or this policy is coming out now.
Susan Divers: So it sounds like if you were advising let's say a startup, or a relatively small company that's program is just getting underway, you would advise them to focus very much on the value side on getting organizational justice right, on getting speak up culture going and creating that atmosphere of trust, and also on making sure that managers know what the ethical and compliance considerations that affect them are, and what that means in practice.
Jon Drimmer: Yeah. Yeah, that's exactly right. And look, that relates directly to the guidance as we look at rewards, in terms of pay, of performance commitments, presumably of bonuses, of promotions. So setting those expectations for management, along with organizational justice and speak up, I think are really vital components. And so if you are just starting out, the sooner you look to embed that within the company, the more effective it's going to be hopefully as the company grows.
Susan Divers: Wow, this has been such a terrific, insightful conversation. And I really feel like I've benefited a lot personally just from hearing the way you've wove together the policy, the guidance. And just for one point of clarification before we sign off, I've been looking at the guidance since I think 2013. I've seen an evolution, actually. It's gotten stronger and it's gotten smarter in focusing on the right things like culture. I don't see it really weakening or changing, even during the Trump administration, interestingly. Is that your perception as well? Is that your expectation for the future?
Jon Drimmer: Yeah, yeah, absolutely. Look, they are clearly sharpening the guidance. They are sharpening their policies in a way that is actually quite healthy. And I completely applaud the degree of transparency that we've seen in terms of talking about how these are applied, in terms of talking about how these are to be interpreted. So I applaud the transparency and I completely agree. It is getting much sharper, particularly around those aspects that really impact compliance professionals, like culture, like incentivization, like trying to establish commitments, like integrating compliance into employment processes. So I think it is getting smarter. And again, I think the transparency is really helpful, and particularly for chief ethics and compliance officers.
Susan Divers: Great. And I agree. I mean, it's actually making people's jobs easier if they take the key messages in the guidance and are able to use the guidance to drive change in their organizations. So Jon, thanks so much for joining me on this episode. Just to wrap up, I'm Susan Frank Divers, and I want to thank everyone for listening to Principled Podcast by LRN.
Jon Drimmer: Thank you.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode How do you know if your ethics and compliance program is successful? How are you capturing data and comparing it to industry benchmarks, or tracking your own company’s trends over time? In this episode of LRN’s Principled Podcast host Emily Miner, director of Advisory Services at LRN, talks about benchmarking E&C data with her colleague Derek Clune, product manager of Data & Analytics. Listen in as the two explore how benchmarking practices come to life and the role AI plays in LRN's new Catalyst Reveal solution.
Featured guest: Derek Clune Derek Clune has been working in the ethics and compliance space for over 5 years with an emphasis on data and analytics. As a Product Manager at LRN, Derek is responsible for the vision of LRN’s new data and analytics platform; Catalyst Reveal. His main goal is to provide E&C professionals with more actionable data to understand their E&C program effectiveness better. Derek’s team works to create products that offer best-in-class prescriptive interventions to improve E&C programs and ease the administrative burden.
Featured Host: Emily Miner Emily Miner is a director of LRN’s Ethics & Compliance Advisory services. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Emily Miner: Gone are the days of checklists, ethics, and compliance programs where one simply goes down a list of program features and elements. Now, regulators, employees, customers, leaders are asking, are our ethics and compliance programs effective? Are they successful? Well, how do you know? Hello, and welcome to another episode of LRNs Principled Podcast. I'm your host, Emily Miner, director at LRN. And today I'm joined by my colleague Derek Clune, product manager of Data and Analytics at LRN. We are going to be talking about ethics and compliance benchmarking and how organizations can track their own trends over time, as well as compare themselves to industry peers. We're going to talk about how all of this data comes together in technology environments like LRNs new Catalyst Reveal Solution which is launching soon. Derek is a real expert in this space. He's been working in that data and analytics vertical at LRN for a number of years, and is a key architect behind our product innovation and incorporating the insights of our industry collaborators at major corporations around the world. Derek, thanks so much for joining me on the Principled Podcast.
Derek Clune: Absolutely, Emily. Pleasure to be here.
Emily Miner: So before we get in, maybe just some definitions and level setting. So what is benchmarking? The way that we think about it, it typically means comparing what you do as an organization to a number of comparable organizations or individuals. And usually this is done in a quantitative way, so a more kind of a numeric databased way as opposed to a qualitative way. And benchmarking is helpful just for comparative purposes. And it can also help to identify best practices in the industry. And best practices referring to those behaviors, those practices systems, which some sort of research shows that the very top firms use in a way maybe beyond or to a greater degree than other organizations. So why do organizations benchmark or want to benchmark? Derek, I know that you have a lot of conversations with our client partners around their benchmarking requests and their needs. But sort of as an overarching point, why are companies interested in benchmarking? What's the value to them?
Derek Clune: Yeah, I think there's a number of reasons why we see it. In my conversations with our partners, obviously regulators are looking at ethics and compliance programs with much higher scrutiny than they ever have. And so organizations want better visibility into the wider space, whether that's how their ethics and compliance program measures against others within their industry, whether that's how it measures against others from an employee size or geographic footprint. So organizations use really two sets of benchmarks, internal company benchmarks. Their own data and organizational assessments and benchmarking those quarterly year over year to measure their own program. But also they want a broader audience to compare themselves to, to really see where they... For lack of a better term, rank within the pack so to speak. And so a lot of this we see is all around measuring ethics and compliance program effectiveness.
How do I know my program's effective? I have the parts and the components, the codes of conduct, the policies, the disclosure certifications, but how do I know that those are effective? And we're seeing more and more that data is being used as a key component in that measurement of program effectiveness.
Emily Miner: Yeah, I'm reflecting on some conversations that I've had with our partners where they've said, our calls to our hotline are X percent. Is that good? When we look at our... We can collect data on ourselves and measure it and certainly that's sort of where organizations have been heading for a while. This increased data collection and analysis. But sometimes doing that in a vacuum, you're sort of left wondering, okay, well, the number is four, is that good? Should it be five? Should it be one? Should it be 20? What does this mean? And I think that's where that comparison is helpful because you used the term kind of broadening the pool or broadening the lens. I don't remember exactly what you said, but that idea of broadening your view finder. And that's where I think the strive for this desire for being able to benchmark and compare a large place of where it comes from. And just also as humans, we like to compare ourselves to others in so many parts of our life. So there's maybe a human nature component to it too.
Derek Clune: Yeah. No, absolutely, you took the words right out of my mouth. None of these organizations while they all are unique operate in a vacuum. And so they need to have some sort of comparison just to know that they're below, above or equal to a number because we know the regulators don't give specifics. So the next best thing that we have really is this benchmarking tool of, in our case all of the LRN partners, which over 2000 partners in a number of different industries, Fortune 500, et cetera.
Emily Miner: Yeah. And so Derek, I know that you partake in a lot of voice of the customer type conversations, and you are the recipient of a lot of requests for information from others within our organization. What are some of the top requests or data questions that you hear from our partners? You talked about wanting to measure program effectiveness, how are people thinking about program effectiveness? What do they want to measure? What do they currently have versus what don't they have but they want it? What are some of the general themes?
Derek Clune: At a high level we know that all of these questions typically start with a risk assessment. A company will do a risk assessment from a third party to get at maybe their blind spots or to tell them some things that they already know. And so in most cases that serves as the initial roadmap of different topics to consider around benchmarking around these data questions. And so from there we see organizations typically focused on the course data. That's the most popular one. We're rolling out mandatory training, how are my employees performing on that training? It has some sort of test in it, are my employees performing better or worse than I expected or right on par with what the requirements are? And within that there's a lot of different sub context. So is a particular business unit outperforming or underperforming based on the average or the median?
Is there a regional confusion around a question? So I would say the initial focus that people immediately go to is the mandatory training that is being assigned and the course performance metrics I'll say, how employees are performing within those courses. There are a lot of tertiary components that are critical to measuring program effectiveness. What we see also is culture being a critical component of ethics and compliance. And larger initiatives at an organization at measuring that overall learner sentiment of the communications and the courses that are being rolled out to the learners. So not only are we looking at the performance aspect of those but also the sentiment and learner feedback of what they think. All of those kind of surveys where you're getting additional feedback from employees is another great metric. Overall investment. Of course, senior leaders and maybe chief ethics and compliance officers, they want to see the return on investment in the ethics and compliance program.
So what metrics can we look at to demonstrate that there is an ROI there? And then another piece that we see is the communication strategy and how do we take those metrics to identify the best time to roll out a campaign. Frequency of reminders, those types of things is another point at which we can look at and also improve upon year over year.
Emily Miner: Yeah, that's interesting. I actually don't know the answer to this, do we do any type of AB testing? I'm kind of fascinated by that idea that you were just describing of what's the optimal time to roll out a training and the frequency of reminders. And I was actually just having a discussion with one of our colleagues about is she the type of person that kind of takes her training right away as she is. Or does she wait till the last minute, which I confess I am that type of person. So we were just talking about kind of different type of people and how their personality, their characteristics kind of inform their behavior with respect to taking training. But anyway, so I'm just sort of thinking about like okay, we have these two types of people and how can we optimize attention and what's the right cadence of reminders to get the laggards like me or the right time of year?
So with that, how do we know? Do we do any type of AB testing or comparison? We tried one reminder a week last time, let's do two reminders a week. How do we kind of know?
Derek Clune: Yeah. So at LRN, we currently have if a partner is using the LRN platform, we do have the overarching data of when they're sending reminders, when they're rolling out campaigns. We are just at the forefront with this new catalyst reveal dashboard of being able to look at that data and make prescriptive recommendations for organizations. And so what I've seen is a lot of there's really no one size fits all for any of these organizations and their communication strategies. You have some people who are rolling out training and communications once a year, some on a quarterly basis, some biannually. And so we're just at the forefront of being able to look at that data, look at the time of a completion, how many people completed before a due date and after a due date. And we're expecting sometime mid next year to be able to make those prescriptive recommendations.
And the exciting thing about this is the more people that we get onto this tool and using the tool, the more accurately we can prescribe different methods. So potentially we could say for a specific industry like tech, we see that Friday afternoons are a better time. This is very normal in sales and kind of marketing strategies for emailing. When's the most optimal time to send an email and somebody will look at it, 11:00 AM on Tuesday is something the last time I checked. So we want to be able to do that. But also within each of those communications, what are the collateral that are the most effective? A quick short video from the CEO that Emily is going to click on, is it the email spoof to look like it's coming from the CEO? That might get everyone's attention. So there's a lot of things that we're looking at currently, and we'll be doing that sort of AB test as you mentioned.
Emily Miner: Okay. Well, that's really fascinating. So it sounds like you and I should have another conversation in June or July of 2023, and you can tell us what you found with all of this. I love it. I think that's so interesting. And you're right that it's about building up that data pool, and it's only as good as the size of the data pool just like genetics testing. What percentage of me is Irish? So we talked a little bit about... You've mentioned Catalyst Reveal, and you're talking about LRNs platform. So I kind of want to turn to that now because this is a really exciting product launch for LRN. And we're launching out a whole new platform in just a few weeks in mid-October that will dramatically increase the ability for our partners to benchmark against some of those metrics that you were talking about before. And I know that you've played a lead role in designing what that looks like, and the feature functions, and how it work and making those choices. So one, can you tell us what Catalyst Reveal means? And then two, what will it enable our partners to do?
Derek Clune: Sure. Yeah, so Catalyst Reveal is the name that we've given to our new data and analytics platform. We want to reveal actionable data and insights to our stakeholders who are mostly ethics and compliance program administrators, who are really in the day to day nitty gritty of an ethics and compliance program and the data around that itself. Secondly, chief ethics and compliance officers, thirdly our leadership board of directors, et cetera. So the name reveal comes from the idea that we want to provide our partners with more actionable data so that they can get deeper insights into their employee populations. But also be able to use those insights through data to take action accordingly. So that's where the reveal comes from. [inaudible 00:15:10] itself really is we've really revolutionized our data and analytics platform to allow for administrators to do a whole lot more than they ever could through LRN.
Number one is the organizational aspect of the data and benchmarking just the single organization's data. So I have all the LRN employees. I want to be able to compare and contrast sales with finance, with marketing, and see how those test scores are on a quarterly basis year over year. That's something that's going to be within the tool. Additionally, as we're talking now, being able to benchmark those pieces of data to a larger LRN audience. So within a particular industry, how do we compare within an employee size of 5,000 to 10,000 organizations of that size? How do we compare with organizations with a revenue between 500 million and a billion dollars? And so going back to the beginning of our conversation, this allows our partners to internally benchmark and externally benchmark.
So they have the numbers and the data, and they're not in a vacuum because they can quickly with one click of a button look at the benchmark and see how they compare. And the main aspects of our initial launch in October are going to be the course data. So the course performance metrics that I mentioned that we know organizations are keenly attuned to, the company culture and measurements around that. And finally, the overall learner sentiment on the courses themselves. In the future will continue to add but those are the three core dashboards and benchmarking capabilities that partners will be able to have come in October.
Emily Miner: Yeah, just a quick note on the potential benchmark data pool because I hopped over to our director of communications to get some insight into our partner base. And we're looking at over 1000 partners from around the world with a combined 28.3 million employees, including a big chunk of the Fortune 500. So that's sort of the potential universe of comparative data that we hope our partners will have access to, so that's really exciting.
Derek Clune: My eyes light up when I hear that amount of possibility with this tool because it really is the more you put in, the more you get out. And so as the product manager of the tool, we'll be adding more capabilities such as the disclosures and certification management all around that. So you can see and in the future you can see the possibilities of, okay, if we identify a risk through a disclosure or a certification and we see that employee or that region is scoring low on say the conflict of interest course and they're not disclosing anything, we could hypothetically see potential for a high risk environment. There's a lot of really exciting things, and I know we have a bullet point to talk about what the future of this tool looks like. But it's going to be a game changer for LRN and I think for our partners as well.
Emily Miner: Absolutely. And thinking about the culture data, the ability to drill down into that one particular business unit or location that's scoring way below. And kind of what is raising that red flag and going in and comparing that with some of the other data that you've mentioned, more partners can collect on our platform. And kind of triangulating those and rolling out some early intervention, or refresher training, or leadership coaching, whatever it might be. But being able to have those different kind of data sources, those data feeds pulled together into one place so that you can look at them... We've been talking about in vacuums, you can look at them not in a vacuum is really exciting. I can't wait to see how our partners use it,
Derek Clune: Yeah, a single source of truth to be able to start the triage process whether that's for a high risk issue, or even if it's for triaging, okay, is this specific question in the specific course too difficult? Do we need to change the wording? Okay, we've changed the wording, do we see an improvement in performance? So we want to create that tool to really track the entire kind of ethics and compliance life cycle and just make the administrators' lives a little bit easier with that single source of truth, so that they have one place design specifically for them with the appropriate metrics that we found from our 1000 plus partners. These are the metrics that are most important so that they can build world class program.
Emily Miner: Yeah, so this is all really exciting. And I know that this is a kind of an area that you and I both have some personal passion around. But we would be remiss to not also acknowledge that there are limits to benchmarking and it's not a be all end all. And we should be thoughtful to guard against what's sometimes referred to as blind benchmarking. So I want to spend a little bit of time kind of talking about where benchmarking isn't helpful or what it can't do or what we shouldn't use it for. I guess just to start, you mentioned earlier one size doesn't fit all. And I think that we know that to be true and also the regulators acknowledge that as well. So the Department of Justice in their evaluation of corporate compliance programs, guidance document, talk about how one size does not fit all with respect to ethics and compliance programs and that organizations need to consider the risks.
So you talked about risk assessment as well. They need to consider their specific risks, their size, their industry, their geographic footprint, their resources, et cetera, when designing and implementing their ethics and compliance programs. So because all organizations are unique, even within a given industry there are some limitations. To give a concrete example that one of our colleagues in the advisory practice, Susan Deva shared with me. We conducted a program evaluation for two companies around the same time when we were looking at their program maturity and effectiveness. Both companies happen to be in the same tech manufacturing sector and they even produced really similar products. So one might be forgiven for thinking that our evaluations and our recommendations would be structured the same. But despite these companies similarities, they had really different risk profiles. So one company was a major exporter to the Chinese tech company, Huawei, which was sanctioned by the US government in 2019. Whereas the other company had a different customer based makeup.
So comparing policies and procedures around trade control for example, would not have been appropriate in this case. So that's one example of again, kind of using that term blind benchmarking. And we just have to be careful with what we're choosing to benchmark and recognize that not everything is benchmarkable or even if it is, should be benchmarked. I'm just curious kind of your thoughts around the limits of benchmarking or where we want to take it with a grain of salt. Obviously it has a lot of really positive uses that we've already talked about, but what are some of those that we need to just make sure we're kind of eyes wide open about?
Derek Clune: Yeah. I think you really want to make sure you understand the benchmark itself. So if you're looking at industry, what that makeup really is, or employee size. Two organizations of 10,000 employees can be wildly different as we know. One could be in retail, one could be in manufacturing and those have completely different risks. And so when you look at the numbers associated with the benchmark, like the average test score for this harassment course in your industry is an 80% and you're at a 70%, the immediate response is well I'm below the benchmark. But those could be wildly different organizations. And so I think understanding the benchmark itself is certainly critical to when organizations are looking at this. And even when that benchmark is... As you correctly pointed out, is correctly defined, each organization is still very unique. And so I think it is a great data point to use to orient yourself and navigate from not the end all be all solution.
Emily Miner: Yeah. And really by default the benchmark if it's a complete data pool benchmark, meaning it's including all the possible data points, it is by definition an average. And the average isn't always good. My beat at LRN if you will, or one of my beats is culture. And I've worked with a number of organizations in helping them to understand and evaluate their ethical culture and improve upon that ethical culture. And we typically do provide industry benchmarks related to that ethical culture data which is helpful. But I've been in a number of conversations with chief ethics and compliance officers where they say, we don't want to be average. We want to be better than average. So the benchmark is a helpful sort of orientation of where we are, but it's not something necessarily to shoot for. Maybe we want to shoot higher because our standards... What we expect is higher.
Just another little example, we recently, a few months ago I guess it was, did this benchmarking effort related to codes of conduct where we evaluated I think it was nearly 150 publicly available codes of conduct from the top listed companies in the US, UK, France, and Germany. And what we found was that over 70% of the codes we assessed had a flesch Kincaid grade reading level. And that's meaning the typical sort of grade level that one would need to have in order to understand the content. Over 70% had a reading level above a 9.5, but that's actually kind of commonly accepted to be too high. What we typically want to shoot for is like an eight and a half to nine and a half. And this is a sort standard range for not just codes of conduct but for material on a company website. Like any sort of content that is being consumed by people.
It's sort of a generally accepted appropriate reading level to be accessible to the majority of your audience, whatever the audience might be. So anyway in this case, we have the vast majority of codes reading at a very high reading level. But again, that's not necessarily what a company should shoot for. And in this case we would argue that they should shoot for something lower. So I think those are just... I completely agree with you, one, just understanding what is the benchmark. Is it a valid benchmark that we're comparing ourselves to? And then assuming that it is, how do we also just put that in context of our own organization, our own goals for ourselves, our internal comparisons year over year? I think that's really important. And I've had the privilege to work with a lot of companies for many years with respect to their ethical culture where we do these recurring assessments. And so we're able to track progress over time.
And what I have observed over about 10 years of doing this is the industry benchmark tends to be important kind of the first time. But as companies do this the second time and the third time and the fourth time, the industry benchmark I've even seen to sort of decrease in its relevance because at this point the company is competing with itself. Well, how do we improve versus last year and the year before that and the year before that? And that's where they're setting targets. We want to increase people's willingness to speak up by X points, how do we do that? As opposed to, well, here's the benchmark and how do we shoot for it? So that's just been an interesting trend that I've observed in how the benchmark is so helpful for setting that baseline but it can be less useful, the external benchmark. The internal benchmark is always useful but the external benchmark can become less relevant. I don't want to say useful but less relevant or less informing our goals as we go on in making investments in certain areas.
Derek Clune: Yeah, right. The benchmark becomes a trend internally and so you have the trend analysis. And the tool that we're building is really helping administrators identify those trends. You mentioned context is key, and you're so right there. And in talking with some of our account executives, they're very excited to get their hands on this data and share it with their partners so that they can make more better informed decisions around our recommendations as an organization to our partners. We know that these ethics and compliance professionals are busy. They are juggling multiple jobs, if you will, at once. And so our goal is just to make their lives easier and to again, prescribe best in class initiatives and actions that they can take. And so super excited to be able to take those benchmarks, take this data, and within the context of the organization in a specific environment be able to consult and add value.
Emily Miner: Yeah. So Derek, to close us out let's talk about the future. Let's talk about what's next. What is on the roadmap for Catalyst Reveal? We're launching in October. It has a lot of great features and functionality and the ability to reveal insights to our partners. What comes after that? What are we adding on?
Derek Clune: Yeah, so ending on a high note here, this gets me very excited. So I mentioned reveal insights provide actionable data, and I've touched on the prescriptive aspect of having the tool work for the professional. And so that's really where we're going to be focusing on in the next year and out into two, three years into the future. So what this looks like in practice is taking all of the data from the entire LRN product ecosystem, bringing it into this single source of truth so that we can... If you think of a spider web, can pull from different parts of the web whether that's a high risk disclosure, or a knowledge check score, or a unsigned policy, or if we're bringing in hotline information from a partner, a hotline call. We want to be able to have this network of an ecosystem that we can pull from different places into a single source of truth to provide that data.
And then taking the next step is to prescribe specific action of, okay, this is what we've identified within the tool and the tool suggests that you should do this. And a lot of the capabilities around that is around AI and ML, artificial intelligence and machine learning. And so some of the four key aspects that we're looking at in 2023 will be natural language processing and search. So you could similar to Google, go into this tool and type a full sentence question and the tool can provide you with the answer. What's the average knowledge check score for my harassment course? And it's going to populate that answer for you instead of the click through to get to that answer. To provide quick answers to the administrator or maybe even the senior leader, or the chief ethics and compliance officer that's walking into a meeting with the board and needs to know that information quickly. So one aspect.
Second aspect would be auto notifications around the data. So giving administrators the ability to kind of program the system so it works for them. Meaning if I know the average score for a course is 70% and someone's scoring 30%, I need to know that. I want to get an automatic notification that lets me know this business unit, this location, or this gift of this amount was given. I need to know that information. And so being able to have those automatic notifications and have the tool work for you is another aspect. Two more that we're working on is around the auto narratives. And so that the tool again, having the tool work for you and prescribing action. So based on the data, here are the high risk topics that we see in your organization. Based on this benchmark here within this industry are the trainings that most people are rolling out.
So having auto narratives around the data that change based on your filters or the data that's coming in. And then the last piece is going to be on a forecasting. And what forecasting will allow us to do is to do some predictive analytics in terms of where we want the program to be in the future. And so we could see... If we touch back on the campaign data, we can see that okay, out of the 10 reminders we've rolled out five, you're at 30% of getting 100% completion. Here's the forecast, here's the trajectory that we expect you to get by your 10 reminders. And so being able to forecast different components of the ethics and compliance program, all of these aspects or all of these capabilities go back to those really two points that I've [inaudible 00:34:16] on providing the actionable data, having the tool work for you, and then the prescriptive part of what should you do. We've identified this, now what do we suggest that you do?
And so those are all key initiatives that we have for 2023 with the overarching idea of making this tool as self-service as possible. We want admin to be able to go in here and do all this on their own. Obviously they can rely on LRN if they need to, but we want to give them the power to be able to do everything.
Emily Miner: Wow. Derek, I'm struck by how valuable these types of insights are going to be for our partners and ultimately their organizations. Like what is this in service of? This is in service of helping employees around the world know what the right thing to do is in any given situation. And know how to behave in alignment with their company's values and their code and inspire principal performance. That's so exciting to hear about the future. And 2023 is not that far away, sadly this year has flown by but wow, I can't wait to hear more. Thank you so much, Derek, for coming on and sharing your insight with us and sharing about these exciting updates for our company and for all the companies that we have the honor of working with. I look forward to coming back and speaking with you and what is it about? Eight months or so, so we can hear the answers to some of these questions that we asked. Yeah. Thank you so much, Derek.
Derek Clune: Yeah, likewise. I look forward to it, Emily.
Emily Miner: All right. Well, my name is Emily Miner, and I want to thank you all for tuning in to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled podcast is brought to you by LRN. At LRN our mission is to inspire principled performance and global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us @lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode “Thirty years of innovation and influence” is the subtitle of the recent report issued by the United States Sentencing Commission. But what does that really mean in the context of the organizational sentencing guidelines? In this episode of LRN’s Principled Podcast, Eric Morehead, LRN Director of Advisory Services Solutions, is joined by one of the report’s authors: Kathleen Grilli, the General Counsel for the US Sentencing Commission. Listen in as the two discuss how the commission impacts business leaders and the creation of compliance programs.
Read LRN’s takeaways from the report here.
Principled Podcast Show Notes coming soon
Featured guest: Kathleen Grilli Kathleen Cooper Grilli is the General Counsel for the United States Sentencing Commission, having been appointed to the position on October 7, 2013. Ms. Grilli has been on the staff of the Commission since 2003, serving as an assistant general counsel from 2003-2007 and deputy general counsel from 2007-2013. As the General Counsel, Ms. Grill provides legal advice to the Commissioners on sentencing issues and other matters relating to the operation of the Commission. Ms. Grilli is the agency’s Ethics Officer and has conducted training on white collar crime and the organizational guidelines at numerous training events.Prior to working for the Sentencing Commission, Ms. Grilli was with the Office of Staff Counsel for the Fourth Circuit Court of Appeals. Before relocating to Virginia, Ms. Grilli was a partner in a small firm in Fort Lauderdale, Florida, handling civil and criminal litigation. Her previous work experience includes serving as an Assistant Federal Public Defender in the Southern District of Florida and as an associate at Akerman, Senterfitt and Edison, handling commercial litigation. Ms. Grilli is a member of the Bars of Florida and Virginia. She received a Bachelor of Arts in International Relations, with honors, from Florida International University. She graduated cum laude from the University of Miami School of Law.
Featured Host: Eric Morehead Eric Morehead is a member of LRN’s Advisory Services team and has over 20 years’ experience working with organizations seeking to address compliance issues and build effective compliance and ethics programs. Eric conducts program assessments and examines specific compliance risks, he drafts compliance policies and codes of conduct, works with organizations to build and improve their compliance processes and tools, and provides live training for Boards of Directors, executives, managers and employees.
Eric ran his own consultancy for six years where he advised clients on compliance program enhancements and assisted in creating effective compliance solutions.
Eric was formally the Head of Advisory Services for NYSE Governance Services, a leading compliance training organization, where he was responsible for all aspects of NYSE Governance Services’ compliance consulting arm. Prior to joining NYSE, Eric was an Assistant General Counsel of the United States Sentencing Commission in Washington, DC. Eric served as the chair of the policy team that amended the Organizational Sentencing Guidelines in 2010. Eric also spent nearly a decade as a litigation attorney in Houston, Texas where he focused on white-collar and regulatory cases and represented clients at trial and before various agencies including SEC, OSHA and CFTC.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Eric Morehead: 30 Years of Innovation and Influence is the subtitle of the recent report issued by the United States Sentencing Commission, but what does that really mean in the context of the organizational sentencing guidelines?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host today, Eric Morehead, Director of Advisory Service Solutions at LRN. Today, Kathleen Grilli, the General Counsel of the United States Sentencing Commission is joining us. She's one of the authors of this recent report, and we're going to be talking about how the commission impacts business leaders and the creation of compliance programs across the world. Kathleen is a real expert in this space and is a guest of ours last season where we talked about the seven hallmarks of an effective ethics and compliance program enshrined in the US Sentencing Commission's federal sentencing guidelines. Kathleen Grilli, thanks for joining us again on the Principled Podcast.
Kathleen Grilli: Well, thanks for inviting me, Eric. I appreciate it.
Eric Morehead: The commission just released this new report, The Organizational Sentencing Guidelines: 30 Years of Innovation and Influence. Even after more than 30 years, there are still, I think, at least from my perspective, many people who, when they start their career in compliance, are confused a little bit about why the Sentencing Commission is involved in corporate compliance. Can you talk just a little bit about how the US Sentencing Commission came to assume the role it has regarding compliance standards?
Kathleen Grilli: Sure. You say that people in compliance are confused about it, but the truth is, even in the criminal justice arena where the commission operates... Our guidelines are used in federal courts for sentencing organizations and offenders. Even in that arena, there's not really widespread knowledge about Chapter 8 and the hallmarks for an effective compliance and ethics program. That's because there aren't a lot of organizational cases sentenced every year.
But the reason the commission got into the business of corporate compliance has to do with its statutory mission. The commission was created in 1984 through a bipartisan piece of legislation called the Sentencing Reform Act, and that act did a couple of things as it related to sentencing of organizations. It provided that organizations could be sentenced to a term of probation, sentenced by way of a fine, and it required that at least one of those be imposed. This was something new.
It also subjected organizations to orders of criminal forfeiture, meaning the proceeds of the criminal activity could be taken from them, order of notice to victims, and orders of restitution. That act also created the commission, which is a bipartisan agency and tasked the commission with developing guidelines for use in criminal cases for sentencing. It told us what the purposes of sentencing are, which is just punishment, deterrence, protection of the public, and rehabilitation of the offender. The commission had to decide what to do for sentencing of an organization. Obviously, you cannot put an organization in prison. Unlike individual offenders where sentencing ranges in terms of incarceration are something of the norm, you had to figure out what to do to sentence organizations.
With an organization, as we know, the bottom line is they're in business to make money. In developing the organizational guidelines, the commission came up with its notion that it should use fines to incentivize self-policing. It would punish organizations who were not self-policing or not trying to prevent a crime or commit the offense with certain aggravating factors more severely than those who were trying to prevent and detect crime. That's how we got into the business of corporate compliance.
Eric Morehead: Yeah. And it is interesting that the original writ was from the statute that you examine this. Can you talk a little bit about how the commission got specifically to those hallmarks, those programmatic pieces that we talked about a little bit on our last podcast a while ago? What was the process for the commission to get to those standards, those specific compliance pieces of the puzzle, if you will?
Kathleen Grilli: The commission started its work in 1986 on organizational guidelines with a public hearing at which it received testimony from a variety of witnesses across various different wakes of the world: academics, people in business, government agencies, and the like. Over about a five-year period, because as I said, the Commission started its business in 1986 and didn't actually promulgate the organizational guidelines until 1991. During that period of time, there were numerous public hearings attended by a wide range of witnesses from different areas of the law, academics, government agencies, business owners, representatives of just different industries, and the like. The Commission had these hearings, they heard testimony, the Commission went back and developed drafts with proposals for how organizations would be sentenced. They published those drafts. The process of publishing is really a solicitation for public comment, so they got public comment on the drafts. This went on for a good period of time.
In the meantime, the Commission was doing research. We had academics writing proposals and giving us ideas on how to implement the purposes of sentencing, which again, as I said, were just punishment, deterrents, protection of the public, and rehabilitation. Eventually, it came back to how does an organization get in trouble to begin with? An organization doesn't act alone. We have this theory in the law called vicarious liability where an organization is held responsible for the acts of its agents, meaning its employees. If the employees are the bad actors, everyone finally came to the conclusion that the best way to incentivize or prevent corporate crime was for the organization itself to self-police and to direct its employees and talk about what is and is not appropriate. That's how we ended up with compliance standards.
At the time that they started all this work, compliance and ethics was not widely accepted in the industry. There was a little bit of compliance in the context of antitrust and then there was, in the defense industry, there was an initiative relating to that. Those ideas got floated before the commission and it generated a lot of interest. That's how they started developing the standards.
Again, the standards were included in proposed guidelines that were published and they got public comment and not long before the actual vote where they adopted these guidelines. Even folks who were skeptical about whether this was going to work or not thought that the Commission had gotten the hallmarks of a compliance program right. They thought that they made sense and that they gave sufficient guidance to folks on what would and would not work.
Eric Morehead: That's a really important point too, and I often will say this when I'm talking to people and I talk about my background. Full disclosure, I'm a former employee of the US Sentencing Commission, so I have a strong belief in the mission of the organization. But oftentimes, I will say, "Well, they were first," and part of being first is you've tried different things and maybe you don't know exactly what's going to work and what is going to be successful. But I think over time, and this report really homes in on that, this notion that the direction that the Commission took from '86 to '91 really has paid off a lot of benefits.
One of the conclusions, one of the key conclusions from the report is that perhaps one of the biggest wins for the organization over the years is the widespread of adoption of the guidance and, in particular, the standards for what makes an effective compliance program.
I have a two-parter here. Do you think the Commission recognized in '91 how important that might be? And does the Commission today understand the overall importance of the organizational guidelines, and in particular, 8B2.1, those compliance hallmarks? Did they understand it then and what's the understanding of the Commission now of the relative importance of these?
Kathleen Grilli: Well, let me just back up a minute and just say that the commissioners who promulgated the organizational guidelines in 1991 no longer serve on the Commission. Commissioners have term limits. It's a different group then. It was a different group in 2004 that made the changes that brought ethics into the standards for compliance and ethics programs. As we were talking about before we started this podcast, we have a brand new group of seven new commissioners recently nominated by the President and confirmed by the Senate. You have different folks working on it. I can say that in the process of doing the research for this publication and others that I've worked on in this area, the Commission I don't think ever expected what we see today 30 years later. This widespread influence not only in terms of its use in the criminal justice arena, but how it has impacted other agencies.
And we'll talk about that and the global reach. The Commission itself said, "This is an experiment." They had hopes that it would lead to better actors in the corporate world, but those were hopes and there was a lot of skepticism from the business community when this process was ongoing about whether this was going to work or not. I think we're always blown away when we realize the impact of it, and I say that from a personal point of view, too. Because when I came to the Commission and I've been on the staff for some time, I was not aware of Chapter 8. I had never represented in court an organization, but only individuals.
And the first time I went to a compliance and ethics program where I saw and understood how well received and well regarded and what an impact we had had outside of the criminal justice arena, it sort of blew my mind that I know Judge Murphy and her Commission in 2004 or just before 2004, when they adopted the changes, they learned about it too when they came on board and it sort of blew them away. And I don't know with my current new bosses how well informed they are about this. This is really one of the reasons why, before they came on board, the staff and the then Commission, the one member, Judge Brier wanted to put this report out, memorializing the 30-year anniversary of the organizational guidelines. We're very excited about it, I have to say.
Eric Morehead: No, it is an amazingly effective rubric that the Commission put together and that the Commission is taken a measured approach from my opinion, both in 2004. And then I had an up-close look in 2010 when I was on staff through that process. I think that its impact is pretty incredible 30 years later, looking back.
One of the other things that's incredible... And I talk about new things when you come to the Commission. I had never really paid much attention to sentencing data until I joined the Commission in 2007. And the majority of the actual pages of this report have a lot of really interesting data about the organizations that have been sentenced over 30 years. Some key takeaways include trends that many of us, for those of us who are sentencing nerds, have seen over the years about the impact on small organizations, for example, versus larger organizations, making up the vast majority of defendants in that data set.
To me, a lot of looking for what makes... Because compliance professionals that are listening to this podcast and that are not necessarily interested in sentencing per se, but interested in the sentencing guidelines because of compliance, they're looking for what makes a successful compliance program from sentencing data. To me, a lot of it is what you don't see. It's sort of like looking for... I liken it to looking for a black hole when you're an astronomer. You can kind of tell the telltale characteristics of a black hole existing because of how it affects everything else. And we don't really see organizations that have successful programs in this data. There were just 12 organizations out of those 5,000 or so in 30 years.
Kathleen Grilli: 11.
Eric Morehead: 11. See? I even increased the number. It's just 11 organization out of 5,000 or so, 4,900 and some change, that have ever been deemed to have a successful program. What are some other striking things that you and the team noticed looking over this data and these trends for 30 years?
Kathleen Grilli: Let me just first say what this data is and what it is not so that listeners can understand why they may not find what they're looking for as to what makes a successful compliance program from the data. This data is for organizations, whether it be a corporation, a closely held corporation, partnership, whatever, but organizations that a federal prosecutor has decided to charge and gets convicted of a federal crime. It doesn't include organizations that the prosecutors decide, "Oh, we're going to enter into a deferred prosecution agreement or a non-prosecution agreement." It doesn't include organizations where a regulatory agency has seen that they violated some of the regulations, but they've decided not to proceed against them criminally but to pursue civil adjudications.
I mean, in some ways, this data is about the folks that prosecutors decided were the worst of the worst organizations. You don't see what makes a successful compliance program in this data, but I like to say what we do see is that some of the things that the Department of Justice says to you about what they're looking for in deciding whether to prosecute an organization or not might find support in this data. We concluded that the lack of an effective compliance and ethics program might be a contributing factor to criminal prosecutions against organizations. And what specifically led us to that?
Well, in the 30 years that we've been collecting data, overwhelming majority of the organizational offenders in our data set didn't have any program at all, much less an effective program. 89.6%, as you said, as you mentioned and asked me the question, there were only 11 sentences in fiscal year 1992 that got a culpability score reduction for having an effective compliance and ethics program. And I want to stop on those 11 because we went back. Everybody's always interested in what happens with those organizations or why was their program effective? And we were not able to suss a lot of information from the documentation to sort of tell people what it was. There wasn't a lot of descriptive information in the documents we received that would answer that question, but there's only 11 of them. And most of those 11 were very small organizations. It means they didn't have to have a very complex type of program.
More than half, 58.3%, of organizational offenders sentenced under the fine guidelines got a culpability score increase for involvement in or tolerance of criminal activity by upper management would suggest to you. If the management or the substantial authority personnel are in on it, they may well end up sentenced before a federal court. I think that's an important point, too. And very few of these organizations, we'd only saw 1.5% overall that did the three things that get you the maximum reduction off your culpability score, which is self-report, cooperate, and accept responsibility. There were very few organizations, even though there were many that pleaded guilty and accepted responsibility, that actually self-reported. That's important because you hear the Department of Justice talk about why that matters. And this data sort of offers support for the fact that it does.
And then the other thing we saw is that courts are now ordering organizations to implement effective programs in about 20%, one-fifth of the cases that come before them when they impose probation. This was the kind of data that we thought would help fuel the discussion or the debate on the importance of having an effective compliance and ethics program. The other thing you should note about our data, I think it's important too, is that a good percentage of the organizations that have been sentenced over the last 30 years are smaller organizations. It's not large publicly-traded Fortune 500 companies. It's smaller, less number of employees. I think that matters too.
Eric Morehead: That's a trend that I think we've noted in the data, because the size of organizations, the number of employees has been a data point that the commission has released over the years on an annual basis. And by the way, as it's worth mentioning for people who are interested, there'll be a link in the show notes here for this particular report we're talking about. But the Commission puts out data all the time. And at least on an annual basis, there's the Sentencing Commission's Sourcebook on sentencing, which has discussion on organizational cases and includes some of this data. You don't have to wait 30 years to see the trends again. You can keep up with it at the Sentencing Commission website.
Yeah. The small organizations... I think a big surprise to people who have first heard about this because we see the headlines all the time about the Enrons and, I'm going to date myself here, World Comps and Volkswagen and some of the other organizations. Some of those aren't actually even criminal sentences, as you point out. Those are deferred prosecution agreements or civil settlements of some sort, but those are the companies that make the headlines. It's the little guys, small and medium-sized organizations, that take these big hits more frequently than the larger organizations. That, I think, is surprising to people who aren't familiar with the data, but that's a consistent trend throughout the entirety of the enforcement, at least throughout the 30 years that the Commission's been keeping track.
Kathleen Grilli: Yeah. It may change now, given what the Department of Justice said last week.
Eric Morehead: Yeah. You never know. Yeah never know. We'll have to pay attention and then look at the Sourcebook next year and see what the differences are. The other impact beyond our friends at the Department of Justice and the courts throughout the United States is the impact that the Commission and the organizational sentencing guidelines and these standards have had on other enforcement agencies besides the criminal enforcement and also internationally, which I think is very interesting.
Can you talk a little bit... And that's documented in chapter three of this report. The first chapter is talking a little bit about the history. The second chapter is the data that we were just discussing. And then chapter three talks about how the USSC has encouraged other enforcement agencies and regulators to focus on good governance and compliance. Can you discuss a little bit about what the team found when you researched that?
Kathleen Grilli: Yeah. I think that using the word that the USSC has encouraged suggests that there's some sort of active work going on by the Commission. Let me just say that I don't think that is a fair statement. The Commission did its work and let its work speak for itself, and it has sort of spread throughout regulatory agencies and/or the globe just because it makes sense, I think. Anyway, that's my personal opinion. But I made reference to the Department of Justice, and so I'll start with a Department of Justice if I could.
The Attorney General, where it's his designee is an ex-officio member of the Commission, a non-voting member. Obviously, the Attorney General Department of Justice were actively involved in the development of the chapter eight itself and then the subsequent amendments in 2004 and 2010. But you see the impact of the guidelines in their evaluation of corporate compliance programs and all of the information that they release and discuss on how they focus on compliance in deciding how to prosecute an organization.
Just last week, the Deputy Attorney General, Lisa Monaco, talked about changes that they're going to make. There was sort of an oblique reference to our data, which is that there's been a drop in corporate prosecutions that we see in the data. I think there were less than a hundred last year, and they talked about sort of reversing that trend and looking at that, that the department thinks this is important. And they've placed a lot of importance recently on compliance programs because she said companies need to actively review their compliance program to ensure that they adequately monitor for and remediate misconduct or it's going to cost them down the line.
Kenneth Polite, who is the... I think it's Assistant Attorney General of the Criminal Division. He's a former chief compliance officer and they've made a lot of emphasis in the department on active review of programs and true independence for the chief compliance officer. That's the Department of Justice who obviously are actively involved in using the guidelines in federal courthouses, but then you have other regulatory agencies.
I'm going to run through them real quick and just say the SEC, HHS, EPA, FERC, which is Federal Energy Regulatory Commission, and the FAR all have requirements built into them about compliance programs. And most of them say that they're looking to the guidance on the guidelines. Some of them adopted them full scale, some of them may have modified them a little bit. And all of that came after chapter eight in 1991. All of those agencies look to the guidelines.
And then we see that if you look internationally at what's happening around the world in terms of anti-corruption, anti-bribery, and all the like, that elements of the hallmarks for an effective compliance and ethics program found in the guidelines are making their way into legislation, into programs, into initiatives that foreign governments are releasing. And I can't even keep track of it, truthfully, but it seems to be coming up more and more and more.
When the Commission promulgating the guidelines in 1991, they described them as an experiment. We wanted in this publication to sort of show, did the experiment bear fruit? And I think all of that suggests that it did. These changes and everything that goes back to those original seven steps laid out in the guidelines and elevated in 2004 to give them a little more prominence. It really is very, very exciting. I feel bad. I sound sort of like I'm patting myself on the back, and so I want to make it really clear to the listeners. I was not on this staff in 1991. I wasn't working on this. I did not have anything to do with the 2004 amendments. I came into it after the fact, but it's just really exciting to see it and to see the impact and how well regarded the Commission's work is.
Eric Morehead: No, I think that's right. I think the report really sums up what I think a lot of us have felt. Again, I'm probably biased, but a lot of us have felt this way for a while, that the standards, really, have set the bar and provided kind of a North Star for compliance programs for that whole generation, that whole 30 years. And it's made a difference in millions of people's daily lives in their working lives, because it affects how their company operates for the good or for the bad. And that really makes all the difference to us. I think you guys can successfully pat yourselves on the back a little bit.
Well, last thing, again, knowing that we're talking to a lot of compliance officers who hopefully have, if they're new, have a little bit more appreciation as to why the US Sentencing Commission is involved in their lives, are there other takeaways from the research and work that the team put into this report that you think are particular importance for compliance professionals or things they should be aware of?
Kathleen Grilli: Well, one of the things that I hear when I intend conferences and one of the things that I think folks [inaudible 00:26:26] is the fact that there's not enough investment in compliance. The bottom line in business is money and making money, and you can't necessarily provide metrics that show how your work is going to add to the bottom line. Then it's hard to make the case. Now, I know these days, in recent years, folks have come up with ways to measure how compliance and ethics does contribute to the bottom line, and I really believe it does. But this data can offer you the picture of what happens if you don't.
Eric Morehead: Yeah.
Kathleen Grilli: Because since 1992, courts have imposed nearly $33 billion in fines on organizational offenders. The average fine was over $9 million. Although the median was a little lower, it was only $100,000. But for a small mom and pop organization, a hundred grand is a lot of money. And the other thing is that courts will sentence organizations to probation. Over two thirds of the organizational offenders in the last 30 years have been placed on probation with an average term of 39 months, where you're going to have to be reporting to a probation officer and complying with all these requirements. And that's time consuming and costly, too, when you think about it. There's a little bit there that can answer the mail in terms of why am I going to invest in compliance and ethics.
Eric Morehead: I'm a big believer in making the positive business case, but you also need to make the "everybody's going to go to jail" case too.
Kathleen Grilli: Well, especially in light of the recent guidance that the Department of Justice, I mean, where they're going to be looking at individuals and they're going to be requiring organizations to give up all individuals who might be involved, I think that's something that folks should keep in mind as well. It's important because it's not just going to be the company, it's going to be the employees too.
Eric Morehead: Yeah. And again, that's important data. That's in chapter two of this report, that over 50% of the time over the period, you've got at least one living, breathing human being who's also faced charges consistent with the charges that the organizations faced. It includes actual human beings in this process, not just the organization.
Kathleen Grilli: I think we're only going to see an increase if the department's guidance holds true that those numbers may go up.
Eric Morehead: Yeah. We'll have to check. We'll check in next year after the Sourcebook comes out and see if the trend has moved. Kathleen Grilli, it's been a tremendous honor again to have you on our podcast and really appreciate you taking the time.
Kathleen Grilli: Oh, it's an honor for me to be here. Thank you so much for inviting me.
Eric Morehead: No problem. My name is Eric Morehead and I want to thank all of you for tuning in once again to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us lrn.com To learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen, and don't forget to leave us a review.
What you'll learn in this podcast episode Most of us have heard the phrase, “If you see something, say something.” But what does that look like when someone witnesses bad behavior in the workplace? How can companies help their employees be active bystanders in the face of misconduct? In this episode, LRN colleagues Felicity Duncan, senior instructional designer, and Kristen Motzer, learning director, share their expertise on bystander intervention training and how organizations can effectively give employees the knowledge and skills they need to step in and help their coworkers. Listen in as the two share insights from their latest course development for the training library at LRN.
Principled Podcast Show Notes [1:22] - What does it mean to be a bystander, and why do organizations have bystander training?
[3:05] - Unpacking the idea of a “Speak up culture”.
[3:40] - Why don’t people get involved when they see problems?
[6:08] - How to train people to be active bystanders?
[9:36] - Why are scenarios so important?
[12:14] - How DEI relates to bystander intervention.
[15:26] - How having a robust bystanding and speak up culture will benefit partners.
Featured guest: Kristen Motzer Kristen Motzer is an experienced leader in values-driven, empathetic behavior change. As Learning Director for the LRN Library she oversees course content development and online, blended, and facilitated learning experiences. She has expertise in human-centered learning design and has developed and managed education and learning programs at institutions such as NYU Langone Health, NeuroLeadership Insitute, Stanford University, Xavier University, and the Cleveland Clinic. Kristen holds a BA from Wright State University and an MA from Carnegie Mellon University and resides in Chicago.
Featured Host: Felicity Duncan Dr. Felicity Duncan believes that training and communication interventions have the power to transform behavior, including driving people toward more ethical treatment of those around them.
Felicity graduated with a Ph.D. in Communication from the University of Pennsylvania. After teaching at the college level for several years, she transitioned to workplace education to have a bigger impact on working adults by providing them with the training they need to truly thrive in their roles. At LRN, she is focused on developing high-impact, behaviorally focused content for the LRN Library. Her most recent project saw her working with the Library team to create a powerful new DEI Program that includes not only LRN’s world-class Inspire courses but also a set of microlearning assets designed to support, reinforce, and guide behavior change.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Felicity Duncan: Most of us have heard the phrase, "If you see something, say something." But what does that actually look like when someone witnesses bad behavior in their workplace, like bullying or harassment? And how can companies help their employees be active bystanders in the face of misconduct? Hello, and welcome to another episode of LRN's Principled podcast. I'm your host, Felicity Duncan, Senior Instructional Designer here at LRN. And today, I'm joined by my colleague Kristen Motzer, the Learning Director of LRN's Library Course Content. Kristen has over 20 years of experience in technology supported learning and development, and I am a PhD with a decade of experience working in both academic and professional training environments. Kristen, thanks for joining me on today's Principled podcast. So, let's start with the basics. What does it mean to be a bystander and why do organizations have bystander training? Can you explain the sort of core idea here?
Kristen Motzer: Sure. A bystander is someone who witnesses misconduct but isn't directly involved in the situation. So, they see something happening, but they're not actually a part of it. So, being an active bystander is about doing something as opposed to just standing by when you see someone being harassed or bullied or abused. And there's actually a lot of research showing that bystander intervention can have a major impact. When bystanders intervene in situations in the right way, they can stop abuse in its tracks, support victims, and really make perpetrators reevaluate their behavior.
However, very often bystanders witness abuse and harassment and say nothing. That's why we need active bystander training that equips people with the tools they need to intervene successfully when they see something wrong. So, recently we've seen a lot of interest in bystander training from our partners, and Chicago now has an requirement for our long bystander of training for employees in Chicago. But really beyond that, there's a recognition that engaging your workforce to do something, to fight back, to say this is not behavior that we want to have in our workplace can be really powerful. And it's creating a speak up culture.
Felicity Duncan: So, tell me a little bit more about this idea of the speak up culture. What do we mean by that?
Kristen Motzer: So, it's creating an environment where people feel safe to be able to speak up. Of course, speaking up is a little bit scary. You don't know what's going to happen. There could be retaliation, things could change. The folks that usually eat lunch with might not want to eat lunch with you anymore. Things might change an environment that we spend a lot of time in at work. So, creating a safe space where there's an expectation that you see something that you don't want in your workplace culture, you're going to speak up and say something.
Felicity Duncan: So, obviously acts of bystander intervention is really important. We really want this speak up culture that's going to help us build a better workplace environment. So, why don't people get involved when they see problems?
Kristen Motzer: It's a great question, and it's really important to understand that it's not because people don't care. It's not that we're bad people at work or wherever we might be. It's that we're human. And intervening can be really difficult. Psychology has shown research from the 60s and onward that people have good intentions, and people tend to actually believe that if they saw something happening like harassment, discrimination, that they would get involved. But when it actually happens, that intention that they would get involved disappears and they just freeze up. And it's because of our fight, flight, freeze response kicking in. We're facing an unknown situation. We don't know how the people involved will react, and we're just scared of looking stupid, upsetting someone, getting into trouble, being embarrassed besides the possible outcomes like having some kind of retribution losing our job or our workplace friendships. So, from a biological and neuroscience perspective, our brains flood with stress hormones and react as though we're facing something like a bear, a really dangerous situation even though it's a social threat, not an actual bear, it can feel just as intense.
So, when this happens, it's really hard for humans to overcome these instincts and get involved. So, we freeze. We try not to make eye contact, we put our heads down, try to hide, and if we're in a group, behavioral psychology research is found that it's even worse. So, when there's multiple people witnessing a situation, everyone's kind of expecting someone else is going to take action, and we sort of take the lead of kind of like group think. We take the lead from those around us, and if they're not doing anything, then we won't do anything. We have all these reasons why people don't intervene when they're bystanders. And Felicity, given these barriers, how do you train someone to be a bystander at work? I would love for you to take me through how you created the Inspire Active Bystander Training.
Felicity Duncan: Well, luckily for us, the research that you mentioned earlier that talks about why bystanders don't intervene also gives us hope. It shows us how we can overcome those barriers to intervention. At what it really boils down to is being prepared, right? Being ready to get involved in these situations. But the truth is, it's a long road to get learners to that point. So, I'm going to walk you through what we did and why we think that works. So, we begin our training by acknowledging that this is hard. As you said, a lot of people assume that if they're in a bystander situation, that they're going to do the right thing, and then when it actually happens, they're unprepared for how scary it is, and for how strongly and viscerally they react to that fear, right? And so what we try to begin with is getting our learners to understand what to expect, right?
We're really frank about the fact that it's going to be scary. Your palms are going to be sweaty, your heart is going to be pounding. You're going to be really afraid, all right? And telling them that feel the fear, but overcome it because that is not a reason not to intervene. It's just part of the experience. And so, in that way, we try to help prepare them for how it's actually going to be. What they're actually going to feel when a situation arises where they need to make some kind of intervention. Then what we do is we give learners some very practical strategies for how to intervene. And again, we're preparing them, right? We give them a literal list of step one, step two, step three, Here are four possible approaches to intervention. Here's how you would implement those approaches to intervention. So, it gets incredibly practical so that when learners are faced with these situations in the real world, they don't have to think like, "Oh, what am I going to do?" They have a set of actual steps that they can take.
And then finally, we let them essentially practice using literally dozens of real world scenarios. And there's an important point here that I want to make about our training is that it's really focused on the workplace. Now, a lot of the research that you mentioned earlier, and a lot of general bystander research comes from non-workplace environments. So, a lot of it comes from campus sexual assault prevention and also from street harassment. So, we're getting involved in preventing street harassment more recently. And those are really different situations to what you'd face in the workplace, right?. In a street harassment, there's a real threat of violence, its strangers. What's at stake is perhaps your physical safety. And of course in sexual assault, if we're talking particularly, a lot of this work is done on college campuses, there's a lot more social pressure. People are really afraid of offending their friends. And that's really different to what's at stake in the workplace.
You mentioned earlier the issue of retribution and retaliation. So, if I get involved, is that going to undermine my promotion? If I say something, am I going to start getting put onto bad projects? So, we really try to dig into the fears and issues that arise in a workplace context and our scenarios are really focused on that.
Kristen Motzer: So, let's talk about this a little bit more. You mentioned scenarios multiple times, and I know this learning experience that we've created includes dozens of scenarios. So, why are these so important?
Felicity Duncan: It really comes down to that question that you asked originally. What can we do to help learners overcome their biological resistance to saying something and get them to actually take action when they're witnessing misconduct? And as we said, the key is preparation. And we know the best way to prepare for a situation is to really think in very concrete terms about what you would do in that situation. In all kinds of training scenarios, we really focused on planning and preparation to help you deal with the situation that might be emotionally difficult.
And so, our scenarios illustrate dozens of real world scenarios that our learners or people encounter every day. So, a coworker telling a sexist joke maybe, and abusive customer using racist language. And then we look at like, "How do you handle those situations as a bystander who is witnessing misconduct?" So, in other words, we ask people, "What would you do in this situation? What's the right thing to do? What are the possible consequences of doing that?" And that gives us an opportunity to talk about retaliation and sort of the protections that exist in workplaces to keep people safe from retaliation.
So, the idea is to really help learners engage with the practical steps that they should take when they're bystanders. Because the more someone plans their responses to different situations, the more likely that person is to actually take action when they're faced with those situations. And what we want to do by giving all these scenarios, by giving these practical strategies and steps that we're providing in our training, is equip learners with a practical toolkit of responses. So, when they're in that bad situation and their heart is pounding and their palms are sweating, and they're feeling anxious and they're scared, they don't have to think, "What should I do?" They know what to do and they're ready to do it. And that's really the only way to help people overcome these natural biological barriers to intervening in bad situations. But Kristen, I want to ask you, in our library, we've put bystander training in our diversity, equity, and inclusion suite of content. So, why have we conceptualized bystander training as part of DEI?
Kristen Motzer: That's a really great question and an important one. So, if we think about our philosophy at LRN, and within our inspire content with the library, we think about DEI as the antidote to harassment and discrimination. So, diversity, equity and inclusion content around respect, allyship, these are the kinds of things that the mindset and the skills we build that will prevent harassment and discrimination.
So, if we think about bystander and being able to put that respect and allyship to work, when you see something that needs to be dealt with, that should be reported, bystander intervention isn't just about harassment and discrimination and these kinds of scenarios. It's about as much that helps our HD programs. It's about a kind of culture that you want to build. It's not just about preventing the worst kinds of sexual harassment and discrimination. It's about actively speaking up and knowing that when people see microaggressions, when they see subtle behavior that excludes people, that hurts victims. But it's not illegal. It's not quite at that level of being something illegal, but it's saying, this is not something that we want to see in our culture and our culture, we treat people with respect no matter who they are.
And DEI is about building a culture that gives everyone the freedom to be themselves and the tools they need so they can thrive and make their best contribution and be these ethical employees in this ethical culture that we want to have. And we have to decide that's what we want to create, and that's what we want to protect. So, it's more than just preventing the worst kinds of bad behavior. It's about being intentional in saying instead of just thinking prevention, we're going to build. We're positively choosing these behaviors that create an equitable and inclusive culture for everyone. So, we see bystander training as a critical part of this broader DEI program, and it's really seeing it as a tool that can enable our partners and employees to create and maintain the kind of culture that they want to have at work.
Felicity Duncan: I think that's a really important point, and it's essentially the difference between doing the baseline of compliance and moving further beyond that to actively create good. At LRN, we argue that by doing that, by going beyond, we obey the basic rules to we actively try to make a great environment, that is a real business advantage for organizations that that taking those extra steps is not only the right thing to do, but it's also the smart thing to do. So, can you talk a bit about how you would see having a robust bystander training program and having a speak up culture is actually going to benefit partners beyond the sort of avoiding the fines and problems that come with harassment?
Kristen Motzer: Absolutely. That's a great question. So, if we think about this kind of culture where employees speak up, it's a culture where employees feel trust. And we know that employees feel that trust, not only will they speak up, but they will behave more ethically. In general, they will feel, this is the environment we're in, this is what the culture expects from me. This is what the highest levels of leadership expect from employees and from our culture. This is what we do here. So, if you think about that trust and that psychological safety of being able to be who I am and know that I can speak up, if I see behavior that I don't want in the workplace, I go to work to do a good job, to do something that I'm passionate about doing, and I shouldn't have to worry about am I going to get harassed today or discriminated against.
So, it's really in everyone's best interest to create this culture, because also the trust, it increases engagement. So, every organization wants engaged employees. It's good for business. So, if we think about this kind of culture that encourages people to be themselves and to stand up for others, then you've got employees who are engaged with the organization, with its values and the mission that it's trying to achieve, and that's good for everyone.
Felicity Duncan: See, and I think it's really important to draw these connections because you can think about bystander training as being, well, there's this new Chicago requirement and we're going to have to give people an hour of bystander training and get that compliance box ticks. But I think it's really important for companies to think about this more broadly. About culture, about engagement, about having happy people in your office who are there for more productive, right? None of this is happening in isolation as a box ticking exercise. It's really all about building the kind of workplaces where people want to be.
Kristen Motzer: Absolutely.
Felicity Duncan: But clearly this is a conversation we could be having all day, but we are out of time for today. Kristen, thank you so much for joining me on this episode. My name is Felicity Duncan, and I want to thank you all for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcasts on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode A few weeks ago, the United States Sentencing Commission (USSC) issued a report titled The Organizational Sentencing Guidelines: Thirty Years of Innovation and Influence. The publication summarizes the history of Chapter Eight’s development and discusses the two substantive changes made to the elements of an effective compliance and ethics program. So, what does this mean for compliance professionals? In this episode of the Principled Podcast, host Jen Uner, Strategic Communications Director at LRN, talks about the guidelines with Eric Morehead, Director of Advisory Services at LRN. Listen in as the two discuss how these updates—and the wider USSC—impact corporate governance.
The purpose of the U.S. Sentencing Commission is to study and develop sentencing policies for the federal courts. The Commission serves as an information resource for Congress, the executive, the courts, and the public on matters relating to federal crime and sentencing. Our episode today focuses on Chapter 8, which addresses organizational sentencing guidelines, not individual sentencing guidelines which is also a significant focus for the USSC.
Principled Podcast Show Notes [1:24] – Explanation of the new publication from the U.S. Sentencing Commission and why it matters.
[6:42] - How the original standards have held up over the last 30 years.
[7:51] - Eric outlines some of the highlights of the most recent publication.
[12:53] - The real repercussions for organizations.
[14:58] - The relationship of the Sentencing Commission with the DOJ and SEC.
[18:33] - Steps organizations should take when crafting their own E&C programs.
[21:43] - The role of company culture in determining how effective the program will be.
Featured guest: Eric Morehead Eric Morehead is a member of LRN’s Advisory Services team and has over 20 years of experience working with organizations seeking to address compliance issues and build effective compliance and ethics programs. Eric conducts program assessments and examines specific compliance risks, he drafts compliance policies and codes of conduct, works with organizations to build and improve their compliance processes and tools, and provides live training for Boards of Directors, executives, managers, and employees.
Eric ran his own consultancy for six years where he advised clients on compliance program enhancements and assisted in creating effective compliance solutions.
Eric was formally the Head of Advisory Services for NYSE Governance Services, a leading compliance training organization, where he was responsible for all aspects of NYSE Governance Services’ compliance consulting arm.
Prior to joining NYSE, Eric was an Assistant General Counsel of the United States Sentencing Commission in Washington, DC. Eric served as the chair of the policy team that amended the Organizational Sentencing Guidelines in 2010.
Eric also spent nearly a decade as a litigation attorney in Houston, Texas where he focused on white-collar and regulatory cases and represented clients at trial and before various agencies including SEC, OSHA and CFTC.
Featured Host: Jen Üner Jen Üner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Jen Uner: A few weeks ago, the United States Sentencing Commission issued a report titled The Organizational Sentencing Guidelines: 30 Years of Innovation and Influence. The publication summarizes the history of Chapter Eight's development and discusses the two substantive changes made to the elements of an effective compliance and ethics program. Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Jen Uner, strategic communications director at LRN, and today, I'm joined by my colleague, Eric Morehead, director of advisory services solutions at LRN. We're going to be talking about the guidelines, and how it impacts corporate governance and what compliance professionals need to know. Eric Morehead is a real expert in the space as he once worked on these guidelines in a prior role at the US Sentencing Commission. He advises LRN clients now on these topics. Eric, thank you for coming on the Principled Podcast.
Eric Morehead: Thanks, Jen. It's good to be here.
Jen Uner: So hot off the press is this new publication from the US Sentencing Commission. Tell us about what it is, why it matters, and especially to owners of compliance programs at their organizations.
Eric Morehead: Well, it's sort of a look back over the last 30 years. The Sentencing Guidelines for organizations were first promulgated and came into effect in 1991, so technically the 30th anniversary was last year, but the report has just come out now, and over those 30 years, there's been about 5,000 organizations that have been sentenced under the US Sentencing Guidelines. The Sentencing Commission and the Sentencing Guidelines have to do with federal sentencing, so either individuals or organizations who have been charged with a federal offense and find themselves in a federal district court, somewhere in the United States, and they either have pled guilty, or been found guilty by a jury, or found guilty by a judge after a bench trial, and now they're being sentenced. So when you sentence an individual, obviously, that can include a fine in restitution, but also time in a federal penitentiary.
You can't jail an organization, but the Organizational Guidelines have put together over the last 30 years standards by which the judge can assess fines, restitution, and also order when necessary compliance reforms and implementation. Since you can't put the organization behind bars, you can however, put the organization on probation and require the organization to make some necessary reforms, if you will. So that's a kind of quick background of what the guidelines are for those of you who weren't sure, and why they matter to us, because the implementation of compliance standards is baked into any kind of probationary sentence or sentence that's handed down to an organization, or can be baked into, I should say.
Jen Uner: And you have personal experience at the USSC.
Eric Morehead: Yes, I worked at the Sentencing Commission from about 2007 to 2011, and during that period, there have been two amendments to the original guidelines that were first put out in 1991 for organizations. The first was in 2004, partly in response to Sarbanes-Oxley and the legislation that came out at that point around implementing reforms for organizations and their governance, but also there was back at the time in the early 2000s, a task force put together that the Sentencing Commission took some advice from. And so they made some amendments in 2004. The primary thing that happened in 2004 is that these compliance standards that are in the Sentencing Guidelines were put more front and center.
They had been what are called application notes before, and they were actually promoted, if you will, to an actual textual listing in the guidelines. Just making them more prominent is really what it boiled down to. Also, putting a little further definition around the components of an effective program, training, governance and oversight, written standards, and procedures in place, reporting mechanisms, that we all know most organizations have an anonymous reporting mechanism, a hotline or helpline out there. That comes out of these standards that were first put together by the US Sentencing Commission. They were the first national standard in the United States anyway that suggested having a reporting mechanism, including with an anonymous option.
Enforcement, discipline, and incentives often overlooked, but the Sentencing Guidelines have been talking about incentives for the past couple decades as well. And then in 2010 while I was there, the second amendment to the Organizational Sentencing Guidelines was undertaken, and that also strengthened that relationship between the governing authority of the organization, the board of directors, or whatever the oversight of a particular organization might be, because these guidelines affect not just public companies, but any kind of organization, so nonprofits, governmental agencies. Any kind of organizational structure is contemplated by the guidelines, and the 2010 amendments strengthened that relationship between the people actually responsible for the program and the governing authority of the organization, and also provided some incentives for organizations to come forward and to reform their programs. So those things have all happened over the years.
Given the length of time that the Sentencing Guidelines have been in effect, now 30 years plus, to only have gone back and revisited them twice is not that significant. So they've been kind of bedrock standards that have existed and been well known. We often talk about them as the hallmarks of an effective program for this entire time, and the commission gathers data, and so the other big piece of this report that's very interesting is there's 30 years worth of data. And in fact, the majority of the report goes through in much detail about the demographic characteristics of organizations that have been sentenced over the years, how many organizations have received credit for having an effective program. Spoiler alert, not very many out of the 5,000, less than a dozen. So that's the other great thing about this report for those of us who are interested in compliance is you have a great wealth of data to see what the characteristics are, and how organizations have gotten into real serious trouble in the past.
Jen Uner: So you were saying there have only been two amendments since inception?
Eric Morehead: Yes.
Jen Uner: That's pretty interesting, because it kind of speaks to how enduring.
Eric Morehead: Yeah, they got it right, and the primary takeaway in this report in the executive summary in the beginning is that the biggest impact that the commission sees for its work is that these standards have become so universally accepted, and that's not just in the United States. That's across the world. These standards are seen to be when you're talking about effective compliance programs, they're seen to be sort of the bedrock, if you will. There are obviously other international standards out there in Europe, and Asia, and other places where government agencies and international agencies like the OECD Good Guidance that came out well over two decades ago itself.
They all kind of trend and follow the same path, if you will, that the Sentencing Guidelines started 30 years ago. So it really has been the guiding light for not just individual organizations that want to build a better program, but also other regulators out there, whether that's the Department of Justice, or other agencies here in the United States, or international organizations that are adopting compliance standards.
Jen Uner: So the most recent publication, it provides great historical context about the commission and its impact. Can you outline some of those highlights? I remember that the report is chock full of charts, data, as you were saying, which is great if you're needing to report about program effectiveness, for example. What do you think is most salient for leaders in that report?
Eric Morehead: Yeah, as far as those particular pieces of data, nothing here if you've been paying attention to the sentencing guideline data over the years, and every year, I should mention that the Sentencing Commission puts out what they call the Sentencing Source Book, and that has a lot of data about not only individual's sentencing, which is the primary thing that the Sentencing Commission collects data on is the actual, real living human beings that are being sentenced year in, year out in federal courts around the nation, but it also includes data on the organizations that have been sentenced in that prior year. So if you've been paying attention over the years and looking at these source books, you will have noted that pretty much year in, year out, the vast majority of organizations that are sentenced, 70% of them have less than 50 employees, and 12.1% have 99 to 400 employees.
And just a very small percentage, 8%, have more than 500 employees. So the vast majority of organizations that get sentenced are very small, but if you think about it, that makes logical sense, because smaller organizations tend to have less governance structure, probably have less resources, probably don't have a compliance program, and that's certainly the finding that courts when they review these cases 89.6% of the time, so almost 90% of the time organizations have been found not to have a program in place, or what was in place was not significant enough to be considered a compliance program. So those two figures seem to correlate well, right?
The organizations that face the most serious repercussions are small and also don't have a program, so probably hadn't even contemplated having a program before misconduct occurred. The other real striking piece of information that comes out of this report and is also something that's been consistent through the years is the number of actual living human beings that are being sentenced along with the organizations in these cases. When we look at these cases, often we're talking about the demographics of the company, how many employees they have, what sort of crimes they have been found guilty of, how big the fines are, et cetera, but sometimes what gets lost in that discussion is the fact that if there's misconduct that's occurred, very often, there are individuals who are charged right along with the company for violations of the law. And in fact, over time, 53% of these cases include at least one other individual, and sometimes multiple individuals, who've also been charged with crime.
The other really striking piece of data out of this that I think a lot of people don't realize is the vast majority of individuals who are charged are not considered "high level", so these are folks that have some authority to engage in whatever behavior underlies the conduct that led to a criminal offense. So they probably are not at the very lowest level of the organization most of the time, but they are not necessarily in the C-suite. Only 25.7% of the individuals charged with an offense along with an organization were considered high level. So almost three quarters of those individuals who find themselves facing criminal sanction, potentially going off to the federal penitentiary are folks that are not considered high level in their organization, and I think that is perhaps counterintuitive, because we oftentimes hear the headlines of executives and other senior folks in organizations getting in trouble and facing criminal sanction, but the reality is the opposite of that.
Jen Uner: That's kind of scary, I got to say. I mean, it makes me as an individual in the company really want to pay attention to my compliance training.
Eric Morehead: Certainly. Anytime an organization... And granted these cases are not as numerous as situations where organizations may have an investigation and might settle with either the Department of Justice or an agency, like have a civil settlement, something short of a criminal conviction, and there are a lot of situations where organizations might receive a subpoena or have some sort of investigation that occurs, that just ends without any kind of charges or settlements being attained. So there's a lot of data that we don't have, right? Where things may not go perfectly, but don't go quite as bad as ending up with a criminal conviction, but it is scary to consider that there are individuals that are being charged right along with these organizations for this misconduct.
Jen Uner: It's really interesting, because so often inside organizations, you've got pressure on one side to perform or deliver in a certain way, and then you can find maybe shortcuts. I mean, I don't know how else to describe it, but a quicker way to get there that maybe is potentially outside the law. So it's true that there are real repercussions for taking those shortcuts, and also for not speaking up, if you see something.
Eric Morehead: Yeah, and the real repercussions here for organizations, again, you can't jail a company. You can only fine them. You can order restitution. A federal judge can order them to implement compliance reforms, put together a program if they don't have a program. Those are all things they can do, but the other thing to consider here too is if you take a federal felony conviction, and you are an organization that does any amount of work with the federal government, you can be debarred from future federal contracting, so that can very often... Taking a federal conviction beyond the fines and the costs associated with having to defend the organization against those charges, if it actually ends up with a conviction, and your organization relies heavily or primarily on government contracting, that's the end of the organization. I mean that's the death penalty.
The best example of that that we all can probably remember is Arthur Andersen. When they took the federal conviction in Houston for conduct involving Enron, that was the end of Arthur Andersen. They could no longer audit public companies, and they were debarred from government contracting, obviously, after that point too, and that was just the death sentence. Oftentimes when we're looking at these cases, when we look at the data, those are organizations that just had no options, because if there were any options before that to settle the case, to make reforms, to have some sort of civil settlement, those on-ramps just weren't available to them.
Jen Uner: I do remember that whole upheaval. My father was in accounting at I think Ernst & Young at the time. I can't even remember, but I do remember that massive upheaval for Arthur Andersen, and how they had to completely pivot the entire business.
Eric Morehead: Yeah. The consequences reputational and lost opportunity, real bottom line business costs involved in having misconduct, even if it doesn't rise to the level where we're talking about Sentencing Guidelines or having to implement Sentencing Guidelines for the organization, just an investigation can really derail an organization in a significant way.
Jen Uner: I'm going to ask kind of a uninformed question now. It's because I'm not a lawyer. This is going to be maybe really obvious for others, but in case you're like me, can you describe what the Sentencing Commission's relationship is with the DOJ and the SEC, and how do these organizations sort of interrelate? We so often hear about DOJ guidance, for example. How is that different from Sentencing Commission?
Eric Morehead: Over the years, we've seen more and more guidance both here in the United States and abroad from prosecuting entities like the DOJ, but also other regulatory agencies like SEC, and many of these regulatory organizations have compliance standards they put together. As far as I'm aware, they're pretty universally based on the same basic standards that we talk about in the Sentencing Guidelines. The DOJ guidance, and primarily we're talking about the memoranda that the criminal division has put out periodically since I think 2017 with the most recent iteration being the 2020 summer one, I believe, that guidance is based and explicitly cites the Sentencing Guidelines as its fundamental basis. Now, obviously there's a lot more detail and specificity within the DOJ guidance.
The difference between guidance from the Department of Justice, other guidance that you might see in other agencies, but particularly the memoranda that we're talking about from the DOJ, is that can be withdrawn at any time, and as we've seen over the past few years, it can be amended at any time. It's only a few years old, and it's been amended twice. The DOJ, if there's a change of administration or a change within the hierarchy of the criminal division, those new officials that come in may want to make a change. The former deputy attorney general in the prior administration had talked about doing away with memoranda from the department altogether and codifying everything in as much as you can codify it in the US Attorney's Manual. So there are various things that could potentially happen at any time.
Because the US Sentencing Commission is a rule making organization, there's a whole process that the commission has to go through before there are changes made to the Sentencing Guidelines. That's one of the reasons why there have been very few amendments to the Organizational Sentencing Guidelines over the years is because there's a whole process involved. The commission first has to publicly publish its intention to make any changes. It'll often, if there are proposals to make changes, it will seek public comment, often have a public hearing, and then it votes. And once a commission votes, if a new amendment is promulgated, then it's sent to Congress to both the House and the Senate, and they have a period of time to either make changes or not allow those guideline amendments to come into effect, but if they don't do anything, they automatically come into effect and basically have the force of law as the Sentencing Guidelines.
Now, granted the Sentencing Guidelines don't officially apply to your organization except when you're in front of a federal judge being sentenced, right? So if there's no sentence, there's no criminal offense where the sentence is being determined, the guidelines don't have any official capacity, but we've all taken them as the standards by which we measure the effectiveness of a program. So I guess what I'm saying here is I think any guidance is helpful guidance. Certainly the DOJ guidance has been very helpful and added more detail into what regulators are looking for when they peer into an organization, but just the sort of bread and butter basic pieces of a compliance program are always going to reflect back to those seven hallmarks of an effective program within the Sentencing Guidelines, because they're pretty immutable.
Jen Uner: So if you're building an E&C program, what are the steps that organizations should be taking to lower their risk? Can you go into a little bit more detail on that? How do you unearth all the rules that apply, and how can you effectively transmit them to the people in your organization?
Eric Morehead: Yeah. Whether you're using the Sentencing Guidelines, looking at the guidance from the Department of Justice, or guidance from international organizations like the OECD or others, I feel like, and this is backed up by the specific guidance that the department has given over the past few years of what they look for, every organization is unique. It's its own unique snowflake, right? And so you're going to have your own unique risk profile, and you're going to have to develop your own unique compliance program to be an effective control for those risks. So you evaluate all of these standards, but you put together a program, and you put together standards that really address what your program needs.
One of the key provisions of the Sentencing Guidelines, by the way, is what I would call the not one size fits all provision. The guidelines from the very beginning stages of when they were developed had this notion that not every program is going to look the same, not every program is going to be as extensive as other programs. Smaller organizations that are purely domestic here in the United States, for example, and maybe are smaller probably don't have the same exposure to anti-corruption concerns, for example, foreign bribery anti-corruption concerns that international organizations might have for just as an example. So really the best advice is to make sure that your program meets your needs, and so the first step along that process is evaluating and figuring out what your needs are.
What are compliance risks that your organization faces, and how are you addressing those risks, and do you need to reform those controls, put more resources behind training or monitoring and auditing, or whatever it might be to address those particular risks? So it's really an investigation of what you face as an organization, what are the risks you face, looking at all these standards, reading the guidance from the department, reading specific guidance that might apply to your organizations, for example, if there are particular compliance requirements. If you're a government contractor, you have to have a written code of conduct. You have to post certain reporting materials if you're a government contractor.
So there are some particularized compliance requirements, depending on who you are, and how your business is operating, and you have to be aware of all those standards, but you develop a program that fits your organization, that is very specific and customized to the risks you face, the resources you have to use, because not everybody has the same resources. So you have to make some tough calls sometimes as a compliance officer or the person responsible for compliance at an organization, because you may not be able to do all the things you really want to do, but you have to figure out and prioritize the things you need to do.
Jen Uner: Which makes me think about corporate culture, right? Because every company's culture is also unique and completely attuned to its own size and position of the marketplace, and where it trades, and who it does business with, and all of those pieces.
Eric Morehead: Yeah, the ethics side of compliance and ethics is the determining factor very often, right? The culture of the organization really tell the tale as to how effective or ineffective ultimately you're going to be. You may need more controls. You may have some potential risks that need to be addressed. Even if you have a super strong culture, you can't just get by on culture alone, because organizations are made up of a lot of individuals, and some of those individuals may have bad intent, but it's hard to imagine how you could properly resource an organization that had a poisonous culture, right? If you don't have values, if you don't have an effective ethical framework that everybody is primarily operating under, you can pour money onto systems, controls, tools, and it may not make any difference whatsoever. You can have a compliance budget that is the top budget out there, but if the culture is ruined or ruinous, then it's going to be really hard to have an effective program.
Jen Uner: Yeah. I think they famously have said, "Culture eats strategy for breakfast."
Eric Morehead: Yeah, and that's really true. I've seen different ends of the spectrum, right? I've seen organizations where the culture was hard to know how you would start to climb back up that hill and reform the culture, and how you would be able to have an effective program without having a positive, ethical culture, but I've also seen the other end too, which is less frequent, but also potentially problematic, where organizations... And sometimes I see this, for example, a good example of this would be a nonprofit where mission is really important, and everybody has a very ethical outlook, and they wouldn't be working at a nonprofit and particularly in difficult circumstances unless they really were all about the mission and had a very positive, ethical attitude, but they don't have a lot of structure. They don't have a lot of resources. And so there's always the potential that there could be failures and misconduct, because for instance, they might be a good target for an outside data privacy issue, right? Because they don't have strong data security systems.
Jen Uner: I was just going to say data privacy.
Eric Morehead: So you can be at both ends of the spectrum as far as that culture piece goes, and still have some serious compliance risks.
Jen Uner: So there's definitely always a need for E&C training for sure.
Eric Morehead: Yeah, training in Sentencing Guidelines, and the guidance from the Department of Justice, both are really clear about we are not interested in one size fits all. We are not interested in how big your budget is. We just want to make sure your budget is right, that the governing authority and the organization has addressed this properly and is serious about compliance, but if you're a smaller organization or an organization where the risks are being properly addressed without spending a lot of money, that can be perfectly fine. Again, depends on the individual organization, and what is their risk profile, how are they addressing those risks, and are they meeting the other big picture criteria of having some standards that everybody knows about, training where appropriate, having proper governance and oversight, and monitoring and auditing, having a reporting process, where people can ask questions and report concerns, properly enforcing the rules, and disciplining people, and having incentives. And that's the one that often gets missed. That's been in the Sentencing Guidelines for years now, and has is mentioned in the guidance. How do you incentivize proper behavior at your organization? That's really important too.
Jen Uner: There is so much that goes into building an effective E&C program. I'm sure we could be talking about this all day, but we are running out of time. I am so glad you could join me today to talk about this report and why it matters to every organization. I know we'll be including a link to that report in our show notes at LRN.com. My name is Jen Uner. I want to thank you, Eric, for joining me today.
Eric Morehead: Thanks, Jen. It was my pleasure to be here.
Jen Uner: And I want to thank everyone for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at LRN.com to learn more, and if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen, and don't forget to leave us a review.
What you'll learn in this podcast episode How are boards of directors of major companies coping in 2022 with the increasing expectations from so many stakeholders? How can directors equip themselves to meet oversight challenges and ensure that their companies do business in the right way? In this episode of the Principled Podcast, guest host Dr. Marsha Ershaghi Hames explores the critical role of boards in shaping ethical corporate culture with Diana Sands, an accomplished corporate leader who currently sits on the boards of SP Plus Corporation and PDC Energy. Listen in as the two discuss the evolving responsibilities and tools for today's boards, including guidance from the latest report from LRN and Tapestry Networks: Assessing Corporate Culture: A Practical Guide to Improving Board Oversight.
Principled Podcast Show Notes * [2:15] – Diana Sand’s background and its impact on her board roles. * [8:07] - The push for board culture refreshment and ESG priorities. * [12:06] - Thoughts on changing attitudes toward board culture. * [15:37] – Board needs for transparency, accountability, and communication. * [18:34] - Navigating structural impediments and the Assessing Corporate Culture report.
Featured guest: Diana Sands Diana Sands brings over 30 years of business experience to her board and advisory roles having held senior executive finance and governance positions across multiple industries. Diana currently serves on the boards of SP+ (Nasdaq: SP), PDC Energy, Inc. (Nasdaq: PDCE), and National Philanthropic Trust (the largest independent provider of donor-advised funds). She is the Board Chair for Start Early, a non-profit champion for quality early learning. She is also an advisor to New Vista Acquisition Corp. and to Ethisphere (a global leader in defining and advancing the standards of ethical business practices). Diana retired from The Boeing Company in 2020 where she was an executive officer and Senior Vice President, at the Office of Internal Governance and Administration. Reporting to the CEO and to the audit committee, Diana oversaw a diverse team including ethics & investigations, compliance risk management, internal audit, security, and internal services. Previously, Diana held senior finance roles at Boeing including corporate controller where she signed and oversaw the development of the company’s financial statements, and head of investor relations where she was the primary management liaison with investors and industry analysts. She also led financial planning & analysis and worked in corporate treasury. Prior experiences include leading financial planning & reporting for General Motors Corporation and working at several companies in audit and product line finance positions. Diana has an MBA from Northwestern's Kellogg School of Management, and a BBA from the University of Michigan Ross Business School.
Featured Host: Dr. Marsha Ershaghi Hames Dr. Marsha Ershaghi Hames is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement. Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc. a global governance, risk and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority.
Marsha has been interviewed and cited by the media including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics and more. She hosted the Principled Podcast, profiling the stories of some of the top transformational leaders in business.
Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc. an integrative supply chain advisory firm and Compliance.ai, a regulatory change management firm.
Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Marsha Ershaghi Hames: How are boards of directors of major companies coping in 2022 with the increasing expectations from so many stakeholders? How are boards equipping themselves to meet the challenges of overseeing organizations? And how can directors ensure that their companies are doing the right things and doing business in the right way?
Hello, and welcome to another episode of LRN's Principled Podcast, where we continue our conversations about the critical role of boards in shaping ethical corporate culture. I'm your guest host Marsha Ershaghi Hames, a partner at Tapestry Networks. And today, I'm joined by Diana Sands, an accomplished corporate leader who currently sits on the boards of SP Plus Corporation and PDC Energy. Today, we're going to talk about the evolving responsibilities of today's boards, many of which are outlined in the newest report, Assessing Corporate Culture, a report from LRN and Tapestry Networks. Diana, thank you so much for coming on the Principled Podcast.
Diana Sands: Thank you, Marsha. It's great to be here.
Marsha Ershaghi Hames: Let's kick off. Diana, you had an accomplished career, retiring as an executive officer and senior vice president in the office of internal governance and administration at the Boeing Company. And you have now turned to service on corporate boards. Your career has spanned a variety of leadership roles across multiple industries and disciplines. Maybe for our listeners, we can kick off by hearing more about, just tell us about your background and career and how this has informed your approach to serving as a director.
Diana Sands: Sure. And thank you again, Marsha, for having me. As you noted, across 30-plus years, I worked in various industries, including professional services, consumer products, and industrials, mostly in finance roles. I held several finance leadership positions, including corporate controller at Boeing. And my last role, as you alluded to, before I retired, was reporting to the CEO and the audit committee in a chief administration and chief ethics and compliance role. As you also mentioned, I currently serve on both public company and nonprofit boards.
Marsha Ershaghi Hames: How has this experience started to really shape or inform your approach to serving as a director?
Diana Sands: You know, Marsha, I think the breadth of my experience is mainly what shapes me as a director. I've been part of a lot of different business opportunities and challenges. And with that, I tend to think pretty holistically, whether it's assessing an opportunity starting with a strategy all the way to how it can be practically executed, or dealing with a particular challenge, which often means quickly yet systematically gathering facts, evaluating options, and then taking actions.
I do believe that the best way to leverage experiences is not to automatically duplicate what one has done in the past. In fact, I don't really love hearing a director simply stating, "This is what we used to do at XYZ Company." I think the greater value from past experiences is a director's ability, because of those experiences, to quickly absorb an existing situation and think through the possible outcomes. And that's the approach I tend to try to take in the boardroom.
Marsha Ershaghi Hames: We're going to dive into some of how you're transferring some of your unique background as a compliance and ethics officer into the boardroom. But first, I want to take a step back. I mean, when I look across 30 years, across all the sectors that you have developed your career in, you were probably or likely one of the few women executives in these fields. I'm just curious, as you look back, were there any mentors or, I'll use the term sponsors, that sort of provided more guidance, influence, coaching through developing your career journey?
Diana Sands: Yeah, definitely. And I think you're right. I was often the only female and/or minority in rooms during my career. I do think the good news is that it's changing, albeit maybe slowly, but it's changing across all sectors. But having said that, mentors are definitely important, and I had several great ones. Most of them, by the way, were white males because that's who I was primarily working with. But I remember one very early in my public accounting career, a manager who showed me tough love as he reviewed my work papers. He was really hard on me and my work, but it was formative in the way I think today. In fact, that holistic approach I mentioned earlier is in large part thanks to this person who taught me early on to always think about that bigger picture.
And then later in my career, another mentor, one of the CEOs I worked closely with, pushed me to aspire for more than I might have otherwise. He's the one who coached, or maybe coaxed is the better word. He coaxed me to take on some roles that went beyond my comfort zone. But ultimately, those were the roles that enabled me to ascend to the C-suite, which also was critical in getting my current board positions.
Those are a couple mentors, I've had several, but I think the common thread across all my mentors is that they not only took an interest in me, but they really pushed me to be better, to stretch, and to be uncomfortable. I think that's important to advance in a career and in life, I think.
Marsha Ershaghi Hames: No, it's so true. Let's continue down this path. You do bring a unique background to the board as a former compliance and ethics officer. It's not a typical skill set that we see serving today on the other side of the table. Tell me a little bit about how that maybe shaped or influenced landing your first board seat and how the lens in which you look at information or assess decisions is impacted by this background.
Diana Sands: Yeah. You know, I think that's absolutely right, Marsha. In fact, my board roles were obtained not so much because of my ethics and compliance experience, but because of my finance background. They were boards that were specifically looking for a financial expert, which I can be deemed as one, because public boards, as you know, need some number of financial experts.
But interestingly, I find that when I contribute in the boardroom today, it's more often from my broader governance and ethics and compliance experience. I'll often ask questions about how things get done at the company, which alludes to culture, gets at culture, not just what gets done. Monitoring risk management is a key responsibility of boards. And again, I find my broader governance experience helpful in those discussions.
Marsha Ershaghi Hames: Talking a little bit about your broader, bigger picture experience around governance, excuse me, there have been a lot of conversations about the need to change the chemistry in the room, the culture of the board. And board refreshment is kind of at the top priority of this dialogue. So, composition, what are the skills we need in the room to support some of these governance practices? What are you seeing from your vantage point? Are things changing? Are boards more open today to soliciting and considering other types of skills and backgrounds for board seats?
Diana Sands: Definitely, yes. I think board refreshment is an important topic in many boardrooms these days. In fact, all of my boards, not just the public boards, but my nonprofit boards as well, have been talking about board composition and board refreshment. I think they're all looking for diversity. I do think companies and boards are beginning to look now for individuals who have broader experiences than just those who have been a CEO, CFO, or operating leader, which I think is what was very common years ago as boards were trying to fill their boardrooms. There are certain experiences like cybersecurity and ESG, for example, which are experiences much more being sought after today in boardrooms.
Marsha Ershaghi Hames: Yeah, no, and I mean, it takes us to the next segment I wanted to dive deeper into with ESG priorities right now. There's one thing to draw on outside experts, but it's another thing to be able to interpret data, really try to develop the linkages, ensure that conversations with the right folks in management are clear on advancing, but with the focus on climate risk and people-talent issues, and cyber and technology. I mean, how are some of your boards thinking or approaching thinking differently around oversight of these issues and the types of skills that you need in the room?
Diana Sands: Yeah, indeed. All those topics you mentioned are really relevant in the boardroom today, especially as regulatory bodies are considering what additional reporting requirements may be required in these areas. I think having board members who have practical experience, by the way, in these areas, cyber, climate, technology, is really helpful and almost becoming necessary, especially if their experience is recent because many of these areas are so rapidly evolving.
Even talent management is different than it was a couple decades ago. The workforce today can span multiple generations. It's more technologically savvy and more diverse than ever. So having board members who are in touch with today's environment is important, which I think is driving a lot of refreshment activities.
I would also go back to something I said earlier. I think that it's important that directors don't immediately rely on the way they did things years ago. Oversight of these evolving issues requires being on top of how they're evolving. So to your point, leveraging expertise within the company with external consultants, advisors as needed, and listening to those board members with these recent experiences, I think is critical. And then of course, ensuring that these topics are given the appropriate time in the boardroom is also important, which I'm certainly seeing in all of my boards.
Marsha Ershaghi Hames: So you're seeing a shift more so, because it seems like almost every committee is becoming an ESG committee. So, how do you keep this focus?
Diana Sands: You know, it's funny because one of my companies, sometimes one of the board members will mention, "Wow, we're actually talking about an operational issue today." And this company's pretty well run. Because so much time we're spending now on these topics, because of everything we've just been talking about, it is getting more time and attention in boardrooms. And to your point, you're right. I think boards are also trying to figure out how to make sure that there's some deliberate discussions around them, and more and more ESG-type committees are being created. But there's no doubt, more focus in these areas today than there were in years past.
Marsha Ershaghi Hames: Yeah, yeah. Well, let's go back to a comment you also made about the tone or the theme of, well, this is how we used to do things. That lends me to a question more on board culture. It is always more comfortable to lean on the levers of the past. It's consistent, it's what we know. As I've certainly spoken to a number of newer directors or directors that are occupying newer seats, I've heard varying input on, do they feel as comfortable voicing or asking unpopular questions or challenging the status quo.
I'm sort of curious from your vantage point and your current experience, do you see any type of shift or shift in momentum around assessing board culture, boards being a little bit more cognizant of, we need to assess our culture of how we discuss, debate, challenge things. What are some of the changes that you're seeing, if any?
Diana Sands: Yeah, I do think, Marsha, that culture in all organizations is becoming much more important to examine, and more organizations are doing so. Some of that, I think, it's unfortunately because of the terrible events in recent years related to racial inequities. But I'm also hoping some of it is because it's simply just becoming clearer to everyone that culture really does drive everything that happens in an organization. And I am finding that boards, again, at least the boards I'm part of, again, both public and nonprofit, have been going through some sort of process to advance its own culture. I think that's really good, in my view.
I will also say that I think there's a bit of kind of personal responsibility in this. I do try to take on personal responsibility to help advance culture in every group I'm part of. I'm talking, these are day-to-day actions, not big initiatives. For example, things I try to do include not being afraid to bring up a different view. You alluded to that, especially if it's a minority view. I'll try to do it respectfully and productively, but I'll make sure, and I'll really deliberately in my head, make sure to express that view.
I also try to bring out every voice in the room. I will often ask someone for their thoughts if they've been quiet, and that happens even in boardrooms. There are always some folks who speak more and some who speak less. And finally, I still try to make sure I personally am feeling some discomfort at times, again, something I learned from my mentors. It's one reason the boards I sit on today, Marsha, are part of industries different than what I've worked in in the past. They're learning experiences for me.
Also, in a boardroom, and maybe as simple as going over to talk to that person who is most different than I am, the one I have the least in common with. I'll sometimes actually have to force myself to do that because it may be a bit uncomfortable, but I know it will help advance the culture and the dynamic of the group. Yes, I think cultures are shifting in boardrooms. I think each of us should think about what we can personally do to help that journey.
Marsha Ershaghi Hames: You've been a part of contributing, and not only to the ethics, culture, and compliance network, but also the Assessing Corporate Culture framework that was recently released. And these insights also came up both in the interviews and in some of the questions that were being developed. One was around the need for greater transparency, a sense of accountability, and better communication or optimization of communication, not only amongst board members, but also between the board and management.
A few executives raised, "We want to be able to bring difficult news to the board and be able to have that conversation." Tell me, in your experience, what can this look like? Or how practically, what role can the directors play to create the space to encourage more of this open communication and transparent communication?
Diana Sands: First of all, those qualities you mentioned, transparency, communication, accountability, they are really important and they're hallmarks of a strong culture. And there's no question, there's many pieces of data that show these healthier cultures drive better results.
I think the board sets the tone in many ways. The board's own culture actually flows down in many ways to what the management team and the company, what they do and they operate. If the board operates in an environment of inclusiveness, of open dialogue and debate, and the management team sees that, and the board engages in that kind of behavior with the management team, that will affect the dynamic where those tougher issues can be brought up and discussed. And it also flows throughout the organization. So I think it's really important.
I do think on the topic specifically of raising those difficult issues, it's not easy, but good boards, I think, do create the space for that. I think to start with, the board actually has to, board members themselves need to be willing and wanting to hear those difficult issues. And then the directors actually have to do some work to help pull them out. It's always easy or nice. It's nice for board members, it's nice for everyone to hear good news. But we also have to, I think, proactively be asking, "What's not going well? What is the management team worried about?"
Seek out those tougher issues and be willing to deal with them alongside management. I think that's what board members can do. But I don't think it's necessarily all that easy because it can be hard to hear and it can be hard for management teams to share the tough news. But I think the more the board and the board members make it easier for them, where we listen, we're willing to listen to them, we want to hear them. We may not like what we're hearing, but we need and want to hear them. And we're willing to work with them through those issues. That'll help set the environment for those tougher issues to be brought up and discussed, which is absolutely, we all know, necessary for effective boards to do.
Marsha Ershaghi Hames: Another insight that came out of this report that you contributed to was also structural impediments. I know you certainly can draw upon your experience both as a senior executive with oversight of compliance and ethics, and now on the other side of the table, but one of the directors said just the structure of boards can make it difficult for a board to really get a clear picture of culture.
I just want to get your perspective on how important or critical is it for the board to hear from other management voices? I mean, typically, boards have looked to CEOs to get an overall understanding or pulse on culture. How important is it to bring other voices in like the compliance officer, ethics officer, or CHRO? Is there an independence opportunity? Is there contextual opportunity? Just love to get your perspective on that.
Diana Sands: Oh, totally. And by the way, you've mentioned this report a couple times. I do want to give credit to Tapestry and LRN. You all did an excellent job on this guide. And also frankly, on convening the conversations that led up to this guide being developed. I just want to put that out there, Marsha. I think it was an excellent, it is an excellent product.
But yeah, I think it's really important for board members to engage with, certainly, obviously, the CEO and his or her leadership team is often who the board will engage with. And I think that's really important, members of that senior leadership team. But then also going deeper, we've talked about this in some of our conversations, going out and kind of seeing sites where you get a sense, you get a sense. It depends how big the organization is, and it's often you have to keep in mind as we discuss, management teams will put forth their best team, their best people. But you do get a sense when you're out there engaging. So I think engagement by board members with team members is important.
I do think having that dialogue with those leaders who I think in many ways are touching and influencing and seeing culture, the company's, every day, whether it's the chief ethics and compliance officer or the chief HR officer, or the chief legal council, depending on how the organization is structured. It is really important for board members to have direct engagement with them as well. I think many boards do, but I think board members need to be really attentive to those engagements because you can pick up a lot, not just from the tactics of what's going on and the results of what's going on at the company, but also you get a lot of indications of culture when you talk with these folks in the company.
Marsha Ershaghi Hames: And my final question, Diana, and I appreciate you highlighting the report, but how are you thinking of leveraging some of the guiding points from the report? I mean, you contributed to helping us develop questions that directors can use for reflection and questions that they can certainly explore with management teams. But speaking to your peers, you've got directors listening, how can they use this framework as a roadmap with their peers and management teams?
Diana Sands: Yeah, first I want to spread, and I'm going to do this with my context, but I really just hope this guide gets out. It's really great, what you all have done. You've got summary points. If you just want to go on the website and look at some of the summary points and some questions boards can ask. Or you can download the whole guide, which I think is just, like I said, really well done. There are a lot of practical tips there. What I plan to take out of it, I hope others do, there are some questions there that boards can ask. There are examples of how the board can itself set a good example of culture. And it also notes ways we can measure culture with tools that are likely already being used at companies, like surveys, internal audit reports, and employee-related data.
I think importantly, when I stepped back and looked at it again, even though I was part of the team that gave you input on putting this together, but when I stepped back and read it again, I think it will help directors, when they look at this guide, realize that many topics already discussed in boardrooms provide an opportunity to delve deeper into culture.
For example, DE&I statistics, which are regularly being talked about now, I think, in most company boardrooms, company mission and value statements, hotline reports. These among many others are ways to discuss company culture. Risk management is another one. And in fact, in one of my boards, we had an annual risk management dialogue where all the board and C-suite members had to complete a risk tolerance survey. It was just part of their normal risk management process. But when we talked about it, it was fascinating as we reviewed the results to see the similarities and differences. And we ended up having a great conversation about culture.
I think this guide is just a really practical and useful tool for board members to just realize, actually, that in many ways, there are avenues to delve deeper into culture and that obviously, it's really important to do so.
Marsha Ershaghi Hames: So true. And I think one of your colleagues on the committee of contributors of this said, "We just have to get the conversation started."
Diana Sands: Exactly.
Marsha Ershaghi Hames: It's just important to start asking the questions and get the conversation started. But Diana, we're out of time, but there's so many insights that you've shared with our listeners today. Some great nuggets here that we can take away. I want to thank you for creating time and space to share your thoughts and for joining us on this episode. So Diana, thank you.
Diana Sands: It's been my pleasure. Thanks, Marsha.
Marsha Ershaghi Hames: And to all of our listeners, my name is Marsha Ershaghi Hames, and we appreciate you all for tuning in to this episode of the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at LRN.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode What is top of mind with board directors when they think about corporate culture, ethics, and compliance? How can leaders best assess culture in the companies they oversee? In the season 8 premiere of the Principled Podcast, LRN Director of Advisory Services Emily Miner is joined by Dr. Marsha Ershaghi Hames and Dr. Eric Baldwin at Tapestry Networks to discuss how board members can improve oversight. Listen in as the group shares insights from Tapestry Networks and LRN’s joint report Assessing Corporate Culture: A Practical Guide to Improving Board Oversight, which draws from a working group of nearly 40 directors and executives representing over 60 public companies.
Principled Podcast Show Notes * [0:29] - Emily welcomes listeners to this episode with Marsha and Eric of Tapestry Networks. * [1:46] - A discussion on the recently published report, “Assessing Corporate Culture: A Practical Guide to Improving Board Oversight.” * [6:14] - Why the report offers a practical framework and what needs it seeks to address. * [9:59] - The key findings or pillars of the report. * [15:22] - How the report helps leaders answer “How?” questions. * [20:30] - What is the potential broader impact of the report?
Featured guest: Dr. Eric Baldwin Eric Baldwin is a principal at Tapestry Networks, working with teams in the firm’s corporate governance and financial services practices. Prior to coming to Tapestry, he served for several years as a research associate at Harvard Business School (HBS), where he collaborated with faculty on a variety of research and writing projects covering topics ranging from organizational culture and change management to corporate strategy and healthcare policy. Prior to his time at HBS, Eric taught in the religious studies departments at Franklin & Marshall College and Boston University, while earlier in his career he served in engineering and operations roles at ON Technology Corporation, a software development firm based in greater Boston.
Eric holds a PhD in religious studies from Boston University and a BA in history from the College of William and Mary.
Featured guest: Dr. Marsha Ershaghi Hames Dr. Marsha Ershaghi Hames is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement. Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc. a global governance, risk and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority.
Marsha has been interviewed and cited by the media including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics and more. She hosted the Principled Podcast, profiling the stories of some of the top transformational leaders in business.
Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc. an integrative supply chain advisory firm and Compliance.ai, a regulatory change management firm.
Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.
Featured Host: Emily Miner Emily Miner is the Director of Advisory Services at LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Emily Miner: What is top of mind with board directors when they think about corporate culture, ethics and compliance? How can leaders best assess culture in the companies they oversee?
Hi, and welcome to another episode of LRN's Principled Podcast. I'm your host, Emily Miner, director of advisory at LRN. And today I'm joined by Dr. Marsha Ershaghi Hames and Dr. Eric Baldwin partner and principal respectively at Tapestry Networks. We're going to be talking about corporate culture and how board members can improve oversight. Marsha and Eric have just collaborated with us at LRN on a report entitled, "Assessing Corporate Culture: A practical guide to improving board oversight." The report presents insights from a working group of nearly 40 directors and executives representing over 60 public companies, including some of the largest companies in the world: Cigna, Sony, McKesson, Lockheed Martin, CDW, Coca-Cola, Excel Energy and Palo Alto Networks included. Marsha, Eric, thanks for joining me on the Principled Podcast today.
Marsha Ershaghi Hames: It's great to be here.
Eric Baldwin: Thanks for having us, Emily.
Emily Miner: Okay, so let's jump right in. This report, a guide really, assessing corporate culture is the result of working group sessions of the ethics, culture and compliance network. Marsha, let me start with you. What is the ECCN, who are its members, and how did it come to be?
Marsha Ershaghi Hames: Sure. Great. We're happy to continue to share the Ethics Culture Compliance Network progress. This network was founded in the summer of 2020. I mean, it was during the thick of a pandemic. Companies were spiraling. It was just a lot of crisis management and companies were starting to take a real reflective step back. They were assessing where do we need to look? How do we need to assess our planning for longer term future? And the conversation emerged initially, Emily, as a forum. It was a safe space to convene. Public company directors and senior executives, namely chief ethics and compliance officers, to really start exploring values, corporate culture and the role of ethical decision making in business.
Emily, if I can highlight just a few key aspects that the stakeholders of ECCN started to really prioritize over the last two years, number one, the need for boards and executive teams to align and articulate culture so that management feels supported. Number two, to address the challenge of getting ethics and culture on board agendas and to really promote directors going deeper with management, we're going to get to shortly. Number three, ECCN stakeholders have continued to really want a forum to share peer to peer examples, pragmatic examples of the need for better communication and greater transparency between the CECO, the broader management team and the board.
Emily Miner: Thanks, Marsha. Having sat in on some of these sessions, I know that those specific examples that you just alluded to, those were among some of the most powerful conversation prompts. So I think that the members got a lot of value out of that. I certainly know I did. And so this report builds on a report that we, Tapestry Networks and LRN, collaborated on last year, activating culture and ethics from the boardroom, which was a really insightful temperature check on board's attitudes about culture. Eric, can you talk about that project and how it led to this latest one?
Eric Baldwin: Sure. With the last year's activating culture report, we had set out to understand the realities facing boards and their oversight of ethics and culture. What were their key concerns, the challenges they face, current practices. So to get at that, we interviewed 40 directors who occupied about 80 seats on public company boards with the aim of getting a really broad view of board oversight of ethics and culture. What we found was a pretty diverse range of practices across boards, in terms of what kinds of information they were receiving, their engagement with their management teams, including how often they heard from their chief ethics and compliance officer, a range of assignments of committee responsibilities and really it's just a variability and how much attention the issues get from boards.
We also found a real lack of comfort among directors. So directors recognize the importance of culture and the risks associated with ethical lapses or with unhealthy cultures, but recognize that their ability to oversee culture doesn't have the level of clarity and rigor that you find in other aspects of board oversight, like say financial reporting. So there's a real gap between the seriousness of the risk associated with culture and the importance of culture on the one hand and director's sense of their ability, or lack of ability, frankly, to effectively oversee that set of issues. So given that, it seemed crucial to start to develop some board-level tools and practices that could help directors make their oversight of ethics and culture more robust.
Emily Miner: Thanks, Eric. I know that this latest report traces its roots back to those earlier insights that you were just describing and the need for a practical framework that board members could adopt. Tell us why this framework and the specific needs it seeks to address.
Marsha Ershaghi Hames: Yeah. So maybe I'll take that one. So to Eric's point, we have conversations with 40 directors in 2021 and coming out of it, it was the spirit of action. How can we now take action? So the consensus was, we want a simple, practical framework to start to advance a conversation, just get the conversation started. Think of it like a simple roadmap. How can we take this into the boardroom? How can we start to connect with management with simple prompts, questions. Help us organize our thoughts about how to activate and get the conversation started. Then, another goal was the input was we want to have a peer-reviewed framework. We don't want a treatise. We don't want a commission study by a third party. We want to be a part of driving the frame for what we think will have the greatest impact, both within board rooms and for the boards to explore directly with management.
Emily Miner: You've talked a little bit about the approach to developing the framework, talking to the 40 directors and the peer-to-peer nature of it. What else about the approach of how the framework was developed, do you think contributes to the power of what it ultimately offers to boards and management teams?
Eric Baldwin: Yeah, I can jump in here. As Marsha noted, we really wanted this to be as useful and practical for boards as possible so we thought it was really important that it'd be grounded in the experience of directors. We knew that there was a lot of good practice already going on in boardrooms. So if we could tap into that collective knowledge and pull that together, it could be really valuable. So the way we went about that was to recruit and convene a working group of about 12 to 15 members, 10 of whom were sitting public company directors. Several of those directors are current or former chief ethics and compliance officers so they've got deep experience in that space that they bring into the boardroom. We also included a couple of sitting senior ethics and compliance executives who report into boards on these matters on a regular basis to bring their perspective, as well as our colleagues from LRN, who brought their expertise in culture measurement.
So, we brought the group together several times for virtual discussions, for peer exchange, to really surface the challenges and gaps that they're experiencing, to share and vet existing practices and tools and identify some key insights and good practices that are already going on. So out of that, our team developed a draft framework, which we shared then with a larger group of about 40 directors and ethics and compliance executives to pressure test our recommendations and get additional feedback before publishing the piece this summer. So I think what really gives it its power is that it's grounded in the experience of the boardroom, it's peer developed and peer vetted and rooted in the efforts of directors and practitioners.
Emily Miner: Yeah. Thank you, Eric. And just to underline something that both you and Marsha shared, I think something that's so compelling about it in terms of being grounded in that experience is, as you mentioned, many of those directors are current or former chief ethics and compliance officers. So being able to hear from people that have worn both of those hats or are wearing both of those hats, I think is so powerful. So let's keep on talking about the framework. What are the key findings or pillars? I know that there are five pillars of the framework and I'd love for you to expand upon those five pillars for us.
Eric Baldwin: Yeah. I'm happy to try to do that. There's a lot of insights there, so I'll try to be brief. As you mentioned, there are five key themes here, and we see them not so much as a series of steps, but more as sets of interlocking practices or that can mutually reinforce each other. So briefly, the first is really just to make ethics and culture a priority. We've heard from directors that culture and ethics often don't get enough time and attention in the boardroom. They get pushed to the bottom of crowded board agendas. So a key step is simply just to ensure that they get priority on the agenda, that they get enough time and attention. It's really crucial. We heard that boards communicate to management that culture and ethics are priorities, which they can do by pushing for information, asking questions, following up, probing. Management needs to know that ethics and culture are board priorities.
The second is for boards to take a look at their own culture. Boards have their own internal cultures and the culture of the board influences the culture of the organizations. They sort of set the tone from the top. But directors tell us that boards don't often examine their own cultures in a rigorous way. So it's really important for boards as one member put it, to take a hard look at their own culture. In this, it's especially important for boards to assess their openness and transparency and the level of trust, both among the directors and between the board and the management team, and especially their willingness to hear difficult news and how the board responds to bad news or to hard truths. A key element we heard of ethical culture is trust and transparency and to foster an environment where bad news travels fast. That starts with the board and the board's willingness to hear bad news.
The third is the challenge of being able to articulate the elements of culture and really to describe and articulate the culture you're aiming at, what you want to see in your corporate culture. The challenge here is that culture can be a very fuzzy and abstract concept. It's implicit, it's unspoken rules and norms, and that makes it really hard to measure and assess.
So anything boards and management teams can do to make discussions of culture more concrete and precise will really help. This can mean breaking down ethical culture into various components, things like trust, willingness to speak out, fairness, organizational justice, so that boards and management teams have a clear answer to the question, "When we talk about culture, what exactly are we talking about?" A key insight here was the importance for boards to be active partners with their management teams in defining and articulating the attributes of a desired ethical culture, rather than just sort of hearing them from management. Contributors told us that the process of defining what a good culture looks like by fostering a robust and structured discussion of culture is as important as the outcome. So boards need to be involved in those discussions early, rather than just the management team coming to them and saying, "Here's what we think our culture should look like."
The fourth is really about the tools that they use to measure and monitor culture. This is all about information and data and how it comes to the board. There's a pretty common range of data and information sources that boards depend on and there's plenty of data. But the key is for boards to get that information presented to them in the right way so that it has enough context that it can really make sense to them. So one key issue for boards we found is to push their management teams to report to them in such a way that insights from a range of data sources are integrated into a coherent picture or narrative. So survey data or data from culture surveys is overlaid with safety data, turnover data, and cost of hotline for example. Boards are really looking for a more integrated view from their management teams. Anything that will help generate a narrative or surface patterns that help boards know where they need to follow up and probe and potentially allocate more resources is really helpful.
Then finally is the issue of establishing clear communication lines. There's a lot of information relevant to culture that comes from a lot of different functional areas bearing on ethics and culture. So boards need to push their management teams to be able to develop a holistic view and really ask the question who, if anyone, in the management team owns culture and owns reporting on it and can give a really coherent and holistic view of culture. The same goes for the board. At the board level, different committees on the board, get reporting from different management teams and information can become siloed. So the key question is how can boards overcome that tendency and make sure that the entire board is getting a full picture of culture.
Emily Miner: Thanks, Eric, you did a great job of covering a lot of detail, very succinctly so I appreciate that. You framed a lot of those pillars in the form of a question: so how can boards do this, how can boards and management team collect the right data and interpret it together and break down those silos, et cetera, so I want to go into those hows a little bit because we call it a practical guide. So how does that manifest? How can this guide, I'll call it a guide and not a report, how can this guide help boards in their oversight of culture?
Marsha Ershaghi Hames: Yeah, so Emily, maybe I'll jump in on that one. So to Eric's point as he went through these five key pillars and big insights or meta themes that jumped out, each pillar is supported with countless examples, practical scenarios, and we've even lifted up some direct quotes that came from all of the contributors. So part of this is practically speaking, we want to help agitate that curiosity from the directors. We want to encourage them, look behind the numbers, start asking some of those uncomfortable questions. We wanted to give them, when you talk about sort of manifesting, how do we give directors a simple roadmap or framework to go into, to start within their own boardrooms, and then to look at opportunities to connect and communicate with management, to build that bridge, to forge an ongoing dialogue. So this is not an overnight put your hero cape on.
This is to start to create essentially more of that accountability partnership, a dialogue between management and the board and framing it in these five buckets. So it's, step one, are we even prioritizing this? So that can be a series of conversations. Step two, have we aligned as a board and management team? Have we been engaged as a part of articulating and assessing and understanding what is that desired culture? Are we as a board reflecting? So as Eric was going through these, it's you need to have a roadmap essentially to start agitating some of that dialogue. We wanted these pillars to become levers to begin that process to engage with management.
Emily Miner: I love the way that you are framing this as agitating the dialogue. There's such a great mental, descriptive image. So thank you for that, Marsha. I know that one of the features of the report or the guide to help agitate that dialogue is a series of questions that can serve as a starting point for this dialogue with management teams and within boards. Can you share some of those compelling prompts?
Eric Baldwin: Yeah, I'd be happy to give some examples. I think questions for boards are really a key tool in their tool belt. One of the things that boards are expected to do is offer a credible challenge to management, and it's really through asking questions that they do that. So we did include a number of questions, I think they're probably more than two dozen appended to the end of the report. I will not read anything like all of them at this point, but I'll give you a couple of examples of some of the questions that we include in the report. Again, many of them line up with some of the key buckets that we identified above. One would be just to ask yourselves as boards, have we identified the cultural attributes and behaviors that align with our stated values and our purpose? How can we effectively articulate the culture we're trying to achieve? This in turn would guide management's efforts to measure culture.
Another question for the board to reflect on is, does our culture, that is the board's culture, encourage management to share those difficult truths with us? How open to debate and disagreement is our board? Then we also include some questions that boards can ask their management teams. One is to simply ask, to what extent can you provide the board with an integrated view that incorporates information from a range of sources of data into a single picture for us? How can you give us an integrated view of culture? Then another question for management is, are you able to communicate directly to the board when necessary? Do you feel you have the necessary independence to bring issues and questions to the board? So those are just a few examples of a number of questions that we've included in this report.
Emily Miner: Thank you. I think that's another feature of the practicality of this. I mean, boards can in some sense sort of lift these questions up and apply them in their own contexts. So recently LRN's Ty Francis, our chief advisory officer had a conversation with Tom Fox, who I think we all know as the voice of compliance and founder of the Compliance Podcast Network. Tom called this report prescient more than once and cited both recent statements of Lisa Monaco, deputy attorney general, and rulings of the Delaware Supreme Court about the need for boards to take a more active role in monitoring and measurement. So with those statements, that context, occurring around the same time as the release of this guide, what do you see is the potential broader impact of the guide, the framework with the five pillars, the practical examples and discussion prompts? What do you see as the potential impact of that?
Marsha Ershaghi Hames: So maybe I'll take the lead here and, Eric, if you want to share any other thoughts ... But if we take a step back, this came up in ... so we had a summit, Emily, that you, of course participated in, where we brought together all of the Ethics Culture Compliance Network contributors, not only of the report, but other key stakeholders. It was interesting, a few people pointed to this and they said that if you look at the foundations of corporate scandals over the last few decades, there's a pattern that points to the failure to speak up and a correlating fear of retaliation. So it's that notion of someone always knows what's going on. Right?
So when you look at the statements of Lisa Monaco and the Delaware Supreme Court about boards taking a more active role, you have to take a step back and look at what is the role that boards can play to encourage and drive a culture that is more transparent and more open. How can a board activate open dialogue? How can a board establish a more transparent tone. We know, there's enough research around this, that culture's fundamental to business and tone at the top matters.
I could even say, and Emily, you and I have collaborated, full disclosure, over years in my consulting days. I saw this. I can just draw anecdotally that in 22 years of consulting, I would come across so many compliance executives who just felt like, "Hey, is my company going to make the investment in my team, and are they going to prioritize culture?" CECOs, they're under a lot of pressure to operate as a resource, enforce policy, developed policy. They're regarded as the primary architects of culture, but oftentimes we're also labeled as a cost center. So some of this stuff has been coming out as you know, Emily and Eric, and our conversations around like, "Are we leading on this or are we in a reactive mode?"
So I would say in terms the broader impact of this framework, it's the notion of how can we be proactive? How can we put a framework and a roadmap in front of the board to agitate the curiosity, to ask for more data behind the numbers and to empower boards and management teams to get the conversation started. To Eric's point, it's like, is it a toolbox? Is it a tool set? Well, yes, it is. It's been pressure tested by peers. It was developed by peers. They're trying it in their own boardrooms. Some of these stakeholders are current or former chief ethics and compliance officers so there's an appreciative inquiry of the tensions on both sides of the table. So in my opinion, I really forecast that this is going to have a catalyzing impact on the industry. Eric, I don't know, thoughts on your end too.
Eric Baldwin: No, I would just say, I think one of our hopes here is that as directors bring this into the boardroom and, Emily, you're right to point out that it does seem like the expectations for boards in oversight in this area are going nowhere but up. It is our hope that this is a tool that helps them meet those heightened expectations. But also that it's only a starting point, that boards will use the tools in this framework to get the conversation started and come back to us with further recommendations of what would be additionally helpful to assist them in their oversight here.
Emily Miner: Well, I, for one look forward to following along and participating and seeing what the impact is and how this framework is used and what the feedback is from those that use it. Marsha, Eric, it has been such a delight speaking with you today about the genesis of this report and all of the insights assembled from such a stellar working group. We're out of time for today. But for those listening, if you're interested in learning more about the report, the framework, et cetera, please look at the link in the podcast description. My name is Emily Miner, and I want to thank you all for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcasts on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn on this podcast episode Stories of compliance failures aren’t strangers to news outlets or entertainment networks. But while the circumstances can make for great media headlines, what is arguably more interesting is watching how those companies respond. In this episode of the Principled Podcast, host Emily Miner is joined by Carlos Villagrán Muñoz, Gerente de Compliance (Director of Compliance) at CMPC. Listen in as the two discuss how, over the past decade, CMPC has sought to not just recover from a significant compliance failure, but rebuild—stronger—by focusing on ethics, culture, and values.
To learn more, download the 2022 E&C Program Effectiveness Report.
Featured guest: Carlos Villagrán Muñoz Carlos Villagran is a Chilean attorney who graduated from the Pontificia Universidad Católica de Chile with a Master of Laws (LLM) degree from Georgetown University (US). He currently serves as Director of Compliance of CMPC, a 100 years old Chilean-based holding, one of the worldwide leading manufacturers of pulp, paper, packaging, personal care, and other forest products. With more than 19,000 employees, CMPC has industrial operations in 8 countries (LatAm) as well as commercial offices in the US, Europe, and China, selling and distributing its products to more than 45 countries around the world.
He has previously served as Compliance Officer for the Chilean operations of Liberty Mutual Insurance and Mitsubishi UFJ Financial Group, as well as Legal Intern at the World Bank’s Integrity Compliance Office.
Featured Host: Emily Miner Emily Miner is the Director of LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact.
Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
What you'll learn on this podcast episode Stories of compliance failures aren’t strangers to news outlets or entertainment networks. But while the circumstances can make for great media headlines, what is arguably more interesting is watching how those companies respond. In this episode of the Principled Podcast, host Emily Miner is joined by Carlos Villagrán Muñoz, Gerente de Compliance (Director of Compliance) at CMPC. Listen in as the two discuss how, over the past decade, CMPC has sought to not just recover from a significant compliance failure, but rebuild—stronger—by focusing on ethics, culture, and values.
To learn more, download the 2022 E&C Program Effectiveness Report.
Featured guest: Carlos Villagrán Muñoz Carlos Villagran is a Chilean attorney who graduated from the Pontificia Universidad Católica de Chile with a Master of Laws (LLM) degree from Georgetown University (US). He currently serves as Director of Compliance of CMPC, a 100 years old Chilean-based holding, one of the worldwide leading manufacturers of pulp, paper, packaging, personal care, and other forest products. With more than 19,000 employees, CMPC has industrial operations in 8 countries (LatAm) as well as commercial offices in the US, Europe, and China, selling and distributing its products to more than 45 countries around the world.
He has previously served as Compliance Officer for the Chilean operations of Liberty Mutual Insurance and Mitsubishi UFJ Financial Group, as well as Legal Intern at the World Bank’s Integrity Compliance Office.
Featured Host: Emily Miner Emily Miner is the Director of LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact.
Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
What you'll learn on this podcast episode Mobile devices influence nearly every aspect of our lives, including how we learn and process information. So, it’s no surprise that mobile is only becoming more important to ethics and compliance programs—especially when it comes to meeting employees where they are. LRN’s 2022 Ethics & Compliance Program Effectiveness Report confirms this. But how can organizations ensure that they are integrating effective mobile E&C solutions? In this episode of the Principled Podcast, host Carolyn Grace, content writer and podcast co-producer, talks with de Guise Vaillancourt, a lead project manager at LRN who specializes in mobile app development. Listen in as the two discuss how mobile solutions enhance E&C program effectiveness and what mobile considerations E&C professionals should take for the year ahead.
To learn more, download the 2022 E&C Program Effectiveness Report.
Featured Guest: de Guise Vaillancourt de Guise Vaillancourt is a lead project manager at LRN who specializes in mobile app development. In this role, he serves as the main contact between clients and product developers throughout the entire mobile project lifecycle—including design, content, user experience, customization, technical requirements and troubleshooting. de Guise has helped LRN launch over 20 apps for client partners in the last three years alone, thereby playing a significant role in shaping LRN’s mobile offering and its evolution.
Prior to LRN, de Guise worked on apps as vice president of international marketing for 20th Century Fox, where he contributed to development from predominantly the end-user perspective. Before that, de Guise was the executive director of global marketing at Avon Products. There, he managed and led the strategic planning, marketing, and product development for Avon's global product portfolio and built partnerships across 15 key international markets, helping transform Avon’s image into a modern beauty resource. de Guise earned his Master’s in I/O Psychology at New York University as well as a Master’s and B.A. in Macroeconomics and Finance from McGill University.
Featured Host: Carolyn Grace Carolyn Grace is a content writer on LRN's global marketing team and co-producer of the Principled Podcast. She specializes in writing compelling stories about ethics and compliance that resonate across business segments, industries, and personas while hitting critical KPIs for traffic and engagement. Topics she frequently covers include ESG, data privacy and protection, DEI, the role of boards of directors and leadership, corporate training and e-learning, and ethical corporate culture.
Prior to joining LRN, Carolyn was a writer and content strategist at Thinkso Creative, a boutique creative agency in New York City. At Thinkso, she wrote internal and external communications for clients in technology, nonprofit, law, logistics, and financial services sectors. Before that, Carolyn conducted trend research and cultural strategy at Horizon Media, specializing in entertainment, travel, media and technology, health and wellness, and food and beverage categories. Carolyn graduated magna cum laude from the University of Pennsylvania with a B.A. in American History and French Studies and a minor in Journalism.
What you'll learn in this podcast episode Can we make diversity matter to everyone? If so, how can we overcome resistance to dealing with tough topics like racism and gender equality and really change people’s behavior? In this episode of the Principled Podcast, host Jen Uner talks with Senior Instructional Designer Felicity Duncan about a new LRN learning model and how it can drive behavior change to support diversity, equity, and inclusion initiatives. Listen in as the two discuss effective DEI training as well as Felicity’s recent work on the new LRN DEI Program, a comprehensive learning campaign that includes a range of essential microlearning assets.
Additional resources:
LRN’s DEI Program provides companies with a multi-faceted training solution—a ready-to-deploy learning campaign with curriculums, asset packs, and customizable courses, plus the option to add bespoke content, learner experiences, and communications campaigns developed in association with LRN’s E&C experts. You can preview some of our most popular course content (just one piece of this program!) by clicking here.
Featured guest: Felicity Duncan, Ph.D. Dr. Felicity Duncan, Senior instructional designer, believes that training and communication interventions have the power to transform behavior, including driving people toward more ethical treatment of those around them.
Felicity graduated with a Ph.D. in Communication from the University of Pennsylvania. After teaching at the college level for several years, she transitioned to workplace education to have a bigger impact on working adults by providing them with the training they need to truly thrive in their roles. At LRN, she is focused on developing high-impact, behaviorally focused content for the LRN Library. Her most recent project saw her working with the Library team to create a powerful new DEI Program that includes not only LRN’s world-class Inspire courses but also a set of microlearning assets designed to support, reinforce, and guide behavior change.
Featured Host: Jen Uner Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
What you'll learn in this podcast episode Can we make diversity matter to everyone? If so, how can we overcome resistance to dealing with tough topics like racism and gender equality and really change people’s behavior? In this episode of the Principled Podcast, host Jen Uner talks with Senior Instructional Designer Felicity Duncan about a new LRN learning model and how it can drive behavior change to support diversity, equity, and inclusion initiatives. Listen in as the two discuss effective DEI training as well as Felicity’s recent work on the new LRN DEI Program, a comprehensive learning campaign that includes a range of essential microlearning assets.
Additional resources:
LRN’s DEI Program provides companies with a multi-faceted training solution—a ready-to-deploy learning campaign with curriculums, asset packs, and customizable courses, plus the option to add bespoke content, learner experiences, and communications campaigns developed in association with LRN’s E&C experts. You can preview some of our most popular course content (just one piece of this program!) by clicking here.
Featured guest: Felicity Duncan, Ph.D. Dr. Felicity Duncan, Senior instructional designer, believes that training and communication interventions have the power to transform behavior, including driving people toward more ethical treatment of those around them.
Felicity graduated with a Ph.D. in Communication from the University of Pennsylvania. After teaching at the college level for several years, she transitioned to workplace education to have a bigger impact on working adults by providing them with the training they need to truly thrive in their roles. At LRN, she is focused on developing high-impact, behaviorally focused content for the LRN Library. Her most recent project saw her working with the Library team to create a powerful new DEI Program that includes not only LRN’s world-class Inspire courses but also a set of microlearning assets designed to support, reinforce, and guide behavior change.
Featured Host: Jen Uner Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
What you'll learn in this podcast episode The world of data privacy and protection continues to evolve at a rapid pace. From the growing number of US states adopting privacy laws to the growing list of rulings under GDPR, the EU’s General Data Protection Regulation, it’s a lot to keep track of. What can organizations do better to adapt to these regulatory shifts and adopt a greater culture of privacy? In this episode of LRN’s Principled Podcast, host Aitken Thompson talks with Andrew Lachman, the head of legal and data protection officer at Contentstack, about data privacy and protection and how to create a privacy culture in the modern workplace.
Learn how you can get involved in today’s conversations around data privacy and protection with these organizations mentioned:
- The International Association of Privacy Professionals (IAPP)
- Future of Privacy Forum
- TechGC
Featured Guest: Andrew Lachman Andrew Lachman has nearly 19 years of experience in privacy space, having founded the privacy practices committee at Move.com and co-founding the Congressional Tech Staff Association while Legislative Director for Congressman Ted Lieu who represents most of the Silicon Beach area. He is currently Head of Legal and Data Protection Officer for Contentstack after running his own firm for a number of years working with startups and growing companies. Andrew is a co-founder and chair of the LA County Bar Association's Privacy and Cybersecurity Section, a member of TechGC, the California Lawyers Association Privacy Section and has been a member of the International Association of Privacy Professionals since 2007 when he received is Certified Information Privacy Professional certification.
Featured Host: Aitken Thompson After starting his legal career at Kirkland & Ellis, Aitken became interested in the then-nascent field of educational technology. He left law firm life and co-founded Thompson Educational Consultants and, subsequently, Taskstream, LLC. Taskstream quickly became a leading company in assessment and accreditation for higher education. Aitken served as Chief Operating Officer, leading the legal, human resources and finance functions of the business. Beginning in 2016, Taskstream underwent a rapid expansion, merging with five other ed-tech companies in a span on 18 months and, in the process, becoming Watermark, LLC, and creating the “Educational Information System” category of ed-tech. During this period, Aitken’s legal and HR focus expanded to encompass private equity investment and the transition between primary sponsors, cultural and process integration amongst the various merged entities, and the management and harmonization of legacy client and vendor contracts.
What you'll learn on this podcast episode A code of conduct is your organization’s character and culture written down. It articulates who you are, what you believe, and why you are in business. It also provides a reference for all stakeholders. A reference into what your organization values, and how you live those values. But how do you design and implement a code that communicates effectively? What does “good” look like when it comes to codes of conduct? In this episode of the Principled Podcast, host Jen Uner speaks with Senior E&C Advisor Jim Walton about LRN’s new Code of Conduct Report, which presents a set of best practices in code design and implementation. Listen in as the two unpack the report’s insights from nearly 150 codes of conduct deployed by companies around the world—including codes from 3M, General Motors, and Imperial Brands.
Get a free copy of the 2022 LRN Code of Conduct Report today.
Featured guest: Jim Walton Jim Walton is a member of LRN’s Ethics & Compliance Advisory Services Team – with over 25 years of professional experience in corporate, institutional and government settings, spanning the fields of ethics and compliance; environment, health and safety; and energy management.
Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics & compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third-party due diligence reviews; and helping managers at all levels become better ethical leaders.
Jim is a Certified Compliance and Ethics Professional.
Featured Host: Jen Üner Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
What you'll learn in this podcast episode Trust is foundational to business and society, so much so that the global public relations firm Edelman releases an extensive annual survey covering whom and what the public trusts. However, their 2022 Edelman Trust Barometer reveals a concerning insight: people are increasingly more inclined to distrust than trust. In this episode of the Principled Podcast, host Emily Miner explores key findings from the 2022 report, “A Cycle of Distrust,” with David M. Bersoff, Head of Global Thought Leadership Research at Edelman Data and Intelligence. Listen in as the two discuss what drives trust, why public trust in certain institutions is eroding, and how businesses can help rebuild trust moving forward.
Additional resources:
Get a copy of the 2022 Edelman Trust Barometer.
Read our blog post on takeaways from this year’s report.
Featured guest: David M. Bersoff, Ph.D. David oversees Edelman Data & Intelligence’s (DxI) global Thought Leadership research including the annual Trust Barometer and Brand Trust studies. In this capacity, he is responsible for questionnaire development, leading all data analysis and insight gleaning activities, and developing new frameworks for understanding trust, credibility, and consumer-brand relationships.
Prior to joining Edelman DxI, Dr. Bersoff spent 18 years as a consumer insight and marketing strategy consultant at The Futures Company. In his last 5 years with the organization, he served as its Chief Insights Officer and was a member of its global board of directors.
Prior to entering the consulting world, David spent 12 years engaged in social science research at various Ivy League institutions, including 4 years as an assistant professor of social psychology and research methodology at the University of Pennsylvania.
Featured Host: Emily Miner Emily Miner is the Director of LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
What you'll learn in this podcast episode Is trust the ultimate currency of stakeholder capitalism? If so, how can corporate leaders create a culture of trust inside and outside of their organizations? In the final episode of season 7 on the Principled Podcast, host Jen Uner talks about the role of values in building organizational trust—and frameworks to help you get there—with LRN Director of Advisory Services Emily Miner.
You can listen to the other season 7 episodes mentioned in this discussion here:
- How values inform decisions: Unpacking the role of the CECO
- Trust is at stake, and other insights from Edelman's 2022 Trust Barometer
You can access other materials mentioned in the discussion here:
- Aspen Ideas Fest panel discussion with Ellen McGirt
- Corteva case study
- LRN Benchmark of Ethical Culture
Featured guest: Emily Miner Emily Miner is the Director of Advisory Services at LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Featured Host: Jen Üner Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
Principled Podcast Transcript Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Jen Uner: Is trust the ultimate currency of stakeholder capitalism. If so, how can corporate leaders create a culture of trust inside and outside of their organizations? Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Jen Uner, strategic communications director at LRN, and today, I'm joined by my colleague, Emily Miner, director of advisory services. We're going to be talking about the role of values in building organizational trust and frameworks to help you get there. Emily, thanks for joining me today on the Principled Podcast, by the way, our final episode of this season seven.
Emily Miner: Yeah, thanks for having me, Jen. I'm happy to be here and honored to be rounding out an incredible season on the Principled Podcast.
Jen Uner: It has been a great season, and I think we're going to have an opportunity to touch on some of the folks that we've had on the podcast. To get us started though, recently at Aspen Ideas Fest, Fortune senior editor, Ellen McGirt, asked a great question of her panel. She said, "Is trust the ultimate currency of stakeholder capitalism?" It's how we started our conversation today. I of course will say yes, but recently, you spoke with David Bersoff, head of Global Thought Leadership Research at Edelman, and he worked on the Edelman Trust Barometer. You had a chance to speak with him earlier this season, and I'd love for you to recap for us some of the insights that stood out to you.
Emily Miner: Yeah. I think based on the 2022 Edelman Trust Barometer, which is a fantastic annual look at levels of trust in key societal institutions, business, government, media, I think that the 2022 Trust Barometer report would say that the answer to your question and to Ellen's question is yes, trust is the ultimate currency of stakeholder capitalism. In fact, what Edelman found in their research is that business is the only institution in our society that is trusted, and that's actually a first in the 20 plus years that they have been running this type of study.
Actually, for the second year in a row is business the most trusted institution. That was one of the takeaways from the Edelman Trust Barometer, and that David helped unpack when we spoke earlier this podcast season. Given that, if business is the only trusted institution for the second year running, it really underlines the question, what does this mean for leaders? How can they ensure that business remains trusted?
People are looking more and more to business to help solve or address the problems of the world because we don't trust government, because we don't trust media, because we don't trust NGOs. With that mantle of being the only trusted institution, a lot more is falling on business and specifically business leaders and the expectations for them are a lot higher. I think that that really ... That was a current through the Aspen Ideas Institute that you mentioned through the conversation that took place there.
Jen Uner: It really does put a lot of pressure on CEOs and leaders then. One of the stats that I thought was so interesting was how I think it was 60% of employees, they're basing their employment decisions now on the values of the companies that they're looking at and the positions that companies take around social issues, and of course they expect the company to have a position on a social issue, which I thinks it's a rather new thing. Would you say?
Emily Miner: Yeah. I don't know if it's new in the past few years because I do feel like this has been a trend that I've observed in the research maybe up to the past decade or a little bit less, but it certainly every year seems to get to ... It grows. I think, first, it was a healthy minority of the global workforce or of the workforce in the United States, and now it's tipping to be a majority of the workforce. You see some of this in demographic changes as millennials grow in the size of our workforce and now Gen Zers as they're entering the workforce and the expectations that those two generations have for their employers.
But it's certainly not a concept that millennials invented, but it does seem to be growing. Something that's interesting to me now where despite ... We're potentially heading toward a recession in the United States, and despite that, it's still very much an employee market out there. We're still in the midst of a great resignation, which is now really being more called a great reshuffling because it's not that people are dropping out of the workforce so much as they're leaving their jobs to find better jobs.
What some research has shown is that it's not so much that I can find another job that pays me better, but it's that people are no longer satisfied with the status quo and they're looking for opportunities where they can feel more values alignment, where there's more culture of inclusion and equity in the workplace, where they feel that their company is doing something that's contributing positively to the world.
Those are strong drivers of why people are jumping ship and looking elsewhere. It'll be interesting to see how that shapes the narrative and the importance of values and multi-stakeholder capitalism more generally as we continue to hopefully be coming out of the COVID pandemic and this great reshuffling in spite of some of the more negative trend lines with respect to our economy.
Jen Uner: Yeah. I was just going to bring that up. When you have a business environment that's marred by an economic downturn, that puts a lot of pressure. There's then the business financial pressure on decision-making and performance for the company. Then you layer on top of that some of the social and political challenges that are happening and this need to have a position, and can you have a position on everything? Which are the things that you need to prioritize?
I think often corporate leaders in ethics and compliance, our field, chief ethics and compliance officers, for example, the people listening here, they find themselves in a role of counselor to the C-suite as the company and as leaders are facing these kinds of tough decisions. One of the things that really struck me at that Aspen Ideas Institute conversation was Allstate's CEO, Tom Wilson, was one of the panelists and he spoke about a societal engagement framework. I know you had a chance to listen to his presentation. Can you tell me about their approach to decision-making and how they engage on hot button issues?
Emily Miner: Yeah, absolutely. I am so inspired by this framework, and beyond that, there's so much common sense in it, and Tom Wilson talked about this societal engagement framework as something that Allstate developed a little over a year ago in response tom, he didn't use this word, but a deluge of social issues that were coming their way and that the company was being asked to take a stand on or take a position on, sign a letter that's going to be on the front page of the New York Times or what have you.
It got to this point where they said, "We've got to pause and really think about how we're making these decisions." They developed what they call a societal engagement framework that they run all of these issues or questions through. The way that it starts is, first, as an added outset, how does this issue stack up against our values and the way that we do business? There needs to be a level of values alignment before they'll even entertain going further. But assuming that the issue does, they have four filters, as Tom called it, or you could also think of it as just four questions to ask.
The first is, does this issue or does our taking action on this issue help us better serve our customers? The second is, do we, Allstate, have any institutional knowledge about this issue? Third is, can we affect change on this issue? What is our agency here? Then the fourth is, what impact does this issue have on our employees and our reputation? If issue A passes through all four of those filters, then Allstate will come out and they'll take a public stand, and more than just take a public stand, as in the CEO pens a letter that gets published somewhere, they'll actually come out and lead on the issue, engage on it.
An example of an issue that passes this values track and the four filters is climate change. Allstate, obviously, an insurance company, and we know from science that the rate of forest fires in the west of the United States, for example, in the intensity of forest fires is ... The climate change plays a role in that. Forest fires are burning down Allstate customers homes. Does taking a stand and working to address climate change help them better serve their customers? Well, absolutely. That's an easy one. Do they have any institutional knowledge about the issue of climate change?
Yeah, there's a lot of math and science that goes into determining what policy plans and rates are and the risk of different issues to someone's particular home. They have a lot of institutional knowledge about that. Can they affect change on the issue as a large insurer of homes as well as, of course, other things? Their voice carries some weight. They've worked with the government in the State of California to help shape and advance legislation and regulation, as well as perhaps other jurisdictions at the state level, or nationally as well. Then finally, what impact does this have on their employees and their reputations?
Well, they know that climate change is an issue that their employees care about, and so it passes that filter. One distinction that Tom made that I thought was really helpful was that if an issue doesn't pass through the filters, it doesn't mean that they're not going to do anything with it. One of the examples that he gave was the Supreme Court recent ruling that overturns [inaudible 00:12:54]. Allstate's healthcare plan has always covered abortion care, and given the impact that the Supreme Court decision might have on some of their employees that are located in states where abortion care is no longer an option, Allstate has said, "We'll reimburse the travel, et cetera, for our employees in order to access that care."
They're responding to that issue, but they're not coming out and taking a public stand on it. They're not taking a lead on reversing the reversal, shall we say, because does it help them better serve their customers? Well, they're not a healthcare insurer. Do they have any institutional knowledge about abortion care and the impacts of abortion or access or lack thereof? No. Et cetera. It doesn't pass the filters, but that doesn't mean that they're not doing anything about that particular issue. Having this societal engagement framework is a way for them to bring some discipline and structure and consistency into how they engage on the increasing number of social challenges, political challenges, climatic challenges that we as a global society and as businesses are faced with.
It also tells everybody else, all of their stakeholders, their employees, their investors, their customers, it tells everybody, "This is how we do things. This is our process, and we go through this process." At the end of the day, depending on how you feel about the outcome, at least you know what that process was. I just think it's such a brilliant example of bringing that level of clarity into how they're operating in this multidimensional world and connecting it back to the Edelman Trust Barometer that we were talking about into the role of them as business leaders in fostering trust.
Jen Uner: I think this clarity of where you stand and on which issues is an interesting one, because you can't necessarily stand for everything, right? You need to decide where is it your business, really? I think it's interesting how Allstate has chosen to filter a topic and arrive at a conclusion on it. This whole thing about how do you filter and how do you decide, I just find so fascinating. We had Scott Sullivan, he's the current chief integrity and compliance officer for Newmont Mining. We had him on the podcast with Joe Henry, former US compliance officer for Braskem, and they were talking to Susan Divers on our team.
They were on a recent podcast and they were talking about some of the challenges they've both faced in decision-making, and one of the things that stood out for me was how they both used values to guide their decision-making and to guide their counseling of their colleagues in the C-suite, because they were both leaning into values and those corporate values might be stated differently or might be prioritized differently between the two organizations, they would arrive at different outcomes. Right? One of them would say, "Well, our policy around vaccines and masking is that you've got to do it, and no one's allowed back to the office without it."
Then another organization might prioritize something else that says, "Well, it's up to you. You get to make that decision. You can work from home forever if you need to." I think it's really interesting that values plays a really important part and has a real impact on how corporate policy and ultimately behavior, how that comes to be. I don't know if you could talk to me a little bit about that, because obviously you spend a lot of time consulting on values with companies. Tell me about how that shapes company policy and behavior.
Emily Miner: Yeah. An interesting byproduct of the COVID pandemic I think has been that ... I perceive that the role of values has grown in prominence in terms of the discourse about the role of values in companies has increased. I think it's because the decisions around COVID are so hard. How do we ... Do people come in? Do they not come in? We're risking lives in making this decision. How do we keep, but we can't employ people if we don't have the money to pay the salaries? We have to keep on producing whatever it is that we produce in some level, but how do we do that? These are incredibly complex decisions.
When you're in a situation where you have to make these really challenging decisions and there isn't necessarily a playbook for it. The last global health pandemic was over 100 years ago. I think a lot of companies have come out and said, "We didn't have a plan in place," because this wasn't something that was anticipated. When you don't have a playbook, or to use terminology that's common in our industry, ethics and compliance, rules or regulations about something, values help to fill that void and they guide us on what we should or shouldn't do as opposed to a playbook or a rule, which says what you can and can't do.
Of course, we need rules, we need regulations, we need to know what we can and can't do and where the lines are. But there are always going to be these unforeseen situations, the variant on the scenario that we didn't anticipate when we wrote the rule, and that's where values come in. I think a lot of leaders, a lot of business leaders turned to their company's values, as well as I'm sure their own personal values, to help them navigate the incredibly complex decisions companies had to make surrounding COVID.
I've read a number of accounts from business leaders that have talked about how helpful that was, and they're talking about values more internally and externally. I hope that that's a lens that business leaders will continue to use as strongly coming out of COVID, and that's at the company level, but it trickles down to the individual employee level too, because most companies offer some type of training or onboarding, or you have a code of conduct or you have policies. We have all of these resources that should tell us, again, the cans and can'ts, as well as the shoulds and shouldn'ts.
But I think it's something like humans can only keep three or five things in their mind at once. We can only remember so much. Having the presence of really strong values where the values actually mean something, they're not just a nice recruitment tool on your website, but they really mean something, that's going to be infinitely more helpful guiding behavior on a daily basis across a global workforce and all the variation that comes with that. I've really been encouraged by how values have become a more dominant part of the conversation in the business community.
You're right, depending on what your values are, you might have completely different outcomes. But again, it comes back to that transparency of the process and the fact that there is a process, the structure of the process that, at the end of the day, most of us can get on board and accept what it is because we understand how we got there. That's what I think is so key. It's just that transparency on how we got there. It's not so much about the end as the journey, so to speak.
Jen Uner: Yeah. That makes total sense. I know in our code work, in the consulting work that you do with our clients, speaking of employee level work, we often include frameworks for decision-making, right? That work at the employee level. What are some examples of these tools that can help not just leadership, like we were just talking about a societal bigger picture one, but on the individual level? How does that play out?
Emily Miner: Yeah. Actually, after watching Tom Wilson talk about Allstate's societal engagement framework, I actually went online and just Googled Allstate's code because I was curious, how do they ... do they have something similar, a similar framework that they share that they've developed for their employees? In fact, yes. In their code, they have a whole section on ethical decision-making that lists nine questions that employees should ask themselves when they're faced with a decision or a situation where the decision or the course of action is unclear. Is it legal? Okay. Yeah, that's an obvious one, but does it conflict with our values?
What are the consequences of this? How would your family and friends perceive this decision or course of action that you take? These are some of the questions that Allstate included in their code that I think we ... The majority of us could probably take any number of tough, sticky, gray area situations and go through it, and is it legal? Okay, well, maybe I'm ... I don't know the law, but how would I feel if my mom knew? How would I feel if this was on the homepage of CNN? We all know how we would feel about that, and that's such a helpful ... It connects to our humanity, the human heart level.
It's just really helpful framing that Allstate's providing to their employees. We help a lot of companies write their codes of conduct. Ethical decision-making models or a code in and of itself is a guide for behavior and breaking out different risk topics into what are the behavioral expectations, et cetera. But having a decision-making framework or a list of questions or whatever it is that ... It's issue agnostic, it's situation agnostic, it's just something that anybody can pick up and use. That continuity of Allstate at their company level, as well as how they translate that down to employees, it is just something that I wanted to note.
But it's something that we include in most of our codes that we create for our clients. Some of my favorite examples, one of them is John Deere. Their code is beautiful, and it's who they are. It's their culture written down, which is what we always strive for. They include a decision-making framework as well and it include ... There's a series of questions and it's an interactive. You ask yourself this question and then you click yes or no, and it reveals guidance for what your next step is. But also, it starts out with is it consistent with our values? Centering the values first and then going into consistency with rules.
They also ask, "Would this build trust with employees, customers, shareholders, or communities, or would it harm trust?" That is how we started at the outset of this conversation around the importance of trust in the business context. Similarly, how would I feel if my actions became public? Et cetera. They have their own framework that's speaks to their culture and to their values. Another example is Corteva, which is an agriscience company, and they also have a framework. Theirs is a little bit different. It asks a series of questions, and then depending on how you answer those questions, they give guidance on who you can consult for advice, and it's going to be different depending on the situation.
That's also nice that you're not on your own, right? There are others in our organization that are here to help and can help, and if it's this situation, contact this group, and if it's this other situation, contact this other group. I also thought that's something that they did a little bit differently. They're all different. You talked about the conversation in the earlier podcast, but the goal is the same, which is to provide guidance for behavior that is reflective and supportive of who we are as an organization, what we stand for and what we value.
Jen Uner: It's really, really important. One of the things that we know from our Benchmark of Ethical Culture, which is a report that you were very involved in, and it certainly steers a lot of my thinking these days. We know from the Benchmark of Ethical Culture that the companies with the strongest ethical cultures are going to outperform their peers by up to 40% in key business metrics, the standard things that you would want to have as a business like employee loyalty, innovation, adaptability, customer satisfaction, and growth.
I think that taking code of conduct seriously, taking value seriously and taking culture building seriously is probably one of the most important things that a company could be doing right now, especially when you look at the Edelman Trust Barometer and the role companies have to take right now in society. Trust becomes super foundational to that. I know you've got some insights that you can share around trust building and how foundational that is for ethical culture.
Emily Miner: Yeah. When we conducted our research into ethical culture globally in a business context, we looked at ... I want to say 10 different dimensions of culture and how people and organizations behave and operate, and we did some fancy statistical modeling to look at are there some aspects of culture that are more important than others? How do they relate to each other? What drives what? And all of that. What we found was that there were some dimensions that rose to the top in terms of influencing other elements of culture, as well as those business outcomes that you talked about, and trust was one of them.
We found that trust had an outsized impact on whether or not people behaved ethically in an organization, and particularly when they were under pressure. I think that that's such an important idea because if you look at any number of corporate scandals, so often, not in every case certainly, but in many cases, the pressure to perform that was set out or pushed by the organization, by leaders in an organization, is part of why people did what they did.
This idea that trust is one of the strongest drivers of whether people behave ethically, especially when under pressure, I think is a big one that certainly makes me sit up a little taller and take notice, because it's something that any chief ethics and compliance officer would say that they're looking for and is a goal of their program. Another area where trust really stood out as a driver of employee loyalty, we were talking earlier about the great shuffling, but I think that also makes it stand out even more for me, just in our current context. People are more likely to stay in your company, you're more likely to retain great talent if they trust you as leaders, as an organization, their peers, and if they feel trusted themselves.
Jen Uner: I think one of the things that was evident too in the research is the value of transparency and building trust.
Emily Miner: To wrap up a lot of the threads that we've talked about and as it relates to transparency, one of the findings that was so compelling to me from the Edelman Trust Barometer was that the majority of people are expecting CEOs, specifically CEOs, to take a public stand on any number of social issues of our times. But at the same time, at least in the United States, these issues have become so politicized and polarizing. That's a tough bar to set for CEOs. How do they thread that needle? It's why I think that Allstate's societal engagement framework is just so brilliant, because it helps them figure out how are we going to address these issues?
Responding to that majority of the population as Edelman, found they're looking for Allstate CEO and for any number of other companies' CEOs to take a stand. It's a way to respond to that call without politicizing or polarizing or without politicizing the issue, because that's not what it's about. It's not about is this a liberal cause or a conservative cause? Is it a Democratic cause or is it a Republican cause? It's four questions. Does this help our customers, do we know something about it, do we have agency over it, and what impact does it have on our employees?
It really takes all of that noise out of the decision-making. I just think it's such a great example of how leaders in general can take up that mantle of society's expectations of business to help solve and address our social issues without having that response fall into any political trap that's going to alienate you or with your employees or with customers. It's such a great example and one that I hope other business leaders take inspiration from.
Jen Uner: Well, I think it just really speaks to how important it is to set up those frameworks in advance so that you're not caught in panic mode or in defensive mode when it's not even necessary to be that way. Right? If you've set up those mechanisms in advance, you're going to probably come out ahead because you will have already created a framework that's going to prioritize the human response.
Emily Miner: Absolutely. Absolutely. Because what's the next COVID? What's the next unexpected thing? To already have that framework in place is going to be so helpful.
Jen Uner: That's why we say rules are good, values are better.
Emily Miner: Exactly.
Jen Uner: Goes back to that. Emily, thank you so much for joining me on the Principled Podcast today. It's our final episode of season seven, as we take a summer break and we'll resume with season eight in September. In the interim, we'll share encores of our favorite episodes from this season. To close out. My name is Jen Uner, and I want to thank you all for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. If you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen, and don't forget to leave us a review.
What you'll learn in this podcast episode It’s generally accepted that effective E&C programs are based on values as well as rules. But applying those values to real-life situations can be difficult. This has been particularly true during the pandemic, as organizations make hard decisions in many instances and chief ethics and compliance officers play a key role in guiding those efforts. How can values help CECOs sustain ethical performance—and even excel—in the face of such change and adversity? In this episode of LRN’s Principled Podcast, host Susan Divers talks with Scott Sullivan, Chief Integrity & Compliance Officer at Newmont Corporation, and Joe Henry, who just retired as US Compliance Officer at Braskem. Listen in as they discuss the difficult choices they faced in providing moral leadership in their organizations—how those choices were made, by whom, and what the examples say about the role of the CECO.
Principled Podcast Show Notes * [1:58] - Scott’s role as the CECO at Newmont Corporation, the challenges faced and how he applies his values. * [4:50] - Ethics and compliance at the heart of Newmont’s decision making during the pandemic. * [6:10] - Joe’s role at Braskin and the challenges he faced. * [11:20] - The role of Joe’s values in influencing colleagues to change the decisions they made. * [13:35] - The lessons learned from these tough experiences in the company. * [16:12] - How both company’s ethical cultures emerged after the pandemic. * [19:50] - Other circumstances which strengthened the respective ethics and compliance cultures. * [27:25] - The most important areas of focus for an ethics leader in resolving difficult questions.
Featured Guest: Joe Henry Joe Henry was the US Compliance Officer for Braskem, a multi-national Chemicals and Plastics company headquartered in Sao Paulo, Brazil. He led the Ethics, Compliance and Risk Management efforts for Braskem’s US operations including commercial, manufacturing, logistics, management and Innovation and Technology (R&D) functions.
Prior to joining Braskem in January 2017, Joe was a Compliance Director at GSK, a global pharmaceutical company, and worked in various ethics and compliance roles since 2003. Investigations oversight, Compliance Operations, Methodology development, process assessment and improvement, policy and procedure management and managing government oversight programs were some of the responsibilities he successfully fulfilled while at GSK. Prior to his GSK Compliance roles, Joe worked at SmithKline Beecham as an Information Technology Project Director and with IBM Sales, Technical Support and Product Development.
Joe earned a B.S. in Chemical Engineering from Carnegie-Mellon University and an MBA from Saint Joseph’s University. He also earned his certification as a Leading Professional in Ethics and Compliance from the Ethics and Compliance Initiative (ECI). Joe and his wife reside in Lewes, Delaware and he retiredg at the end of March 2022 to pursue personal interests, travel and enjoy more time with his 3 grown children and two grandchildren. Joe continues to provide advisory and investigation services on an as-needed basis to Braskem’s US Compliance department.
Featured Guest: Scott E. Sullivan Scott E. Sullivan is the Chief Integrity & Compliance Officer of Newmont Corporation, the world’s leading gold company. Newmont has approximately 15,000 employees and 15,000 contractors and has 12 operating mines and 2 non-operated JVs in 9 countries. Mr. Sullivan oversees, develops, implements and manages Newmont’s integrity and compliance program including ethics, anti-bribery, corporate investigations, and global trade compliance. Previously, Mr. Sullivan was the Chief Ethics & Compliance Officer of a global manufacturer of fluid motion and control products with approximately 17,000 employees operating in 55 countries. Mr. Sullivan has written and contributed numerous articles on compliance programs, anti-bribery/FCPA, export controls, economic sanctions and other ethics and compliance topics to a variety of publications. Mr. Sullivan is also a frequent local, national and international speaker, moderator and conference organizer on compliance, anti-bribery/FCPA, export controls and economic sanctions.
Featured Host: Susan Divers Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
Principled Podcast Transcription Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Susan Divers: Hello, it's generally accepted nowadays that ethics and compliance programs that are effective are based on values as well as rules, but applying those values to real life situations can be difficult. This was particularly true during the pandemic when organizations had to make hard decisions in many instances in unprecedented circumstances, and ethics and compliance officers frequently played a key role in guiding those efforts. How can values actually help ethics and compliance officers sustain ethical performance and even excel in the face of change and adversity?
Well, hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Susan Divers, director of thought leadership and best practices with LRN's advisory group. Today, I'm joined by two thoughtful ethics and compliance professionals, Scott Sullivan, the chief ethics and integrity officer at Newmont Corporation, and Joe Henry, who just retired as the US compliance officer at Braskem. We're going to be talking about the difficult choices they face in providing moral leadership in their organizations, how those choices were made, by whom and what the examples say about the role of the chief ethics and compliance officer. Scott, I'm going to start with you. Can you talk about your role as the CECO at Newmont and some of the hard choices you've faced and how you applied your values?
Scott Sullivan: Sure. And thank you, Susan. It's exciting to be part of this podcast and it's a subject I'm very passionate about. So while Joe will be tackling some specific examples, I thought it might be more beneficial to start with a bit on process and approach. So when your values are tested in trying times, this is when the rubber meets the road. So the least common denominator approach, or what is accepted, what is condoned, often becomes your culture. It's not the pronouncements and the platitudes, but rather what you do on the ground or in crunch time. So during COVID, which by the way is not yet over or gone, we faced numerous challenges like everyone else, our values of safety, responsibility and integrity were at the forefront of what we did and said every day. As our strategy rolled out, we had to consider the full spectrum of stakeholders from vulnerable indigenous communities in which we operate to suppliers who were dependent on us to our employees.
In some cases in the early days of COVID, we even went into what's known as care and maintenance mode, which is basically shutting down except for essential services to protect the health and wellbeing of a variety of our stakeholders. We also deployed over 20 million in a COVID fund to assist communities around our minds with COVID type issues and challenges. We were active partners in the COVID struggles. We protected our employees with PPE, with vaccines, with health checks, et cetera, all this being said there were numerous and oftentimes competing opinions on what to do, being strong proponents of our values, and always circling back to them as a gut check when we made decisions, some of them which might have turned out to be controversial, was an excellent moral compass. It made us focus on not just what the short term, but what the long term was and what the consequences could be, both the good and the bad. It was our collective corporate decision that we had to make.
As a compliance team. Part of our job was trying to read the tea leaves and anticipating what was coming. Fortunately at Newmont, we have a fantastic executive leadership team who gave us the space to support them and the organization this endeavor. We invited in diverse perspectives, we had spirited debates and we pressure tested key decisions that mattered most. I'm proud of the approach that we took as an organization whereby no means perfect, but I think it has served us quite well.
Susan Divers: Scott, before I turn to Joe, one of the things that strikes me about what you just said is it sounds like ethics and compliance was really at the heart of decision making in these difficult areas that you mentioned. Am I reading that right? And if so, how did you achieve that?
Scott Sullivan: Yeah, I think, health and safety for sure was I think the heartbeat, if you will. Perhaps we were the supporting role, but really as COVID evolved over times, the issues got more complicated as they went. So you had initial true health and safety issues, in some cases life and death that you had to do, but then you had a whole series of decisions around employment, around vaccinations, around care and maintenance. And what do you do with communities, where the donations go? How do you ensure that you're not supporting corruption when you're doing the good deed of making donations? So I think as COVID evolved and as the challenges around COVID evolved, we became more integral and more integrated to those decisions over time.
Susan Divers: Well, and that's really a good example of how it's meant to work. Yeah, the ethics and compliance department isn't defective if it's often a corner, but it is effective if it's right at the heart of difficult choices, and that's a perfect segue to Joe. Joe, do you mind outlining your role at Braskem and then talking about some of the actual challenges you faced in your role in those?
Joe Henry: Certainly. Thank you, Susan. Thank you for the invitation to join you all today. Let me start off by saying that Braskem leadership team is a caring and forward looking group and primarily based in the US headquarters in Philadelphia. And that information will be important in a minute or two. Early in the pandemic two of our sites operated for 28 days via a live-in where our workers stayed on site, quarantined from family and other outsiders to operate our plants in Pennsylvania and West Virginia. These plants produce polypropylene, which is a key material for personal protection equipment, such as surgical gowns, face, shields, gloves, and masks. So our workers were willing to do that. And our Braskem leaders provided all the essentials for this live-in. And our team members were paid for every hour on site.
So Braskem tries to do the right thing. And during that time, all other team members were directed to work remotely during the pandemic. Eventually after our operations were deemed essential to US business interest, all of our plants reopened with strict masking and quarantine requirements, including restrictions in travel. One of our first policy decisions developed in Philadelphia was to require workers to quarantine for 14 days after travel if they had traveled from their home county. Works for Philadelphia were pretty close around in the urban area. The policy, and it worked for salary team members who could work from home, but not for hourly workers who worked on site and who would not be paid for the time they must quarantine. So at our Texas sites, this policy was problematic in that it would not be unusual for a worker employee to travel to the next county to care or check in on a family member. Therefore, compliance was asked to intervene. And as a result of that, our intervention, we extended the travel range and only had the policy applied to travel outside usual circumstances.
The other one is more around vaccines. So one other example as vaccines became available, again, I remember they were under emergency authorization. There became a drive by Braskem management to encourage team members to be vaccinated and to push required team members to be vaccinated or else be terminated. The impetus for this requirement was that several people at manufacturing sites were complaining about being vaccinated and still having to wear a mask because others were not vaccinated. We discussed the proposed requirement at the leadership team meeting, which US compliance is a part. And then there was actually a discussion in our industrial team where we're not a part and they mandated this vaccination or termination requirement by a majority vote, not a consensus vote.
I received a call from one of the dissenters. He was concerned that many of his employees would resign or be terminated because they did not trust the vaccine yet. His plant would be greatly affected. I brought this to the attention to the US leadership team that the vaccines were not yet fully approved and that no matter how administratively burdensome the CDC's recommendation was vaccination or regular testing. So I informed the group, I thought our requirement was overly restrictive. It infringed upon employees' rights, and I would not approve any of these terminations, in the US, the US compliance officer approves all terminations. So I had some leverage there. So what happened is we implemented weekly testing for team members who were not vaccinated. And that seemed to resolve the situation. By the way, it was helpful that I was fully vaccinated and boosted and it was clear, my personal beliefs were not a factor.
Susan Divers: Wow. That's a very striking example, Joe, there's a couple of things I'd like to pursue a bit. One is, it's clear that people brought you into these decisions that they turned to you as a resource, it sounds like certainly in the case of be vaccinated or terminated before the vaccines were fully approved, but also it sounds like you were asked to intervene on the travel restriction. Is that correct?
Joe Henry: Yes.
Susan Divers: And was that at a senior, if I can ask, or other level?
Joe Henry: I would say the vaccination or termination decision was a senior management at one of our industrial sites had the concern. And then the travel policy was probably, as I recall from one of the HR leaders at the site saying, Hey, we have some employees that are in unique situation here, or maybe not so unique, but different than what we would have from an urban center versus someone working in a more rural area.
Susan Divers: Well, that's another good example of how a compliance and ethics and compliance program should work. It should be a resource and be welcomed into decision making, particularly on very difficult and tricky issues like the two that you just described. Can you talk about the role of your values in convincing your colleagues and your leadership to change or moderate the decisions that they made?
Joe Henry: Absolutely. That was probably the driving force is our code of conduct, we don't dictate to people how they must behave, especially outside of work. It's fortunate that US compliance and compliance department of Braskem is independent and we're objective. And we're very visible. So people know us and people are willing to approach us. Again, that's why I started off the leadership team, it had the best of intentions. They heard from one group that says, Hey, we're tired of wearing masks. We want to be productive. And they reacted to that without understanding the potential consequences and the potential issues they may have with our own code of conduct. And that we couldn't mandate someone put something that was not yet fully approved. And that actually went further than what the government was telling us we needed to do. Which isn't uncommon. Our policies and procedures are frequently tighter than what the law requires. But in this case, we had to recognize that people have freedom of association and freedom of choice about theirselves. Once we brought all the potential consequences and perspectives of all affected team members, I think we reached the right decision.
Susan Divers: So was that a difficult process, would you say, was it time consuming, or once you played that role of honest broker, was it something that people widely accepted?
Joe Henry: Yes. Yes. I would say, we did use a lot of influence in... Basically had the show them what the consequences are, why their actions might not be entirely appropriate. So it wasn't a matter of authority. It was a discussion and it was a lengthy discussion, but I think everyone was fairly open minded and recognized that it was going take some more work and maybe we were going to have to spend some more money, especially getting a company to do the testing for us on a weekly basis. But I think they quickly arrived that it was the right decision.
Susan Divers: Well, that's a great example. And thank you for sharing that. I'm going to go back to Scott for a minute and then to you Joe and ask. So obviously these were pretty intense situations that you dealt with. What lessons did you learn from that experience given your role in the company? If you could discuss that a bit, that would, I think be very helpful.
Scott Sullivan: Sure. Yeah. Building on my prior comments a bit, I would say there were a few learnings and perhaps a few aha moments that we recognize along the curve. I think one was, you need to think both long term and short term. So whether it's your employees or your stakeholders, you might have a decision today that is different than the consequences tomorrow. So really making sure you're not just stuck in the moment, but you're thinking about the long term of the consequences or actions that come out of your decisions today. Playing off one of Joe's comments about culture and values, modifying a Warren Buffet quote a little bit, "Values take a long time to build, but they can be destroyed in a heartbeat." And people watch, I think that's the one that organizations often forget when they're looking at their culture, it's that whatever you allow or condone becomes your actual culture.
So I think it's really important to practice what you preach and stay true to those values or before you know it, or right under your nose, you lose them. And that's true, perhaps even more so in the darkest days. So, how you're treating your employees and what people did with respect to terminations, or extending compensation during COVID, all eyes were on that. And I think that has longterm consequences for employees is they think, well, how did my employer treat me during those dark days? Did they exit us from the organization? Did they treat us poorly? Was the mighty dollar, the only thing that mattered? And again, for us, we have a social license to operate in the locations we do. So you have to think about that holistically, the full ESG perspective and look at all your stakeholders.
And I think a little bit about what we've been talking about as well is anticipating the pushback, where are those pressure points, or focal points that are likely to come up and figuring out, like we always say, you can't take a program off the shelf, but customizing or figuring out what works best for you? And then hopefully that leads to you and many more in your organization becoming both values, beacons and champions to help the organization propel forward.
Susan Divers: So in other words, it really can become a tremendous positive as long as you stay true to your values. And you're actually strengthening your culture, not destroying it to go back to the Warren Buffet quote. And Joe, based on your experience, do you think that your ethical culture at Braskem emerged stronger as a result of the types of difficult choices that people made in those circumstances? And are there any other lessons learned from that, that you would want to highlight?
Joe Henry: So I believe our culture has gotten stronger. The ethics and compliance group and officers know they need to stay ever vigilant to ensure that passions do not overtake the organization's foundational values. We live in an impatient society that is quick to react and does not always consider all perspectives and unintended consequences. So this experience gives us an opportunity to talk to the leadership team and say, Hey, let's take a breath here. Let's look at this. I think when you're more thoughtful about these decisions, I think the decision will be better, probably strengthen your culture versus weaken it, or undermine it. But I do know that my successor's still facing these challenges.
Susan Divers: Yeah. Although you're building ethical muscle at the same time, I want to highlight what you said about stop, pause, think, or you said it a little differently, but our chairman of our board, Doug Sideman, has written extensively about the benefits of pausing. And we do live in a impatient world and one that moves at light speed, particularly with social media. And I think Scott, you would agree with this too, that stopping and getting everybody to slow down and look at all the potential ramifications and equities. Joe's example of employees in Pennsylvania versus employees in Texas, I think is a very telling one. And that, that is really, I think what's needed to deal with particularly moral leadership issues. Scott, does that make sense? And also if you could talk about whether your ethical culture came out stronger as a result of the pandemic, that would be helpful.
Scott Sullivan: Yeah. I think you often see in some areas the short term view or this, in the impatient world, as I like the way Joe characterize it, you see the pitch forks and the torches coming out in any particular topic. And so part of our job is to say, let's pause, let's think this through, the unintended consequences, the longterm consequences, I think for sure our ethical culture has emerged stronger. It really gave us ample opportunities to do the right thing and to put theory into practice. So one of the things coming out of the tragedy of COVID is it really gave us an opportunity to show our values and do the right thing in those dark days. And I think that also that consistency of messaging and values, it's not one offer. There's one big case. I think that really builds trust with stakeholders and gives you an opportunity to show that you're a different kind of company.
So even in the dark days with bad or troubling news, you're going to be transparent and that we stand true to our values and hold ourself accountable to those values. So that consistency of operational model, I think extends well beyond ethics into business and health and safety. When faced with a challenge, we're going to think about it, be very thoughtful in what we do and ultimately do the right thing for the entirety of the stakeholder community.
Susan Divers: Yeah, that sounds like very sound holistic decision making. Joe let's let's switch gears a little bit. We've talked about the pandemic and the challenges and how both of you feel that your ethical culture got stronger as a result, and you both played pivotal roles in the ethics and compliance programs, played pivotal roles in helping your organizations navigate. Can you give some other examples outside of the pandemic of having to do that?
Joe Henry: So I mentioned one of our values is the freedom of association. As a result of the summer of 2020, George Floyd death and all, we had some outsiders, some activists and DE&I consultants recommend some potential path forward for the company. One of those, including tracking managers' social media profiles, and other forms of public expression and see whether they should continue to be leaders in the company or not. For instance, should we sanction a manager for attending a pro-life rally, or another manager for posting their support for the police on their Facebook page? That type of monitoring is not aligned with our code of conduct. We declined that recommendation. Again, the passion was there. Hey, we got to weed these people out. Well, no, we have to make sure that when they're working for Braskem, they're aligned to Braskem's values and that they're not diminishing our name in the public.
And then most recently we've discussed how and when should compliance be involved in handling microaggressions. And we've agreed that microaggressions are supposed, should be handled between the two people in the first instance, maybe in a second or third occurrence, that it's handled, the person's called out publicly. And if it's repeated, then it's no longer a microaggression, it's an aggression. And then it comes to human resources or compliance. But those are some of the choices where, again, we relied on our code of conduct and relied on our proven policies and procedures regarding our ethics line to preserve the culture and continue to move the company forward and evolve the company.
Susan Divers: Well, and that's another excellent example of pausing and looking at all the ramifications and carefully analyzing whether it is consistent with your code or not. Scott, do you have similar examples outside of the pandemic experience?
Scott Sullivan: Yeah. So we've been on a journey of what I would probably call radical transparency in the ethics and compliance space, so where we're willing to show the good, the bad and the ugly to advance the health of our culture. It is a journey, so we're not perfect by any chance, but we're now more transparently and willing to share internal stories and struggles with our employees. I used to laugh all the time that most companies will say something happened to somebody, sometime, someplace with some result. And that leaves everybody, what the heck is that? What happened? And what are the expectations I know? So we've decided that we want to clarify expectations for employees. We want to at least establish the baseline for ethical behavior. And we want to ensure really that fraudsters or predators are held to account in the organization wherever and whenever we can. And also there's an evolving view about when something happens in our organization, what do we do to ensure that those individuals or groups of individuals are not just set free and allowed to go into the general community and repeat those damage?
How many times have we all learned in the compliance profession, individual moves from company A to B, to C to D. And when you do the investigation, there's a long track record that history being repeated at different organizations. So we have done cradle to grave exposes, including one with a public press release, where we actually lifted the hood and told the full story. So most times it's fairly detailed internally and the reception has been excellent. It's advanced our culture ball pretty dramatically. As I mentioned, that being said, it's really, we're still on the journey, but we feel that practicing what we preach and not allowing performance to excuse misconduct or cornerstones of our culture.
So even when the outcome is internally painful and extremely disappointing, we've been trying to promote this. So it's not just you do it once, because you can't fake it. And if you do it once, you see big scandals in organizations and periodically it's a big splash in the paper. And we've had similar things where you've had a case that we did our first radical transparency case. And I think the organization, the employees were saying, okay, is this a new way that we're going to operate, or is this the company's hand was forced and they felt they had to do it, so they did it? And so I think that whole concept of you can't fake, it's got to be genuine, it's got to be demonstrable and it's got to be sustainable, is really important.
And as an aside, I think most companies can get compliance correct, or they get it right. That's to say that it's the right side of the brain, it's the math science side. It's one plus one, plus one equals three. But when you get to integrity, you get to ethics and culture, that's the equivalent to me, the left side of the brain, it's the English history. It's a little bit more soft. It's touchy, feely. It's hard to measure, but I think it's far more impactful. And that is often where I see organizations fall down, because it's so hard to do. And it's so hard to say, what is it? And it feels like it's subjective, or judgemental, or it's just real hard to do. So I think companies that focus on getting the integrity or the culture piece right, are so far ahead of the curve and getting everything else right. And that's not just in the ethics and compliance space, because I think that could be a proxy for good governance. It could be something that is a springboard for doing other things in an extraordinary way or well above peer organizations.
Susan Divers: That's so interesting that you framed it in those terms. Something we talk about a lot and we're not alone in that in this area is that you can't just look at your ethics compliance program as a checklist and say, I'm good to go because I've got policies, code, training, audit, it has to be living and breathing. And that's where the touchy feely comes in. And the research, interestingly, it shows that if you have organizational justice where you're holding people to the same standard, and I hear you both talking about that in what you've described today, then you have the lifeblood and a strong foundation for your ethics and compliance program and activities. But if you don't, if there's two standards of justice, or what I'm hearing today too, is if there's a rush to judgment where some people get trampled in that rush, then you don't really have a strong foundation for your program. Joe, would you agree with that as well?
Joe Henry: Yes, I absolutely do. Yeah, it has to be thoughtful, fair. We haven't gone to the extent from a transparency as Scott Newman have us to naming particular people, but we do anonymize those situations and publish them or even present them as lessons learned.
Susan Divers: Yeah. That's very powerful. Well, we're starting to run out of time, but two questions before we terminate, which is what are the most important areas of focus by an ethics leader in resolving difficult questions? You've both given great examples of how central ethics and compliance was to tough decisions. But if you're a relatively new ethics leader, what are some of the key things to really bear in mind when those tough issues come up? Scott, you want to lead us off on that?
Scott Sullivan: Sure. So I think as we've both mentioned, and same with Susan, the tone at the top is really important. So getting your executive leadership on board, otherwise the likelihood of success drops pretty dramatically. And I think as we've also both said, relationships matter. So build them wherever and whenever you can. And I think it's always that rainy day fund, you build credit in the bank, you build street credit. So for the bad news bear moment you have to come in, I think that's really important. So they understand who you are. You're not just a cry wolf person, you're thoughtful, you're methodical. You do all the things the way the organization would expect.
And I think, for all of us, unfortunately, and you can see the business partnering go too far. So I think not withstanding that you always have to remember that there will be times undoubtedly as a compliance officer, where you have to put your neck on the line and hopefully your organization does not have a kill the messenger culture, that's not a fun organization to be a part of. And I think value based decisions are toughest in downturn markets and during crises. So we've come out of a pandemic and now we're going into what seems to be a downturn market. So I think the key message there is really prepare in advance and look at your rainy day credits and figure out where you're going to have to put your stake in the ground and move forward.
Susan Divers: So build up your relationships and your credit and your goodwill. Joe, something to add.
Joe Henry: I do that. I wholeheartedly agree. I think that what Scott mentioned is the most important area, but another area of focus is the company's values, which usually describes in the organization's code of conduct and implemented through your policies and procedures. And I remind the executives and our team members, employees, the code of conduct and policies are approved by the board of directors after thorough and thoughtful review by the executives, by the stakeholders and by compliance. So they're not done instantaneously and there's a lot of thought, there's a lot of reason why we have them and they shouldn't just be dismissed quickly because the particular circumstance. These documents provide the desired ethical direction of the company and have been very useful in resolving difficult decisions in the past, especially with well-meaning, but passionate team members. Go back to the foundation and consider it maybe, maybe, maybe we do need to make a change to the code of conduct or a change to our values, but at least reference it and have that discussion before taking any severe action that may have unintended consequences.
Susan Divers: That's a very good point. One of my colleagues describes the code of conduct as your culture written down, and using it as a focal point and a way to ensure that major decisions and discussions include values, I think helps make it a living and breathing document. Well, this has been such an insightful conversation. I wish we could continue it talking about tough choices, I think is really helpful for people at whatever stage they are in their ethics and compliance journey and profession. So I want to thank our listeners. My name is Susan Frank Divers, and we'll see you the next time on Principled Podcast. Thanks Scott. Thanks Joe.
Joe Henry: Thank you.
Scott Sullivan: Thank you all.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principle performance in global organizations by helping them foster winning ethical cultures, rooted in sustainable values. Please visit us at LRN.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode Good training is not quick to create. It takes time, effort, and years of instructional design experience. And too often, best-in-class training gets derailed by inadequate communications. An effective, attention-grabbing communications strategy is just as important as the quality of the learning itself. How can companies ensure that they’re designing training and communications that produce positive learning experiences and—ultimately—business outcomes? In this episode of LRN’s Principled Podcast Damien DeBarra, leader of Curriculum Design and Communications Strategy at LRN, and Tomaso Manca, learning director at LRN, discuss the importance of intentional curriculum design when developing corporate onboarding. Listen as the two talk about what best practices organizations should consider in their approach.
Principled Podcast Show Notes * [1:28] - What is meant by the idea of campaigns, not courses? * [3:47] - Best practices for incentivizing learners. * [6:11] - The benefits for learners. * [7:31] - How does LRN approach this campaign-based strategy? * [9:46] - Examples of ways to retain the attention of your audience. * [11:54] - Tactics used by LRN to bring the idea of campaigns, not courses to life. * [15:00] - Tips to ensure people don’t feel overwhelmed by your campaign. * [17:30] - The LRN difference in this approach. * [20:40] - Advice for people looking to implement this approach for the first time.
Featured Guest: Tomaso Manca has created exciting learning events for more than 20 years. As a Learning Director at LRN, he works with clients to create engaging learner experiences that support behavioral changes. Before joining LRN, Tomaso spent more than six years as a Learning Manager at Interactive Services. Prior to that, he worked as Best Practices Global Learning Manager at Thomson Reuters, supporting the learning of their Sales Organization. Tomaso holds an M.A. in Economics from Yale University.
Featured Host: Damien DeBarra brings more than 20 years’ experience to the instructional design and strategic workforce planning spaces. As a Senior Advisory Learning Solutions Manager at LRN, he focuses on creating training solutions that ensure business buy-in and connect hiring practices to day-one learning roll-outs. In the last few years, Damien has helped organizations such as United Airlines, Sun Life Financial, SITEL, Astellas, MFS Investments, and SAP create 90-day action plans for their solutions and develop supporting communication strategies. He has worked with over 200 clients in areas ranging from retail to pharmaceuticals, call centers to nuclear plant manufacturing. Prior to LRN, Damien spent more than nine years as the Learning Solutions Director and Head of Instructional Design at Interactive Services. He has also worked as an instructional designer at NCALT, Electric Paper, and Epic. Damien received his BA from Maynooth University.
Principled Podcast Transcription Intro: Welcome to the Principled Podcast. Brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Damien DeBarra: Good training is not quick to create. It takes time, effort, and years of instructional design experience. Best in class training is too often ruined by inadequate or authoritarian style communications. An effective attention grabbing communication strategy is just as important as the quality of the learning itself. So, how can you ensure that you're designing training and communications that produce positive learning experiences and ultimately positive business outcomes? Hello, and welcome to another episode of LRN's Principled Podcast. I'm Damien DeBarra, the leader of curriculum design and communication strategies at LRN.
Tomaso Manca: And I'm Tomaso Manca, learning director at LRN. As co-host for this episode, we are going to be talking about the importance of intentional curriculum design when developing corporate onboarding, and what best practices to consider in your approach. All right, Damien, let's dive in. Something I've been hearing a lot at LRN is the idea of campaigns and not courses. What do we mean by that?
Damien DeBarra: So campaigns, not courses, it's taken from the name of a talk we did recently at the Learning Technologies Conference in the UK just a month or two ago. And it's reflective of a conversation, which we have a lot here at LRN, which you hear in production, in our delivery teams and in the advisory team where I work. And that is the... We often semi-jokingly refer to it as, "the tragedy." "The tragedy" is that, we see world class learning materials being delivered to the business with a sort of, "or else" style communication. So if you think about it like, the client comes to us and says, "look, it's really important for us to roll out this training initiative around..." For example, B E and I, we make them a world class e-learning course. We develop a brilliant interactive classroom version of that for those who can't do online.
We animate fully bespoke, beautiful videos. There's a whole plethora of support materials ready for the learners to help apply to the job. And the people who've partnered with us are really super psyched and can't wait for the business to get at this. But then the email goes out saying, "Hey, do this course by Friday, or else." It's devastating to your efforts, because as we sometimes like to joke a little bit, people who take online training, particularly online training, they're a little bit like people who ring call centers. And that is that they're already slightly irritated before they get to you. And if you do anything to give them an opportunity to opt out, to give them an opportunity to let that email slide down the inbox and just be ignored, they'll likely grasp it. And it's not because people don't want to learn on the job, it's simply that it's one email and another hundred inside of the day. They've probably got a job to do. They've already got training. They might be behind on... So any kind of blunt order to do a course really doesn't help. So instead, what we try and do is catch people's attentions and then incentivize them, or if you like, seduce them or draw them towards actually exploring those learning assets.
Tomaso Manca: Very interesting, Damien. Can you share the best practice for incentivizing learners?
Damien DeBarra: Sure. Well, we tend to do it slightly differently for... with each client, with each partner and differently for each communication strategy, depending on what's being taught or what needs to be learned. But there does seem to be an emerging best practice and it is nascent, it's really emerging, but that is the move away from what you might call the one and done training deployment towards a more campaign based approach. Campaigns, they're spread out over slightly longer periods of time. The amount of minutes a learner spends in their chair doing the training should be the same, or if even possible, less than whatever they did the previous year. But the campaign is spread out rather. And it's made up... The idea is use microburst trainings and snappy communications. Really engaging videos, try and keep them under one minute, two minutes, maximum. Job aids with exploratory questions to help you focus, and then whatever the medium, whatever the channel, we try and focus on using simple repeated messaging across a period of time in multiple channels.
And if possible, we try and get that messaging going through the business, not just from an actor, as aware in a voiceover, but rather from real people within the organization. So real people within that business, diverse voices and if possible local leaders. So it brings a degree of authenticity to it, but again, back to that idea of, we need to catch people's attention. So whatever communication it is you're sending out around your training launch, it really needs to get people's attention. It has to stand out from the other 99 emails that you might have received that day. The response we want is, we want people to see a headline in an email and go, "oh, what's that?" And click to open it. And it's... It is about drawing people in and avoiding the language you normally associate around training. The very instructional designer language, the very people and culture departments. So human resources department's language, moving away from all that language around learning and trying to make it sound and feel not like training but more like a marketing campaign for something really cool. That's going to make you better at your job.
Tomaso Manca: So we're talking about using language that draws the learner in, within a campaign based strategy. What are the benefits for our learners?
Damien DeBarra: Well, there's a number of them, as we said, the first one is to try and take the sting out of being asked to do training when you've already got a multiple... a long series of tasks to do in your day. So as we said, we know people, a lot of people... if we give them an opportunity to leave that email alone, they will. Also... I alluded to this a couple of months ago, that language of instructional design we're all kind of used to hearing, "by the end of this course, you will be able to..." Whilst that has its place, if we can use a different kind of tone and approach, what you might call a more magazine style of writing, it's much more human. It's much more relatable. And it benefits the learner because, basically we want to try and increase and drive engagement.
So it's about trying to make the materials not sound like training, it's something that's going to be where you're being talked at. And the benefit of the learner is, as I say, primarily engagement. Keep them guessing, kind of engaged in thinking, "what's going to happen next? What's this about?" You've told them there's something in it for them, but using good copywriting and clever headlines, and also simple questions to draw people into wanting the answers to those questions. So the benefit, I'd say probably in summary, if you were to reduce it to one word, it would probably be engagement.
Tomaso Manca: And how does LRN approach this campaign based strategy?
Damien DeBarra: Well, like I said, it's different for every partner, but there are common tools. So, the idea is to have a carefully targeted communication strategy that is, we determine what the core messages are that we want in the comms campaign. We determine when we want to release them. Not everything should go out at the same time. And we want to repeat those as a series of simple focus messages through multiple channels. So yes, the email is the obvious one, because that's... things go to the inbox. It's the primary point to contact, but we also like to use internal communications channels. So for example, if you're within the Microsoft Office environment, as many of our clients are, let's start pushing stuff through Microsoft teams or through Yammer or through Slack, if that's where your environment is for internal discussion.
And also, it doesn't have to be digital. So for example, we create off, sometimes physical assets. So posters that go on walls in common areas within manufacturing environments is a classic one. Tent cards that sit on tables with a QR code. Again, seductive headline. "What's that about?" You take your phone out, maybe scan a QR code and it launches you to a 62nd advertisement about the campaign. So we do it a multiplicity of different ways, but the idea is that we work with you, your partners and communication specialists within those partners, to create a calendar strategy that's tailored for your needs. It's about getting the right messages and the right headlines delivered in the right channels. It's important to spread the messaging across different channels to make sure that we hit everybody in as many places as we can, at the same time as trying not to oversaturate the business with too many communications. So it's a bit of a balancing act between those two things.
Tomaso Manca: These are great points, Damien. I think it's important to make sure, as you were saying, to cut through the noise. Ensure that the learners hear what they need to hear in a form that resonates and connects with them. You want to engage and excite people, as you were saying.
Damien DeBarra: Exactly. You do. You want to engage and excite people. And in fact, I'll just throw the microphone back to you for a second and ask you. You've written stuff like this as well, and had a lot of experience of this at the deployment level, at the individual communication level. Could you give us a couple of examples of what that looks like tactically? Some of the approaches and ideas you've used.
Tomaso Manca: Well there are a few things to keep in mind, first of all, talk about real people and real issue that will resonate with your audience. And use messages that are simple and direct. For instance, with a client of ours, a large multinational food conglomerate, we have scheduled design workshops that focus on creating targeted messages. Representatives from the target audience are invited to each workshop and they help tailor the message and provide immediate feedback on whether the message will resonate with their peers or not. You also want to deliver those messages using multiple formats to ensure you capture the attention of your audience, something you already touched upon. A good example is a communication program you are creating for a large chemical company. Every month, we generate a message that fits within the client's larger communication initiatives. And so far we used a variety of medium.
We use graphically announced email blasts. Actual poster to be placed in the client's office, and short videos. We plan on adding podcasts and user generated video content next. And speaking about medium, the choice of medium barriers depending on the message and the desire to impact. You want to ensure that the content and the format go hand in hand, that they're aligned and true to your brand, your voice and your audience. The feedback we keep receiving from our clients is that these tips really help engage in their audiences as the messages come across as relevant, flexible, and timely. I know I covered only a handful of examples, so I'm going to bounce it back over to you then and ask you, what additional tech do we use at LRN to really bring campaigns, not courses, to life?
Damien DeBarra: So it's a little bit of the kitchen sink approach. Our strategies leverage the full LRN toolkit. So we've mentioned multichannel approaches like, using emails, using online training, but we also can design virtual classroom events. There's the email and comms campaigns I've mentioned. Internet, banner adverts, SharePoint, or WordPress built websites, to back up the training materials. But we also have our... We have a campaign manager tool, which allows you, the client, to log into the LRN platform, plan out the entire comm strategy, put all the copy... and schedule the entire thing, to send out the emails or the comms at exactly the time you want weeks and months in advance. And it enables you to do a load of work up front and then sit back and let the system take care of it. Ultimately, we can write the... work out the comm strategy for you, write the copy and the headlines and provide the visual assets, and then hand them over to the partner to deliver themselves.
This is a 50-50 split on what partners want. Some want to control that release themselves internally, and others want us to do everything for them, or have a tool that does everything for them. But we use everything, job aids and videos, microsites. Also help lines, chat channels in teams and Slack and other tools like that. And then crucially there's one overlooked thing, which is leader accountability programs. In the past, we've grandly called this, the accountability principle. And that's a slightly fancy pants way of saying something quite simple but very important. And that is... That if you bring leaders into the process of the training, it has a dramatic effect. So if you consider the two... the following two ideas... following two communications, "Hey Tomaso, I want you to do this training course by the end of the month."
That's of relative interest. If I say in the communication, "Hey, Tomaso, I need you to do this training by the end of the month." And one week afterwards, your leader slash manager is going to have a conversation with you about this for 10 minutes. I think your interest level, your amount of skin in the game dramatically increases. And an even better version of that is, "Hey Tomaso, do the course." Now then you're going to talk to your leader, "and by the way, this affects, or connects to your annual performance review." That's a really powerful incentive. So, a leader accountability and leader involvement, or just general accountability for your participation in training is very, very powerful. So it nudges the learner, we think, from being potentially passive, into a very active role within their own learning journey.
Tomaso Manca: I could see that having clear incentives linked to the overall job performance is a very powerful motivator. I really like, also, the imagery you used of the kitchen sink approach. And I'm also thinking that some people might hear this expression and worry that it could lead to information overload. What are some tips to make sure that people don't feel overwhelmed by your campaign?
Damien DeBarra: Yeah, it's a really important concern because it can go too far. I saw a campaign recently we were designing, when it was getting out of hand. We were sending out, potentially discussing sending out 8, 9, 10 communications around something which was actually only a 30 minute training course. And that's probably far too excessive. So you have to work with the partner to make sure that we're not overdoing it. And also, it's about being judicious and careful in what you say in the communications. So two obvious things to say, the first of which is, if you're sending somebody an email about a training initiative, make it short. Make sure that the email is written as snappily, and as eyecatchingly as the training should be written itself. And then the second thing is, if you're worried that people are getting too many communications and there's too much training and too much time spent on training is a common complaint we hear.
Actually make a virtue of the issue of time. So for example, you can say to the learner, "put the time into the title." So let's say something like, "the 20 minute code of conduct training." Okay, that's a very awful title, but put the time into the title and say something like, "invest 20 minutes in doing this now. And you'll be prepared for your annual review." "Spend 30 minutes on this training course, and you'll be able to do this, this, and this in your job." So again, it's back to what you and I often talk about the whiffing. The, "what's in it for me?" Explain to the learner how much time... how little time you want them to spend. In fact, "look, we've reduced it to 20 minutes, because we've heard you, there's too much training. It's taking too long. We heard you, it's now down to 10 minutes every month."
So again, if it's a campaign and it's spread out across a quarter, rather than asking them to do a 40 minute course, tell them, "you're going to do 10 minutes every week for the next four weeks. And as a result, you're going to be safe in your job. The company's going to benefit and you'll be ready for your performance to do... and you'll be able to serve your customers and our communities and our shareholders." And so on. So I would say if you're worried about them... if the partners expressing their concern or you have a concern about there being too much time spent on this, or if it's just overload, make a virtue of talking about how it actually saves time in the long run.
Tomaso Manca: Makes sense to me. And when it comes to this approach, what do you think is the LRN difference?
Damien DeBarra: So I could probably talk to you all day about tech and campaign managers and our disclosure tools and how there's a lot of technology to talk about. But actually, sometimes I think that the power of good copywriting can't be underrated. So we deploy a lot of cutting edge technology to drive solutions, but sometimes the most powerful tool we've got is one simple eye-catching headline. So we know, as we've just been discussing, that learners are time poor. They're training wary, so we place a strong emphasis on getting their attention using snappy headlines to drive people to the training assets.
Tomaso Manca: Interesting. Can you share some more examples of successful copywriting?
Damien DeBarra: I can probably share a few headlines. I won't name the partners themselves, but one springs to mind is, Large North American Financial Firm. That's as far as I'll go in describing it. And their problem was, very much like we were just discussing, learners getting way too many communications around having to do training. The communications were a bit on the blunt side, borderline rude in one or two... in cases. And learners were telling us via data in surveys and in focus groups that they were just really quite fed up with this. So the approach we took was, we knew that we had to get their attention in five to 10 seconds. Getting their eyeballs or they were gone. So what we did was, we opened up a campaign, and the first email in the campaign, the headline said, and it was deliberately written in capital letters.
It said, "I can't wait to do compliance training this year." And then when you clicked on the mail, the next line was, "said, no one ever." That's the headline to grab your attention. And then the next thing is, it said, "we hear you. We've got it. You've told us through focus groups that it's taking too long to do training. So what we've done is, we've reduced everything down to 20 minute buckets per quarter or per month." I think it was. Another example was, from the same campaign in fact, was that, for reasons which aren't entirely understood or there seems to be a different set of reasons for different clients, fishing scans spike in August and September. So what we did there was, we sent out an email. I think it was in August and the headline in that one was, "you are a danger to yourself and others."
So deliberately provocative headlines. And there's about 12 different subjects in that communications campaign, but they all took that approach. I hesitate to call them click bait headlines, because that's an awful term, but it was something designed to make you go, "what? What's that?" And hopefully you click. Again, that principle of having got their attention with the headline within 30 seconds or even 30 words. You should tell them in the first paragraph this is why you've clicked and this is what you're going to get and how long it's going to take you to do it. And again, that thing, the whiff and "what's in it for me" explaining that, if you do this, it will make you better at your job, et cetera. So getting their attention and explaining what the value is for them.
Tomaso Manca: And I can see that it all boils down to writing. Damien, you've touched... certainly you've touched on a lot of great points about the value of taking what we are calling a campaign, not courses, approach. And I think this will inspire a lot of our listeners to consider for their own training. So what advice would you give to people who are looking to implement this approach for the first time?
Damien DeBarra: Well, at the risk... That's a great question. So at the risk of potentially starting with something negative, get ready for resistance. A lot of the times the heartbreaking thing we hear sometimes when we're talking to our partners is, I kind give them this pitch and then they say, "that's brilliant. That's never going to work here." See, it's that classic line. "That's fantastic, now let me tell you why I won't work for our company." And it's because a lot of people are wedded to the particular calendar of release at one time of the year. And we understand that's a necessity for certain partners and clients, particularly if it's a very big program. We understand why they might want to get it all done in one quarter so the learners don't feel it's dragging on over the year. But if you have one particular smaller training initiative, you might consider that campaign based approach, but get ready for resistance.
People will be skeptical about it. Some folks just won't want to do it. You also, when you get into doing communications around this, you'll also need to bring in other partners from across the business. So traditionally, if you're the training manager at a company, small to medium enterprise, I don't know, a couple of hundred staff, the training department might be you... might be just one person. But now you're talking comm, so you've got to bring in your communications team. They have their own calendars. They have their own priorities for things that need to be communicated to the business. And a common one we hear is... from our learning and development partners is, "that's great, but the communications team are already telling me there's too many communications." So get ready for that conversation. Get ready to try and influence the other stakeholders in your business to understand the benefits of taking this different approach.
And to do that, you might try and arm yourself. This is easier said than done. Too massive, right? But you might try and arm yourself with a case to make that change. And that's in the form of some data. So are you able to get a survey from your current learners on... let's say on your last year's training on, how your learners liked it? Get that survey data. Now that might be painful because that survey data might reveal that they really don't like the training and it can be hard not to take that personally. And you might think to yourself, "do I really want people in the business scene, the feedback we're getting?" And an even more powerful... Sometimes in addition to a cluster of data from a large number of learners, is anecdotal information taken from focus groups. So a classic trick... not trick, but a classic approach we've done a few times is to bring in a group of learners into a focus group. Keep the training and development people out of the room. That might sound cruel, but you want people to feel free to speak freely. And of that five or six people, you might have a bit of a spectrum of learners. That is saying a couple of learners who have been in the business a number of years, who'd probably be training wary, that might be a bit tired of all this.
And maybe a couple of learners who are newbies who've just gone through the training, have not yet been at the company long enough to be completely drawn into the culture, and they can often give you very fresh observations. So I suppose what I'm saying is, get ready to have the conversations and get ready for that resistance, but also try to strike a balance. As I said, if there's a possibility you can overdo this, where you can go hog wild, go crazy and start communicating to the business on everything. And that can become even more irritating than the blunt once a year communication. So there's a balance to be struck all the time. I hope that answers your question. Not sure I have.
Tomaso Manca: Oh, absolutely. It does. And it opens up a lot of other questions. You and I can probably be talking about strategy for the rest of the day, but it looks like we are out of time for today.
Damien DeBarra: Yeah, we should probably wrap it up. And it's always great talking to you about this stuff Tomaso. Thanks for the time.
Tomaso Manca: Likewise. And thanks to our listeners. My name is Tomaso Manca.
Damien DeBarra: And I'm Damien DeBarra. And I'd like to thank you all for listening to the principal podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures, rooted in sustainable values. Please visit us at LRN.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple podcasts, Stitcher, Google podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode According to LRN’s 2022 E&C Program Effectiveness Report, 56% of the respondents said that integrating major program elements into a mobile app was a high priority for them this year. But what does a “good” mobile solution look like? And how can you ensure it strikes the right balance of meeting compliance needs while creating an engaging—and helpful—user experience? In this episode of LRN’s Principled Podcast, Carolyn Grace, content writer and podcast co-producer, discusses E&C mobile solutions with María Fernanda Castañeda Zavala, the ethics and compliance manager at Hershey. Listen in as they explore how Hershey leveraged a mobile app to enhance the components, capabilities, and overall brand of their E&C program.
Featured Guest: María Fernanda Castañeda Zavala serves as the Ethics and Compliance Manager for The Hershey Company. She is responsible for driving the ethics and compliance program effectiveness and awareness across the company. She leads the implementation of training, communications & outreach, policy lifecycle management, monitoring, case management, and co-leads Hershey's Ambassador program.
Prior to joining Hershey, she was Ethics and Compliance Analytics Program Manager at Nokia, where she led initiatives to collect, analyze and visualize data to test compliance controls, enabling data-driven decisions to drive continuous program improvements. She holds a Master of Business Administration degree from Montclair State University, New Jersey, and an Accounting bachelor's degree from Escuela Bancaria y Comercial, Mexico. She is a Certified Compliance and Ethics Professional-International (CCEP-I) and a Certified Business Analyst.
Featured Host: Carolyn Grace Carolyn Grace is a content writer on LRN's global marketing team and co-producer of the Principled Podcast. She specializes in writing compelling stories about ethics and compliance that resonate across business segments, industries, and personas while hitting critical KPIs for traffic and engagement. Topics she frequently covers include ESG, data privacy and protection, DEI, the role of boards of directors and leadership, corporate training and e-learning, and ethical corporate culture.
Prior to joining LRN, Carolyn was a writer and content strategist at Thinkso Creative, a boutique creative agency in New York City. At Thinkso, she wrote internal and external communications for clients in technology, nonprofit, law, logistics, and financial services sectors. Before that, Carolyn conducted trend research and cultural strategy at Horizon Media, specializing in entertainment, travel, media and technology, health and wellness, and food and beverage categories. Carolyn graduated magna cum laude from the University of Pennsylvania with a B.A. in American History and French Studies and a minor in Journalism.
Principled Podcast Transcription Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Carolyn Grace: If you want your ethics and compliance program to meet your employees where they are, you need to take mobile seriously. And most E&C professionals know that. In fact, 56% of the respondents to LRN's 2022 E&C Program Effectiveness Report said that integrating major program elements into a mobile app was a high priority for them this year. But what does a good mobile solution even look like, and how can you ensure it strikes the right balance of meeting compliance needs while creating an engaging and helpful user experience?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Carolyn Grace, content writer and co-producer of the podcast at LRN. Today. I'm joined by María Fernanda Castañeda Zavala, the ethics and compliance manager at Hershey. We're going to be talking about how Hershey leveraged a mobile app to enhance the components, capabilities, and overall brand of their E&C program. Fernanda is a real expert in this space with a background focused on compliance analytics and monitoring. Fernanda, thanks for coming on the Principled Podcast.
María Fernanda Castañeda Zavala: Thank you for having me, Carolyn. I'm glad to be here talking about our journey and our ethics and compliance program.
Carolyn Grace: I've really been looking forward to this conversation with you as I've been hearing nothing but success stories coming out of Hershey's mobile E&C solution. For those who aren't as familiar with your story, can you start by sharing what Hershey's ethics and compliance program was like before the app came along? What were the challenges or opportunities you wanted to address at the time?
María Fernanda Castañeda Zavala: Certainly Caroline. Well, at Hershey, we are a purpose driven organization and our ethics and compliance program is designed to promote an organizational culture that encourages ethical behaviors and lives our shared values of togetherness making a difference, excellence, and of course, integrity. Our program overall is guided by a suit of carefully crafted policies and processes developed to keep us competitive, prepared and resilient. Back in 2020 and motivated by the 2020 DOJ compliance guidance, one of our priorities in the program was to understand how our colleagues were interacting with our set of policies, our code of conduct and general information that we were putting together around our program. Our goal was to be able to measure our program effectiveness. So various data points to identifying trends, patterns, KPIs, or potential gaps.
At that point, we used to have our policy library on the internet and had the limitation that we weren't able to get any insights on the number of views or searches in the code or our policies. We were looking to streamline the process to providing training, access to our concern line, that's the way we call in Hershey, our helpline, our code of conduct and overall, the policy information. That is when we thought about having all in one place that could allow us to have metrics and provide all resources in a consolidated way. We were conscious that we wanted to do it in a way that allow our colleagues to get our information in easy to access way and ideally, on the go. We know that a good part of our workforce is not in front of a computer the whole time. And we're looking to ensure they have the support needed at their fingertips, an easy way to ask for help when required. That is when we realized a mobile app with the correct capabilities would allow us to achieve this goal. And we did our research and start working toward this objective.
Carolyn Grace: That makes a ton of sense. I think, especially hearing you talk about the ease of access and being on the go, we are in a 21st century workforce. There's no surprise there that many people are away from desktops and laptops and using their mobile devices. So your logic behind building this program into a mobile app makes a ton of sense. So let's talk about the mobile solution itself. What did you ultimately build into your E&C app and what was your reasoning behind choosing those particular elements to achieve the objectives that you were just talking about?
María Fernanda Castañeda Zavala: Perfect, yes. So as I said, we wanted to monitor our effectiveness. So our goal was to have one stop shop for ethics and compliance needs. That is why we focused on some elements that were core to our program and we wanted to make sure all of them were included in our app. Those elements are our code of conduct, our policy library, our reference guide library, or job aid library. We needed to have a direct access to our concern line and either access to our learning management system to allow our colleagues to complete their trainings on ethics and compliance, or any training overall throughout the app. And we also wanted to have a direct access to our monitoring processes, like for example, disclose a conflict or any of the processes that we have in place in the program.
We were able to design an app that is user friendly, easy to navigate and where employees can find the content in their local language. That was also an important inclusion aspect that we wanted to ensure in the app. As an example, the code of conduct is organized by section. So the end user is able to go directly to the area of interest or search on any specific content. Let's say, if I am looking to understand the company's stand on retaliation, I can go to the specific area or search by the term and the app will provide me all the resources available around that topic. Our user interface is set up in English, but the end user can select the language they want to see the content in. So we have that flexibility built in, in the app. For example, if a colleague based in Mexico will like to see all the content in Spanish, they are able to do so, selecting their preferred language and the content in the language is automatically showed.
For us, it was important to include languages, to empower all employees to have the and compliance information in their fingertips. The app also helped us to consolidate in one place, all monitoring processes, as I said, that we have in place. Our colleagues don't need to look around in the internet or different portals to find where to disclose a potential conflict, where to declare some hospitality or any of our processes. They can get into the app and find the proper links there.
The app is also a way to facilitate access to our LMS. Our colleagues can complete their trainings from their mobile phones or tablets. These greatly benefits employees that are not in front of a computer all the time, as we just highlighted. Overall, one of our main objectives was to measure program effectiveness. And with analytics available on app usage, we are able to identify what areas of the code most are most the most viewed, the terms most search. So we are able to take action and draw out campaigns or produce content that answers the questions that are being asked. It is important for us to highlight that, although we do analytics in the app usage, we do not connect any consumer or customer data. The app is designed to host our library. And the only information we get is a number of view and search terms. That is enough to give us visibility on the data we wanted to see, to understand our content impact.
Carolyn Grace: That is a really great clarification point for sure. And I love that I'm hearing all of these elements of personalization that you have really built into this app. Not only in terms of languages that people can engage in with this content, but also the actual content itself that they are engaging with. One of the things that always interests me about mobile app development as well is the branding, and how organizations really lean into making the app their own. I'm curious, what were some things that Hershey did to help make the app look and feel connected to the wider company?
María Fernanda Castañeda Zavala: I think that you hit a very important point. Branding is important when you are developing your app or customizing your app. That is why the first thing that we did during the development of the app is sharing our company visual guidelines. We connected with our communications team and they provided the color codes and imagery that will ensure Hershey look and feel within the app. Our company already has other apps for different purposes. That is why we wanted to provide a similar experience in the ethics and compliance app.
The next step that we took is it was to define the name of the app itself. For that purpose, we also wanted collaboration. Therefore, we asked for the help of our peers and we launch an internal survey asking for suggestion on the title of the app. And we received a variety of creative names, but we selected five that resonated the most.
And the selection went then into a poll, where we asked for votes and the winner was selected, and our app it's called iComply. Once we had the name, we went back to our talented corporate communication designer, and she came up with our app logo, which matches our program brand and is aligned with our corporate visual guidelines. The development team in LRN made further customizations to make the app feel in line with our brand, delivering consistent brand identity across the wider organization. It was without doubt, a very collaborative process and we needed to relay a lot in our internal resources to have the proper branding within the app.
Carolyn Grace: That's great. And I love that you went to the people of Hershey to really get involved in this process and contribute to what ultimately became the brand of your ethics and compliance program. I think that only speaks to the even bigger importance of a company's brand, it's made up of the people who work there. So I love that particular element of your process. So I'm sure at this point, our listeners are now eager to know what the impact of all of this has been. What are some interesting results that you've seen, quantitative or qualitative, since adopting this mobile app?
María Fernanda Castañeda Zavala: Well, right after the implementation, we got a very positive reactions from our leadership, our colleagues, and our compliance ambassador network. From a quantitative perspective, we saw a very good adoption rate in our workforce. 40% of our corporate employees reviewed the app and it's content at least one time in the first six months, after the implementation. We compared this with other companies within the industry and it came out to be a very good adoption rate, ratifying that having all resources in one place was a real necessity. We were able to identify that our reference guides or job aids were the contact consulted the most. So that informed our decision on how to best convey our compliance guidelines to our colleagues.
We now understand that another important part is the use of notifications. The app enable us to send a short message to all our users, reminding them of the important aspects of the program, or invite leaders to discuss videos or reference guides with their teams that we have available in the app. And appropriate use of notifications, I must say, allows you to drive adoption, maintain awareness, engagement, and send tailored messages to your teams.
As the use progressed, we identified areas that we needed to include in the app. For example, we were able to connect our legal chatbot to the app. Now, employees can navigate in the app and get redirected to the chatbot and get the immediate assistance they require. One of the other comments that we got right at the beginning was that the app needed to be available for tablets. So we raised that right away to the developer. And now we have the app available in that format too.
Carolyn Grace: That's fantastic. And I mean, wow, what an adoption rate for your app. I have spoken with a member of LRN's mobile development team on a prior episode of this podcast, actually, and we were talking about adoption rates. So to hear that it was 40% is just incredible. And again, to hear that you were taking direct feedback from employees using the app to further iterate on the development is just really exciting to hear. It sounds like this was a highly iterative process, which I am sure is just another day in the life for ethics and compliance program managers like yourself. What are some key insights you learned from this work and how can they inform the way E&C professionals should approach mobile?
María Fernanda Castañeda Zavala: That's a great question. I think that overall, planning is key. And you first need to understand your needs and set goals that align with them. If you have, for example, a workforce that's on the go and do not have a computer all the time in front of them, you may want to consider having a mobile option for them. Once you have clarity on what you're looking to achieve, do your research. And building an app might seem a big challenge, but if you have a clear idea of what you want to include and what are the pain areas you want to ease with an app, the task will be easier. As I said, planning is key.
When developing our app, we made a list of areas that we wanted to cover. We collaborated with our IT team to ensure we will be able to connect our LMS and the security required within the app. We brought our communication team, as shared before, in the planning stage to ensure we had the correct branding. We talked with our HR team to make sure we included the the correct policies in the app. And at the end, it was a cross functional collaboration. And I would say that's another key area, cross functional collaboration is key. That collaboration also paid off when we look to connect our chatbot. IT has been a key partner to help us make that happen.
Another important area that we might consider is simplicity and user friendly. These are other key components to consider. If you decide to have an app, it should be easy for the end user to navigate and explore the content. That will help to ensure engagement with the users and secure awareness. You also have to consider to be agile in the process. In our program, we strive to keep relevant content in the app, make regular reviews of your content to make sure it still serves your purposes and update it as necessary. That will make sure that you send notifications about the changes or the updates and it will ensure that users are engaged and are really checking and reviewing the content in-app.
Carolyn Grace: That makes a ton of sense. And I think what you just mentioned about simplicity is so essential here. You and I, and so many of our listeners are using mobile apps every day, and it's no surprise that the ones we don't use as frequently tend to be ones that are too complex. And with something like an ethics and compliance program, I'm sure it can be very easy to want to put everything in there. But that cross-functional collaboration that you were just talking about I'm sure is what ultimately helps figure out, okay, what is the most essential pieces of information and features that we need to get that program message across and to ensure that is as effective as possible? So I think that's a really great point to make.
I mentioned at the top of our episode, that one of the key findings from our 2022 E&C Program Effectiveness Report was that more than half of respondents said integrating major E&C program elements into a mobile app was a high priority for their program in the near future. What recommendations would you give to those folks who are just starting out with this?
María Fernanda Castañeda Zavala: I would say that similar to what, what I shared before planning is key and knowing your program is key. Ethics and compliance tends to be a complex area, where you need to convey messages in an easy way for employees to adapt and understand and follow. So if you want to have an app that your colleagues will use, definitely you have to make it simple and have to make the content engaging enough so people go back and see the usefulness of the app. Having a mobile option for all employees to consult policies and procedures, I think it's a great advantage that must be considered. Before we were recording this podcast, PR came to me and mentioned that she normally, when she has some hesitation about a procedure or a process, she normally goes to the app and quickly reviews the section that she needs to clarify and find it easy and really fast way to just check one or two points on the go.
So I think that if that's something that you're willing to achieve, explore the possibility of having the app. Do not be afraid that it's going to be a complex situation, but do make a plan. And also consider that if you want to have an mobile application for your ethics and compliance program, that this application, it's part of your communications calendar or your overall year strategy. When you combine campaigns that you do with the trainings and you send notifications throughout the app that all, the whole experience or the whole idea, it's very cohesive and allows employees to have an overall idea of the environment and the usefulness of the app.
So have that in mind whenever you want to explore the possibility of mobile app. And then again, simplicity, be agile, look for a functionality that allows you to update the information that you have there quickly and in an easy way so that it does not turn out to be cumbersome for you being updating the information in that app. That would be my main recommendations because I think it's a great option and a great tool that ethics and compliance programs can leverage from.
Carolyn Grace: Absolutely. And you make such a great point, that ease of use in the app is not just for the end users. It is for the program managers and it and admins who are putting material in the app as well. So all the more reason to keep it simple and streamline the process as much as you can. That communications aspect as well, I think is a great point to highlight for folks because to your point, ethics and compliance programs are so much more than training or just the code of conduct, it really is about the whole experience of the program. And so highlighting the use of notifications, I think is a great point when it comes to communicating key elements of your program. Fernanda, I think that we could go on and on and on about the importance of mobile apps to E&C programs, but unfortunately we are out of time today. But thank you so much for sharing these insights with me and keep up the great work at Hershey.
María Fernanda Castañeda Zavala: Thank you so much. I think you're right, we could go on and talk for a long time. But thank you for having me and for this opportunity to share our journey and lessons learned.
Carolyn Grace: Yes, absolutely. And thank you all for listening. You can learn more about the importance of mobile solutions by downloading a copy of the 2022 Ethics and Compliance Program Effectiveness Report at LRN.com, or by clicking the link in our show notes. I'm Carolyn Grace, and we'll see you next week on the Principled Podcast.
Outro; We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations, by helping them foster winning, ethical cultures rooted in sustainable values. Please visit us at LRN.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode Over the last 20 years, codes of conduct have undergone an evolution. Originally written as textbook-sized rulebooks, codes now seek to be visually engaging, readable, and useful guides to employees to help them do the right thing. And rather than covering all manner of what you can and cannot do, today’s codes aim to illustrate values-based principles of what you should and should not do. But these changes are no small task. How can organizations ensure they are designing and implementing their codes to deliver effective and meaningful change? In this episode of LRN’s Principled Podcast, Senior E&C Advisor Jim Walton talks about code reinvention with Carmen Jandacek, the Director of Ethics and Total Rewards at Arizona Public Service (). Listen in as the two discuss how APS reinvented their code of conduct to better reflect their organization’s culture, values, and employee experiences.
Principled Podcast Show Notes * [2:02] - Carmen shares about her career background and getting into the ethics and compliance space. * [4:07] - What is Arizona Public Service (APS)? * [5:20] - The key drivers which led APS to undertake reinventing their code of conduct. * [7:40] - The process of updating APS’s existing code. * [10:11] - How was the code rewrite accepted among stakeholders? * [12:10] - How did the reworked code turn out in the end? * [13:35] - Carmen’s advice for other ethics and compliance teams who are thinking about updating their own codes.
Featured Guest: Carmen Jandacek Carmen has worked for Arizona Public Service (APS) since 1996 and is currently the Director of the Ethics Office, Total Rewards, Health Services, HR Operations & Technology.
Carmen is the Founder and President of the APS LGBT Alliance, an employee network group, a board director of the Better Business Bureau serving the Pacific Southwest, board member of one•n•ten a local nonprofit and a member on the Greater Phoenix Chamber of Commerce Diversity & Inclusion committee. Carmen has an undergraduate degree in management, and she earned her MBA from the University of Phoenix in 1999.
Carmen is an avid health enthusiast and believes the key to leadership success is a healthy mind and body. She has participated in many biking, running and triathlon races and is an Ironman Arizona finisher.
Featured Host: Jim Walton Jim Walton is a member of LRN’s Ethics & Compliance Advisory Services Team – with over 25 years of professional experience in corporate, institutional and government settings, spanning the fields of ethics and compliance; environment, health and safety; and energy management.
Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics & compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third party due diligence reviews; and helping managers at all levels become better ethical leaders.
Jim is a Certified Compliance and Ethics Professional.
Principled Podcast Transcription Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.
Jim Walton: Over the last 20 years, codes of conduct have undergone an evolution. Originally written as textbook-sized rule books, codes now seek to be visually engaging, readable, and useful guides to employees to help them do the right thing. Codes have also shifted their organizational priorities. Rather than covering all manner of what you can and cannot do, today's codes aim to illustrate values-based principles of what you should and should not do. But these changes are no small task; How can organizations ensure they are designing and implementing their codes to deliver effective and meaningful change?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Jim Walton, Senior Ethics and Compliance Advisor at LRN. Today I'm joined by Carmen Jandacek, the Director of Ethics and Total Rewards at Arizona Public Service. We're going to be talking about how APS reinvented their code of conduct to better reflect their organization's culture, values, and employee experiences. Carmen has dedicated more than 26 years of her career to shaping the culture, ethics, and compliance at APS, and has real insight into how the company has evolved as a result of its new code of conduct. Carmen, thanks for joining us on the Principled Podcast.
Carmen Jandacek: Thanks. I'm just delighted to be here today.
Jim Walton: Wonderful. Just to start out, maybe you could tell us a little bit about yourself and how you came into the ethics and compliance field. I'm always fascinated at the journeys that we've all taken to get here.
Carmen Jandacek: Absolutely, and mine was absolutely not the traditional way of coming out of college and then going into an ethics and compliance career field. I came to work for APS in 1996, and I spent the first 15 years of my career there on the human resources team. At that point in time, I was really ready for a change. I spent really primarily my time in the space of total rewards, compensation and benefits, and I wanted to look at some other areas where I could expand my career also.
An opening came up in our ethics office, and I immediately fell in love with the work. In ethics, you have such an opportunity to not only reinforce and build ethical culture, but the ability to really be the voice of employees and the ethical coach for leaders. It's a really unique role that I have purview and sight to our entire organization, so I can identify trends or issues in one area of the organization and use that as a preventative opportunity and strategy to counsel and coach the rest of the organization. So from my perspective, ethics and compliance work is rich, it's never dull, and it's highly underrated. I think ethics and compliance organizations are the backstop to good governance at any organization.
Jim Walton: That's great. I couldn't agree more, and I think your unique background is really a wonderful add to the ethics and compliance community. It's always fascinating to me to see kind of the multifunctional, and the variety and diversity of backgrounds of ethics and compliance professionals, and it only adds to our effectiveness. So, thanks so much for that. I wondered if you could also just set the stage a little bit by giving us a little bit of background about Arizona Public Service, for those who might not know much about your company.
Carmen Jandacek: Sure. At APS, we are a subsidiary of Pinnacle West Capital Corporation. We have roughly 6,000 employees, and we serve 11 of the state's 15 counties. We're headquartered in Phoenix, but we are serving primarily the entire state of Arizona. In fact, more than 1.3 million homes and businesses are served by us, and we've made some very bold commitments. We're committed to providing a hundred percent clean, carbon-free electricity to customers by 2050, and we are well on our journey to doing so. We are 50% clean energy today. We also run Palo Verde Generating Station, the nation's largest clean energy producer that is west of Phoenix, and that's really the foundation of our future of carbon-free energy.
Jim Walton: Well, that's all very exciting. I know a big part of the commitments that APS is making were instrumental in wanting to rewrite and redesign your code of conduct, and we like to talk about reinventing a code of conduct. So, what were the key drivers that led you and the company to want to undertake this project?
Carmen Jandacek: Absolutely. It's been an interesting journey because I also was involved in rewriting the code that we had prior to this code rewrite. We were coming off of a code that was based on policy and procedure, that was framed in policy and procedure, and we had a couple key moments that really culminated in the work that we decided to do. First, we just went through a CEO change. In the CEO change, the CEO, Jeff Goldner, launched a significant culture change throughout the organization. So we wanted to make sure that all of what we were presenting in our code of ethical conduct embodied what that culture change was.
Part of the culture change was all about being customer-centric focus, and I fully believe that in order to really deliver on the customer experience, you have to deliver on the employee experience. So, providing frictionless delivery and service, and providing information in a way that is easy for our employees to utilize. So really what we were doing is, from a company perspective, building from the customer backwards to make sure they had a great experience, and I wanted to do the same thing from the code, making our employees with basically the customer of our product kind of front and center.
We also, as I just talked about, embarked on the bold new energy commitment to be a hundred percent clean by 2050, and that is really the backbone of the strong purpose that we have, and that needed to be really woven through all of the different documents and all of the different components of the code of ethical conduct. So all of that came together and culminated in us realizing that our current code was not going to help us bring those things to life, it was not going to allow us to bring and capture all of the change that was happening to us as an organization. So we knew that we couldn't just iterate what we had today, we had to completely reinvent that code to support these key initiatives and align with our cultural direction.
Jim Walton: Any of us that have gone through a code rewrite, update, reinvention, we know that it can be a daunting prospect. So I'm just wondering if you might be able to walk us through the process a little bit. So, now you've decided that you wanted to update the code. How did you actually go about it?
Carmen Jandacek: Daunting is pretty much an understatement, but very frankly, the LRN team made the complicated seem really easy for us. So we had to collaborate with over 30 different stakeholders and reviewers at APS, and it's never easy when you have that many editors, pulling all of those people together and capturing all of their comments to make sure that code was reflective of the important components that they had responsibility over. But all of the timing lined up. We had just deployed Microsoft Teams, and we created a Teams site, and had the reviewers put input in the one master document. And then I as the final editor either accepted or kept the comments that they had added.
Interestingly enough, and I have done this now a number of times where I've had to have really large documents with multiple stakeholders, we did something different this time. I had one of my colleagues go through and for every comment we didn't accept, we wrote a narrative as to why and sent it back to that person. I have never received as many thank-yous as I did by saying, "Wow, that's pretty awesome. Thanks for letting me know why you didn't accept that." Many times I'd never hear, and I thought, "Boy, that's something I'm keeping in the back of my mind for any future endeavors that I have, in whatever space it might be that closing that communication loop is so critical for people there."
After we solidified the content component and we then moved to layout, (and the layout portion was, again, a partnership with our creative team and the LRN creative team,) our final stop on the journey after that was getting our board's approval of our content. And then we actually shared the code during our annual training deployment that we do, and now we're getting ready to do Ethics Reinforcement Week. So we are getting ready to deploy the actual leader training and conversation guide that we created as part of this, and are excited to have that reinforcement opportunity for our leaders and employees.
Jim Walton: Wow. That sounds fascinating. I'm curious with the subject matter experts and the internal stakeholders, was there a difference in some people understanding why you were maybe trying to make it less policy-focused and more simple? Was there a difference across the board how different people viewed that, and did it take a while to get some people to understand that?
Carmen Jandacek: Absolutely. I think it did, and I think that this is part of the evolution of just codes of ethics and compliance period across not just only the utility industry, but just period that is occurring. For many years, (and I can remember looking back at the first codes that we had, too,) it was a document that you might have needed to have a legal background to even understand. It was thick, it sat on the shelf, and it had all of the prescriptive language of the dos and the don'ts.
We really wanted to make this something that people could use in the flow of work that covered of course our compliance-related things, but didn't use that as the lead and really tried to make this a more conversational, understandable document that people wouldn't really fear picking it up, thinking that it would be complicated to navigate or to get the information that I was looking for. So when you look at the utility industry period, we're very compliance-based. So, it's small steps to get us to that place, but I think really all of my team and all of the stakeholders approached it with a really strong growth mindset, and we leaned into making some of those changes to create the great product that we have today.
Jim Walton: That's great. Yeah, I always say it takes a village to make a good code. So, it sounds like you pulled all the people together that you needed to. How did it come out? What are you most proud of when you look at your code?
Carmen Jandacek: There are so many different things. First of all, it possibly is one of the most beautiful codes that I've ever seen, literally. The visual components of it are striking, and that's all part of pulling you in. That is all part of pulling you into the user-friendliness of the document, is its appeal when you open that up. It's easy to navigate. We've got all kinds of built-in navigation. We utilize different modalities. So we've got videos that are in there, we've got other different links that we have built into the document. It's engaging.
So it's something that as we put it on our internal intranet site, it's very easy to pull up and get to your answer in literally one to two clicks versus having to scroll through a document before. So not only is the content really rich, it speaks of us. It really represents who we are as APS, our values. What we call our "APS promises" thread through the entire document. So it has just lifted all of the efforts that we are doing and pulling them together. A really good resource for our employees.
Jim Walton: Well, that's really good to hear. That's kind of the dream of what we want a code of conduct to do in this day and age. So I'm really glad to hear that. Finally, just to close it out, what advice do you have for other ethics and compliance teams who are thinking about updating their codes?
Carmen Jandacek: I think certainly what we look to achieve and we did is moving from a legal document to a guidebook for our employees and our leaders, and code from my perspective can be one of the most powerful tools an organization can have to throttle success in the decision-making space, and in laying out cultural expectations. When I think of it from the eye of the employee, really from the user's point of view, that's what I want them to walk away with. Our business is changing so rapidly that what we used to think was okay from a refresh perspective every five years, that seems like an eternity now.
So we have to be more willing to update, accept, and reflect the new ways of working and new work expectations. COVID certainly has changed that component of it, also. And I think what really made this the incredibly rewarding kind of experience that we had was the strong partnership that we had with your team, which makes really an overwhelming effort seem very achievable. And when you bring the experience that your team brought to the table, it really allows us to deliver strongly for our employees.
Jim Walton: Well, clearly this is a conversation we could be having for hours, but unfortunately we're out of time for today. Carmen, thank you so much for joining me on this episode.
Carmen Jandacek: Jim, thanks so much. It's been an absolute pleasure being here today.
Jim Walton: My name is Jim Walton, and I want to thank you all for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at LRN.com to learn more. If you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen, and don't forget to leave us a review.
What you'll learn in this podcast episode With increasing demands from institutional investors, employees, consumers, and shareholders around ESG priorities, how are company boards assuring that they are shaping business strategy to be responsive to these expectations? In this episode of the Principled Podcast, Dr. Marsha Ershaghi Hames, partner at Tapestry Networks, explores the role of boards in bringing a strategic mindset to advancing ESG issues with Virginia Addicott, former president and CEO of FedEx Custom Critical and board member of both CDW Corporation and Element Fleet Management. Listen in as the two discuss how the board’s own diversity can humanize the elements of creating sustainable corporate cultures and creating meaningful organizational change.
Featured Guest: Virginia Addicott Virginia Addicott recently retired as president and CEO of FedEx Custom Critical®, a leading North American expedited freight carrier located in Green, Ohio. Virginia joined FedEx Custom Critical in 1986 and quickly worked her way up the ranks, holding director positions in various departments where she placed a strong focus on organizational culture, customer satisfaction and developing people. In each role, Virginia used technology to improve productivity. By streamlining processes she has improved efficiency and enhanced communication capabilities to move the company forward.
Virginia has been recognized for her leadership both at work and in the community. In recent years she has been inducted into the Northeastern Ohio Business Hall of Fame (2013), received the Women of Power Award from the Akron Urban League (2013), and also received the Leadership Excellence Award from the National Diversity Council (2014). She has also been named to the Inside Business Power 100 list for the past six years (2011-2016) and the Crain’s Cleveland Business Power 150 (2014). She was also named honorary chair for the 2015 Bridgestone Invitational Tournament, the first-ever woman to be named honorary chairperson for the tournament.
Virginia earned a Bachelor of Science degree (‘85) and an EMBA (‘95) from Kent State University. In 2013 she was appointed by Ohio Governor John Kasich to the Kent State Board of Trustees. She is past chair of The Boys and Girls Club of the Western Reserve and past chair of the Greater Akron Chamber of Commerce. She also serves on a number of other boards, including Akron Children’s Hospital, the Akron Community Foundation and FIRST (For Inspiration and Recognition of Science and Technology).
Featured Host: Marsha Ershaghi Hames Marsha is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement.
Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc. a global governance, risk and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority.
Marsha has been interviewed and cited by the media including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics and more. She hosted the “PRINCIPLED” Podcast, profiling the stories of some of the top transformational leaders in business.
Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc. an integrative supply chain advisory firm and Compliance.ai, a regulatory change management firm.
Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.
Principled Podcast Transcription Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.
Dr. Marsha Ershaghi Hames: With increasing demands from institutional investors, employees, consumers, shareholders around ESG priorities, how are corporate boards ensuring that their companies are assessing, measuring, and shaping business strategy to be responsive to these expectations?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your guest host, Dr. Marsha Ershaghi Hames, a partner at Tapestry Networks. Today, I'm joined by Virginia Addicott, the former president and CEO of FedEx Custom Critical. Virginia serves on the board of CDW Corporation and Element Fleet Management. We're going to be talking about the critical role of boards in shaping ethical corporate culture and why board diversity is essential to creating meaningful organizational change.
Virginia is a real expert in the space, having carved out an impressive career in operations and innovation in logistics at a time when relatively few women were in the industry. Virginia joined FedEx Custom Critical in 1986 and quickly worked her way up the ranks holding director positions in various departments where she placed a strong focus on organizational culture, customer satisfaction, and developing people.
Virginia has been inducted into the Northeastern Ohio Business Hall of Fame. She's received the Women of Power Award from the Akron Urban League and received the Leadership Excellence Award from the National Diversity Council. Virginia, thank you for coming on the Principled Podcast.
Virginia Addicott: Well, thank you very much for having me. It's a pleasure to be here. Thank you.
Dr. Marsha Ershaghi Hames: So let's get started from the top. You had such an accomplished career. You retired as president and CEO at FedEx Custom Critical before turning to a distinguished career of service on both corporate and nonprofit boards. Maybe to start, just share a little bit more about your journey and how these experiences have helped shape and prepare you for the lens of oversight and board service.
Virginia Addicott: Yes, Absolutely. As you have mentioned, I had a really terrific career at the FedEx corporation leading the FedEx Custom Critical organization. I was with the organization for a little over 33 years. Unbelievable in this day and age I think. But I really did have a terrific career because I started out in the ranks and moved my way up quite quickly. I think really starting out really... I'll say doing the doing, having your hands dirty, and really in the operations really did shape and prepare me for ascending to the role of president and CEO because I really understood how the organization worked, how the people worked together.
And through that 33 years, one of the biggest things that I did see was that culture is everything to an organization and how you treat your employees with fairness and dignity and making sure they know that they're valued in their work really makes the difference in how you can execute a strategy. And I love strategy, but without having a really engaged workforce, it's very difficult to take any strategy and put it into play.
Dr. Marsha Ershaghi Hames: As you came through this, I would say, observation of the importance of the intersection of not just the execution, but the how we get there, there were relatively few examples of female leaders in your industry. A lot of how we look at the lens of decisions can be informed by our own personal and professional experiences. Tell us a little bit more about how your experience of perhaps being the first woman or the only woman in a room shaped how you took your next steps in your career and maybe some of the lessons that you're carrying forward into the boardroom.
Virginia Addicott: Well, definitely when I began my career back in the '80s, the later '80s and 90s, you're right, there weren't that many women in the leadership levels of our industry and the transportation industry. And of course today, much different story to that. But one of the things that it was absolutely apparent to me is the whole need for diversity around a table, because one of the things that I witnessed was that when you have the same types of people all sitting around a table and they've had maybe similar backgrounds, similar experiences, et cetera, they come to the table with similar viewpoints.
When you start bringing people to the table who have had diverse background, experience, you really do start to get a whole new possibility of how you'll take something forward, how you'll shape your strategy, how you'll handle and work with those people who are working with you and for you. So I really do think that the opportunity to be that person who was maybe the only or one of very few gave me the context as to how that feels and how important it is to have the diversity, but also how to embrace and engage and work with people who come from many different types of backgrounds.
Dr. Marsha Ershaghi Hames: So I think embrace is a great characterization here because it starts with the willingness to be open and inclusive of ideas or points of view that may differ from your own. I've certainly been in dozens of conversations now with corporate directors that continue to reveal this pressing need for boards to really improve their understanding of diversity, equity, inclusion.
And there's a lot of dialogue around the board's role in the governance of DEI, especially as investors and employees are demanding more progress from institutions. I'd like to get your reflections a little bit more on this. I mean, to what extent, both within your own industry, and I think more holistically, are you seeing progress around inclusivity, diversity, even gender parity, and what is really the responsibility that you feel is of the corporation in being more intentional about driving us forward?
Virginia Addicott: Well, I have the luxury up sitting of course on a couple of boards. And I can tell you, on both of our boards, we have a really firm look at the entire ESG and we talk about it. But the number one thing we understand before you even get to ESG is how important diversity is.
So it's not doing it because somebody just said, "Hey, we have this thing called ESG and this is what you need to do," it's really understanding, and again, embracing the idea that when you have people from different backgrounds, whether it's gender, whether it's ethnic, whether it's background of an experience, when you get those people around a table, you get a better answer.
I can't quote them off the top of my head, but there's studies out there that show that when you do have this diversity, a company is much more likely to thrive, grow, and be profitable. So it's a no-brainer to know that that's important. Now, I'll tell you that the boards I sit on, we do talk about this at the board meeting and we do have metrics around it and have the human resources or the chief operating officer. But we include all of the C-level players at these companies in talking about, how are we doing?
How can we do better? And really working around the ideas of acceptance of other ideas, embracing other people's thoughts and experiences. So it's an ongoing conversation and a dialogue. And again, it's not one done just because of ESG, it's done because we all understand that diversity will help our company be even better.
Dr. Marsha Ershaghi Hames: Well, I mean, it's really a testament to the cultures of the boards you sit on too in terms of some of the progressive design and openness to keep this as a priority on agendas, to be more inclusive of some of the C-level executives. Not every board today is taking those approaches, so that's fantastic example.
Virginia Addicott: At least my experience has been when you see a board that has good communication amongst themselves, good dialogue, and good dialogue, of course, with the C-level and even those below that level, when you've got good communication, and I'll say respectfulness of thoughts and opinions, that maybe I'll bring something up and maybe the chief operating officer, the CEO or somebody maybe they agree, maybe they disagree with my thought, but they're open to hearing the thought.
I think that's where it all begins, is you've got to be respectful of each other and communicating with each other and open to each other's ideas first. Then when you start talking about diversity, certainly that then spills over into it. But I think you have to start with this notion that we are all here for the good of the whole, for the good of the company, for the good of the shareholder, and that we need to be open to ideas so that we don't go down the wrong path or make unnecessary twists and turns. But by listening to each other, we can come up with the best ideas.
Dr. Marsha Ershaghi Hames: It's so important to point out just the simplicity, but the power of respect and respectful communication and good listening skills.
Virginia Addicott: Yeah, absolutely. And it's great when you're sitting in a boardroom and people come up with ideas and we can banter them around. The board is not trying to certainly tell the executives how to run their company, but we're all in it together to advise and to talk about it and to have that good dialogue so that we can come up with the right answers to situations or strategy, et cetera.
I think one of the things that I've really witnessed, I can say personally, what I've witnessed is this move from... with ESG coming out, is move from having a plan to become more diverse in an organization and maybe even over a couple of years where you see the plan and it gets presented again and we're not really making that great of a headway or... et cetera. For me, what I'm seeing is we are seeing the plan and we're seeing headway because we, the board, are saying, "Okay, so you didn't get to move the needle as much here, tell me what you're going to do next time."
And then again, we banter it around, we talk about best practices we've seen other places, maybe some creative ideas defining diversity to come in or raising people up within the organization. But I think that this ESG certainly has prompted the notion that you can't just keep putting numbers up and them not moving. You need to see movement, and then let's get creative on how we're going to do that.
Dr. Marsha Ershaghi Hames: Well, building a little bit on ESG issues. So you and I initially we met... You're part of our audit committee network and you have been fantastic contributor to our ethics, culture, and compliance network. However, every committee, I think, that you're on and you're a part of seems to be morphing into some sort of ESG committee. There's just so much focus now on climate risk, people, talent, cyber, tech transformation, and all these issues.
And these are great examples around, how do we go from the plan to making headway on the plan? What would be your guidance for our listeners? How can boards start to really approach thinking or planning differently around oversight of these issues? What are some strategies you picked up where boards could be doing better?
Virginia Addicott: I think one of the things that we've got to... at least we bring this one up, is that post... and I don't want to say post-COVID because obviously COVID is still alive and well, but I'll say post-vaccine, one of the things that we're seeing is a big stretch on people because of people exiting the workforce or moving companies. So I think one of the things is there is a heightened focus on climate and people and cyber, et cetera, as you've mentioned, and then we have this exit of people.
So one of the things we have to do is really understand who is in charge of each of these things? What is the team, the committee? And make sure that they are staffed correctly to get the work done. Because what I'm seeing is quite a bit of stress in workforces just in general. So I think it's really making sure that when you look at each of these areas that are very important to us, that who is on point for it and what resources do they have to do this? The other piece for me that I'm seeing a lot of, which I really love, is the collaborative effort across the companies to address these issues.
For instance, cyber is not an IT or technology issue, yes, probably the leadership and ownership sits there from the standpoint of the CIO or whoever it is in that organization, but it's the operations, it's the human resources, it's the marketing, it's the legal, and they all have to collaborate to make sure that we're in compliance, that we are on track with the cyber possibilities and the cyber threats. So one of the things I've seen through all of this is really a nice collaboration. We were just talking the other day, I was at a board meeting, and one of the things we were talking about, and this is around the diversity piece especially, was how everybody has to own diversity.
And it's got to be a part of the fabric of each organization within the company. And it's not something we're checking off so that we can have an ESG score, it has to be woven into the fabric of everyday things that we do to make sure that people are, one, from the very beginning that we've got a diverse slate of candidates when we have jobs available, that we're working with let's say universities or colleges, or depending upon what the job is other people, to how do we develop a new slate of candidates?
Then within our companies, making sure we're working from within the company to make sure people are getting the right development to move up. But it has to be, each and everything we have to do, are we doing things each day to make sure people feel included, that we're listening, and that we are valuing the opinions and inputs of people who may not look like us, may not come from the same country we do, may not worship the same way, may not like the same people that we do, et cetera? So for me, I'm seeing much more collaboration. And again, let's weave it into the fabric of the organization. This is not a number to check off.
Dr. Marsha Ershaghi Hames: Yeah, no, this is an excellent example. And what I'm really hearing from you here is the ownership and the threading into the DNA as you're saying [inaudible 00:16:39] it in. How can boards activate this expectation? Because there's a lot of conversation around, who in management owns it? How much time do they have to be visible at the board level in terms of what's being measured and what's changing? But I've also heard, if the board is not demanding or asking of, are we able to affect change? So I'm just wondering, it's this tension between who's driving what? Who's taking those first steps?
Virginia Addicott: Right. Definitely, the human resources type function or the chief diversity officer is going to present information. And of course, we want to see that and we want to see those metrics move. But I think one of the places that boards can really... let's say when a new position is coming available, a high-level position is coming available, are we asking, what does that slate of candidate look like? And I'll use the word demanding, but are we really pushing the idea that we need to see a diverse slate?
But I think the other place where it's really a bit of a no-brainer and it's super easy to do is let's say the operations is reporting out on something, that we are asking that operational leader, the chief operating officer, or somebody, a director, et cetera, we're going to be asking them questions of their organization and what does their organization look like and how have they been taking other people's opinions and new ideas into putting them into play?
I think it's asking the questions to many people, not just in that one section where we talk about diversity, equity, and inclusion. But really asking questions as we go through the entire board meeting and putting an emphasis on that. I think that really helps people get the idea that this isn't a check the box, it's a I need to live my life like this.
Dr. Marsha Ershaghi Hames: Yeah. Yeah. Yeah. So much of this is a purpose, values orientation, but then it goes a little bit back to the culture of the board. Maybe that helps us shift to this topic of, you've been an active contributor to the ethics, culture, and compliance network. We formed a culture measurement working group earlier this year and you contributed to helping create a framework that boards can leverage as a guiding tool to assess culture. Tell me a little bit about how do you see frameworks like this helping directors really move the needle. How are you thinking or leveraging this even within your own boards?
Virginia Addicott: I can tell you, when I was talking to one of my boards about being involved in this ethics, culture, and compliance network, they said, "Oh good. I really look forward to seeing what your outcomes are and maybe see how we can use it." So I think number one, from my standpoint, is certainly talking about it and talking about the work that we have been doing. And it was a great group that you all put together. I think there's a lot of boards that really want to do more around this, but maybe don't know how to get started or exactly what does this mean?
So I think these frameworks help to frame the question, and what is culture? And what is diversity? What is inclusion? And then giving some good ideas on how the board can... as we just talked about, how can the board in their role as advisor, how can we help to either direct, redirect, or just ask those probing questions to make sure our organization is really embracing diversity, equity, and inclusion all the way through the organization?
Dr. Marsha Ershaghi Hames: Well, Virginia, I want to ask one last question before we wrap up, and this is going to be a little more personal. I want to go back to your life, your professional journey, building your career. As you mentioned, 33 years is an exceptional tenure, one that we just don't see in today's professional landscape. But I want to peel back the concept of mentorship. In all my interactions with you, you're incredibly confident, you draw from a strong notion of, "I've tried this." I'm confident asking even the questions that I don't know the answers to.
And that's not always easy, especially for us as women, as we're building our careers. I've certainly had a number of mentors that have opened doors for me and that I've drawn upon and have guided me. I want to turn to you and see, were there any significant mentors, or shall I even call them professional sponsors, that maybe had an impact on examples or opening up the trajectory of your career path and how do you, looking back, look at their guidance and how do you in turn give back in terms of your mentorship?
Virginia Addicott: Well, this is definitely a topic that I enjoy talking about it because I think it's really important. And absolutely I have had mentors and I have had champions. For me, just to clarify, I say a mentor is somebody that you can sit down and really talk about things with and, "Hey, this is the dilemma going on. Maybe how should I handle it?" Or, "Hey, I'm thinking about this career, I'm thinking about this job. Help me to develop myself for that role." That's to me a mentor.
A champion or a sponsor for me is somebody who when I'm not in the room, they're the person saying, "Hey, Virginia would be great at that. Let's put Virginia in charge of that." Or new possibility coming up is speaking out and saying, "Oh, let's put her in that role." And I'm very much a person who wants to mentor men and women because I think everybody needs this. So I think sponsoring somebody, so speaking up for them on their behalf when they're not even there, and really being their champion and mentoring, helping to guide, are very important things.
Yes, I've had plenty of them myself. And I still have them, so don't mishear me. I still have people who I go to and talk to. But I also am very keen always to help people who are in this upward climb of the corporate ladder, if you will. So I do spend quite a bit of time. I love doing it because it gives me the opportunity to share some of my experiences. And I will tell you, I'm very quick. In fact, I'm mentoring a young woman out of Chicago who has great upward mobility.
And I was telling her something the other day, she was going to give a presentation, and I said, "Listen, I would love to work with you on the presentation if you want me to because I was given tremendous feedback that was so helpful to me." And I explained to her what I had done wrong and how it impacted me and how through some coaching that I got from an outside firm my presentations got so much better. So to me, it's not about, this is what you should do, but also giving experiences where it didn't work out so great for me and these were some of the things, the lessons I learned, and maybe I can impart that to you.
But I really think it's very helpful for men and women to help those who are in these lower levels and have this upward trajectory and the desire to really take the time to stop, turn around, and as people say, lend a hand to pull somebody up along with you. As a woman, I think it's important to have mentors who are men and mentors who are women, because when we talk about diversity, people come at things from different angles, and people who have diverse backgrounds and experiences, not just somebody in your business line or your organization. So you get the idea.
But I'm really big on mentoring. I love to do it, I love to spend the time with people, and it's so... I always say it, all through my career, the most rewarding piece of my career was not my upward mobility and climbing, but it was to see people that you were working with or that you had maybe hooked up with, another coach or mentor, to see them move ahead. That development to me was worth everything from the standpoint of making me feel like, okay, we are really accomplishing something here. So I certainly suggest to everybody that they get to be mentors and hopefully they're champions for people as well.
Dr. Marsha Ershaghi Hames: No, you couldn't have said it any better. It can be so rewarding. And it's a very positive, if not infectious behavior. So I hope we can spread more of that. Virginia, I could speak to you for hours. I've learned so much through your reflections. But we're going to be respectful for our listeners' time. So I want to thank you for opening up and sharing a lot of your thoughts on all of these matters from ESG to the trajectory of your career, mentorship, being a good champion, the importance of diversity and culture. There's so much that we covered. But thank you Virginia for your time.
Virginia Addicott: Thank you, Marsha. I really appreciate being asked to participate on your podcast. I hope that our discussion here today triggers something in somebody's mind to think differently about maybe whether it's ESG or culture or mentoring. It would be great.
Dr. Marsha Ershaghi Hames: Thank you. Thank you. And to you all, I'm going to close up. This is Dr. Marsha Ershaghi Hames. I want to thank you all for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustained values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode As the business world makes an overdue shift from shareholder to stakeholder capitalism, is it possible that we will see an erosion of innovation? How does a company’s purpose impact its success? In this episode of the Principled Podcast, LRN Chief Advisory Officer Ty Francis MBE talks about how corporate purpose and stakeholder capitalism fuel innovation with Mark R. Hatch, CEO of clean energy startup SiLi-ion, Inc., an instigator of the maker movement with the founding of TechShop, author of The Maker Movement Manifesto and The Maker Revolution, and researcher on the influence of “organizational purpose” on innovation and business transformation at Pepperdine University. Mark has dedicated his career to educating the business community on innovation and advanced manufacturing and has spoken at the White House on these topics. Listen in as the two discuss what it means to help people—and companies—around the world do the right thing.
Featured Guest: Mark Hatch Mark R. Hatch is an advanced manufacturing entrepreneur, writer, and sought-after speaker and advisor on innovation, the maker movement, digital strategy, and advanced manufacturing. He has held executive positions for innovation, disruptive technology, entrepreneurship, and intrapreneurship in various industry sectors.
Mark is the CEO of clean energy startup SiLi-ion, Inc. and an advisor to Studio MFG, an advanced spatial-web innovation consulting and manufacturing design firm. Mark has dedicated his career to educating the business community on innovation and advanced manufacturing and has spoken about these topics to various audiences—including the White House, TEDx, Global Fortune 500 firms, and Harvard University. He has appeared on prominent media outlets such as ABC, CBS, NBC, Bloomberg, CNN, and Fox, and has been quoted in Bloomberg Business, FastCompany, Forbes, The New York Times, The Wall Street Journal, The LA Times, and The San Francisco Chronicle among other publications.
An avid researcher on the influence of “organizational purpose” on innovation and business transformation, Mark is working on his DBA at Pepperdine University and is a faculty member for digital innovation and strategy at Pepperdine's Graziado School of Business. He is also an entrepreneur in residence at UC Berkeley. Mark holds an MBA from the Drucker Center at Claremont Graduate University and a BA in economics from UCI.
Featured Host: Ty Francis Ty Francis MBE is a Welsh-American business development, operations executive, and subject matter expert in Corporate Governance, Ethics, Compliance and Culture and is currently LRN’s Head of Advisory Services, and a member of the Executive Team as a Special Advisor to the CEO.
Ty has utilized his expansive network of industry experts and thought leaders to help companies enhance corporate character, culture, D&I and transparency and has launched E&C programs and forums in the US, UK, France, Hong Kong, Japan, Brazil, Singapore, Brazil and the Middle East. He spent over a decade in New York City where he was EVP of Global Programs at the Ethisphere Institute and prior to that led the Corporate Board member business at the New York Stock Exchange’s Governance Services division.
In 2019, he was awarded an Honorary Doctorate in Business by the UK’s Solent University for his outstanding contribution in the field of corporate governance and international trade. In 2017, Ty was appointed a Member of the Most Excellent Order of the British Empire (MBE), by Queen Elizabeth II, in recognition of services to business.
Ty also studied at Stanford’s Rock Centre for Corporate Governance and Oxford University’s Said Business School and is a Certified Compliance & Ethics Professional (CCEP).
Principled Podcast Transcription Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders, and workplace change makers.
Ty Francis: As the business world makes an overdue shift from shareholder to stakeholder capitalism, is it possible that we'll see an erosion of innovation? How does a company's purpose impact its success?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Ty Francis, Chief Advisory Officer LRN. Today I'm joined by Mark Hatch, an accomplished entrepreneur, advanced manufacturing expert, and sought after speaker on topics of innovation, disruptive technology, and the future of work. Mark holds an MBA from the Drucker Center at Claremont Graduate University. And is presently pursuing a DBA, a doctor of business administration, from Pepperdine University.
We are going to be talking today about corporate purpose, stakeholder capitalism, and what it means to help people, and companies around the world do the right thing. After several successful decades in business, Mark is now researching the influence of organizational purpose on innovation and business transformation at Pepperdine, while simultaneously serving as CEO of the clean energy startup, SiLi-ion, amongst other things.
Mark Hatch, thanks for joining me on the Principled Podcast.
Mark Hatch: Thank you very much, Ty. It's great to be here.
Ty Francis: Okay so, for those of us saying to ourselves, "Where have I heard this name before," please tell us a little bit about your professional history.
Now, we know you as the founder of TechShop, and an instigator in the maker movement. What else? Oh, yes, you've spoken at White House about advanced manufacturing, and at the Clinton Global Initiative, something my wife [inaudible 00:01:58] was actually involved in during her time at Swiss Re.
Mark Hatch: Oh, how fun.
Ty Francis: Yeah, she was at Swiss Re for about 10 years and worked very closely with President Clinton. So, that's a name, it's all too familiar in my household. But I also know you're involved in the Singularity University, which sounds very Star Trekky, which is an interesting side note, especially since we're talking about purpose today.
So, I've given an overview, but can you give us a little bit more about your backstory Mark?
Mark Hatch: Oh, hit a couple high points. I'm a former green beret, so I was in the army for three years coming out of high school, which was quite entertaining. And then, I started my first company, an interactive multimedia company back in '80s. One of the things I've discovered that I'm really good at is jumping into something way too early. And then, getting beaten up for years and years until it becomes the obvious next thing.
The interesting thing about that interactive media though, was that John McAfee of McAfee Antivirus was one of my first investors. I actually got to know John before he became infamous, I guess. I spent a little bit of time at Avery Dennison, a big package goods company. A little bit of time at Kinkos, where I launched the e-commerce portion for Kinkos. And pulled T1 lines around the United States to wire them all up. Spent a little bit of time doing a health benefits ASP and so forth. But most people, if they know who I am at all, is from the maker movement days wrote a couple books in it, and spent a lot of time traipsing around the globe trying to get people to make things again.
Ty Francis: Well, I want to touch a couple of those things. So now, you aren't the average professor, as we've just heard, because you've got some real bites to your bark. Within what you just told me, I did read that you raised over $20 million and turned TechShop into that leading brand in the maker movement, growing it from 1 to 12 locations. And more impressively membership and revenue 20X in five years. I got that right, 20X?
Mark Hatch: 20, yeah. As long as you start from a very small base, it's really easy to hit those high numbers.
Ty Francis: I think you and I have got a different definition of the word easy.
If that wasn't impressive enough, you also grew that $200 million business at Kinkos by 18%. But I think more impressive than that, and someone who runs a P and L you cut costs by 15 million in a single year.
Mark Hatch: In a single year, yeah.
Ty Francis: That is both impressive. And I get, your students get a kick out of all that experience. We had a pre-conversation before. And I mentioned that I'm lucky enough to know Sir Richard Branson. And he told me years ago how he went into a bookshop, and pulled a bunch of books off the library that were about business. I think the first 20 he counted, none of the authors had actually been in business, or run a business, and were anecdotal at best.
Looking at what you've done and what you've succeeded, how has that happened? And how has that paradigm shifted to you now?
Mark Hatch: One, I do actually tend to live in the future. It's a bad habit. I've got a very, very clear view of what I believe is going to happen. And I clearly did not take my desert training in the Special Forces very well, where they beat into your head, never mistake a clear view for a short distance. It will kill you.
So, I saw interactive multimedia early. I saw dot com early. I've seen many of these things. What I managed to do with TechShop was raise funds, and grow the base quickly enough so that we actually survive for a solid 10 years.
But what I do is innovation. My entire career has been on the edge between in a research and development, or the most recent trends, and then commercializing them, turning them into something that a consumer can understand, and acquire.
Ty Francis: So, I am seeing a Star Trek theme in all of this, by the way. Seeing into the future. A Q-esque type person here. But this is fascinating. And you, obviously, have an incredible foundation [inaudible 00:06:08] what you are doing, looking at the past, predicting the future. But I do want to tap more into the research you're doing at Pepperdine. And as part of your DBA, again, I'm looking at this and I have an honorary doctorate, and I feel very, very small right now.
Mark Hatch: Congratulations. That's quite impressive actually.
Ty Francis: Yeah, but apparently when the air cabin crew asks if there's a doctor on the plane, I'm not allowed to raise my hand. When they say, "What can you help this person with?" I can say, "Well, I've got an interesting anecdote about business."
So the DBA you're pursuing right now, I mean, I particularly admire the notion of going back to school for an advanced degree. I've had a limited amount of business success. And during the lockdown, I took three courses, one at a side business university at Oxford, one at Stanford, and one at the London School of Economics. The recurring theme through all of those courses... One was executive leadership. One was DEI and leveraging business through it. And the other was international relations and global politics. Organizational purpose was a common theme through all of those postgraduate and diplomas. And it was fascinating how that was a theme, and linking back into business.
So, I want you to talk about your work on organizational purpose. But first of all, can you give me, or us a definition of your definition of organizational purpose?
Mark Hatch: There are like three versions of what purpose means. But to get a little bit technical, the short version is really simple. Like the single word, the single concept is why a corporation exists. That's what purpose means, why?
Now, usually, when you use the term, what is your corporate purpose? You're not thinking of the single thing that the word means. You're thinking of a corporate purpose statement, or a development of a series of concepts. Or, as they say in business speak, it's a construct. So, I have adopted George et al's from 2021, which is interesting. Most of this good work has happened just in the last few years. So, purpose in the for profit context captures the essence of an organization's existence by explaining what value it seeks to create for its stakeholders. So, you're creating value.
But then he goes on and defines it a little bit more, which I like. "In doing so purpose provides a clear definition of firm's intent, creates the ability for the stakeholders to identify with and be inspired by the firm's mission, vision, and values, and establishes actionable pathways, and an inspirational outcome for the firm." Sorry, that's very technical, but that's the best broad version that includes mission, vision, and values, which people tend to associate with purpose when you ask them what a corporate purpose is.
But let me back up a little bit. So, the reason I got intrigued with this was, well first of all, I'm very purpose driven personally. I was, usually, involved with technologies that I found intriguing, and could improve humanity in some way. But my experience at TechShop was at a completely different level. People were joining because of the purpose of this idea that we could remake our lives by going to a shop that had, basically, democratized access to the tools of the industrial revolution. We were giving the average Joe access to tools that they had never had access to, unless they were 80 years old, had come up at three machine shop or something. But we were giving them laser cutters, and 3D printers, and so forth.
And I personally got a level of satisfaction out of that. And I got my staff members to perform at levels I had never seen before. We had members that are evangelists. I mean, it seemed like sometimes they would go out on the street and tell people, "Have you heard of this place? You've got to come in." We had this one member, he quit his job. And he didn't have a great job to begin with, but he quit his job as a night watchman, came up and couch surfed. Like that was a thing for a while, couchsurfing.com where you could go and spend the night at somebody's house randomly. This was well before hotel folks came along. He would evangelize each couch that he slept on became a member, like not the couch, the people. Every place that he went, we got new members. And we thought about maybe paying him just to hang around, and sleep on a new couch every night because he was our best attractor.
And so, this got me really interested in this concept of what is your corporate purpose? And how does it play out and impact the organization at large?
Ty Francis: I think the biggest question that we have, and I have is when people are talking about this concept, how organizations are dealing with this, how are you articulating this to companies, to brands, to leaders, and how to actually put this into practice? Because many of the conversations I have with boards, with GCs, with anyone, they understand the problem. They see what's happening. They read and they see blogs, and they have conversations with the fellow board members. But it's actually the tangibility of creating a strategy that puts this into place. And something they can follow.
I guess what's the sticky sauce? What's the magic wand that you throw over your clients, your peers on how do I actually put this into play?
Mark Hatch: So the research that I'm doing specifically came out of kind of the question, how do I deal with the naysayers? How do I convince a board, or a C-suite folks that are like, "Yeah, yeah, yeah, whatever, whatever, whatever. I've got my ESG guy and they're going to keep me between the lanes, and everything's going to be fine." I started down this path as like, what do we actually know about corporate purpose? Where did it spring from? Actually, I go all the way back. What's the original concept of a corporation? Where did that come from? And it goes all the way back. It's crazy. It goes all the way back to pre-Babylonian times. And I won't bore you with all of that, but it turns out you couldn't have a corporation without having a purpose of some kind. It wasn't allowed. The state would not allow it. The king would not allow it.
I've got a great quote out of the Law of Corporations 1702, "The sole purpose of a corporation is to improve the society and support the king." Full stop. You can't say, "Okay, I'm here to do like, blah, blah, blah. And I'm going to make this." No, no, no, no. How are you going to help your customers? How are you going to improve society? And how are you going to support the king? And if you don't have an answer to that, I'm sorry, not only will I not give you corporation, if I happen to have given you one, and you have strayed too far, I will shut you down. And this was actually the norm up to about 1880 globally.
And there's this great quote. It was Massachusetts Bay Company and they charged this poor sod 200 pounds for overcharging his customer. And then, on Sunday morning, the preacher got engaged talking about the egregious greed, and what can happen. And it was simply against the law. And then, things changed with the 14th amendment, some other bizarre things. But we've had this like weird era, and that's how I would describe it, between 1886 to about 1950, we were set loose. You didn't have to have a purpose at all. You actually didn't need any purpose at all. You could just go down to Delaware and say, "I want to set up a company." And they go, "Great." They still would ask, what are you going to do? And so, in your mind, you had to at least have a customer, or somebody you were going to steal money from. You had to have some idea. So even today in your charters, you have to say, "Okay, I'm going to be in this industry segment," which by the way, you just send them a note and that can change.
But about around 1950, that started to shift. So, that was a long winded way of saying, so how do we deal with these guys? And what I wanted to do, and what I'm doing is I'm a practical guy, I'm a practitioner. I don't want to sell them something that doesn't work. What does that mean for your purpose? And so, I'm really intrigued with this idea of empirically based management tools. How do you know something works? Not one of those 19 books that Sir Branson was talking about, but the one that comes out of the trenches.
So, I've gone back and I've done a fairly significant review of all of the literature on corporate purpose. What's actually known from a theoretical perspective from doing interviews, which I don't put a lot of weight into because you get what you want out of your interviews. But actual empirical work that's been done in this space. And it turns out those corporations that do have a purpose that's more than simply serving customers, they have substantially superior financial returns. And actually, I think your firm is an example that promulgates that point of view based on research you guys have done in the past.
Ty Francis: Our tagline is, principle performance. And I'll add that some research we did last year echoes most of what you're saying. I mean, all of what you're saying. My own advisory team released a report alongside our marketing team. And we called it our LRN Benchmark of Ethical Culture, which is a multi-year, it's a collaborative research effort, which draws data from nearly 8,000 employees, 17 industries, 14 countries. And that study conclusively proves that ethical cultures don't just protect corporate reputations, but they propel the bottom line. Companies with the strongest ethical cultures, strongly outperform by approximately 40% those with weakest ethical cultures. And that was across all measures of business performance, customer satisfaction. You talked about employee loyalty, innovation, adaptability, and growth.
It's very simple, and you can make a lot of links to this. But if you keep people happy, if people believe in what you are doing, they will stay. If they stay, they will not leave. If they will not leave, they will not take IP with them. They will not go somewhere else. So, all that money you've invested in hiring them, training them, making them better people they will not take that somewhere else.
Mark Hatch: Yeah, your brand positioning, your ability to [inaudible 00:16:32]. The theory is actually pretty well illuminated. Actually, the step that I'm taking... I think we have, in fact, proven that having a higher purpose can, or will result in superior financial success. So, there's my answer to the naysayers. This is really simple besides being the right thing to do, and to feel good about yourself, and your company when you go home at night, and you talk to your kids about what you're doing, your returns are higher.
But the next question that I asked is, okay, show me how? Just throwing a purpose together and announcing it from the mountaintop is not the right answer. Now, we are getting results, so kudos to the companies that are executing. But I'm trying to answer the question, okay, how do you operationalize a superior purpose? What are the actual specific financial drivers that create superior firm performance?
Innovation, and then specifically radical innovation is historically the largest way that firms create superior returns by far. There are other ways of doing it: brand, financial management, operations, Six Sigma, blah, blah, blah, blah, blah, blah. But the number one way of improving your financial performance is actually to do innovation. And then radical innovation in particular. That's my little chunk that I'm chewing on is can I show that firms with a higher aspirational purpose actually get superior innovation returns and superior radical innovation returns?
And the quantitative numbers have come in. I'm now working on writing it up. And it's clear like it's 0.0001 chance that it's false. In fact, a higher purpose does drive radical innovation in a very significant way. It explains 30% of the variance of that. And like 35 to 37% of all variance in your innovation. It's huge. So, my answer is, okay, install, purpose, and innovate. Point this amazing effort that you've created, point this missile down the range at radical innovation because you're going to get an enormous return out of it.
Ty Francis: You've actually answered the next question I was going to ask about, what this means for the future of business, and what is your vision for how company leaders can apply these insights? As you said, it's not enough for somebody to read in a book about what's happening. It's how they can relate that and put that into practice to change the dynamic of their own companies.
We're not just talking about this. Investors are asking companies point blank, define your purpose. What are you doing to make the world around you better? Larry Fingers, writing to CEOs every single year. In the UK, the banking industry are asking, "Yes, we get it. You're raising capital for people, but what else are you doing?" It's a little bit, what have you done for me lately kind of thing.
Mark Hatch: We've come full circle now. In 1886, we decided, okay, you don't have to have a purpose. But now, we are rewriting the laws. The SEC in the US, the UK, as you mentioned, the French have done it. The Italians have done it. The Germans did it ages ago. But there's an enormous amount of pressure now on corporations to be able to explicitly measure what their social good is. They don't necessarily call it your purpose, but that's what they're getting at.
When I came at this, of course, I have the context of working at Singularity University as a speaker. And I know, I know a friend of mine is Salim Ismail, who's driving this whole exponential organization's effort globally. And, in it, he said, sidebar conversation. "So Mark, I've tried to do these exponential innovation efforts without a massively transformative purpose at the beginning of the effort because the corporation was like, 'Yeah, you're making me feel kind of weird about this idea of changing the world and all that. We're an X company, let's just do the execution part and skip the massively transformative purpose part.'" And he said, "Every single time we did that, it failed. Every single time. We got nominal innovation out of it."
And it actually makes sense when you think about the internal resistance of individuals in their risk profiles. Typically, you go to work and you want to have things normal. And then, what's going to happen all day long, and you're competent and so forth. But when you start doing innovation and, particularly radical innovation, you don't know what tomorrow looks like. You don't understand who your customer is. You don't know what the value is per se. And you're thrown in the deep end and you got to figure it out. Now, it's not quite that bad, but it is substantially different than your day-to-day. And it's hard. Doing radical innovation is the hardest part of being in business because you don't know how it's going to come out.
That as a background, is like, "Oh my goodness, you're kidding me. You just told me that one of the keys to being able to execute this isn't actually reaching for the stars." It's not like, can we get a 15% increase in this? Or can we cut costs by 10% or 5%? It's can you cut cost by 50%? Can we double our market share? Can we open up an entirely new market segment? Just saying those words creates a new tension in somebody's head. You bring them in and say, "Okay, we're going to get 10% here, and 15% there." And everybody goes, "Oh cool, I don't have to change anything. I can go back to my desk and keep stamping those pieces of paper. And I'm good." You come in and say, "I want a 50% increase. And I need a 30% reduction over here," actually you've lost the audience because for the next five minutes, all they're going to be wondering is whether or not they have a job. Am I qualified to do this? That's what got me going.
And we live in the most exciting time in all of human history. We've got more technologies coming on stream in amazing and radical ways, and how they're interacting with one another is absolutely stunning. So, this is the best time in all of human history to do radical innovation. This is the best time to go after actually deep purposes. And I feel sorry for these corporations who are going, "Okay, let's try to get a 12% bump over the next two years." They're doomed. In my mind it's like, forget it. You and I and others in this world are going to teach the executive suite that radical innovation is possible, it will drive the bottom line, make them feel better and will, in fact, change the world. And I'm proving it empirically. That's kind of what I'm excited about.
Ty Francis: It reminds me of a quote that was a famous NFL coach. And I can't remember it now and I'll come back to you by the end of the podcast. But it was about reaching for perfection that you'll never attain it. But on the way down, you will hit excellence. And I think this is an area why people aren't reaching for the stars is surprising because it's that competitive advantage. When we talk about how this is a competitive advantage, not just on a social scale, but on a business scale, we've been talking to board directors. We had a collaboration with a group called Tapestry Networks. We spoke to 40 directors of publicly traded companies, I mean 40, 50 companies. And they represented about 70 or 80 different companies across their different board positions.
We did this specifically to talk about purpose and culture. We released the findings in a report called Activating Culture and Ethics for Boards late last year. And the results, albeit mostly predictable, the boards want to put culture at the top of their priority list, but they still don't fully understand how to measure it. The refreshing part was that they see that the paradigm shifted from board members having a nose in, fingers out ability to more having nose and fingers in because they are starting to see this as a competitive benefit to having both strategy and culture and purpose aligned. And with that, I think they're seeing they have a better understanding of what corporate purpose should be. I think we're trying to see a tangible move in the... I'm using quotation marks here, a "tone from the top" conversation on how boards are impacting priorities, and are influencing culture.
So, how does that help your research for what you are doing now for the future of work?
Mark Hatch: You've done the surveys, you know what the answers are. But what I'm trying to do is start a small renaissance around, prove it to me. What are the actual ways that you operationalize it? It's like, okay, employee retention. Okay, measure employee retention. But don't just measure employee retention, invest in your employees. If you know that they're going to hang around longer, don't just sit on your hands, and say, "Oh cool, they're going to be here longer. Woo hoo." No, no, no. What that means is you can't actually invest in them in ways that your competitors can't.
That's operationalizing this idea of this competitive advantage, invest in your customers, invest in your brand. What are you doing specifically to drive your brand in relations in a deeper way? You've created this competitive advantage. You've got this great purpose now sitting on the shelf. Great. How are you going to operationalize it? And can we measure it? That's my point. It's can we actually measure it and see what the returns are?
Ty Francis: The measurement, that's the trick. Everyone knows what they should be doing, but they don't know how they should be doing it.
Mark Hatch: And if you don't measure it, then you don't care about it.
Ty Francis: Wasn't that the famous misquote from Peter Drucker what you can't manage, you can measure, or the other way around?
Mark Hatch: Right.
Ty Francis: So we've been talking a lot about boards and purpose, but we know the SEC, and we're talking about the US. Obviously, although I'm American, I'm also Welsh. So, I'm curious if your research extends to Europe, or other regions. I mean, is this universal? Or is it just stage one USA, stage two [inaudible 00:25:55]?
Mark Hatch: It does work at least in the UK. So, I chose my sample's 50/50, US/UK. 50/50, male/female. Native English speakers, try to control for some other variables. This is clearly true in the UK and the US. My suspicion, obviously, is that it's true in a lot of other parts of the world as well.
Other research suggests that it is at least pan-European. Gartenberg's work and others. Gartenberg did some quantitative research that had 500,000 companies in it from around the globe. And they were able to show empirically that purpose does, in fact, drive superior financial returns, similar to what your research did.
Ty Francis: When you're talking about this corporate purpose, I've noticed working in the States for a long time, that there is in the States and, to a certain extent, in the UK as well, there's a shareholder driven purpose kind of alignment where there's in broader Europe, France, and Germany, and Italy there's more of a stakeholder driven perception. So, there you see in Germany where you've got the different kind of board levels, and with the very straight labor laws in France, you are seeing that connection between leadership, and the employee base having to be aligned because they've got no choice because if they don't like what their companies are doing, they can change it, and quite dramatically. So, that would be interesting to see how that dynamic between the UK and the US, but then certainly further afield of that, how the European companies and organizations are actually using this corporate purpose vehicle to their competitive advantage.
Mark Hatch: Right. One might hypothesize that corporate purpose, that's a fundamental driver. But how you operationalize it may vary from region to region. Maybe brand is a better tool than radical innovation. Maybe employee retention is a better one. I'm not sure.
I doubt it, frankly. I think innovation is one of the fundamental things that you do as a business. Drucker would say, you're not even an entrepreneur, if you're not doing innovation. You can call yourself a businessman, but you're not an entrepreneur. And so, I suspect that innovation. And then as we're moving, again, the opportunity set available now to innovate is phenomenal. Radical innovation, it should be a fundamental strategy for any business that's trying to drive purpose into their organization, and with their stakeholders.
Ty Francis: Well, before we sign off, and before I get a raft of my very angry American listeners asking why this British guy is talking about American football? It was Vince Lombardi, [inaudible 00:28:28]. And his quote was, and I'll see if I can get this right, "Perfection's not attainable. But if we chase perfection, we can catch excellence."
Mark Hatch: Yeah.
Ty Francis: So Mark Hatch, this has been a fascinating conversation and one that we have merely pricked the surface of. And I'd like to have you back to talk a little bit more definitively, especially when the research is done, to look at those results. Thank you for sharing your thoughts with me today and us on this episode.
My name is Ty Francis. I want to thank you all for listening to the Principled Podcast by LRM. If you have enjoyed the conversation today, please do give us a top rating on your favorite podcast app. Goodbye for now.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values.
Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode The world of data privacy and protection continues to evolve at a rapid pace. From the growing number of US states adopting privacy laws to the growing list of rulings under GDPR, the EU’s General Data Protection Regulation, it’s a lot to keep track of. What can organizations do better to adapt to these regulatory shifts and adopt a greater culture of privacy? In this episode of LRN’s Principled Podcast, host Aitken Thompson talks with Andrew Lachman, the head of legal and data protection officer at Contentstack, about data privacy and protection and how to create a privacy culture in the modern workplace.
Learn how you can get involved in today’s conversations around data privacy and protection with these organizations mentioned:
- The International Association of Privacy Professionals (IAPP)
- Future of Privacy Forum
- TechGC
Featured Guest: Andrew Lachman Andrew Lachman has nearly 19 years of experience in privacy space, having founded the privacy practices committee at Move.com and co-founding the Congressional Tech Staff Association while Legislative Director for Congressman Ted Lieu who represents most of the Silicon Beach area. He is currently Head of Legal and Data Protection Officer for Contentstack after running his own firm for a number of years working with startups and growing companies. Andrew is a co-founder and chair of the LA County Bar Association's Privacy and Cybersecurity Section, a member of TechGC, the California Lawyers Association Privacy Section and has been a member of the International Association of Privacy Professionals since 2007 when he received is Certified Information Privacy Professional certification.
Featured Host: Aitken Thompson After starting his legal career at Kirkland & Ellis, Aitken became interested in the then-nascent field of educational technology. He left law firm life and co-founded Thompson Educational Consultants and, subsequently, Taskstream, LLC. Taskstream quickly became a leading company in assessment and accreditation for higher education. Aitken served as Chief Operating Officer, leading the legal, human resources and finance functions of the business. Beginning in 2016, Taskstream underwent a rapid expansion, merging with five other ed-tech companies in a span on 18 months and, in the process, becoming Watermark, LLC, and creating the “Educational Information System” category of ed-tech. During this period, Aitken’s legal and HR focus expanded to encompass private equity investment and the transition between primary sponsors, cultural and process integration amongst the various merged entities, and the management and harmonization of legacy client and vendor contracts.
Principled Podcast Transcription Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Aitken Thompson: The world of data, privacy and protection continues to evolve at a rapid pace, from the growing number of U.S. States adopting privacy laws, to the growing list of rulings under the EU General Data Protection Regulation, it's a lot to keep track of, and that doesn't even include following your own company's data privacy policies. What can organizations do better to adopt to these regulatory shifts and adopt a greater culture of privacy?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Aitken Thompson, Chief Legal Officer at LRN. And today I'm joined by Andrew Lachman, the head of legal and data protection at Contentstack. We're going to be talking about data privacy and protection and how to create a privacy culture in the modern workplace. Andrew's a real expert in this space. He's been working on the topic of data privacy his entire career, consults on public policy, and his actively leading conversations about this with GCs and Tech. Andrew Lachman, thanks for joining me on the Principled Podcast.
Andrew Lachman: Oh, thank you. It's my pleasure to be here with you and with LRN.
Aitken Thompson: Your legal career in Tech goes back to the earliest days of internet technology. You've been on the front lines of data, privacy and protection for more than 20 years. We often talk at LRN about an ethical culture in the workplace, but you also talk about privacy culture. What does privacy culture mean?
Andrew Lachman: Privacy culture means making privacy decisions for the benefit of your customers as a part of the operation of your company and ingraining that in your culture. It's a difference between for instance, what you see companies like Apple do, where they have really made privacy and privacy by design and everything else that they do a part of the company and understanding that maintaining that customer trust is important. There's a lot of allure out there in data, but it also presents a very big target for hackers and for abuse, as we've seen with some of the headlines that have come out recently, and a lot of the decisions that have come out of the European Union about technology such as Google Analytics, for instance, and a variety of others.
Aitken Thompson: Well, you touched on it right there and the regulatory environment or topic is what privacy is constantly evolving and changing on a month to month basis, it would seem. So thinking about privacy culture as an attribute to ethic culture is worthwhile. So how can we best prepare the company's leaders, product developers, business analysts, et cetera, to keep privacy in mind on a day-to-day, moment to moment basis?
Andrew Lachman: Well, I think first of all, it's important to always review with leadership and everyone what the cost is of not engaging in a culture of privacy. It can affect the trust in your company, it can do reputational damage. It can do financial damage. If you think about it, GDPR, we're starting to see out of a number of jurisdictions, some very large fines. It can be as much as 20 million Euro. It can be as much as 4% of your gross revenue, if they're able to establish especially after repeated engagement, that there's no longer a good faith effort to try to comply with the law. So there's the financial damage, there's the operational damage in terms of the morale of the company. So, there's a lot of reason. And then, of course, there's dealing with investors. And if investors don't have faith and dealing with also activists investors, if you're a public company, that kind of damage can take up a lot of resource as well. So I think that's the number one thing to do is review what the cost is.
And then the second thing you can do is empower these various leaders to understand your analysis and how you look at things and what the benefits are. And I think the third is doing a real financial analysis and asking yourself, not just financial but also a data analysis. Everyone wants to hold on to data because it could be useful at some point, but with GDPR and CCPRA in California and other laws around the world, Brazil as well, even Philippines, China just passed laws as well. You can only hold the data for the purpose in which you collect it, and you can't hold onto it forever. You can only hold onto it in an identifiable fashion for the period in which you're empowered to use it in relation to the service being provided. That is, if you don't do that, then you expose yourself to investigations and audits. And those all take a lot of time and resources as well that could be spent on building your customer base.
And so when you do that analysis, you can really look at it and say, okay, well, is this particular data we're collecting, we want to collect? What is the actual use? Is it related to the purpose in which we collect it? Recently, the French Authority said that you can't even use data to improve products that aren't related to the original product that the data was collected from. So you really have to ask yourself, "why am I using this data? Why do I need it? Is it related? And is there other ways in which we can collect or separate out this data without building profiles or things that would run a foul of various regulatory authorities?" So you've got things like pseudonymization, where instead of throwing together a bunch of data on an individual in one place, you can separate it out into different places and use a token that can't be directly linked without some sort of exceptional effort to the various pieces of data. And that can also, at a very low cost and a low operational impact, protect the company.
Aitken Thompson: Got you. And so I can understand since I'm a GC, and I understand the balance between business goals and these privacy other concerns, I worry about that. I think about that. How do I get people sort of the rank file people, the product developer, the marketing department, to keep this in front of mind from a logistical or education standpoint, or however you want to take that question.
Andrew Lachman: So GDPR requires that you have to do annual privacy trainings. And of course, companies will generally speaking to privacy training. It's like on a broad level sometimes and say, "Hey, this is personal data." What you're really better off doing is breaking down and doing sub trainings as well. And talking with your sales team, your marketing team, and your product teams to have them understand. And by the way, also your engineering and technology teams to make sure that each of them understand how this applies to them. So you're making them partners. If you're in the situation where you're the only one who are asking these questions, then you're making your job much, much harder. And so you are much better off empowering your teams that you work with some of the tools of analysis so that they can ask you these questions and it becomes a part of what they do.
And that makes a big difference. And that can be a challenge, especially in a high growth environment, because everyone wants to get it out right away and get it done. But if you build in, what's called privacy by design, which is mandated by GDPR early in the product development process. When they're starting to put together, you can help answer those questions early on, and they're not rushing to clean things up. Proactivity is often a lot easier said than done, especially in this world of what was it, Ready, Shoot, Aim, but that we have and fast failing and things like that, but the whole purpose behind privacy by design and the principles around it is to get you involved in that process early, so that you're not in that situation.
And if people are having regular meetings with your teams, talk about these issues and being a part of every product development process early on makes a difference. Maybe it makes sense if you have a product to just base the entire hosting out of Europe. So that way you're not spending the money you'd have to separate out the data. And frankly, as GDPR and American standards continue to get closer and closer together, it might make sense just to go for the highest denominator as opposed to spending the money to separate everything out.
Aitken Thompson: Got it. And it's interesting. I agree that we're seeing the American or the U.S. version of GDPR which would body in sort of CCPA, or it's actually not called CCRP, but [inaudible 00:08:21].
Andrew Lachman: It's going to be called CPRA as of 2023. And in 2023, it gets more GDPR like, so, a lot of the standards, a lot of the rights are more similar as well. So including by the way most of the other states have a business to business exception, with respect to data that's being provided in connection with a service. Right? You work for a company, you have to provide your email and your work email and your login and your history of the use of the product in connection with that under Colorado and Virginia and the law that's coming out from Connecticut as well, that is accepted and is not considered personal data. And there are exceptions in Canada as well with that, but in California and in Europe, it's all treated the same and you don't have a business to business exception.
Aitken Thompson: Gotcha. And all these new regulations come out and then coalesce around what will probably be a global standard. Have they gotten the balancing right? Do you think that regulators, there are certainly an argument to say, "Look, the regulations have gone too far." Certainly the gathering and analysis of data has created an incredible amount of interesting business insights and certainly value to customers and companies alike. Do you think they're getting that balance between privacy and commerce correct, as a general matter?
Andrew Lachman: It's a always going to be a constant battle. I think there are a couple of challenges. And I remember this from my days both when I was on Capitol Hill, I followed very closely the commenting process around CCPA and the appointment of the folks on the Data Privacy Agency Board as well. Challenge. Number one is that regulations move much slower than the technology changes. And so governments have gotten better at regulating from a set of principles as opposed to a set of strict standards. And that gives them the flexibility and then they can adapt accordingly. GDPR did a very good job with that. CCPA, a CPRA I think did a better job with that. We'll see is the regulations come out because it's still a push and pull. But the other big issue that comes up is that sometimes privacy advocates don't have an understanding of how technology works in the flows.
And so there is a tendency to have a set of abstract principles out there without thinking how it goes through a user experience, how it goes through and how data actually flows with the technology that exists. A good example is sort of the Universal Opt-Out button right now. CCPRA says, "You're not supposed to have it. The attorney general really wants one and has been pushing very hard for it." But getting universal technologies like that adopted takes a very long time in working it into your code, et cetera, in a private workplace. So I think in that particular case, you have this disconnect where there are these theories that exist, but actually understanding how they can be put in practice creates a problem where the aspirations can be very difficult. If not impossible to reach, it's not like environmental regulations, there's technologies out there and people are there and they're constantly working to meet certain standards.
And there's a strong impetus in the marketplace to do these kinds of things. Cause people can make money from it. And that kind of thing. That's not quite yet there. And so you've got really good organizations, that want to protect your data and protect your rights to privacy, but they have never been in the place of actually seeing how the data flows work and understanding how to take these principles and plug them in to the real life application of data, and how companies will work through them. And I think if we can bridge that gap, we'll see a much better set of regulations that meets those goals and also takes away the advantage of some companies that frankly their approaches, well, we just can't do it. And no one has asked them why let's walk through it. Let's see where we can plug into your process.
A while back Google was saying, "Oh, we can't ever change, go analytics. We have to collect IP addresses." And the regulators in Europe went through a very long process of discussion with Google and believe me, it wasn't an easy slog, but they did it. And now Google analytics and its next version will not collect IP addresses, which is going to change the entire advertising space and in a lot of other areas, but it takes a lot of discussion to make that happen. I know that was a very long answer, but it's a very, very complex issue.
Aitken Thompson: So certainly data privacy and protection is an issue for essentially all companies these days. Because everyone uses computers and gathers some sort of data, but does the regulatory burden or people should looking for change or significantly get larger depending on what industry a company is in?
Andrew Lachman: Oh yes. Very much so if you're in a financial space or if you are in a healthcare space, there's much more extensive regulatory regime and environment. As an example, we've got Gramm-Leach-Bliley and the New York Financial Services Regulations Around Financial services, but the banking industry itself has come up with its own set of separate regulations about cybersecurity. And if you're working with banks, for instance, you need to adapt to those. If you're in the healthcare space, you have to deal with HIPAA and Ransomware and High Tech. And then even the cures act now, which has some changes as well. And there's which updates a lot about electronic health records and ePHI, when I work with a Contentstack, which is a content management platform, they have to deal with all kinds of customers and that making sure that they're adapting and working with the various companies out there on the special models that they have to deal with as well.
And finally, I forgot to mention children as well, which is a very highly regulated area. You've got Copa and California has its own separate regulations around children, but GDPR and the privacy regulations out there as well, which affects marketing. You really can affect your outreach to children. So you need to know who you're serving and make sure that you've got those particular kinds of risks in mind as well when you're dealing with regulations based on your market, and what particular areas that you're serving.
Aitken Thompson: Absolutely. These are very [inaudible 00:14:37] issues. We LRN had a product launched delayed because of the Google Analytics issue in France and Austria. I believe that was the country. Do you want to tell listeners just a brief sketch of what exactly why we're talking about IP addresses and Google Analytics?
Andrew Lachman: Your IP address is considered personal data in California and Europe everywhere else. And the reason is even if you're using a dynamic IP address, like on your phone, your IP address, isn't static. It can be traced and be used to identify you as an individual and under European law in particular, their constitution gives individuals a right of control and not just privacy, but a right of control as well in data that's collected about them. And that's why GDPR has set the standards of rights of correction and that sort of thing. And that jumps over into those IP addresses and other things can be used to create a profile on you. As well, which can be used in all kinds of different ways by advertising companies and Google Analytics how they make their money is that they build profiles and they use those profiles to increase their advertising dollars.
So there's been a real logger heads between the European Data Regulatory Authorities, which are saying you have this information that can really be used to identify you as an individual, especially on a computer more, even much more so than a phone and companies that are relying on this construct of collecting the IP addresses to build these kinds of profiles. And so the authorities finally said, look, you've been told over and over again, we've been asking you questions about your industry to understand it better that this IP address information is just too personal. It tells too much about you and really can help to identify you. And so you need to find other means other than IP addresses, if you want to collect information because you're putting them in a situation where you can't turn off the IP address and not share it. And that's a fundamental of European data regulation and we'll be in California as well.
Aitken Thompson: Gotcha. So there actually are other tools we're using Google Analytics, just for internal page counts, to understand usage of our site, parts of our site. There are actually other ways of doing other pieces of software don't collect IP addresses. You said Google's going to be changing their analytics package to not track IP. Do you know when that's going to happen?
Andrew Lachman: I think people were saying whatever version four is, so it's going to be coming out in the next couple of months. I don't recall an exact date.
Aitken Thompson: Got you.
Andrew Lachman: But they are responding to it. And also I think what Apple has done as well in terms of really moving toward privacy and disabling some of the tools that Facebook and Google have relied on to collect information on their users of their services has moved and forced people to move as well. So sometimes when one major market player decides to embrace privacy as core value, it can ripple out and affect other partners as well, and force them to the table in ways in which big companies they don't turn on a dime. So it takes a lot in order to move them in a direction. And I think also what Apple did made a big difference. Tim cook recently spoke at the world the global privacy summit that the IAPP does every year in Washington, D.C. And talked a lot about those values.
Aitken Thompson: Got you. So the conversation we're having just points to me and it's every conversation I have about privacy and data protection illustrates. It's a complicated, fast moving area of law that you really need to cut. Go on to date with. I understand you're also among your other activities, a founding member of Tech GC. Can you tell me about what the mission of that organization is?
Andrew Lachman: There are a number of great organizations. If you're a GC that you should be involved with. I would say Tech GC is certainly one of them. It's been probably they association of corporate council is also great, but Tech GC particularly deals around the Tech Industry and is an association I'm one of the relatively early members in this that allows GCs to talk to other GCs and share their experiences. Sometimes it can be a good therapy session too, by the way. It's a great area for you to find resources, to ask questions and to be able to learn from each other about your experiences and the issues that you face as a GC in the tech area. I would also, by the way, very much recommend if you're interested in privacy, joining the international association of privacy professionals, I've been a member since 2007.
They have certifications now, which are pretty much the standard in the field. There's also an association for data governance, which is other group that's come in, but IAPP frankly, really set the standards. And when you go to their conferences that they do and they have them all over the world, you always pick up something really useful that you can take back at. The last one I was at, we had the top folks from commerce and the European Data Protection Board coming and talking about what changes were coming with respect to a success or to privacy shield.
As you know, it was thrown out about a year and a half ago. And we've all been dealing with the tremors from that, which have made transatlantic data flows very, very difficult. And one of the differences in changes, the administration has been The Biden Administration has been very good in terms of really embracing this and making sure that those avenues remained open and they've come up with a process and by June or July, they're supposed to have all the rest of the details worked out, but this is the kind of stuff you can pick up at IAPP that you can't pick anywhere else.
There's also organizations like future privacy forum, which is also, I think it's a smaller group, but a really good standard and a good place to learn and keep on top of all the changes happening in this particular field. So those are a couple of really good resources, both from a Tech GC perspective, general council perspective, but also from a privacy perspective, to make sure that you're really staying on top of this very rapidly moving field.
Aitken Thompson: Got you. And go, and going back to a culture of privacy in a corporation or a company, I would see a stakeholder being the GC HR there, any other people you would suggest to get together, if for someone who's been implementing or strengthening their privacy culture in their company, how would you go about that from a stakeholder standpoint?
Andrew Lachman: That's just the tip of the iceberg. HR, obviously you've got regulations around employment privacy as well, but your product team, your marketing team and your sales teams and your engineering teams all need to be a part of this discussion, because that's what makes a difference. And I just give an example very early on in my career, when I had my own firm, I had a company come to me and say, by the way, our engineering team just decided that they're going to implement this one technology out there that tracks everything people do on our site. And it's like, well, that kind of has an impact on GDPR. So let's.
I would recommend you pause that and make sure that you review it. But also, frankly, you also need to make sure that your engineering team understands what it is they need to do so that they don't get the company in trouble, because that's the things that will catch you. You can have a privacy policy, but it's those little details out of the marketing and the technology ends. If you're not making sure that they match up to what you say you're doing on paper, whether you've got SOC two compliance, ISO 27001, or just your general privacy policy. All of those will open up your company to lawsuits or potentially open up your company to lawsuits and costs. And they can be catastrophic. They can be company enters, not withstanding the trust of what it would affect in your company.
So you really need to make sure that all of those teams are involved. A lot of the big fines that have come out of Europe, they've been against companies, but it's not been marketing companies, it's been regular companies. It's been telecommunications companies that are tracking information on the back end and didn't realize that they were doing it. And then very suddenly they find out that you got a complaint because someone finds out.
Another really good example that we've seen out there, not from a Data Breach Perspective. The target had a catastrophic data breach that existed because they kept their HVAC Software on the same server as their credit card information. And some guy was fixing the HVAC system and plugged in his USB and ended up downloading a virus into the database, into the computer. And because there was no separation ended up being one of the largest tax of credit card information at the time in the world as a result. But also there's an example of somebody was in a family, a daughter who was worried that she was pregnant, was doing searches on her own about pregnancy tests. And her parents were on Google, I think it was or something.
I want to say it was Google, but it was somewhere that very suddenly Adds started popping up for, are you pregnant? Obviously, the privacy issues not just for children, but between adults who live in the same household and who may use the same computer are pretty scary. And so it's just an example of how trust in your company can really be hurt as a result. And when the trust in your company is hurt, it attracts more regulatory scrutiny. When you have more regulatory scrutiny, there are more legal bills because now you're having to deal with all these audits and investigations that weren't there before.
Aitken Thompson: Oh, absolutely. Well, those couple stories just shows how much more we could cover here, but we're running out of time. Andrew. So thank you for joining me for this episode. My name is Aitken Thompson. I want to thank you all for listening to The Principle Podcast by LRN. Thanks Andrew.
Andrew Lachman: Thank you for having me.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in Global Organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us @lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode A code of conduct is your organization’s character and culture written down. It articulates who you are, what you believe, and why you are in business. It also provides a reference for all stakeholders. A reference into what your organization values, and how you live those values. But how do you design and implement a code that communicates effectively? What does “good” look like when it comes to codes of conduct? In this episode of the Principled Podcast, host Jen Uner speaks with Senior E&C Advisor Jim Walton about LRN’s new Code of Conduct Report, which presents a set of best practices in code design and implementation. Listen in as the two unpack the report’s insights from nearly 150 codes of conduct deployed by companies around the world—including codes from 3M, General Motors, and Imperial Brands.
Featured guest: Jim Walton Jim Walton is a member of LRN’s Ethics & Compliance Advisory Services Team – with over 25 years of professional experience in corporate, institutional and government settings, spanning the fields of ethics and compliance; environment, health and safety; and energy management.
Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics & compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third party due diligence reviews; and helping managers at all levels become better ethical leaders.
Jim is a Certified Compliance and Ethics Professional.
Featured Host: Jen Üner Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
Transcription Intro: Welcome to The Principle Podcast, brought to you by LRN. The Principle Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Jen Uner: A code of conduct is your organization's character and culture written down. It articulates who you are, what you believe, and why you are in business. It also provides a reference for all stakeholders, a reference into what your organization values and how you live those values, and how you design and implement a code that communicates effectively. What does good look like when it comes to a code of conduct?
Hello, and welcome to another episode of LRN's Principle Podcast. I'm your host, Jen Uner, Strategic Communications Director at LRN. Today I'm joined by my colleague, Jim Walton, Senior Ethics and Compliance Advisor at LRN, and resident expert on codes of conduct.
We're going to be talking about LRN's new code of conduct excellence report, which is a work in process, and it presents a sort of best practices in code design and implementation. The report features insights from nearly 150 codes of conduct deployed by companies around the world.
Jim is a real expert in this space and has played a vital role in developing LRN's point of view, and our view that codes are foundational to developing and managing ethical corporate cultures. Jim, thanks for coming on the Principle Podcast.
Jim Walton: Thanks for having me, Jen.
Jen Uner: To start out, I want to validate that codes of conduct is something that people come to us on a regular basis for, right, help in crafting and re-imaging a code of conduct, and you're instrumental in that process. You're meeting with companies on a regular basis to re-invent, re-imagine and even start the process of developing a code of conduct.
Tell us first though why are codes so important? What do they accomplish for companies, and why is a good code of conduct something that really matters?
Jim Walton: Absolutely. As you said at the beginning, the code of conduct, and this is something we feel very strongly about at LRN, that a code should be an organization's character and culture written down. So when you look at a code of conduct you should get a sense of who that company is, what's important to them, what are their values, and how they do business, how they go about interacting with their colleagues, with their customers, suppliers, and the world around them.
The code of conduct is really the basic document that outlines that for all employees, so really helping to set the foundation for the ethical culture that everyone is trying to achieve.
We've seen an evolution of codes. In the past they were very rules-oriented, and now we're moving into much more of a principles and values-based code of conduct.
Jen Uner: Which is such a good idea I think as someone in communications. As a part of the process of creating the latest code of conduct excellence report you undertook with a team an assessment of codes by top firms, as I understand it, on four major stock exchanges. Tell us about this.
Jim Walton: We wanted to expand our reach beyond the United States, to cover some of the major markets where ethics and compliance programs should be fairly mature. We expected this to yield a good cross-section of codes of conduct for the study.
So we decided to pick the top 40 companies on the major stock exchanges in the following markets, the S&P in the US, the FTSE in the UK, the CAC in France, and the DAX in Germany. Out of a total of 160 companies we were able to find publicly available codes of conduct for 147 of them.
Jen Uner: That's pretty impressive. Just a quick sidebar, codes of conduct are typically available publicly? If only a handful were not available, would you say that most people are publishing publicly?
Jim Walton: Absolutely. And if you're publicly traded you really should have your code of conduct online. That would be a question that either the listing authority or the regulators who regulate securities in those jurisdictions might ask you about. Why is your code of conduct not publicly available?
Jen Uner: Yeah. Yeah. I could see that. So as you were looking at these codes of conduct, what exactly were you looking for in terms of assessment? What dimensions mattered the most in this process?
Jim Walton: We looked at what we called the eight dimensions of code effectiveness. These are tone from the top, purpose and value orientation, applicability and administration, speaking up, risk topics, knowledge reinforcement, usability, and look and feel.
They're all important in determining whether a code of conduct would be considered best in class or not, so it's really the combination of these dimensions and how they work together that can make or break a code of conduct.
If I had to pick the top three that are absolutely essential to get it right, I'd say purpose and values orientation, which is how closely and clearly the code is tied to the organization's primary purpose and shared values; risk topics, which is how does the code describe the specific behavioral expectations that make the values real and bring them to life on a daily basis; and usability.
It's critical for a code of conduct to be a useful resource that helps employees make ethical decisions, do the right thing, and find the information they're looking for when it comes to ethics and compliance.
Jen Uner: So it kind of sounds like there might be a weighting system going on as you assess these codes?
Jim Walton: Absolutely. Our assessment framework was originally developed in 2015 by former in-house ethics and compliance practitioners, drawing on research and experience on what makes an effective code. Over the past seven years we've continuously updated the assessment criteria to reflect the latest research, regulatory guidance and experience in helping organizations re-invent their codes of conduct.
Within each dimension there are a number of underlying criteria. Each will yield a score from one to five, with one being the worst and five being the best. As a result, we're able to produce an overall score for each code, as well as individual scores for each dimension.
Jen Uner: One of the things that I like about this analysis and this scoring as I was getting familiar with the report is that you didn't just divide the results into even thirds. You really applied kind of an indicator of excellence on each of the dimensions.
I think I saw that a minimum... Obviously with this process there's a minimum bar to hit to achieve a top rating, so the range, the way that I saw the data play out in what I was looking at, there were 17% that were ranked most effective, and the vast majority were effective, in the middle. I think it was like 50%, the remainder qualifying as less effective, which is how I would call excellent, serviceable, and needs work. What were the common markers of the most effective codes? How did these things shake out?
Jim Walton: First of all, I love your characterization of excellent, serviceable, and needs work, because that really describes it really well, about how, you know, it wasn't just looking at the top third, the middle third, and the bottom third.
We wanted to be fair. We'd love every code to have a score of five on every dimension, or at least a four across all dimensions, but that's just not realistic. So even with all of the progress that's been made with codes of conduct over the past five or ten years within the ethics and compliance space there's still a lot of work to do, and the bar just keeps being raised all the time.
So we decided that codes with an overall score higher than 3.5 would be categorized as more effective, or excellent, as you've said. Codes that score between 2.5 and 3.5, we consider those to be in the middle range, or effective, so it meets the basic needs. Nobody is going to get in trouble for missing something really important. Then finally the codes that are below 2.5 are considered less effective and need work, and sometimes a lot of work.
So the fact that exactly half of all the codes we evaluated fell in the middle, or effective or serviceable category, really indicates that many companies understand the need for a code, and they also understand the basic standards and expectations around codes.
On the other hand, the fact that one-third of the codes fell into the lowest category, and less than one-fifth were considered more effective in the top category, that suggests that there is significant room for improvement across the largest companies in France, Germany, the UK and the US.
Jen Uner: In taking a bit of a look at some of these results, was there anything that jumped out at you in terms of... You know, where is everybody tending to do well, like on which dimension, or which region is maybe out-performing the others?
Jim Walton: Yeah, that's a good question. The dimension that really scored the best overall was in tone from the top, so that's really good. That just tells me that... And that was about 50%. That tells me that people really get that. That's something that we've been hearing about for a long time now, and really having that strong support from the top is really essential. If you don't have that, then it's very difficult to create a strong culture of ethics and compliance.
The other area, and I was pleased to see this, was in terms of usability. Just about half or just under half landed in the top category for usability, so this is really encouraging, because I think it shows that there's a recognition that codes are supposed to be a useful resource and it's supposed to help guide employees in making ethical decisions, doing the right thing, and finding the information that they need.
On the other hand, the knowledge reinforcement was the dimension... Only 9% of the codes fell in the highest category for knowledge reinforcement, and this is a huge opportunity, because what we really want to do with a code of conduct is enhance the understanding of the concepts that are outlined in the code.
We do this through the use of real-life scenarios as well as links to related policies, so people can get more detail on a specific topic area, linking it to training, videos, and other types of resources. So there's just a very big opportunity in that area and it's a really critical area.
Jen Uner: It sounds like to improve knowledge reinforcement, it's really about providing additional resources that support the code?
Jim Walton: Absolutely, and making them really... Really integrating them in the codes so people don't have to go anywhere else. If you're going about your job, you see something that doesn't look right, you say, "Oh, is that harassment or is that fraud? Let me go take a look at the code." You pull up the code, you quickly find the section that talks about that topic area. Maybe you need more information. You click on a link. You get a video that talks more about the topic, maybe additional training, and then in the end you're like, "Oh, I think we've got a problem. Let me click on the speak uplink," and you can make a report or an inquiry about that topic area.
Jen Uner: Yeah. So accessibility is actually a really important piece of this?
Jim Walton: Absolutely, so making it available to people regardless of whether they have access to a laptop or a mobile phone, or in cases where you have offline employees, making the code available to them quickly in kiosks or terminals, or even giving people access to tablets and iPads and things like that.
Jen Uner: Yeah, my phone. The phone is a device that I walk around with all the time. It's my external brain. Put the code there.
Jim Walton: Absolutely.
Jen Uner: So I've got to ask, you were looking at publicly traded companies, right, publicly available codes? Which codes... If I wanted to go see an example of something good, who should I be looking at? What are some of the companies that landed at the top of the heap?
Jim Walton: Great question. Out of this group I'd say the best codes that we saw came from General Motors, Imperial Brands and 3M, so two from the S&P and one from the FTSE.
The first thing, you pull these codes up... And they're all available on the websites, the external websites of these companies. The first thing that makes these codes stand out is their visual appeal. They really reflect each of these companies' business brand, heritage, culture. You really get a sense of who they are. In the case of 3M and General Motors, and even Imperial Brands, you may be familiar with some of those brands, so the code would look very familiar.
Right up front they also talk about how the code helps the organization fulfill its purpose, so what's the reason why we get up in the morning and come to work, how do we enhance people lives, make the world a better place, and lining up with the core values of the company.
Then finally they're very readable and usable, so they're easy to navigate and move around in, find information, and the information is presented in a way that's understandable and digestible for the reader. They're really fantastic examples.
Jen Uner: That's great. I'm sure I'm going to be able to find those links and post them to the show notes for this podcast. So those are again large publicly traded companies. Let's say though I'm an entrepreneur or, better, I'm a venture capitalist, and I'm about to invest in a great kernel of a firm and help it scale up. I can see a big market opportunity for this new business venture. Let's just say I'm one of those VCs who truly understands the value of stakeholder capitalism and I've read the LRN benchmark of cultural report that tells me the most ethical companies outperform their peers by up to 40% across key business dimensions like employee loyalty and customer satisfaction and innovation and growth.
At what point do I, as a leader in a company like this, need to make sure my company is developing a strong code of conduct?
Jim Walton: That's a really good question, Jen. In working with dozens of companies to help them reinvent their codes of conduct over the years and in evaluating hundreds of codes along the way, we're finding that the size of the company does not always determine the maturity level of either their current code or their desire have a state-of-the-art code. We've seen large companies with really underwhelming codes and smaller ones with great ones.
But I will say for the situation you described, the place to really start is with the purpose and values. So really figure out what those are. Articulate them very clearly to everyone, because that's going to go a long way towards building the culture of ethics and compliance that everyone desires.
Once you've communicated those values and people really understand what they are and how to apply them, the next step would be to create a values-based ethical decision-making framework and add that to... Let's say this is a code, but the code is growing. So it may start out at a few pages, and then each iteration just gets a little bit longer. So the next thing is this framework to help people make those ethical decisions and make sure that it's based on the values.
At the same time, it's important to make sure that the code describes the speak-up culture, in which people are encouraged to speak up and ask questions and raise concerns. This means making sure you've got all the right mechanisms in place to facilitate the speaking up, and also, importantly, equipping managers with the tools that they need to listen and to deal effectively with the concerns raised by their teams.
I think those are the places to start. Then you can add more detail to each of those areas and bring in more of the risk topics as you move forward.
Jen Uner: That makes sense. Start with the big picture and then get more and more granular. I think that makes total sense. Jim, it has been such a pleasure speaking with you today about great codes of conduct and the forthcoming report, the code of conduct excellence report. I'm looking forward to that release. I think we're slated for June with that, if I'm not mistaken?
Jim Walton: I think that's right.
Jen Uner: Yeah. And it's going to be available for free with registration at LRN.com. I also want to say as a part of this campaign I'm looking forward to listening to you actually host an episode of The Principle Podcast with one of our client partners, talking about code reinvention. I think that's going to be actually another really great episode on this topic.
Jim Walton: I'm looking forward to that as well.
Jen Uner: Jim Walton, thank you again for joining me on this episode of The Principle Podcast. My name is Jen Uner, and I wanted to thank you all for listening to The Principle Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principle Podcast is brought to you by LRN. Out LRN our mission is to inspire principle performance in global organizations by helping them foster winning ethical cultures, rooted and sustainable values.
Please visit us at LRN.com to learn more, and if you enjoyed this episode subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen, and don't forget to leave us a review.
What you'll learn in this podcast episode Although anti-corruption efforts have stagnated worldwide, human rights and democracy are under assault. Independent nonprofit Transparency International recently published its annual Corruption Perception Index, one of the most widely used indicators of corruption globally. Its 2021 analysis shows that protecting human rights is crucial in the fight against corruption. So, how can organizations help? In this episode of the Principled Podcast, Yoab Bitran, Head of LRN’s Latin America business, talks about key findings from the 2021 report with Delia Ferreira, Chair of Transparency International. Listen in as the two discuss how business leaders around the world can step up to help combat corruption.
Principled Podcast shownotes * [2:07] - Delia Ferreira explains the work of Transparency International and the corruption perception index (CPI). * [6:14] - The factors influencing Russia’s score on the CPI and how it may be affected by the war. * [9:43] - Which countries in Europe saw relevant changes in their CPI score this year, and steps they can take to improve anti-corruption efforts. * [13:52] - The Latin American fight against corruption. * [18:25] - How business leaders can help increase anti-corruption efforts around the world. * [21:41] - How can ESG help fight corruption and give us hope for the future?
Featured guest: Delia Ferreira Rubio Delia Ferreira Rubio is the Chair of Transparency International (elected in October 2017 and re-elected in November 2020).
Delia is a lawyer who graduated from Córdoba National University (Argentina) and a Ph.D. degree in Law from Madrid’s Complutense University (Spain).
She is a member of the Vanguard Committee of the WEF Partnership Against Corruption Initiative (PACI), a member of the Board of the UN Global Compact, and co-chair of the Global Future Council on Anti-corruption of the World Economic Forum.
She served as a member of the Steering Committee of OGP - Open Government Partnership (2018-2021).
She was the chief advisor for several representatives and senators at the Argentine National Congress from 1990 to 2005, advising the constitutional committee of both the House of Representatives and the Senate.She also served as an advisor at the National Accounting Office for two years.
She has consulted on political finance, anti-corruption, and transparency-related issues with various international organizations (IFES, UNDP, OAS, IADB, IDEA, NEEDS, ERIS, CAPEL, DEMOCRACY INTERNATIONAL, COUNTERPART, UNWomen among others) and NGOs around the world.
She was President of Poder Ciudadano in Argentina (2008-2010). She has authored numerous publications on transparency and anti-corruption, political corruption, public and parliamentary ethics, and comparative politics, among other subjects.
Featured Host: Yoab Bitran Yoab leads LRN activities in Latin America. Before joining LRN, Yoab practiced Law both in the private and public sector, in Chile as well as in the US. Yoab studied Law and holds a Masters in American Law from Boston University and a Masters in Corporate Criminal Law. Yoab is the Academic Director of Thomson Reuters LatAm Compliance Diploma and co-author of the book “Compliance: Por Qué y Para Qué. Claves para su Gestión”. Yoab is a frequent speaker at international conferences and events on compliance and anticorruption.
Transcription Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Yoab Bitran: Anti-corruption efforts have stagnated worldwide. Human rights and democracy are under the result. Russian president, Vladimir Putin invades Ukraine on baseless claims. Corruption in the Americas continues to undermine civil liberties, despite increased legislation. And even with multiple regional commitments, 131 countries have made no significant progress against corruption in the last decade. None of this is a coincidence to Transparency International. The independent nonprofit recently published its annual corruption perception index, one of the most widely used indicators of corruption globally. It's 2021 analysis shows that protecting human rights is crucial in the fight against corruption, but how can organizations help?
Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Yoab Bitran head of Latin America business. Today. I'm joined by Delia Ferreira chair of Transparency International. We're going to be talking about key findings from the 2021 corruption perception index and how business leaders around the world can step up to help combat corruption. Delia is a real expert in this space, having served as the former president of Transparency internationals chapter in Argentina, she has also served as the chief advisor for several representatives and senators at the Argentine National Congress and has advised the constitutional committee of both the house of representatives and the Senate, as well as the national accounting office. Delia many thanks for coming on the Principled Podcast.
Delia Ferreira: Thank you [inaudible 00:02:03] a pleasure to meet you.
Yoab Bitran: For our listeners who aren't as familiar with Transparency International. Can you please tell me a little bit more about your work as an organization and what the corruption perception index is?
Delia Ferreira: Oh yes, of course. Transparency International is almost 30 years old now. We are the leading organization international NGO in the fight against corruption. We have national chapters in more than 100 countries around the world, and we do research and advocacy, and education in many aspects related to the complex issue of transparency and corruption, grand corruption, or petty corruption. One of our most known tools is the corruption perception index that you mentioned in the introduction. But we have other tools also that instead of looking at the perception of experts or academics, looks at the experience of people vis-a-vis corruption in their normal life. And that's our barometer of corruption and we have also one tool, which is the exporting corruption, which analyzes performance of countries. Vis-a-vis the OACD anti rivalry convention of foreign officials.
Yoab Bitran: In this year's corruption perception index. The global average corruption score went unchanged for the 10th year in a row, just 43 out of a possible 100 point. Despite multiple commitments, 131 countries have made no significant progress against corruption in the last decade. Did these numbers surprise you?
Delia Ferreira: Well, in fact, the numbers did not surprise me, they worry me, which is another thing. And just for clarification, for people who are not aware of how the CPI is made of. The CPI, the corruption perception index, which is an annual index, we publish, analyzes the perception of corruption in the public sector of countries, and is the result of 13 sources of research and information from investigative institutes and experts and academic business sector is not a survey on the population of the countries.
Mm. Corruption is becoming more sophisticated each time, more complex, and this requires new approaches. And also the other fact that contribute to this situation is the increase of authoritarian regimes and the populous trends in many countries, where we see leaders competing in elections with the narrative of anti-corruption, but not taking into account the agenda for anti-corruption once they are in office. So we have many factors that contribute to this extermination in the index, concentration of power, lack of accountability, impunity in relation to corrupt acts. And we have to take into account also that we have legislation and commitments and declarations against corruption, but rules which are needed are not enough in terms of fighting corruption effectively, you have to implement those rules, you have to guarantee enforcement of those rules in order to really change the Panorama.
Yoab Bitran: And we will definitely come back to this. It's very aligned with LRN's point of view, the fact that, rules are not enough and you need effectiveness and values to make real progress. But I want to take a minute to talk about Russia, which has been in the news for weeks now. Your report gave the country a score of 29 prior to Putin's invasion of Ukraine. I've also seen you very active in social media about the matter, so I want to highlight that before the invasion again, Transparency International categorize the country as a country to watch because of the corruption taking place. What do you think are some of the major factors that drove the score and how would the current war change the scoring? If at all.
Delia Ferreira: Of course, the problem was very clear in terms of corruption in Russia. It is reflected in the index in several years, and we put that light on the country because of the kleptocracy system that we can find in Russia in terms of capture of state, by corrupt actors that are really exploding the state and the political power in order to enrich themselves and creating an oligarchic elite that is taking money out of the country. Of course, as we have seen, and now the Western countries are reacting in terms of sanctions and even more permanent regulation.
So ill-gotten funds go to tax havens, offshore centers, Shell companies, and complicated and complex corporate structures that allowed these corrupt actors to hide the ill-gotten money and also to enjoy the proceeds of corruption. And for me, that part of enjoying the proceeds without any problem is a great problem because it creates the wrong incentives for a cultural change.
So we have seen real estate, art industry, luxury industry in general, offering these kleptocrats to hide the money and enjoy the proceeds of corrupt tax. And that's the problem that we are seeing very clearly. This is connected with other problems that is in the newspapers in these days, which is the role of gatekeepers in Western countries. Let's talk about bank, lawyers, accountants, real estate [inaudible 00:08:37], the art dealers that should be asking about the origin of money and not performing very efficiently in order to act as gatekeepers of rule of law and transparency and instead of that, becoming enablers of corruption, facilitating corruption. One of the things we were asking for many, many years is the need to have a beneficial ownership transparency. Now we are seeing many countries putting in place these public registers in order to know who is behind the mask, who is behind the Shell company. For instance, in terms of the sanctions that Western countries are trying to apply in order to apply the sanction, you need to identify who the real owner is, not Mickey Mouse, Inc, but the real owner.
Yoab Bitran: Absolutely. Now Russia, isn't the only area within the wider European region that is suffering under corruption. Can you please share which countries in Europe saw relevant changes in their CPI score this year, and what steps do you think they can take to improve their anti-corruption efforts?
Delia Ferreira: This year, we have a decade analysis, although the index is more than 20 years old, but in 2012, we refresh the methodology to really guarantee the comparability year by year, country by country. And so we have now the decade decliners and the decade improvers. And in Europe, the decliners is Western Europe and the EU, the decliners are for instance, Hungary and Poland. In these two cases, it is clear that the authoritarian trend and the concentration of power without respecting checks and balances and the democratic rule has been one of the points that has all the issues that has justified this decline. But we have improvers also in decades terms, let's say like for instance, Austria or Estonia, [inaudible 00:11:02], Italy and Greece in the decade, they are improvers.
Another thing is that we can consider or compare countries and its performance vis-a-vis according to last year. And there for instance, in Europe we have seven countries performing the same, 13 countries that are improvers and 11 that are decliners, but none of this is a statistically significant. So it's one point up, one point down. And when we take the decade, we are considering a statistically significant improves or declines. What to do, of course, it's always the same. You have to guarantee access to information, you have to guarantee the independence of the judiciary, you have to have the proper laws and budgets to guarantee enforcement of the law and the implementation of sanctions against those involved in corruption. Because in fact, corruption is not a victimless crime. The victims of corruption are the citizens, all of us, ordinary citizens. And we suffer the consequences of corruption. But what we need is that those involved in corruption, the actors of corruption acts are the ones suffering the consequences in terms of the legal reaction of state against these criminal activities.
Other thing that we are asking for, and it is something that is concerning us in the last five or six years is to protect and defend civic space and civic liberties. Freedom of speech, freedom of the press, freedom in the use of social media and of course not creating regulations that try to stop civil society organizations from doing what we are doing in terms of holding power to account. This attack on civic space is very clear in many countries around the world. And we have to alert everyone that the defense of freedom of the press and freedom of speech and association and mobilization is defending our own freedoms as citizens. So we need everybody to be alert and to collaborate with civil society organizations and free press in order to guarantee democratic rule.
Yoab Bitran: Right. Now, as head of [inaudible 00:13:55] Latin American business, I need to ask you about our region. I've seen a lot of people talk about an anti-corruption spring years ago when there was maybe a wave of new regulation. Some countries joined the OACD, then you have Operation Car Wash, and we all know where that ended. So despite those regulatory efforts and commitments, it seems like the Americas are paralyzed in the fight against corruption, especially in Latin America. Are you hopeful? Can you tell us a little bit about your view of the region and anti-corruption initiatives?
Delia Ferreira: Of course, I am hopeful and optimistic, if not, I would not be doing this kind of work for years. I think we can change and we can better the situation. I would say that in the Americas as a whole, the problem is not only related to Latin America in particular, you know that Canada and the United States of America are decliners in the decade, both of them, together with Venezuela for instance. So that's an alert that we have to take into account. Of course, one thing is to be a decliner at the top of the CPI and another is to be a decliner, if you are at the bottom. So the situation is different, but we have to take that into consideration. One problem is nice. You talk about the spring of anti-corruption in Latin American particular. It has to do with the OACD in corporation of some countries, but also with the reaction, vis-a-vis case of grant corruption that affect 11 countries in the region.
The other [inaudible 00:15:39] case Lava Jato which started in Brazil, but affected, as I said, 11 countries in Latin America and two African countries also, with the same scheme of corruption and criminal money laundering, et cetera, and illegal political financing of campaigns. And the first reaction in Brazil, and then in some countries in the Americas, was to have cases in courts and the authorities really enforcing legislation against the company and against high level politicians. We were talking about presidents in many countries. That was the source of hope and the idea that, okay, we are at a turning point in Latin America.
Unfortunately, as you already mentioned, we are coming back and some of the decisions and the sanctions applied, has been overruled and removed. By now, in some countries, the procedures are really paralyzed and we are seeing a decline in this energy against these corrupt actors. And this has to do with something that I always repeat, which is, I think clear to see. Some people say that anti-corruption or the fight against corruption is like running a marathon, is a long term endeavor, but I think it is a long [inaudible 00:17:14], but not really a marathon, because in a marathon, everybody goes in the same direction and nobody is throwing stones against the runners.
In fact, when we fight against corruption, we are in a chess board, with some pieces trying to fight against corruption and the [inaudible 00:17:36] and the corrupt actors trying to stop us and making us go a step back. And this is an strategic game let's say. So we have to be aware that we can make progress and that we will be subject to reaction from those who are benefiting from corruption. And we have to be ready to top them and to be firm and keep on working in order to go one step further, but we are not alone in the chess board. There are other actors also that are trying to stop us.
Yoab Bitran: That's a great analogy. I loved it. And you talked about bad and corrupt actors. So this brings me to the larger questions about their role of business in fighting corruption and especially the good actors, the agents of change. Based on your professional experience, how do you envision business leaders, helping sustain and even increase anti-corruption efforts around the world?
Delia Ferreira: I think that, and I have the opportunity to meet many of these business leaders and change makers at the world economic forum in [inaudible 00:18:49] or the global future council on anti-corruption from the world economic forum, which I co-chair with, [inaudible 00:18:56] and good. What we see is that there are many business men and women devoted to go to what I call integrity beyond compliance. Compliance was very important, and it was a new thing, a new issue or topic 10 or 15 years ago, but we have to go and to move one step forward now, because compliance is understood as the compliance with legal issues with the regulation and integrity goes beyond law. It has to do with the culture in organizations.
And I think we cannot really defeat or really effectively prevent corruption without the help of the business sector. And I must say that I am seeing a very positive trend in that field. Of course, there are many things to correct, for instance, the compatibility of the incentive systems in terms of bonds, for instance, or prices for those CEOs performing very well in a company and the ethics code of the company, you can have a wonderful code of ethics, but then if the incentives that the company is offering, that's not much this ethic code, you have a problem. And this is something that has to be taken into account when trying to change the culture, the integrity culture in an organization.
I think the move to stakeholder capitalism, the move to the idea of a public value in a company, the work that is being done in terms of ESGs, is something that is going in the positive way, in order to incorporate business to the fight against corruption, or if you want to put it in the positive, in the fight for integrity in the companies. And we have to keep on working on that because I think many companies have realized that it is in their self-interest to contribute, to have a transparent market and a transparent place where to perform their activities.
Yoab Bitran: And again, that's totally aligned with what LRN believes, exactly, as you said, compliance is an outcome, an outcome of culture and outcome of values and integrity. You mentioned ESG. We see in probably all the West, as, as a big trend, we're seeing new regulation in some countries, new standards, new disclosures, what is your take and how ESG can help fight corruption and help us be more optimistic and hopeful as you said.
Delia Ferreira: I think that DSG is a very useful tool for companies to assess their own performance and also for investors to asses the performance of those companies or projects, where they are putting their money and that the role of investors could be of great help in the fight for integrity. If they really take into account the ESG results of a company. In fact, probably we have to put a lot more attention on the G, the governance structure in a company, where the anti-corruption rules appears and the standards and the organizational places where to issue the controls and to have accountability is place. The E and DS are more visible now probably, or are in the focus are a priority. But I think that without a proper governance structure, including integrity culture, and compliance, and an integral view of these issues, you cannot cut into nudge what the compliance officer do. The climate officer do, and everybody separated. They have to work together in order to really put in place this integrity principles around the whole activity of the company, in the bedrock of this, is the notion of values, of course.
And what we have seen in many societies around the world is that the basic value consensus in society is broken in many countries nowadays. So what is right and what is wrong is not absolutely clear or shared by society. And I remember the Nolan Commission Report in terms of integrity in UK parliament, saying after that, doing surveys and researching these scandals that we have to evaluate, our conclusion is that parliamentarians don't have it clear, what is right and what is wrong. So here are the rules for parliamentary ethics, and that was the origin of the laws and bills on public ethics around the world. You have to be honest, you have to respect the law. You don't have to profit from your position in order to benefit your familiar or your friends or crowns.
So this elementary principles that were part of a consensus many, many years ago, now are in the laws with the force of the law and the power to impose the compliance with this, and to apply sanctions for those who do not comply with these duties, let's say. But in the basic you have values and the need to rebuild agreement on that consensus, which is the only way we can reconstruct trust.
All around the world what we are seeing and Latin America is not an exception, but the North America also, and the rest of the countries in the world, we see a clear lack of trust in institutions, in politicians, in business sector, in banks, even in the press or the NGOs sector. So this lack of trust is one of our problems as a society. We have to reconstruct this trust in order to properly develop a better society for everyone. And I think this should be our common objective, because this is a collective action endeavor. Neither NGOs nor business sector, nor governments can do this alone, the fight for transparency is the fight of every single citizen around the world. I usually say for instance, that if you look at the crisis that we are facing from Afghanistan, to the Lebanon blast, from the Amazon's deforestation to the war in Ukraine, you have two common things. Corruption was there and the victims were simple human beings. So we have to fight together to stop this kind of phenomenon, which is so harmful for society.
Yoab Bitran: Wow. What a great way to end. This is clearly a conversation we could be having all day, but we are out of time for today. Delia, thank you so very much for the joining me on this episode, we appreciate your time and presence here.
Delia Ferreira: Thank you very much. It's been a pleasure and we will keep on talking.
Yoab Bitran: My name is Yoab Bitran and I want to thank you all for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The principled Podcast, is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures, rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcasts on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode Can we make diversity matter to everyone? If so, how can we overcome resistance to dealing with tough topics like racism and gender equality and really change people’s behavior? In this episode of the Principled Podcast, host Jen Uner talks with Senior Instructional Designer Felicity Duncan about a new LRN learning model and how it can drive behavior change to support diversity, equity, and inclusion initiatives. Listen in as the two discuss effective DEI training as well as Felicity’s recent work on the new LRN DEI Program, a comprehensive learning campaign that includes a range of essential microlearning assets.
Additional resources:
LRN’s new DEI Program provides companies with a multi-faceted training solution—a ready-to-deploy learning campaign with curriculums, asset packs, and customizable courses, plus the option to add bespoke content, learner experiences, and communications campaigns developed in association with LRN’s E&C experts. You can preview some of our most popular course content (just one piece of this program!) by clicking here.
Principled Podcast shownotes * [1:26] - Why is behavior change particularly important when it comes to diversity, equity and inclusion efforts? * [4:57] - The three most common barriers to overcome when it comes to inspiring DEI behaviors. * [7:51] - How does the LRN library approach the behavior change differently? * [10:45] - Why empathy is so central in getting people to do the right thing. * [15:02] - The importance of training. * [16:51] - How empathy can be inspired on an online course. * [21:09] - The core behaviors LRN’s new course focuses on. * [25:45] - Leader led learning and why it’s important.
Featured guest: Felicity Duncan, Ph.D. Dr. Felicity Duncan, Senior instructional designer, believes that training and communication interventions have the power to transform behavior, including driving people toward more ethical treatment of those around them.
Felicity graduated with a Ph.D. in Communication from the University of Pennsylvania. After teaching at the college level for several years, she transitioned to workplace education to have a bigger impact on working adults by providing them with the training they need to truly thrive in their roles. At LRN, she is focused on developing high-impact, behaviorally focused content for the LRN Library. Her most recent project saw her working with the Library team to create a powerful new DEI Program that includes not only LRN’s world-class Inspire courses but also a set of microlearning assets designed to support, reinforce, and guide behavior change.
Featured Host: Jen Uner Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
Transcription Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Jen Uner: Creating a quality, diversity, equity, and inclusion program is a top concern of organizations today. Quality being key, how can we positively impact people's behavior? Can we make diversity matter to everyone? How do we overcome people's resistance to dealing with tough topics like racism and gender equality. Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host today, Jen Uner, Strategic Communications Director at LRN. Today I'm joined by Felicity Duncan, a Senior Instructional Designer on the LRN Library Team. We're going to be talking about a new LRN library learning model and how it can truly drive behavior change to support DEI initiatives. Felicity has just completed work on the new LRN DEI program, a comprehensive learning campaign that includes a range of exciting micro-learning assets. Felicity, thank you for coming on the Principled Podcast.
Felicity Duncan: Thanks, Jen. I'm excited to be here.
Jen Uner: Just to get us started, I know that for corporate legal operations folks, according to a 2021 survey that I read about recently, standing up a DEI program was really one of the top priorities of 2021. And it certainly was born out by our own traffic to our own website, the things that people were searching for. And so, I'm really excited to see LRN respond to that interest by expanding the offering that we have for our audiences. My first question for you is since you've just worked on this new program expansion, why is behavior change particularly important in the context of diversity, equity, and inclusion efforts?
Felicity Duncan: Well, with a lot of ENC issues, there's so much companies can do in terms of processes that sort of takes the guesswork out of achieving compliance. So if you think about something like, know your customer, the company can establish 10 steps to follow and they could be very well defined. And if employees do that, great, you're compliant, you have no worries. When it comes to something like DEI, what really matters is the quality of interactions among the people in your company. So those thousands of little moments between people and the reality is, just you can't create processes for that, right? You can't give people 10 steps to having perfect communication every time. You have to inspire people to reevaluate how they're treating others and decide to do better every day. So DEI efforts rely on the actions of every single employee.
And as we probably all know from our own experiences in our careers, if you have one bad apple that was really going to spoil a bunch in a DEI context. So the goal of DEI training has to be to get everybody on board with the ideas behind DEI, and committed to behaving in ways that are consistent with building a great inclusive workplace. So, it's all about behaviors that are not necessarily clearly defined. And it's about everybody behaving in those correct ways every day and in every interaction. So behavior is completely central to DEI in a way that it is not necessarily in these more process-based compliance issues.
And another point is that behavior change is really hard to measure in a DEI context, partners often ask, how can we measure the impacts of our training? How can we be sure that it's working? And in a DEI context, that can be really difficult because again, we can't create a list of very specific measurable behaviors. So your company might want to see respectful communication, but what does that actually look like? How can a manager monitor it? How can you record it? So the idea of behavior is just really central to DEI. And it's also one of the hardest nuts to crack both from the perspective of defining those behaviors from the perspective of measuring them and from the perspective of inspiring them.
Jen Uner: And yet, we know from our own benchmark of ethical culture survey, that the most ethical companies, the ones with the best behavior, they see up to 40% lift in key business metrics like employee loyalty, customer satisfaction, innovation, growth. So, I mean, it's clearly, it's really important. What are some of the biggest challenges we have to overcome when it comes to inspiring DEI behaviors?
Felicity Duncan: Well, actually what you just said there links to my first point here, and that's, some people don't necessarily see the value of DEI. They don't see how it connects to the bottom line. So there's a lot of people out there who are really focused on the bottom line performance, business goals. And for them, it's not always easy to see what role DEI can play in achieving those. And so things like you've mentioned there, the impacts on employee satisfaction, the impact on performance productivity, all of that is really important, and is the way to overcome that challenge is to really underscore that for people taking our training and actually our DEI introductory course called Diversity Equity and Inclusion, that actually starts off with a section that just explains the value of diversity and what it can do for teams and how it can contribute to success and explains that right upfront to try to overcome that barrier.
Another very common barrier that we see is, there are people who would prefer to believe that things like racism and sexism are in the past, right? They don't want to acknowledge that this is an ongoing reality because it's a difficult and ugly thing to face, right? And that's why we found in our training, it's so important to use testimonials and stories to show this is a real problem, and it's happening to real people right now. And I think a third challenge that we have to overcome is, that some people think that as long as they aren't doing anything that is explicitly problematic. So they're not harassing other people. They're not saying inappropriate things.
As long as they're doing these things, they don't have to worry about DEI, right? They don't see a need to necessarily engage in positive behaviors that promote DEI. And that's why our training really tries to focus on the role that everybody can play no matter who they are. And to explain why it's so important that everybody gets involved in creating a positive DEI environment. Because as I said, it's not enough not to do wrong, you have to do good because those behaviors, those active behaviors every day are what underpins successful DEI programs.
Jen Uner: Yeah. Actively do good, really focuses then on outcomes, right? And it's about how things land with others. And I think that's why it is important to know even the most well-intentioned person doesn't even necessarily know where they may be doing something or saying something that is not well received by the audience around them. So I think it does change, good training, I think does change behavior because it introduces sensitivities and promotes empathy in a way that I think doesn't really happen with any other sort of training offered by corporate programs at this point. So for us, what makes the LRN library approach to behavior change different?
Felicity Duncan: Well, I think, and this circles back to what you were just saying, that one of the things that makes our program different in our approach to behavior change different is, we really focus on helping people understand where bias comes from, right? That essentially everyone has biases you, me, everybody, because it's part of how our brains work. They're programmed to use heuristics, to shortcuts things like stereotypes, to make quick decisions, right? And that's actually a good thing. It keeps us safe, right? If you see a large shadowy figure in a dark alleyway, the right thing to do is to run away. You don't want to stop and take time to evaluate whether the person there is dangerous or not. And so essentially being human means that our brains are running on the software that evolved millions of years ago and never got updated, but that doesn't necessarily work well in our complex modern world.
And so even if you have the best of intentions, even if you are a quote-unquote, good person, you can't help having biases and you can't stop having biases. But what our courses really try to say is, like you can manage those biases, right? You can avoid letting your biases affect the things you say and do in the workplace and the decisions that you make, right? So it's not about being a good person or a bad person, having good intentions, having bad intentions. What it's about is being aware of your own biases and managing them so that you don't have a negative impact on the people around you. Another important part of our approach is about putting a human face on the issue. We really try to get learners to see how these issues, so things like racism or anti LGBTQ plus bias, how they affect real ordinary people.
We want our learners to think about DEI in human terms, rather than in political or economic terms. It's about people and it's about how people treat one another. I'd also say we try to talk to everyone. We try to talk to people who are perhaps being targeted by problematic behaviors. We talk to people who may be guilty of doing things in the workplace that are inappropriate. And we also talk to people who are by stand and who see things happening, and maybe don't say anything. So we want to create a role for everybody in creating a DEI environment whether it's changing your own behavior, speaking up when you see a problem, reporting your own negative experiences, it's truly like a 360 degree take on behavior. And so all of this actually, I could summarize by saying that our approach is really strongly rooted in empathy, and that that's the core driving value behind how we see the process of inspiring positive behavior change.
Jen Uner: And so why is empathy so central to getting people to do the right thing?
Felicity Duncan: Wait, if you think about it, right? Empathy is the unique human ability to take an imaginative leap, right? And really put yourself in somebody else's shoes, really understand what life can be like for somebody who isn't you. Okay. And so in a DEI context, if you can start to really understand what life is like for somebody who has to deal with microaggressions every day or somebody who's getting passed over promotion for promotions repeatedly because of who they are, when you really understand other people's reality, you can start to find the will to change things. You can realize how your actions, simple actions from you could transform other people's experiences. And that helps you feel empowered to really make a difference. But from the LRN perspective, we're not only talking about people who lack a DEI mindset, finding empathy for others.
We're actually talking about sort of 360-degree empathy. And that starts with empathy for the learner. So when we design our courses, we start by thinking about our learners as human beings and trying to believe the best about them. A lot of DEI training can be quite, almost aggressive saying, this is wrong. This is wrong. These are bad behaviors. And that's sort of natural, right? Because things like racism, things like sexism are terrible and they are wrong. But if you're trying to inspire people to behave better, then taking that perspective towards your learners is just not going to work, right? People are going to become defensive if you start with that approach and there's no space there for inspiring positive change, right? So we start with empathy for the learner and that really models the empathy that we want to inspire. And then of course, we try to inspire empathy in our learners.
And that means empathy for one another no matter who. And this is something that can be a little difficult, but what we're talking about here is not only empathizing with the person who's being targeted by say for example on microaggression, it also means empathizing with the person who's responsible for the microaggression, right? Understanding, look, maybe they really do think it's just a joke, and that's why they've become so defensive. Okay. Because when you get to the point where people can really understand one another's perspective, that opens up space to move forward, right? When you can truly say, look, I understand, you think it's a joke, but it's not a joke to her. And that matters. You've hurt her feelings. You need to make that right. No matter what your intentions are. That's the point at which positive behavior can emerge. Nobody needs to be defensive. Nobody needs to be afraid. We can all instead rather work together out of a place of understanding to improve the context and the environment around us. So really empathy is at the heart of inspiring that positive change.
Jen Uner: I love what you said about space to move forward. I think that is a really important aspect of progress and change, right? If we're just throwing up walls and problems, we're not going to be able to move forward. We're not going to be creating a culture of respectful communication, which is vital.
Felicity Duncan: And it can be really difficult, right? If you're in a workplace environment where you're sitting down to some DEI training and you're thinking about, my colleagues, so and so who keeps saying all these terrible things, it can be difficult to try and come to a place where you empathize and understand that person's perspective, but we really are engaged in these human relationships in the workplace. And if we don't have that empathy, we don't have that understanding. We really can't have authentic connections and we can't explain to one another how we can do better. There's just no openness and no trust in those environments, and without that there's really no possibility for improvement. So, I mean, empathy, sometimes people think it's a bit of I don't know, like a wooly concept or a touchy-feely concept, but it's really practical. It's really the foundation for creating a positive environment where people can work together effectively.
Jen Uner: It really is very important. One of the things that we say it's somewhere on our website, I can't exactly remember where, but that, at LRN at our core, we do believe that people generally most all people and certainly people that made it through the vetting process to get into your company, do want to do the right thing, people do want to do the right thing. They may not be equipped necessarily. They may not have gone through the work to examine, how are they really comporting themselves in society. So I think that, making that space and arming people with the tools to help assess and evaluate their own behaviors and not just, I'm not trying to say judge others, but are actually aware of what they're doing. I think it's a really good thing that people can use, not just in the workplace, but in their life in general.
Felicity Duncan: Yeah. And you said earlier, like what can training do, right? If we're talking about treating other people like decent human beings, you'd sort of hope somebody learned that when they were a child, right? But what training could do is what you just said there and can really explain to people like, you might think this is okay, but here's why somebody else might think it's not okay. And here's why that matters, and here's why you need to consider other people. And not just assume that your perspective is the only perspective, right? It's really good opportunity to open up how people are thinking about things, because, if you are, maybe an environment where you're not being exposed to a lot of new ideas about sort of DEI issues, you can get trapped in these routine ways of thinking and training can help you break out of it. So I think there's a really important role for training, even in something that might be as hard to define or hard to pin down as building empathy and inspiring kindness in respect, right? Training can still play a role in that.
Jen Uner: And so how can we and inspire empathy in an online course?
Felicity Duncan: Yeah. People sometimes can think about online courses in a sort of flat way, right. But in fact, you can do in an online course, what you can do in any other context. And one of the most powerful ways that we've found to inspire empathy in our courses is through compelling stories, right? Because stories are really just stories are how human beings understand the world. That's how we learn all our sort of sense of morality, stories are really powerful. And so we try throughout our courses to really leverage the power of stories, to inspire these feelings and this type of understanding. So for example, I'm thinking now of our LGBTQ plus course, our anti-racism course, our microaggressions courses.
In all of those courses, we have sort of confessional style videos where real people, real ordinary people share their experiences with things like microaggressions in the workplace, with racism, with dealing with the fallout from agenda transition, they just share these really personal narratives about what's happened to them, how they feel about it, what they think about it. Watching stories like that, stories that, you person in an office taking a training, you might not really be encountering in your day to day life that can really start to humanize the issues that we're talking about.
As I said earlier, like put a human face on it and start to inspire you to think about maybe very difficult to alluded concepts, like racism in these more human terms and in terms of the stories of the impact that they can have on regular folks. And that way, you can inspire empathy even in something that you might not traditionally think of as being a powerful tool for that, like an online course. And I think that in our new sort of revamped DEI program, we've done a really good job of leveraging those kinds of testimonials, those kinds of stories, as well as narratives like real-world scenarios, where you can apply your knowledge and things like that, leveraging all of that to achieve these goals of building, understanding, inspiring empathy, helping to humanize issues. And out of that ultimately encouraging people to behave better to one another.
Jen Uner: Those first-person stories are very powerful. It really provides I think, excellent context, especially if you haven't been exposed to those things and not everybody has, I've grown up in very multicultural places and have seen firsthand microaggressions for example, or the ways that people are just, things are assumed about people and slights are made. And I think that having those first-person stories, just to kind of remind folks about those moments and how prevalent that kind of behavior still is. I think it's really powerful to put that in context of the training right there, right at the moment that you're in a moment to learn. So I want to commend you guys on our learning design team for bringing those real stories to the forum in this training.
Felicity Duncan: No, you're right. And I think you make an important point there is that, everyone is coming to the training with different experiences, right? So some people might have had the experiences you've had, where they are in diverse contexts and they've seen these things happening, but there are people out there who haven't necessarily had the opportunity to hear a lot of these types of stories. And so by having these narratives upfront and by sharing these like sort of really intimate stories, we create this shared understanding among everyone who comes to the training, no matter where they're coming from, what their background is, we can all sort of understand these human stories and that's a great foundation to build on in the rest of the learning where you can say, look, we've understood this. We can see how this impacts force around us. What can we do? Right? Like what are practical things we can do? What are some of the steps that we can take to improve the situation so that, no one has to go through this again.
Jen Uner: So what are some of the core behaviors that our new inspire courses are focused on?
Felicity Duncan: Yeah, a great question. And I think, again, as we said, right at the beginning it comes to DEI. It is really all about behavior. And so we have tried to define a set of behaviors that are really broadly applicable, that are the core things we want people to do after they've taken one of our training courses, whichever it is, whether it's microaggressions or our introduction. So the first thing is really being aware of and managing biases. So beginning there, I started talking about, we all have by biases, you can't help it. You're a human being. You're a member of homo sapiens sapiens, that's it, you come with biases, right? But if you are aware of that, you can manage it. If you are willing to evaluate your own biases and just sort of be real with yourself about that, you can manage them so that they don't impact the people around you so that you're not making decisions or taking actions or saying things from your biases that you're actually giving your conscious mind an opportunity to get involved and not letting your biases control you rather you controlling your biases.
The second key behavior we emphasize over and over again, is the idea of the pause and reflect, right? Pause and reflect before you make a decision. Pause and reflect before you say something that might be problematic. It's such a simple thing, but just taking two seconds to stop yourself before you decide something, before you say something and say to yourself, how could this land with somebody else?
Is this decision based on the facts or is it based on something else, right? Just interrogate yourself, get curious about your own motivations and your own behaviors. And just by doing something simple like that, I think it can have just such a powerful effect on how you show up for the people around you. The third core behavior we will look at, and it might sound a little wooly, but it's treating other people like people, treating everyone around you like a human being, right?
Sometimes we're busy at work and there's pressure and there's deadlines. And we can tend to treat people around us as a means to an end, instead of really seeing them as a person and treating them as a person. And just that simple behavior can really undermine and destroy any kind of aggression or harassment in the workplace. Just saying like, this is a person that I'm talking to, I should have talked to them like a person. A very practical behavior that we really want to see coming out of the training is the idea of speaking up when you see something wrong, companies really rely on people to speak up when there's a problem, especially when it comes to something like DEI, right? If we're talking about a team that where maybe there's one person who has some problematic behaviors, no one is going to know about that in the HR department, unless somebody speaks up.
So the problems cannot be addressed in the absence of reporting or speaking up. And so we constantly, throughout all of our DEI courses, we say, look, we know it's scary. We know it can feel really risky, but speaking up is a really practical thing that you can do that is going to have a direct impacts on the quality of our workplace. And that can really allow your organization to deal with the problem limbs that exist. Because if they don't know about them, they can't do anything.
And I think the last behavior and something that I'm surprised I haven't mentioned up to this point, is the idea of allyship being an ally, right? It's quite a buzzword right now you hear a lot about allyship, but in practical terms, what it means is supporting, listening, learning, being there, being a part of the journey and helping the people around you when they're facing tough times. And in a DEI context, being an ally is a way that anybody, no matter who they are, can sort of take an active role in promoting the kind of culture that we're trying to create. That organizations are trying create, right? You can be there for people around you. You can do your own work, do your own learning, and really just be somebody positive in the workplace instead of just being somebody neutral in the workplace.
Jen Uner: Be a positive force. I love that. In a recent session, you were talking about leader-led learning. And I think this came in the context of the new assets that we've created for program managers around communicating around the programs, the learning courses, and delivering them and creating opportunities for conversation. Can you just tell me a little bit more about leader-led learning and why that's important?
Felicity Duncan: Sure. So leader-led learning really comes down to the idea that, it can be really powerful if you see the person you report to everyday, taking something seriously and trying to guide you and inspire you around that behavior or whatever the case may be. It's saying you respect your leaders, whether it's your team leader or your CEO, whoever it is, you respect that person. You want to impress them. You want to support them. And if they take an active part in learning, that can be incredibly powerful, that can help people recall more. It can help people take the learning more seriously. It reinforces the messages of the learning and it just really strengthens the learning experience. And so as part of our DEI program, one of the things that we created was an asset that is an opportunity for teams and, small teams. It doesn't have to be sort like a company-wide thing, but for you, your small individual team to have a conversation about a DEI topic in a setting that is guided.
So there's guided, there's suggested questions. There's a framework that you can use to have the discussion, but really gives your team and your team leader, an opportunity for leader-led learning where the team leader can sort of ask the questions, prompt the discussion, and it can do a lot of things, right? That can just promote the simple idea of talking about DEI issues, which is really intimidating to a lot of people. It can highlight how important these issues are to your team, to your team leader and to your organization.
And it can give everyone the sense of confidence that if they want to speak up, that they're going to be supported, that this is an open conversation that's happening in their workplace. And that this is something that matters and it's something that's live, it's a live area of concern for their leader and something that need to take seriously. So we're very excited about that sort of taking the learning outside of the online context rather, into the actual dynamics of the team and giving the team an opportunity to sort of trial run this idea of engagement and empathizing with one another and just talking about tough topics.
Jen Uner: Yeah. Felicity, this is a conversation we could continue to have, I think all day. I mean, it's really clear that if you want to be the change, if you want to see in the world, it starts with you. And I'm glad that we are creating the tools to help organizations have a positive impact and create a speak-up culture and a culture of respect and trust and belonging. Is there any parting thing you want to share with me? Anything I didn't get to ask you about before we go?
Felicity Duncan: No, I would just say, it's great as you pointed out earlier, it's really an interesting time when DEI is something that's top of mind for organizations against a backdrop of sort of difficulties with talent retention and shortages of workers, that nothing is very important than creating a great culture, a culture that people want to participate in, a culture that works. And something like the LRN DEI program can play a really powerful role in promoting that, in supporting that and in inspiring that. So it's great to have the opportunity to talk this through. And I hope that organizations everywhere are thinking about what they can do to create better environments for their workforce so that they can really, achieve all the things you mentioned earlier, like better productivity, happier people, a more engaged and engaging culture, and ultimately, better success in their business goals.
Jen Uner: Absolutely, retention, such a huge topic right now with a great resignation going on. And it's clear that toxic work cultures are like the number one reason why people are leaving. So I'm glad that our offerings, our services and our experts are helping to create more positive and more ethical workplace cultures. Felicity, thanks again for joining me on this episode. My name is Jen Uner, and I want to thank you all for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode
Stories of compliance failures aren’t strangers to news outlets or entertainment networks. But while the circumstances can make for great media headlines, what is arguably more interesting is watching how those companies respond. In this episode of the Principled Podcast, host Emily Miner is joined by Carlos Villagrán Muñoz, Gerente de Compliance (Director of Compliance) at CMPC. Listen in as the two discuss how, over the past decade, CMPC has sought to not just recover from a significant compliance failure, but rebuild—stronger—by focusing on ethics, culture, and values.
Principled Podcast shownotes * [2:50] - Carlos briefs listeners on his company, CMPC. * [3:53] - Describing the collusion scheme involving CMPC which took place in the early 2000s * [8:03] - The potential root causes which can motivate people to commit fraudulent acts. * [14:10] - How has CMPC sought to rebuild stronger in the aftermath of this misconduct case * [16:13] - The role of ethics and compliance at CMPC. * [23:38] - Rules vs. value in company culture. * [30:25] - The evolving risks at CMPC.
Featured guest: Carlos Villagrán Muñoz Carlos Villagran is a Chilean attorney who graduated from the Pontificia Universidad Católica de Chile with a Master of Laws (LLM) degree from Georgetown University (US). He currently serves as Director of Compliance of CMPC, a 100 years old Chilean-based holding, one of the worldwide leading manufacturers of pulp, paper, packaging, personal care, and other forest products. With more than 19,000 employees, CMPC has industrial operations in 8 countries (LatAm) as well as commercial offices in the US, Europe, and China, selling and distributing its products to more than 45 countries around the world.
He has previously served as Compliance Officer for the Chilean operations of Liberty Mutual Insurance and Mitsubishi UFJ Financial Group, as well as Legal Intern at the World Bank’s Integrity Compliance Office.
Featured Host: Emily Miner Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
What you'll learn in this podcast episode What does it look like to navigate and excel in today’s business and legal worlds as a woman of color, and how does having an E&C background impact that experience? In this episode of the Principled Podcast, LRN Strategic Communications Director Jen Uner talks with Nadine Jones, General Counsel of Kuehne + Nagel USA and co-founder of The Initiative: Advancing the Blue and Black Partnership, an organization born in the weeks following the murder of George Floyd. Listen in as the two discuss Nadine’s professional path, her productive approach to activism, the value of DEI programs in the workplace, and her advice for E&C professionals advancing their own careers.
Additional resources:
LRN’s new DEI Program provides companies with a multi-faceted training solution—a ready-to-deploy learning campaign with curriculums, asset packs, and customizable courses, plus the option to add bespoke content, learner experiences, and communications campaigns developed in association with LRN’s E&C experts. You can preview some of our most popular course content (just one piece of this program!) by clicking here.
Principled Podcast shownotes * [2:25] - How Nadine got her start in the law industry. * [6:15] - Nadine’s experience in ethics and compliance * [13:13] - How Kuehne + Nagel shapes their DEI programs. * [20:32] - Nadine’s intentions as she enters her new leadership role. * [23:55] - Nadine’s opinions on the notion of breaking barriers. * [28:25] - The genesis of The Initiative. * [32:37] - How The Initiative’s programs were received by police officers. * [37:18] - Advice for the next generation of legal and ethics and compliance professionals.
Featured guest: Nadine Jones Nadine Jones is a graduate of Howard University School of Law and a seasoned Vice President of a multibillion global logistics company. She is a collaborative leader, solutions-oriented, and has expertise in developing and maintaining a corporate ethics & compliance program for a multi-billion logistics company. As a graduate of Howard University School of Law, Nadine also has a strong sense of social justice and equity. In June 2020, she co-founded along with two other Howard Law alumni an organization called The Initiative: Advancing the Blue & Black Partnership (“The Initiative”). The Initiative was established to end systemic police violence and implement a collaborative approach to building healthy, scalable, community policing models.
Featured Host: Jen Uner Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.
Transcription Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled podcast brings together the collective wisdom on ethics, business, and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategy from our community of business leaders and workplace change makers.
Jen Üner: Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host today Jen Üner, strategic communications director for LRN. Today, I'm joined by Nadine Jones, general counsel of Kuehne+Nagel USA, as of April 1st, actually, which is part of the 18 billion global logistics company. Nadine is also co-founder and associate executive director and immediate past director of the initiative, Advancing the Blue and Black Partnership. This is an organization she founded with friends from Howard University in the weeks following the murder of George Floyd. We are going to be talking about the initiative, but we're also going to be talking about her career, her advice for E&C professionals advancing their own careers, the unique challenges women of color face navigating business and legal worlds and her own, I must say hyper-productive approach to work and to activism. It's women's History Month in the US, and so I think it's a good time to reflect on where we are. Nadine, thank you for joining me on the Principled Podcast.
Nadine Jones: Thank you, Jen. Thank you for having me.
Jen Üner: Nadine, I have such admiration for what you do. I'm kind of amazed at how you actually do all the things that you do. You're one of those women who like slays dragons and leaps tall buildings in a single bound. I know this because we had the chance to work closely together for the launch of the initiative last summer, or at least the launch of the courses that we produced for you and are continuing to produce for the initiative. We're going to talk about that a little later though. I want to focus first on your career. You were just promoted to general counsel and congratulations on that, by the way. I think our audience of E&C professionals they'd really like to learn from your trajectory and your experience like how did you get where you are today? I mean, this is a very big job. I know about Howard University, but not much else. Can we start at the beginning? Can we start with your background? Like where did you grow up? How did you choose Howard? Get me started.
Nadine Jones: I actually grew up in Montreal, Canada, working class parents, working class family. I did visit Howard, not as a student, we visited for homecoming. Howard's homecoming is the world renowned, practically. And I didn't really think anything else about it. I did always want to be a lawyer, but I never seen anyone in my family be a lawyer. And I didn't think I was smart enough to be a lawyer. And it was just, might be nice, but that's not for me. Get a good job and which I did. And it was Ama, who is one of the co-founders of the initiative and we'll talk more about later, she got into Howard Law. So we did undergrad together and she went on to Howard Law and I mentioned, I always wanted to be a lawyer, but I'm not smart enough. And she's like, "But we're the same. If I can do it, you can do it." And I thought, we actually are the same, right. Because we'd been friends for years by then, herding together. I don't think she'd mind if I shared that and whatever shenanigans we were getting into.
And I had just never really thought about it in that way, that we are the same. And it was a great example of representation mattering. And I believed her when she said, if I can do it, you do it. And so I applied and I got in and I don't mind saying I did great. I was pretty good at it. But it took someone breaking down a barrier and showing me that it was possible. And somebody that I could relate to showing me that it was possible. And I then believed that it was possible and she was right, it was possible. So that's how I got my start at Howard. And I've been in the United States ever since then. It's my adopted home. I love it and we can talk about it's flaws, it's challenges.
Jen Üner: Oh my God.
Nadine Jones: I see it. But I...
Jen Üner: We have so many.
Nadine Jones: I love, I chose this country. I wasn't running from anywhere. Canada's pretty cool, if you've ever been there.
Jen Üner: I got to ask you Montreal, do you speak French? Isn't it French based there?
Nadine Jones: It is. It is French based there and I'm considered what they all Anglophone. So my parentage and so forth, I'm not Francophone and language is heavily politicized in Quebec. And it felt very oppressive as an English person. What is the point of that story? It's you can politicize anything people, anything it's not just race and ethnicity, it could be language, it could be geography.
Jen Üner: I think you're absolutely right. You can politicize most anything.
Nadine Jones: Most anything. Yep.
Jen Üner: So you went to Howard. I think it's interesting you always knew you wanted to be a lawyer.
Nadine Jones: I did. I always knew. My mother thought that I should be a teacher. She still does. She's accepted that I'm a lawyer, but I think in her heart of hearts, she always wanted me to be a teacher, but somehow I just always felt it. I always knew that this was what I wanted to do. I just thought it was out of reach.
Jen Üner: Yeah. Well, I'm glad that Ama helped you see that wasn't necessarily the case and that you were able to apply to law school and get in. And of course now here we see you absolutely succeeding. A question for you about your E&C experience. That's your background now in law? Is that correct? I don't want to make an assumption.
Nadine Jones: It's the reason why I joined can KN, Kuehne + Nagel was to head up their corporate ethics and compliance program. And I still wear that hat, which is something we can talk about, you might change roles, but you still have insights that you carry with you from whatever experiences that you've had. And it's a plus, it's not a minus. So yes, I'm still involved to some degree, particularly in areas of where I have some background like antitrust, for example, I'm still heavily involved in that, but it is no longer my full-time role. I moved out of ethics and compliance in December of 2017 and moved fully into the general counsel's office of the same company but supported compliance, supported the new officer and still continue to this day. I'm still seen as the go-to person for certain ethics and corporate compliance matters, certainly for DEI as well as a woman of color, as a black woman in a still heavily male dominated space.
And I have a title to my name. I have a lot of visibility and a really good platform from which to speak. So I do speak as much as I'm invited to speak to help highlight certain issues for our women's International Women's Day. So it's a privilege. It's actually a great space and a comfortable space to be in. And I don't like to play the age card because I think it makes the younger folks feel uncomfortable, but it is so rewarding to see how they react act and how excited they are and just to hear their comments. And they'll come by my office, they don't know if they should come in, if they can't come in and just the enthusiasm that they have. So I consider it a privilege to be able to enter their space. They sometimes feel nervous to enter into my space, but I tell them my door is always open and I love it. I do love that part.
Jen Üner: I think that's always a case as you move up in your career. I think you do find that happens where there's that... Somebody in the C-suite, for example, you're never going to just, even if they're really welcoming and saying like, "Come on in." You're always a little bit hesitant, right? Because there's a bit of that hierarchy, right? You don't want to overstep, you don't want to do something wrong.
Nadine Jones: That's right. Yes.
Jen Üner: That's how I see it. So the fact that you've been very visible in the company on topics of ethics and compliance and you hold this visible role and people do seek you out for your expertise for example in DEI, is that something that you're going to continue to do in your new role?
Nadine Jones: Yes, it will be. If they will have me, it will be because one, I'm the only woman GC or only woman who will be holding that title in the next few weeks. I'm the only black person who was on the board ever. And the US company is about, I don't know, almost 70 years old. So it's a pretty big deal. And just by me being who I am, it has generated a strong reaction and it speaks to diversity and it speaks to equity and it speaks to inclusion. The fact that I'm homegrown in the sense that I joined, I'm in my 10th year at this company, and the fact that the company was able to develop me to the point where I would be even viable for this role speaks volumes to those who are here because it shows that the opportunities are in fact here.
We didn't have to outsource, we didn't have to find somebody from Europe to come in to fill this role. We were able to find a person here who had received enough development and mentorship to be able to handle this role. So I think just by the very nature of the body I occupy, the history of the organization, I think DEI is going to be something that I contribute to and happily do. So one of the things I like to do is show them my own evolution, my own biases, my own effort to be more inclusive. And I think it helps because as a black woman, the presumption is, oh, you know how to do this? You have no biases. You are automatically inclusive and welcome diversity. We all have our biases. We all have our blind spots is what I would call them. So when I'm invited to speak, I share and I share my own evolution and my own challenges in whatever area. It's so far, it seems to be well received.
Jen Üner: That's great. That's good to hear. And certainly we do all have our own blind spots. I think that's a great word. I have to say DEI is top of mind this month for us at LRN because we have big product news. We're releasing a new DEI program. It combines our customizable courses, which I'm not even sure if you're familiar with the coursework that we're producing now. We have a whole learn it work it prove it model. There are powerful videos included. And in fact, like the meaning maker video that we did for the initiative, we do similar kinds of assets for our DEI courses. But we're also now expanding that DEI program to include ready to go, out of the box, email templates, huddle guides, learning action plans. The idea is to create kind of a more meaningful multitouch program that sustains over time.
And so like all those courses and all of those things come together to keep the momentum going through the year. And I would say it's like how you would communicate about sort of any kind of corporate values. It's something that you do with repetition over time, across channels and moments. You don't just have like a one and done like, oh, now we're trained. So I'm curious how Kuehne + Nagel shapes DEI programs presently. And I mean, I know you're not necessarily directly working with them right now, but do you have any highlights or insights you could share about the programs there?
Nadine Jones: I want to say to give the company credit, KN credit, we started this, I can't give you the exact year, but I want to say 2018, 2019, the company invested, I believe millions of dollars in what it calls its Care Initiative. And from the highest to the lowest and everyone in between, we were in encouraged, strongly encouraged to participate in this program. And so we hired leadership to spearhead it, the head of DEI and so forth. And so we've been pounding this drum for years before, the upheaval in 2020 and the racial equity discussions that have since spawned or spurred from that. So I want to say 2018, we went full out into the Care Initiative, which is about inclusion, about hearing other voices. Internally, the focus was to start on internally with how we treat each other internally with an understanding that would spill over in terms of how we treat our customers.
We're still a profit for profit corporation, we care about our customers, but we wanted to create an environment where we had the touches. So I love what you said about you can't do one and done. You can't pass a policy that we shall now all care about each other, right?
Jen Üner: Right.
Nadine Jones: You need to create the infrastructure where you have the touches and I'll share a quick a story. We still do our care, it was maintained even through the pandemic periods when we were not physically in the office. So it started out with like physically in the office group, team meetings from different pockets within the company so that we get to see and meet and develop relationships with folks outside of our departments, outside of our wheelhouse. And then during the pandemic, of course, like everyone else, mostly everyone else, we moved to conference calls, Zoom, and other platforms. And I wasn't always the best, I'll be honest. I wasn't always the best about joining, which is something that I've decided to stop doing, especially now with my new position I think it's more important that I make the effort to make those calls.
But within my sub care team, I have one Ukrainian national and we were talking weeks ago, this was before the actual invasion. And these are my words. I know that other people might have different views, but that's how I'm seeing what happened. And she mentioned that her family was in Ukraine and I said, "Oh there's still there. They didn't leave." She said, "No, they didn't leave." And I said, "Okay, but you are seeing the buildup that's happening." She's like, "I see it. And they see it." But I said, "Well, look, we pray for the best and that everything will be okay." And a few weeks after that, we all know what happened. Putin invaded Ukraine. I woke up that morning, maybe it was a Friday morning. Anyway, at some point I woke up and saw what had happened. My first thought was to my care group and I logged on and I Zoom chatted her. And I said, "I'm just seeing what happened. And I want you to know that your family is in my prayers and I'm praying for their safety."
Now, would that have been my first thought had I not had a relationship within my care group? I would've sympathized with Ukraine. I don't know if I would've had that level of empathy had I not known this person over the course of however many years, I've been in her care group four years, that human element where her family, I could almost transpose my family onto her family. And that's when you move from sympathy to empathy, I think for me anyway. So that's an example of the importance of continuous touches in seeing each other and being able to empathize with each other. If you're just in your silo or if it's just an academic exercise or if it's just a mandate from your CEO saying, thou shall care with nothing else behind it and no infrastructure to have those human interactions, then you just have what we all know in the E&C world. You just have a program on paper. You don't have it in reality.
Jen Üner: Check the box.
Nadine Jones: It's a check the box, right.
Jen Üner: Yeah. I think that's a really interesting example and certainly a really poignant one with everything that's going on right now. And I think it does really speak to the company that you work for and the care that they take around care. And I think you're absolutely right, you might not have thought of that first, if you hadn't been involved in that program, which then it makes me think of something that I overheard the other day from one of my colleagues, she was talking to a VP of diversity and inclusion, who's like maybe 90 days into the job. And this person was saying that the real value of DEI programs is that most people aren't really going out there to read books or even know who Brené Brown is, for example. It's not something like you don't put it necessarily on your agenda, just like you wouldn't have necessarily put on your agenda connecting with this person from the Ukraine.
It's because the company took the initiative to increase awareness and understanding and building a culture of respect in the organization that you guys were exposed to this, exposed to each other on a regular basis. So that became the first thing that you thought about. So in a way it's kind of the whole idea of this is really... Because if you don't find it outside the company, it really is kind of a tone from the top sort of thing, the company prioritizes it. And then there you are, it's actually shifted your perspective and your behavior, what you thought first. So that's a lot of words to just say, you're going to be at the top, right? You're going to be part of the group that is forming priorities going forward for the company as part of the leadership team. Are there any items that you're going to want to surface in your new role?
Nadine Jones: I'll be the new kid on the block. So I will just be... I know most of them from my role in E&C ethics and corporate compliance, which is a great role actually, to expose you to people from all walks of the organization. It's a very high, should be anyway, a platform where you do have exposure to the board from the receptionist to the CEO, to the global CEO. And no one has told me this, but I can't help but think that exposure helped to launch me into this general council role because you make relationships and you keep them wherever you go. But that's a bit of an aside. I'm going to, they will now be my peers. And I will be the second woman on the board, first person of color. I don't know what their expectations are. I think they're watching me and I'm learning them in this new role. But here's the thing, I don't have to go in with an agenda in particular.
I just see the world differently than they do, and I feel empowered enough to voice that. So for instance, even before being appointed the next GC, I sit on the investment committee. I was invited last year to sit on the investment committee, which is the fiduciary committee, right, from obligation for 401(k)s, and make sure that we are investing soundly and that things are in compliance with applicable law and so forth. First woman and one of the questions I had almost maybe the second meeting, like how are the women doing? Do we know if there is any gaps in terms of investment or use of the company's offerings between genders? And the response was we never really thought about it. And that's a great idea. That's an example of inclusion. It was quickly, quickly supported by the men. And I was just curious, I just wanted to see if there were any gaps, so I don't have a clear agenda. I'm just bringing my whole self into this role.
Jen Üner: Yeah. I, that's a great way to put it. I had a boss once that would say, "You don't know what you don't know." And I think that's kind of a great example, right. You're in this group and they had never considered something. You're just there with you yourself in the room and realizing, hey, what about this? And no one had even considered that before. I think that really does speak to the extreme value of inclusivity and diversity in the workplace. So, I mean, clearly you're pioneering a bit, you're breaking barriers. You're the, I think you said the second woman on the board and the first black woman. This notion of breaking barriers, do you think that's a big deal, a small deal? Does it not really matter? Because it's the right thing to be happening anyway. I'm just curious your perspective on that.
Nadine Jones: It matters, it's intimidating, but I'll separate the answer. It absolutely matters, right. Remember I told you it was Ama and my ability to relate to her and see myself in her that gave me the courage I needed to step out of my comfort zone and try law school. It absolutely matters. We have to see someone that is relatable break the barrier to know that it's possible for ourselves. So it does matter. It is encouraging, it brings hope, it's validating. When the announcement was made public, there were women, especially women of color, Latinx women who can see themselves in me that they were overjoyed, but also really emotional, really emotional. And that first day when the announcement went out, it was overwhelming for me to see the reaction of mostly the women, not just women of color, just women in general.
And it confirms the importance of representation, of seeing what's possible even if it's through somebody else who was like you. It's intimidating in the sense that I feel, I'll speak for myself, I feel the magnitude this appointment, I feel the magnitude of being on the board, of looking like me and being a board member, the magnitude of it. That said my CEO, and I feel supported. So if I were in an environment where I had to claw my way to the top against people who were less than supportive, maybe even antagonistic, but doing it because it's the new social norm, maybe that's how they might look at it. It's the new trend and there's no real support, can you imagine what that must feel like? Actually, I can't imagine what that must feel like. But because I feel supported internally, even though it's a new role, a big role, it's a historic role, as one woman told me, this is a historical moment in our organization, I don't feel like I'm set up to fail.
I feel like I'm set up to succeed because I know the board member or my CEO in particular, who I won't prefer to put words in his mouth, but at least how I perceive him, my interactions with him, so supportive, even the global parent who's light years away from the United States, incredibly supportive and encouraging. So it is important, you can't just plop a woman on the board or black person for the first time and say good luck and expect them to thrive. You need to support us. That is an element of inclusion. That is part of equity. That is part of diversity, if you really want it to work. And I do feel supported, I do.
Jen Üner: That's so good to hear. And it is so important. And I think in any kind of environment where collaboration is going to be really key, you need to have that, you need to have that respect and appreciation for each other and what they bring to the table. And the skills, knowledge, experience, perspective, everything, those are all valuable inputs into whatever problem the team needs to solve.
Nadine Jones: Absolutely, absolutely. Yeah.
Jen Üner: Taking a whole turn, I would love to talk about the initiative. We worked together that on the initiative last year, it's continuing this year, I can't wait to catch up on what's been happening. But before we dive into that, can you share with us a little bit of the Genesis story of the initiative?
Nadine Jones: Yes. So the initiative was launched in July of 2020, actually it was June of 2020, and it was birthed out of trauma, I guess is the right word. If we all recall, and some of us don't even want to look back to 2020, it's the year that she'll never be mentioned again, I get it, but let's look back a little bit of what was happening and there was incredible up rest or...
Jen Üner: Unrest.
Nadine Jones: ... Unrest.
Jen Üner: Unrest, and uprising.
Nadine Jones: Yeah. Unrest and uprising in the area of policing, police interactions with black and brown bodies. And being the mother of a black son myself, it was at the point where we really could not just sit back and do nothing, myself and the other two co-founders, black women, Howard alumni as well, mothers of black sons and daughters, I'm the only one which is a son. And we decided that we were going to use our corporate knowledge and experience in terms of building sustainable, scalable solutions, along with our Howard civil rights training, and we were going to enter this space. It was kind of a bit of woman arrogance, if you want it done right, just going to have to do it ourselves.
And we were thinking about it in terms of the measures that we have taken generationally to protect our children, which is having the talk, what to do if encountered by the police, you're black, you can't do what your white friends do. You be respectful, make sure they see your hands, all of those things that we do, which basically just kind of steals and takes their innocence way too young. We decided it's not working and that we need something that's more sustainable. And we entered this space with the purpose of building something that lasts, and in order to do that, reconciling those two groups, the blue community, the black community in particular, but to do that, we knew we had to work collaboratively. And that's our corporate upbringing that's telling us that, you can't do anything in a silo and expect it to work and be sustainable, it's not. It's not going to work and it's not going to be sustainable.
And you touched on this Jen earlier, just simply having something on paper and saying, go forth and prosper, so to speak, is not going to be enough. You need to have some touches there, you have to create some infrastructure to bridge divides, to create positive relationships. So that's why we got into the space. It was not just because of what we all witnessed with the George Floyd video, it was not just what we've witnessed with the Ahmaud Arbery being gunned down by civilian, but a former police officer and the handling of that murder, what we can now say is murder by that police department was shocking. And it wasn't the slew of others that we have seen, it was simply a point of decision that we're entering into the space and we're going to do it collaboratively. But we are emerging from this space with the fervent hope and belief to make everybody safer, the blue community, because now you've got members of the civilian community that have humanized them how the blue community views us, and the us is no longer just black folks.
Jen Üner: One of the things that you started with, with the initiative was I think there were some dashboards for assessment of municipalities, and then of course, the courses that we are developing with you, the first one being on mindfulness, which are courses that police are offered to take. How is that going? What kind of adoptions have you been getting for the platform and the programs that you're doing? And what's next? I know that you were already working on ideas for the next courses that we can help you bring to the initiative.
Nadine Jones: Well, the mindfulness training that LRN developed for us is just remarkable. And we didn't ex we didn't do it for the purpose of it serving as an icebreaker, but it turned out that when officers saw that we were concerned about their wellbeing, as well as our own, it opened a door. I don't know how to explain it. LRN did it for free, that was their contribution to the space. It's phenomenal, it's world class, it's incredible quality, and we shared it with police communities for free, and there was no judgment in it. It was, this is brain science. We called it operation brain strategies because we were told by police, if you call it mindfulness, no self-respective officer is going to take a mindfulness training.
So we called it operation brain strategies, there was no judgment. It was, this is just the human species, this is just how we function. So it was a great way, it was like an offering, here we care about you. And we developed that first after we got through the pain and the horror of what we saw, and crying, we were sobbing all the time. It was just a mess in the summer of 2020. But the more we spoke with officers, we saw them more, we said, "Hey, this is tough. We're going to come out with something that shows that we see what they're doing and that it's not easy." And there's nothing defective about an officer who has a moment, it's a tough, heartbreaking job. So that was a great way to come out.
And the next one slated is to talk about, to show in the same similar image or format, how to actually engage with members of the community. And you're right, we did build two tools, one's called central, which is police agency facing, and the other is called central plus, which is community facing. And one assesses the police agency's readiness to engage in a collaborative, proactive type of policing with civilians, not all agencies are equipped to do that. They are equipped to be warriors, but they're not equipped to be collaborators. And so we help the agency self assess their readiness and maybe opportunities where they can make some changes to become a police agency that can engage in that caliber or that type of policing.
And then we develop central plus, which is community facing, which is basically an intake, just success your community. And we do it across policing, certainly public safety and policing, but other areas like education, access to resources, health, these are all areas that if broken will intersect with the police industry, and policing is not response for some of these breakdowns. So it's a way for the police leadership in a particular precinct area, we did it at a zip code level, can see what the concerns are and the top concerns and challenges within his or her precinct area. Thank you for asking about that. We're very proud of those tools, by the way.
Jen Üner: I continue to be impressed by it. And I know that we're all excited here to collaborate with you on building the next set of e-learning tools for this program. One of the things that I hear you say again and again, is about relationships, is about collaboration, is about empathy, kind of a last question for you here, I know we're like at time, past time, advice for those that are coming up behind you in the world, in the legal world, in the world of ethics and compliance, what advice do you have for the next generation on how to do those things?
Nadine Jones: Gosh, there's so much, and I don't want to push you over time. But relationships are key and don't be transactional with your relationships. You don't know where somebody is going to be tomorrow, and that shouldn't be your only basis for wanting to develop a relationship. So don't be transactional about it, spend the time, invest the time. I know not every day you feel like asking, how was your weekend on the Monday, some Mondays are tougher than others. It doesn't really take a lot though to be interested or for the other person to perceive that you do have an interest in them. It could be less than five minutes and you are like, "Oh, I got to call. I got to go," and you may not see them again for another two weeks or so forth.
But take the time, invest the time we are tied as a society. We are as you're basically creating an environment that's going to ultimately be better for you within the corporation, and I would add this, outside of the corporation. We are privileged to work for corporations that have invested in this space, take it with you into your spheres of influence outside of the corporation where others may not be privileged to have access to LRN teachings and resources and the like, and have some humility about it. Not everyone is exposed to this type of learning.
So that's my advice, just invest, take time, care about people, doesn't have to be anything major, and take that with you in all of your environments. Don't compartmentalize it and use it only in the corporate world. It is your obligation, I think, as a human being in this world to take that with you. If you know better do better, that's what I said on the women's meeting speech on the eighth here, Jen, if you know better, do better.
Jen Üner: If you know better, do better. That is a great note to end on Nadine. Thank you so much for joining me on this episode of The Principled Podcast. My name is Jen Üner, and I want to thank all of you listening for staying with us. We will be back next week with another LRN host and expert talking about ethics, culture, and compliance.
Nadine Jones: Thank you, Jen.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple podcasts, Stitcher, Google podcasts, or wherever you listen. And don't forget to leave us a review.
What you'll learn in this podcast episode DEI impacts nearly every aspect of a business. It touches hiring and training efforts, policies and procedures, and even influences company culture and performance. LRN’s 2022 Ethics & Compliance Program Effectiveness Report found that 76% of high-impact E&C programs will be prioritizing DEI initiatives in the coming year. So, how can organizations ensure that their efforts are effective and meaningful? In this episode of the Principled Podcast, Dr. Arieana Thompson hosts a conversation about DEI with Dr. Laura Heron, a chartered occupational psychologist and advocate for inclusion in the workplace. Listen in as the two discuss how businesses can develop an organizational perspective on DEI, and what creating a culture of acceptance and fairness looks like in today’s world of on-site, hybrid, and remote work.
Additional resources:
LRN’s new DEI Program provides companies with a multi-faceted training solution—a ready-to-deploy learning campaign with curriculums, asset packs, and customizable courses, plus the option to add bespoke content, learner experiences, and communications campaigns developed in association with LRN’s E&C experts. You can preview some of our most popular course content (just one piece of this program!) by clicking here.
Principled Podcast shownotes * [2:28] - Dr. Laura Heron defines the term DEI. * [3:49] - Why should businesses invest in DEI? * [5:00] - Laura’s own research with FIU Embrace. * [7:48] - Practical steps businesses can take to ensure their culture is inclusive. * [10:30] - Advice for companies getting started and sustaining positive change regarding DEI. * [14:59] - How to get the entire company on board with DEI efforts. * [19:26] - Persistent challenge Laura has observed in the DEI space.
Featured guest: Laura Heron, Ph.D. Dr. Laura Heron advocates for inclusivity in the workplace. She believes that every person, no matter their background, age, gender, ability, or any other characteristic or identity, deserves to have opportunities for meaningful employment.
Laura is a BPS Chartered Occupational Psychologist, who graduated with her Ph.D. in Industrial and Organizational Psychology from Florida International University. Laura currently works on an employment initiative for FIU Embrace, which is a university-wide initiative at Florida International University that promotes the wellbeing and employment of young adults with developmental disabilities (DD). She researches and consults on improving the employment experiences for individuals with DD and supports companies in creating the infrastructure needed to cultivate inclusivity. She is passionate about conducting research and implementing evidence-based approaches to improve the lives of young adults with DD.
Laura’s research has been published in leading academic journals in Industrial-Organizational Psychology and disability-related fields. As a disability-employment expert, Laura engages in professional speaking and presents research at national conferences. Laura’s work in the area of disability-employment has been recognized by the Society for Industrial/Organizational Psychology and the American Public Health Association.
Featured Host: Arieana Thompson, Ph.D. Dr. Arieana Thompson believes in transforming the modern-day workplace through thought-provoking, evidence-based insights.
Arieana is a subject matter expert in executive leadership, succession management, ethics and compliance (E&C), wellness cultures, and employee development. Arieana has experience advising in external and internal capacities and professional speaking. Arieana offers professional and wellness coaching, helping leaders and individuals to harness natural strengths and reduce stress.
As a scientist-practitioner, Arieana actively researches and publishes employee well-being, organizational culture, and leadership thought-pieces in both industry and peer-reviewed academic journals (see links in the "Featured" section below). These publications enable executives to create and sustain values-led, profitable, and creative companies.
Transcription: Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.
Dr. Arieana Thompson: DEI has become one of the most important acronyms for organizations today. Standing for diversity, equity, and inclusion, DEI impacts nearly every aspect of a business. It touches hiring and training efforts, policies and procedures, and even influences company culture and performance. LRN's 2022 Ethics and Compliance Program Effectiveness Report found that 76% of high-impact E&C programs will be prioritizing DEI initiatives in the coming year. So how can organizations ensure that their efforts are effective and meaningful?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Dr. Arieana Thompson, E&C advisor at LRN. Today I'm joined by Dr. Laura Heron, a chartered occupational psychologist and advocate for inclusion in the workplace. We're going to be talking about how businesses can develop an organizational perspective on DEI. We will also examine what creating a culture of acceptance and fairness looks like in today's world of onsite hybrid and remote work. Laura is an expert in this space, consulting on improving the employment experiences of individuals with developmental disabilities, also referred to as DD, and conducting ongoing research. She supports companies in creating the infrastructure needed to cultivate inclusivity and is passionate about conducting research and implementing evidence-based approaches to improve the lives of young adults with DD. Her work in the area of disability employment has been recognized by the Society for Industrial Organizational Psychology and the American Public Health Association. Laura, thanks for coming on the Principled Podcast.
Dr. Laura Heron: Thank you so much for having me on this podcast. I always jump at the opportunity to talk about DEI as it is so important and something that I am very passionate about. So I'm excited to jump right in.
Dr. Arieana Thompson: Laura, we're excited to have you. Let's start right there. Do you mind defining DEI for us today?
Dr. Laura Heron: Sure. Essentially DEI refers the organizational policies and practices that promote the representation and participation of different groups of employees. For example, this can include people of different race, ethnicity, nationality, sexual orientation, gender, religion, socioeconomic status, age, and physical and mental ability or disability among many others. If you take a second to think about what these words mean individually, diversity is defined as the range of human differences. Equity refers to freedom from bias or favoritism. And inclusion is the state of being included or a part of something. So when you take DEI altogether as a whole, it really involves understanding, acknowledging, accepting, valuing, and even celebrating all differences.
I do want to mention here that you can't just commit to one area and not the other two. It's not enough to diversify your workforce as many organizations are recognizing you need to do. You must also create the infrastructure that promotes and reinforces equitable practices and an inclusive culture to really invest in DEI and make sustainable change. So that's really a snapshot definition of DEI as it applies to the workplace.
Dr. Arieana Thompson: That was wonderful. Can you tell us more about why businesses should care about DEI and what might be some of the benefits of investing in this area?
Dr. Laura Heron: Sure. I get asked this question a lot and I always just want to say that it is simply the right thing to do. I think morally as human beings, we should want every person to have opportunities for meaningful employment. And not only that they have access to employment, but they get to experience a workplace where every person feels that they belong, that they feel comfortable and that they feel valued. But I do recognize that in a world that is often driven by tangible gains, the business case is important to touch on. So briefly we know from a lot of research that DEI initiatives can boost innovation, collaboration, they can expand your customer base, they can reduce employee turnover, and they can also help you to attract talent. And become of all of that, committing to DEI can increase profits. So if the human element isn't enough of a driver, then there's the research evidence telling us that DEI gives you a competitive edge in the labor market.
Dr. Arieana Thompson: It certainly sounds like investing in DEI is a win-win. Can you tell us more about your own experiences working in DEI and your area of research?
Dr. Laura Heron: Sure. For four years now, I've been working for a program at Florida International University called FIU Embrace. And we are an initiative that promotes the wellbeing and employment of young adult with developmental disabilities. I'll give a quick definition. Developmental disability, it's really a broad umbrella term that describes a group of conditions that occur due to impairment in physical, learning, language or behavior areas. Examples include intellectual disability, autism, ADHD, and Down syndrome to name just a few.
I am currently working on an employment initiative to help our students graduate from the college program with a meaningful job. And this is so important because people with developmental disabilities have really devastatingly low employment rates. Prior to the pandemic, only about 19% of individuals with developmental disabilities were employed. And that's compared to about 70% of people without disabilities. So this really just shows us how wide that gap is. And the pandemic unfortunately has severely impacted industries commonly occupied by people with developmental disabilities, such as food and service industries. So this gap unfortunately will likely be worse now.
But I've done a lot of disability employment research in the past few years with FIU Embrace and with FIU's Healthy Work Lab led by Dr. Valentina Bruk-Lee, which is where I completed my PhD in IO psychology. And as part of the college program, our Embrace students get internships both on and off campus to help them develop basic job skills to ready them for life after college. A lot of our work and research involves helping organizations create the infrastructure to support them, for example, by understanding supervisor skill and knowledge gaps and developing training for supervisors. And we're also working on other aspects of the employment pathway, for example, how do we assess organizational readiness, or how do we match students to jobs?
So there is a lot of work to do in this space, but it's something that is growing. In the past few years, we've seen a lot more research or attention on this population, particularly as it applies to work. So that is really exciting. But I will say the main takeaway from my work that I would like to share is that while people with developmental disabilities may face unique stresses in the work environment, with the right supports, they can thrive and be an asset to any company just like any other employee. And what we found is that the types of supports that are needed are often free and will actually benefit all the employees on a work team, not just people with developmental disabilities. I could really talk about this all day, but I know we have some great questions to get to. So I'll hand it back to you, Arieana.
Dr. Arieana Thompson: Absolutely. No, I actually love what you're saying right there about a few more steps that organizations can take in order to support individuals with developmental disabilities. So based on your professional experience and background, what in your opinion are a few practical steps that businesses can take to ensure that their culture is inclusive and supportive of employees with developmental disabilities?
Dr. Laura Heron: Sure. That's a great question. I think the first step to being inclusive of this population is to gain an understanding of what developmental disabilities are. Within the umbrella of DD, there are different support needs, work preferences, communication styles, or language preferences. So it's important to be aware of those so that you can best support them.
It's also important to know that there are a few different pathways to employment for people with developmental disabilities. For example, a lot of our students at Embrace have intellectual disabilities as well as other types of developmental disabilities. So they'll typically go through a college program like Embrace to get employed, or they go through what we call supported employment, which are state run or independent providers who help people with disabilities find work. In light of that, to be inclusive, you may need to diversify your recruitment strategies or build partnerships with supported employment agencies. I often say that organizations shouldn't just rely on automated resume screening, for example, as this can end up modernizing a lot of people with disabilities.
Another way to be inclusive of people with developmental disabilities is to offer DEI training that includes information about developmental disabilities. So it's unfortunate, but this really happens. And often these trainings leave out mention of disability at all, let alone, particularly invisible disabilities like many types of developmental disabilities. I guess, in line with that, training managers is important. Some people with developmental disabilities can have those unique stresses in the work environment. So it's important that supervisors are equipped with the skills and knowledge to support them.
I think a last point is that we are seeing more companies, particularly in the US, but abroad as well, that are creating disability inclusion programs, particularly for employees with developmental disabilities. So I'd encourage anyone to learn from these companies who are leaders in this space. Some examples include: Walgreens, Sephora, Microsoft, or even SAP to name a few. At the end of the day, you're already going to have people in your organization who have a developmental disability, whether it's disclosed or undisclosed. So every organization has that responsibility to ensure that each employee is supported and that they can come to work in a happy and healthy environment. Recent data tells us that one in seven children in the US are being diagnosed with the developmental disability. So it's really time for organizations to step up and be inclusive so that they can grow up and find a meaningful job.
Dr. Arieana Thompson: Excellent point, Laura, that is so true. Something you've said to me in the past is that you've learned through your work in inclusion related to developmental disabilities, that this can also create an environment of inclusivity for other often marginalized groups in the workplace that we care about and focus on when we consider DEI initiatives. Can you talk a little bit more about that and just maybe a little bit broader, what advice you have for companies getting started. And then I know I'm throwing a lot at you, but also how do you sustain positive change once you do get started?
Dr. Laura Heron: Sure. I think a good place for any company to start is by doing an assessment of key systems, including their culture, their recruitment strategy, selection strategy, onboarding, socialization, training, performance management, and even career development. For example, when you think about your organizational culture, ask yourself, is DEI visible part of the culture? How does DEI tie into organizational values and norms for behavior? Do leaders display behaviors that promote inclusion? And what about employees? Do they know what's expected of them? Is the organization authentic in its communication about DEI? How does culture manifest at the team level? In big organizations, team climates can be very different. So this is also something to think about. I think part of this assessment of those key systems can include a survey or focus groups to gather input from your employees. Listening to their perspectives and opinions can help you to understand A, where change is needed, but also it can help you to assess their appetite for change.
And finally, I would suggest learning from others who are doing it right. I wish there was more collaboration and openness between organizations. You don't always have to necessarily reinvent the wheel. There's a lot of organizations doing really good work in the DEI space. So I think we can learn from them.
And then I think the second half of that question was how do we sustain positive change when it comes to DEI? I think to create sustainability, it requires a continual reassessment of those key systems I just mentioned. And this is important because work is constantly changing. For example, what we know now about language preferences, when it comes to disability, for example, and other areas of identity has drastically changed compared to a few years ago, even.
I think another important part of making DEI sustainable is accountability. Are there evaluation and accountability mechanisms in place throughout the organization that are specific to DEI? For example, do leaders have DEI goals as part of their performance evaluations? Or is there a DEI advocate or champion who can oversee DEI efforts? Is data on inclusion made available to all employees because transparency is important? And I say this, because I actually read recently that one of the main reasons DEI initiatives don't work is because of a lack of metrics in place to track progress. So this accountability piece is really critical.
I mean, I could go on for hours about this, but something else that can help with sustainability is keeping DEI in mind when making decisions. We know that organizational change is inevitable and is even important for growth, but bear in mind that any change both big or small can impact your employees. So when decisions are being made, being aware of DEI and how these decisions impact all employees is needed.
And lastly, I'm actually currently participating in a training program on universal design for learning. It's a really cool concept that I did want to share with you all. You may have heard about UDL applied to education. It involves making courses and campuses usable for everyone, but it's a concept that's actually recently being applied to the workplace. So I did want to touch on it briefly in case anyone's interested in learning more and I'd really encourage you to check it out, but essentially it involves the design of products and environments to be usable by all or people without the need for adaptation or specialized design. So it can be applied to the work environment, for example, by having wider hallways, it can be applied to someone's work station, tools and technology, and also policies and practices. But basically it means approaching work in a way that is inclusive of all differences, which I'm all about. And I mention it now because if we can design workplaces with UDL in mind, then I think that will greatly help with the sustainability of DEI efforts.
Dr. Arieana Thompson: Absolutely. Thank you for that comprehensive answer, Laura. I love what you talk about around getting started with a real awareness of where you're at, but then how you tie it back together with sustaining it through those metrics of accountability. That's excellent.
For those organizations that have gotten started and are perhaps having a few different people within the organization running these efforts, can you talk a little bit more about how we could get the entire company on board with DEI efforts and really spread it throughout the entire organization?
Dr. Laura Heron: Yeah, I think it'll come as no surprise, but that top-down support is critical. I did mention earlier, but there does need to be a champion of DEI who is trusted and respected and who cares. And this can sometimes be the CEO or a top-level manager or someone else, but having that authentic support for DEI efforts from leadership will help to get everyone on board.
I think another important thing to talk about is visibility. Incorporate DEI into your values and your organizational strategy, be transparent in how you're going to make your organization more diverse, equitable, and inclusive, and also follow through on those commitments. I think this is an important point. A lot of organizations might brand that they have DEI efforts and they care about DEI, but practice and policies aren't necessarily in place that support that mission. DEI is now something a lot of applicants will look for, but they're going to know to look deeper than just a page on a website, for example. They're going to want to see an ongoing commitment with those initiatives in place.
I think another way to get everyone on board is to develop DEI training that is in-depth and frequent. There are a lot of trainings out there, so it's really important to carefully consider what topics are covered in those trainings. You can ask yourself, is that training representative of different groups? I mentioned earlier that invisible disabilities such as developmental disabilities, a lot of those are often not included in diversity trainings. But another question to ask yourself is, does the training encourage thought-provoking discussion? A lot of times they're offered online as sort of a legal check in the box and do not actually get people learning and engaged in the content. And I really think just being aware of these concepts isn't enough. Part of learning involves hearing stories, communicating with others from different backgrounds, and applying that knowledge and practice. So I would really encourage anyone to try and incorporate that into those diversity and inclusion trainings.
Finally, does the training clearly lay out behaviors that are considered inclusive? DEI training really needs to be tailored to your organization. Are employees left with a set of behaviors or communication techniques that you expect them to use in your workplace? This is something that's so important, and that personal tie from the training back to the company, the day-to-day company is often missing in those trainings. So I definitely wanted to touch on that.
But I think beyond getting people to communicate in trainings, you can create opportunities for collaboration between different groups. I have an example from MasterCard, actually. They offered reverse mentoring where younger employees who were more social media savvy, mentored older employees, so that they could become more familiar with the platform MasterCard users. And I just think this is such a great example of how to get different groups of people together over a shared purpose. And you can also encourage the development of employee networks or resource groups, which are typically voluntary employee-led groups where people with shared characteristics or life experiences get together. A couple of well-known examples include AT&T and Estee Lauder. There are companies that have strong DEI employee networks, and what's really cool about these groups is that they actively work with management in those companies on a number of initiatives aimed at increasing inclusion.
I just love how these groups give employees a voice within an organization, but I think last two things that can help to bring company on board include making your commitment to DEI known at the outset of employment. Ask questions about DEI in an interview, for example, or put information about your DEI efforts into employee onboarding procedures. And then lastly, reward inclusive behaviors. This is a really good way of appreciating people who are upholding DEI values that also serve to motivate others to do the same. So I know there was a lot there, but there really are so many different things you can do to get an entire company on board in your DEI efforts
Dr. Arieana Thompson: There was a lot there, but some very powerful examples of real companies, Laura. So thank you for that. It really puts into context some of the things that we're talking about and how you can make some of the things that we may talk about in the abstract, very actionable. So kind of turning a little bit to what are some of the most persistent challenges that we see in the DEI space?
Dr. Laura Heron: Sure. I think it's an interesting question because inherently DEI does challenge the status quo. And for a number of reasons, some people can find that threatening or some people just don't like change. Unfortunately leaders can always expect some pushback when it comes to DEI efforts. So they just need to be able to be prepared to manage those situations. And this isn't necessarily a challenge, but leaders of DEI efforts also have to expect to be held accountable. A lot of times they're going to be the face of change. And so their actions, attitudes, and words must be aligned with the mission. And they also have to be willing to put time, energy and money in to really make it work. So that can definitely be a challenge for some.
We also want to make sure that we avoid tokenism, which is when we make a symbolic effort to show diversity, but it's not truly embedded in the organization. I mentioned this earlier, but visibility of DEI efforts is really important. It needs to be authentic though. I think part of this involves striking a balance between making your initiatives visible, but also respecting personal boundaries of underrepresented groups. And the best way to do this is by listening and including people who want to be involved in these efforts. Giving them a voice and being compassionate to others is really important throughout this process.
I think a final challenge that most people will realize is that DEI efforts take time. Depending on how mature your DEI initiative is, whether you're at the beginning or whether it's well established, it involves constant reassessment and change. So it's important to be patient and persistent and to just keep going.
Dr. Arieana Thompson: Absolutely. Great point, Laura. Another topic I want to talk about is a lot of us have transitioned to a more remote work life and people might wonder, what does DEI look like in a remote world? How do we create open channels for people to collaborate and connect as the nature of work may be shifting?
Dr. Laura Heron: I think that's such a great question, and I think we're going to be seeing a lot more research in this area in the coming few years. But I think with remote work becoming more mainstream, DEI efforts can sometimes lose momentum or perhaps not get the coverage they would if everybody was in person. So I think one of the biggest issues is that employees who are working remotely can feel out of the loop. In line of that, it's important to keep those channels of communication open by allowing people to collaborate and connect. For example, you can hold virtual coffee chats or social hours, or have scheduled check-ins with employees. You can use project management tools to make sure all employers get equal access to opportunities.
I think another thing that's really important in this remote world is to maintain a focus on health and wellbeing through workplace balanced policies and initiatives, and really just think about the different ways that you can support employees from their homes as opposed to the office or the workspace.
But I think another challenge to mention with the switch to remote work is that organizations can sometimes fall into the trap of taking a one-size-fits-all approach, for example, by offering a generic online diversity training once a year. But researchers tells us that this doesn't work and can even be counterproductive in some situations. I mentioned this earlier, but a customized approach is key. A DEI initiative should really take into account unique factors of your organization. For example, if your organization has global offices, a DEI training program should account for those unique factors across all your locations, not just one, so that people can collaborate with each other. This is so relevant now that people are working from home from anywhere in the world. Yeah, I guess that kind of sums up, but I think we're going to be seeing a lot more work in this space in the years to come. So we're going to need to keep updated with that.
Dr. Arieana Thompson: Definitely. I'm in agreement and Laura, I'm sure we'll turn to you again for updated research as this space evolves, but I'm excited to see where we go in this direction.
Laura, I really appreciate you sharing these insights. As we wrap up this episode, I cannot stress enough how valuable your research will be to our listeners as they move forward with their own DEI initiatives. Thank you again for coming on the Principled Podcast.
Dr. Laura Heron: Thank you for having me, Arieana. DEI is so important and I really hope that this podcast provides anyone out there with some ideas to start or continue their DEI efforts. Or even if you're not necessarily in a leadership position, then I hope that you can also become an advocate for positive change in regard to DEI in the workplace. So thank you for giving me this opportunity to share my insights into this really important topic.
Dr. Arieana Thompson: Yes. Thank you all for listening. I'm Dr. Arieana Thompson and we'll see you next week on LRN's Principled Podcast.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: Trust is foundational to business and society, so much so that the global public relations firm Edelman releases an extensive annual survey covering whom and what the public trusts. However, their 2022 Edelman Trust Barometer reveals a concerning insight: people are increasingly more inclined to distrust than trust. In this episode of the Principled Podcast, host Emily Miner explores key findings from the 2022 report, “A Cycle of Distrust,” with David M. Bersoff, Head of Global Thought Leadership Research at Edelman Data and Intelligence. Listen in as the two discuss what drives trust, why public trust in certain institutions is eroding, and how businesses can help rebuild trust moving forward.
What You’ll Learn on This Episode:
- [1:59] - David explains the Edelman Trust Barometer.
- [3:35] - Why business was voted the most trusted institution for the second year in a row compared to government, media and NGOs.
- [11:41] - The increased engagement of businesses on important global issues.
- [14:35] - What should business leaders be doing or thinking about now that the spotlight is on them to a greater degree than in years prior?
- [25:20] - The expansion of responsibilities being taken on by businesses.
- [29:07] - Advice for business leaders to rise to the increasing expectations without further adding to the trust deficit.
- [33:32] Upholding the values and integrity you claim and leading with them.
Additional resources:
Get a copy of the 2022 Edelman Trust Barometer.
Read our blog post on takeaways from this year’s report.
Featured guest: David M. Bersoff, Ph.D. David oversees Edelman Data & Intelligence’s (DxI) global Thought Leadership research including the annual Trust Barometer and Brand Trust studies. In this capacity, he is responsible for questionnaire development, leading all data analysis and insight gleaning activities, and developing new frameworks for understanding trust, credibility, and consumer-brand relationships.
Prior to joining Edelman DxI, Dr. Bersoff spent 18 years as a consumer insight and marketing strategy consultant at The Futures Company. In his last 5 years with the organization, he served as its Chief Insights Officer and was a member of its global board of directors.
Prior to entering the consulting world, David spent 12 years engaged in social science research at various Ivy League institutions, including 4 years as an assistant professor of social psychology and research methodology at the University of Pennsylvania.
Featured Host: Emily Miner Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Transcription: Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Emily Miner: Trust is foundational to every relationship in life, personal and professional, so much so that the global public relations firm, Edelman, releases an extensive annual survey covering whom and what the public trusts. It's a survey that I personally look forward to every single year and have been reading for a long time. However, this year's report reveals a concerning insight. People are increasingly more inclined to distrust than to trust. And in fact, this year's report is titled A Cycle of Distrust. How can companies take these sentiments and adapt their own practices to better address public concerns?
Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Emily Miner, senior ethics and compliance advisor at LRN. Today, I'm joined by David M. Bersoff, head of Global Thought Leadership Research at Edelman Data and Intelligence. We're going to be talking about the key findings from this year's report and unpack what this means for organizations. How can business help rebuild trust in our society? David is a real expert in this space, having spent the last two decades leading research, data analysis, and insights initiatives for Edelman and the future company's global insights group. David, thanks so much for joining me on the Principled Podcast. I'm really excited to be having this conversation with you.
David M. Bersoff: Me too. And I appreciate you asking me back.
Emily Miner: David, to get started, I've been reading the trust barometer for years, but for our audience members, for whom this might be new, tell us a little bit about the Edelman Trust Barometer. What is it and how long has Edelman been doing this research?
David M. Bersoff: Sure. So the trust barometer started way back in 2001 with a smaller group of countries than we look at today, but we do have sort of a 22-year history of looking at trust in four major societal institutions: business, NGOs, government, and media. I'll be talking about the 2022 results that just came out, as a matter of fact, at the end of January. This year, we were in 28 different markets. We talked to about 1,150 gen pop respondents in each of those markets. So overall, this global data is among 36,000 or more respondents. We do have some good global coverage. We're in North America, South America, Europe, Asia. It's an online study. And so the sample we get is going to be a bit more representative of the total population or the general population in those countries that have a high internet penetration. And countries that have lower internet penetration, say, like India, the sample is going to be more of an urban educated skew than a traditional gen pop.
Emily Miner: And when you say 28 markets, country markets?
David M. Bersoff: Yes, 28 different countries.
Emily Miner: Great. So you talked about how this reporter, this research looks at trust in four societal institutions: business, government, nonprofit, and media. This year's findings were that, business is the most trusted institution out of those four, and in fact, is the only trusted institution out of those four. This is for the second year in a row. There's so much to unpack in that statistic. So let's start with, why? What is it about business that makes it trustworthy? Or conversely, what is it about NGOs, media, the government that makes those institutions untrustworthy?
David M. Bersoff: Yeah. And there's a little bit of both in the situation we find ourselves today. So business are doing some things right or better than the other institutions, and some of the other institutions are essentially doing things wrong. There's a lot of self-inflicted wounds that's reflected in this year's trust data. But in terms of why business is more trusted globally than the other three institutions, I kind of look at five different areas to discuss. The first one is that when we look at trust, we sort of divide it into two dimensions. There's a competence dimension and there's an ethics dimension. So if I trust an organization or a person or an institution, I can trust them to sort of do what they promise to do. They deliver on what they say the product will do, the product is good, they get it done. So think in terms of, a competent airline is one that gets you safely from point A to point B.
The other dimension is ethics. And that is sort of, what's the level of integrity that the organization has? What are their motivations? Are they trying to make the world a better place? Are they honest? Do they treat people well, their employees, supply chain, or what have you? So that's a somewhat of a separate mention. I can trust an airline to get me from point A to point B safely, but I may not trust them to sort of treat people fairly or to do what they should be doing to protect the environment. And so when you look at the institutions in that way, across those two dimensions, what you find is that business is considered both competent and ethical.
Now, NGOs, in the last year, did squeak into that sort of upper quadrant of ethical and competent. But what we see is that, business is considered more competent than NGOs, while NGOs are considered more ethical than business. And the interesting thing here is that, for some reason, and I think I understand why, these days, people are giving competence a little bit more priority than ethics. And I think that comes down to the fact that people are just frustrated that things aren't getting done, problems aren't getting solved, government seems to be politicized or polarized or paralyzed. And as a result, we're not seeing a lot of leadership coming from government when it comes to solving major problems. This is leading to a general frustration, things aren't getting done.
In the context in which people look around them and see things not getting done, they're giving a little bit more priority, they're giving a little bit more emphasis on doing rather than necessarily having pristine motivations. I talk about the fact that business isn't really the hero of this year's story. They're more of the anti-hero. They are somebody who can get things done even if their history or their morals or ethics are a little bit more questioned versus say, NGOs, which are perhaps seen as being better or more angelic, but relatively less competent. That's sort of reason one.
Reason two that I think business is trusted, goes back to a really interesting finding from this year's study. It's a new question we ask. For each of the institutions, we ask, is this institution a dividing force in society or a unifying force in society? And, of course, you could give a mid point saying that they were sort of neither one. But what we found is that, when you do a net score, so the people who think that, say, government is a dividing force minus the people who think that it is a unifying force, what you find is, in general, government and media are both seen as dividing forces in society. So not only are they not effective at getting things done or doing their job, they're actually seen as making things worse. They're dividing us rather than unifying us.
In contrast, business and NGOs are more often considered to be unifying forces. And so I think that maybe the number one reason why government and media are not trusted is because, at some level, they don't want to be trusted. What's going on here is that, I think politicians and media channels have found success in casting doubt on their institutions by convincing people, not in the trustworthiness of the institution as a whole, but only of that part of the institution that they control. Right? It's not like you can trust government. You can only trust that part of government that we, our party, control. It's not that you can trust media in general, you can only trust the voices coming from us, our channel, our platform, what have you.
In contrast, I don't think a business can succeed by sowing doubt in the institution of business, even as it tries to burnish its own image. And similarly, NGOs are not going to increase volunteerism and donations by undermining people's faith in other NGOs, or in the institution itself. The American Heart Association doesn't fundraise by trying to convince you that the American Lung Association is running a pedophile ring out of the basement of a pizza parlor. The way things are, business and NGOs don't feed on themselves, which is why they're more likely to be trusted and more likely to be seen as unifiers. And I think those two perceptions are strongly related.
Emily Miner: My reaction to that point that you just made about the institutions being dividing versus unifying forces is that, unfortunately, all four of the institutions have found success in their model. So government and media have found success in playing to kind of the wings and to emphasizing the clicks or the campaign slogans. They found success in that and so there's this reinforcing cycle. Whereas, of course, as you said, business wouldn't be successful if they doubt about the concept of business as an institution and nonprofits as well. So although they're sort of polar strategies, each institution has found success in that strategy. And it just, I don't know, it doesn't make me encouraged about breaking the cycle of division that you were describing in the government and media.
David M. Bersoff: It really is an issue of the payoff matrix. The reward matrix for media and government has become contaminated. It's become flipped on its head. It wasn't always that way, but somehow we find ourselves in a situation where you do find the clicks and the money and the votes associated with stirring up people's emotions, stirring up outrage, playing to your base, playing to the extremes because that's where the audience is, that's where the engagement is. And until that reward matrix is changed or forced to change, you're right, I don't see government and media changing on their own because they're not being rewarded or reinforced for changing their behavior.
The number three reason is that I think business has been increasing its engagement on important issues. So if you look at sort of what business is doing out in the world now, compared to what it was doing 10, 15 years ago, they are more engaged in things like climate change and economic equality, access to healthcare, addressing issues around injustice. They are weighing in more, they are becoming engaged. And I think that is certainly helping their ethics score go up, which, as I discussed, is a key aspect of trust.
So the fourth one is that, people feel like they have leverage over business. So we talk about this idea of belief-driven consumers and belief-driven employees and belief-driven investors, and we're finding a majority of people globally really do decide what brands to buy or where to work or where to put their money based on whether or not that business, that corporation, that entity has a set of values and belief that matches their own. And I think, in general, people believe that they have more power to create positive change in society through the marketplace, through working with and through business than they do dealing with government or trying to achieve change through votes. And so this idea that business has power, it has resources, and on top of that, I feel like I can actually have influence on it, that real really puts business in a much stronger position to be trusted, to be my go-to institution for making things better.
And then sort of associated with that, the fifth element here, is that business, especially business as employer, and to some extent, certain brands, they have a local feel about them. And that's in keeping with the idea that these days, people's trust circles have shrunk. They're getting smaller and smaller. It's getting more and more local, but even within the context of that shrinking trust circle, that place I go to every day or the people I interact with every day and have a personal relationship, my employer, they're still in that circle. There's some brands that have been part of my family or part of my household or part of my life, literally for decades. Again, they make it within that circle. So even within this idea of a shrinking circle of trust, business, especially as employers, especially through their brands, continue to reside within my circle of trust.
Emily Miner: That's so fascinating. And so much of what you've described resonates with me on a personal level as I just think about myself and my own behavior as a citizen, as a consumer, as somebody interested in politics, et cetera. So thank you for breaking down those results. Given that that's where we are today and the reasons why we're there today, what does this mean for business leaders? What should they be doing or thinking about, now that the spotlight is on them to a greater degree than in years prior? So what should they be doing when it comes to their own leadership within their organizations internally, as well as externally, their leadership within society.
David M. Bersoff: I think that business and business leaders, they sort of have two to-do lists. One is, how do they increase trust in their institution, business writ large, as well as the organization that they lead? And then, what do they need to be doing to sort of restore faith in the system as a whole? So the first thing you need to do is give people a sense of progress and optimism. Yes, at the societal level, but also more importantly, giving them personal optimism. We saw some data that I think is really telling in this regard, certainly in countries that we consider to be sort of developed Western democracies. There was no country in which most people felt that they would be better off financially five years from now than they are today.
And even more telling, we found that more than half of people were worried about losing the respect and dignity that they once enjoyed in their country. So there's real sense of this one-two punch. I don't see a future in which I'm doing better. As a matter of fact, I see a future in which who I am, what I've done is no longer considered important. I'm being marginalized. I don't matter anymore. Ceasing to matter is not something that people take easily. It causes them to rail against change. It causes them to scapegoat. It causes them to see unfairness all around them. So it's really important that business and certainly business quo employer give people some sense of optimism and progress. That's more internal. But externally, you also need to help people create positive change with and through you.
When people choose their employer based on a matching of values and beliefs, it's not just because they want to be surrounded by like-minded people. It's because they want to work for an institution that has power and resources. And that, in the context of my job, will allow me to further what's important to me, allow me to affect positive change, to be my partner in change. I don't want to just sit on the sidelines and applaud while my employer does good things. I want to be part of that. And so it's not only giving me personal optimism, a personal sense that things are going for me in the right direction, but it's also allowing me to have a positive impact in society.
The second thing is, manage the change you want to see. So meeting our current existential challenges are going to require major change and transformation, not only in the economy, in certain sectors, but also in people's lives. And right now, kind of going to that point I was talking about, people are feeling left behind. They're feeling like they don't matter anymore. They're feeling like they're not included in people's views of the future. And, to me, it comes down to sort of this idea of basic change management. Within an organization, change management is usually important. If you don't manage change well, your employees lose confidence and trust and morale. They may actually become barriers to the change you want to see. There's all kinds of negatives associated with bad change management within an organization.
Well, I would argue that a lot of what we're seeing at a societal level is the result of bad change management at that societal level. There's too many people seeing a lot of change and feeling left behind or not understanding it or not seeing what's in it for them. So as a positive change agent, and I think business needs to be, you can't just push for change, you have to manage that change. Also, you need to stay authentic to your values as a corporation. There's a lot of CEOs who hear our story about needing to get more involved and more engaged in social issues. They feel uncomfortable about that. They may even feel like they're already doing too much, but the data we have this year shows that more than likely, they're not seeing as doing enough, that there's this push, there's this pressure for businesses to do more.
But you have to keep in mind that the expectation isn't that you engage on every single issue. It's not like if there's any controversy out there, you need to weigh in on it. In the context of weighing in, becoming engage, doing more, you still need to let your sector, your employees, your customers, the communities in which you operate, and your legacy values define where and how you engage. You can't engage willy-nilly. You have to do it in an authentic manner. And then you also need to form meaningful partnerships. And these are not just partnerships in name only. They're not transactional partnerships with other organizations. These are sort of intel inside partnerships. They have to be intimate. They have to be hand in glove and so I think of partnerships with NGOs to gain expertise in some of these social problems, social issues you're being asked to engage on; and partnering with government in order to get the reach and power that only government has.
Also, keep in mind that the aim here isn't that business needs to replace government and media, even though those two institutions are failing. The idea is to fill the current leadership void while working to renew people's faith in all institutions. And that sort of brings us to the other list, which is how do businesses work or act to restore faith in the system as a whole. And I think the first thing they need to do is act as an agent of stability. They need to fill that leadership void that we've been talking about, the fact that government and media aren't working, they're in that very poor, lower left-hand corner, where they're not seen as terribly ethical or terribly competent. That needs to be done.
But more importantly, business also needs to redefine and defend the center. The center is not holding. The center needs a voice. The center needs to be redefined and defended. And part of this is cutting funds and support to agents of divisiveness and extremism, kind of going back to that point where I was making before, that the reward matrix for government and media is out of whack. It's not giving us the kind of behavior we need. And until the rewards in society, be it money or power or influence, are greater for spreading truth than for spreading lies and information and for facilitating cooperation, rather than fomenting divisiveness, we're going to continue to flounder and suffer and weaken our societies.
The second thing that businesses need to do on sort of a bigger level is battle the infodemic. Good information hygiene, we've found to be intimately linked to trust. People who are better consumers of information are more trusting. And I think it's because good information hygiene mediate extremism. It makes people more open-minded and it also makes people more open to ideas that come from outside. And so business needs to not only be a source of good information, but they also need to teach and nurture and facilitate information hygiene among both its employees, as well as people in general. So until we have good information, until we can agree on what the facts are, it's going to be hard to move forward as a society. I think business has a role there.
Third thing is, help close trust gaps by reducing systemic unfairness. If business has any Achilles heel in all of the data that I've seen this year, it's that there's a little bit of a tendency to see businesses more likely to be serving the interest of the few, rather than the interest of sort of everybody equally and fairly. That's where business is at risk of losing its trust and trust advantage. So they have to be very scrupulous about as they engage in these issues as they offer solutions and policies that they're seeing as fair.
And then finally, what business needs to do is help redefine and reinforce the social fabric that's traditionally served as sort of a binding force, a touchstone for compromise and shared interest, particularly in democracies. One of the most disheartening data points I found in the survey this year is, 62% of people saying, the social fabric that once held this country together has grown too weak to serve as a foundation for unity and common purpose. And I do think that this is, in part, a result of the fact that government and media are seen as divisive forces, but to the extent that we don't have this social fabric. We don't have this shared sense of purpose and values. It's going to be hard to overcome the tribalism, the divisiveness that we're seeing in the country today. We need an entity to help remind us that there's more that unites us than divides us.
Emily Miner: On that last point that you just made, does that statistic reflect your global results or is that specific to the United States? I'm just trying to get us sense of how pervasive this idea is.
David M. Bersoff: So globally, it's 62%. In the US, it's 64%. So it's a generally held opinion. I mean, in my mind, democracy is more fragile than I've seen it in a long time and really is in a position where it could fail. And if we don't learn how to have constructive civil debates, if we don't learn how to respect people who may have different opinions, if we don't see ourselves as sort of being in this together, if we don't have a common sense of purpose, some values that can serve as a touch point or a unifying point for everybody, it's going to be really hard to strengthen our democracies to get through this situation, particularly if media and government keep throwing fuel on the fire.
Emily Miner: One of the points that you raised about what does this mean for business leaders was the idea of business as change management experts in all the change that we are going through and need to continue going through as a society, including in business, but also external to business, and this idea of business being a teacher almost. I'm connecting that to some trends that we've observed at LRN within our own business. And so one of the core ways that we support companies around the world is by developing training and education.
We've certainly seen a rise in the number of companies that are requesting support in, how do I teach? How do I help my people have respectful conversations in the workplace? How do I help my people to understand that our differences make us better, make us more successful, make us more innovative? And to celebrate those differences in our diversity rather than to challenge it or feel threatened by it, how do I help my people understand in the United States the legacy of systemic racism and how that shows up at the workplace? And what can we do to try to break down that legacy in service of a more equitable workplace and a more equitable world?
We're seeing a number of businesses kind of take on that challenge, of supporting these types of conversations and mindset shifts in the workplace, outside of what several decades ago would be focused more on. How do I train you to do your job and your specific skillset that's needed? How do I train you on the rules and the regulations and the dos and the don'ts? Those elements are of course still important, but we're seeing this expansion of the responsibility that business is taking on. I see that as encouraging, having a greater willingness to take up the mantle that's really been placed upon them due to this leadership void that you were talking about.
David M. Bersoff: It's an interesting parallel, the one you draw about. In the old days, because of, say, failures in the education system, it fell upon employers to teach their employees how to do their job. And that may have included some remedial education and mathematics or English, or what have you. But these days, fast forward, now we're looking at businesses and the need for businesses to teach people how to consume information in the new information aid, how to get along with others. It's another form of remedial work. It's almost like the country, the world has had a collective stroke and it needs to relearn how to do these basic things, like keep themselves informed, like how to have civil discussion.
And it's really, I think, incumbent on businesses, especially businesses as employers because that employer-employee relationship is trusting. It's strong. And I think it's vital to rebuilding trust. But using that frivolous position that business has to help people relearn these things, that's really going to be an important foundational step towards rehabilitating the trust environment and strengthening our fragile democracies. And it heartens me, I didn't realize, that you were receiving increased requests for training in these areas because I think it's absolutely vital.
Emily Miner: One of the key takeaways from the report that I found really interesting and also challenging is that CEOs themselves are expected to be the face of change and to inform policy, although not to inform politics. So making that distinction there. And you found that globally, a healthy majority of respondents believe that CEOs, or expect CEOs to shape the conversation and to shape policy around issues like jobs in the economy, wage, inequality, technology and automation, climate change. These are some threads that we've been talking about throughout the course of this discussion, people feeling like they're being left behind and not optimistic about the future. And I think all of these jobs, economy, inequality, technology, automation, climate change, those all are a tangled web that work together to influence that.
So this idea, it's a tough needle to thread for CEOs, I would imagine, particularly when so many, if we want to call these, societal issues are politicized in the US, I mean, speaking from where I'm located. So what advice do you have for business leaders on how they can rise to these expectations of influencing positive change in these societal issues without kind of further adding to the trust deficit with people thinking that their action is actually polarizing? What advice do you have for business leaders?
David M. Bersoff: Sure. And actually the situation is more fraught than even you just painted it because not only do the CEOs and business leaders need to worry about their own actions and how they communicate, but there's going to be outside forces attempting to politicize the organization, the company. They're going to try to sort of paint you with that woke brush. In the US, we look at political affiliation, Democrat versus Republican. This is the first year we've been tracking that, where business is actually distrusted among Republicans, traditionally, the party of business. And I think this is a direct result of sort of this conservative rhetoric around companies that are weighing in on issues being considered woke. Right? That becomes kind of an insult or a damning characterization. So, it's not just that CEOs and businesses need to be mindful of what they're doing, they are going to be buffeted about by outside political forces, attempting to co-op them or attempting to sort of paint them as being political. So it's a really tough, tough problem.
In terms of what I would recommend, the first step in avoiding being politicized is don't be political. So don't be a Republican company or a Democratic company. There's no way, no shape, no form in which we are recommending that the way forward, the way for companies to become more engaged in society, is to affiliate politically with one party or another. You don't want to adhere or don't want to be seen as adhering to political ideology. What you want to be seen is being values-driven. So be a company that champions equality or protecting wellbeing or improving education or any other value that's authentic to your organization, and then work to translate your values into policy. And remember, policy is about fostering positive outcomes against the criteria of fairness and efficacy. If we ask people to do this, if we set up a law or a rule that they have to do this, is it fair? And will we get a positive outcome?
That stands in contrast to politics, which is really about gaining power. Good politics is evaluated in terms of, did we win? Did we get an advantage? And so while any one issue can be politicized, and that's completely out of your control as a business, it's going to be hard to politicize you as a company if your actions can be traced to a consistent set of values that manifest and support for policies that either bridge political divide, so this idea of redefining the middle, or at least policies that are not consistently associated with the same party. So if you're out there leading with your values, your values are authentic to who you are, and it results in you supporting policies that are either in the middle or not consistently aligned with one side or the other, that's about as good as you're going to be able to do in this day and age.
Emily Miner: I think what you said is so powerful that I want to just say it again. We talked earlier about authenticity and how businesses don't need to jump into every single issue, but what is relevant for your business, for your consumers, for the communities in which you operate, for your employees, taking that multi-stakeholder view to help navigate where you're stepping in and where you're not. But leading with your values as a way of responding and behaving authentic to who you are, that's such a powerful statement. And I think it's reinforced by so much other research and storytelling about the role of values in how businesses operate.
Values are something that employees can understand and connect back to the context, the why are we making this decision? If you have a clear framework of values as an organization, and if you talk about what that means for us, if you translate that into how we operate, how we behave as individuals, as a business, there's a sense of logic there that I think helps people to make sense of why we're doing what we're doing, even if it might not be something that I like or agree with. But I can connect it back to the values and so I understand. So I just appreciate that you raised that.
David M. Bersoff: So let me just build on that point because I think you're absolutely right. Especially, if you have values that predate the policy or predate you weighing in, you're right, there's a certain consistency there. There's a certain logic to what you're doing. There's a certain integrity to it. And by the same token in this day and age of belief-driven employees where people choose where they're going to work, to some extent, based on the values and the beliefs and the type of engagement that that organization manifests, there's a tacit agreement that when you go and then work for that company, that part of the reason why you're there is because they champion these values. And so later on, when they're actually out there championing those values, you're already sort of bought in. You may not love the particular manifestation of those values around a particular policy, but there's a logic to it. There's a consistency to it. And there's at least this understanding that yes, I at least appreciate the value even if I don't love the way you're sort of operationalizing that value or manifesting that value in policy.
Emily Miner: So the point that you made about people increasingly choosing where to work and also who to support with their dollars, being aligned with values, one of the ways that we've helped companies kind of increase that broad buy-in to the values is to actually engage the employee population, maybe it's defining values because they didn't previously exist in the organization, or maybe it's, "We have a set of core values that we've used for however many years, but we want to kind of take it a step further to really clarify what does this mean behaviorally." And so creating spaces and communication channels for employees to weigh in on that, what does this value mean for me? What does this mean for my role? How do I see this play out in action? What does it mean to live this value? And having that be a participatory process, really also helps to cement the values being a tangible thing that are really taken off the wall and are operationalized and increase that buy-in of the employee population.
David M. Bersoff: Absolutely. We looked a few years ago at what we considered the emerging or the new employer-employee compact. And what we found is that there's sort of three areas that people use to evaluate an employer. The first one is sort of the basics, which is, are you offering me a good job at a fair wage where I can sort of grow? The career basics. This has been an important certain aspect of deciding on jobs and where to work since the beginning. You need to know that your financial future is in safe, fair hands. It doesn't mean you have to guarantee me a job for life, but it does mean that if something happens, you're going to treat me humanely and fairly.
The next level up from that is this idea of empowerment, sort of what you were alluding to. People want to have a voice. They want to feel heard. They want to be able to participate in decisions. They want to have input. They don't want to just be a cog, but they want to be a vital part of what's going on. And then above that is this notion of coaction, that I can work with and through my employer to create positive change in the world. So you see all these things playing together.
The first thing you need to do is sort of bring my blood pressure down, make me feel safe and secure in my living and in my finances, then make me feel empowered. Give me power, give me a voice. And not only give me power and voice in the context of company operations or business decisions, but also in the context of what that business is doing in terms of engaging on some of these larger issues. That point I was making before about, I don't want to just sit on the sidelines while my company does good. I want to be part of the good that my company does. I want to use my empowerment to work with the company to affect positive change.
And part of what this means, going back to your point about values is, that mission statement, that values statement, what we stand for, can't be something that you spend time developing, and then it goes up on a shelf and gathers dust, and doesn't really have an impact or an influence. The big difference between values, as I think about them today, and maybe values as they've been traditionally been treated or thought about, is that now those values that you develop, the mission statement, what's important to you as a company, what is your goal in society overall beyond, say, making money or returning value to your investor, those values need to be part of your DNA as an organization. It needs to show up everywhere. Your values need to show up in your marketing, in your supply chain, in your hiring, in your policies, everywhere, consistently. And if you do that, then this idea that we've been talking about, which is lead with your values and you'll be as okay as you can because what you do will be seen consistent and make sense and organic and authentic, that's how it all works.
Emily Miner: In some research that we conducted at the end of last year, we saw that organizations that kind of led with their values or use their values to help them navigate COVID and the disruption and confusion that has resulted and continues to resolve from COVID, those organizations actually were more successful on a number of metrics. I think that that's a really important point as we're facing increasing cadence of global crises, that there's a resiliency in leaning on your values to help navigate how we're going through the world. And there's a morality to that. A rule kind of tells you what you can and can't do, but there isn't a rule for every occasion and we need guideposts that help us figure out what we should and shouldn't do. And I think that's where values come in.
Well, David, it's been such a pleasure having you on this episode. And I know that we could spend hours talking about this and unpacking the trust barometer but unfortunately, we are getting to the top of the hour. Thank you so much for joining me and for sharing these insights.
David M. Bersoff: It was a pleasure. I love to talk about trust and I particularly love to talk about trust with someone who's obviously been thinking about these issues and are sort of familiar with our data so we can dig a little deeper. This has been a lot of fun.
Emily Miner: Yeah, it has. Well, my name is Emily Miner, and I want to thank all of you for the listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: How are data privacy laws like GDPR impacting business? What can we learn from Amazon’s $850M fine last year, and Facebook’s recent posture about leaving Europe altogether? In this episode of Principled Podcast, LRN Chief Legal Officer Aitken Thompson, talks about data privacy regulation with Donovan Burke, Partner at VGC LLP and General Counsel at DWELLoptimal Inc. Listen in as the two discuss what’s happening now in the regulatory space when it comes to data privacy and protection, and what steps organizations can take to stay ahead.
What You’ll Learn on This Episode:
- [1:16] The current stance of GDPR, CCPA and developing regulations in the U.S. and Europe.
- [2:24] What trends in data privacy and security should CCOs, GCs and CTOs be considering in 2022 and beyond?
- [3:33] What actions can be taken to protect a company and educate employees?
- [4:45] Other laws and regulations aside from GDPR and CCPA.
- [5:55] How seriously are organizations taking these regulations?
- [8:49] How are companies handling this multiple geographic and jurisdiction?
- [12:08] Are there actually conflicting requirements?
- [13:58] What are the positives of complying to these regulations?
Featured guest: Donovan Burke is a dynamic and visionary legal advisor and thought leader focusing in Emerging Companies, Corporate Structure and Governance, Mergers & Acquisitions, Seed and Venture Capital, Initial Public Offerings, Corporate & Securities, and an expertise in Data Privacy. He is a proven legal counselor and executive as a Partner in premier global law firms and General Counsel of major technology ventures.
Featured Host: Aitken Thompson became interested in the then-nascent field of educational technology after starting his legal career at Kirkland & Ellis. He left law firm life and co-founded Thompson Educational Consultants and, subsequently, Taskstream, LLC. Taskstream quickly became a leading company in assessment and accreditation for higher education. Aitken served as Chief Operating Officer, leading the legal, human resources and finance functions of the business. Beginning in 2016, Taskstream underwent a rapid expansion, merging with five other ed-tech companies in a span on 18 months and, in the process, becoming Watermark, LLC, and creating the “Educational Information System” category of ed-tech. During this period, Aitken’s legal and HR focus expanded to encompass private equity investment and the transition between primary sponsors, cultural and process integration amongst the various merged entities, and the management and harmonization of legacy client and vendor contracts. Aitken is a graduate of Columbia College and Columbia Law School. He is a life-long New Yorker, but spends as much time as he can sailing off the East End of Long Island.
Transcript: Intro:
Welcome to the Principled Podcast brought to you by LRN. The Principled podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Aitken Thompson:
How are data privacy laws like GDPR impacting business? What can we learn from Amazon's $850 million fine last year, and Facebook's recent posture about leaving Europe altogether?
Hello and welcome to another episode of LRN's Principled Podcast. I'm your host Aitken Thompson, chief legal officer at LRN. And today I'm joined by Donovan Burke partner at VGC LLP and general counsel at Dwell Optimal incorporated. We're going to be talking about data privacy regulation, what's happening now, and how organizations can stay ahead. Donovan Burke is a real expert in this space. He's also proven legal counselor and executive as a partner in premier global law firms and general counsel of major technology ventures. Donovan thanks for joining me on the Principled podcast.
Donovan Burke:
Oh, thanks for having me Aitken, pleasure to be here.
Aitken Thompson:
Great. Let's just jump right in by this time I think it's safe to say that most, if not all, CCO's and GC's are at least aware of GDPR and the California equivalent CCPA, they are also aware it's a very fast developing area of regulation here and in Europe. Can you just give us a lay of the land for those who don't know, or not as aware as they would want to be about these privacy and data regulations?
Donovan Burke: Absolutely. In the United States, these regulations were more of a secular variety in the recent history, laws applying to health or financial services. All had elements of them that are data privacy elements. But for several decades, Europe in particular has developed very sophisticated, comprehensive data privacy laws. The most well known of which is the GDPR and GDPR like laws are the laws that are proliferating presently, and they're comprehensive privacy laws that govern specifically information relating to an identifiable person, and protect that person's rights with respect to that information.
Aitken Thompson:
So what are the trends in data privacy and security that you think that CCO's and GC's and CTO's for that matter should be thinking about in 22 and beyond?
Donovan Burke:
Well, as I mentioned before, these laws are proliferating. Not only is the GDPR itself becoming more complex, there's more guidance coming out on it every day. GDPR laws are being exported and adopted in a lot of other jurisdictions, Brazil, China, India, and in the United States, starting with California and the CCPA, which will soon become the CPRA and Colorado and Virginia, and there's a handful of other states that this year are expected to adopt GDPR like laws. So, I think this is not a trend that's going away anytime soon. These laws all have extra territorial jurisdiction, meaning it only requires usually a fairly tenuous nexus in order to be covered by these laws, and as more jurisdictions adopt them, the more likely it is that any given venture is going to run into data privacy issues, that are consistent with the GDPR like law.
Aitken Thompson:
So what can GC's and CCO's do as sort of action items for protecting their companies and educating their employees on GDPR and CCPA?
Donovan Burke:
Yeah, well, just taking a step back, these laws, training employees is not only a means to complying with the substantive, or the other substantive aspects of the law, because of course you need to do that. The employees are the ones that are where the rubber meets the road. They're the ones that really need to be able to identify when a privacy issue potentially arises. The average employee is not, nor could they possibly devote the time to having the expertise to solve these problems, but they need to be able to elevate them. But apart from that very critical function of knowing when to alert someone who's an expert in this area, in order to properly assess a potential privacy issue, these laws actually require the training and documentation of the training as part of the accountability and showing that they're in compliance with the law. So it's a critical, critical aspect.
Aitken Thompson:
[inaudible 00:04:44] people who are aware of GDPR and CCPA, which as you mentioned, is now going to be known as CPRA. Are there other jurisdictions, nations, and for that matter inside The United States that are also promulgating similar laws that people have to be aware of and follow the action vis-a-vis those laws and regulations promulgated underneath them?
Donovan Burke:
Yeah. Oh for sure. And that's obvious. Brazil came out a year or so ago. I believe it became effective with a GDPR law, very close to the GDPR. China has a law that is derived in large part from the GDPR and India also. Obviously these are huge markets and that is going to continue to be the trend. And as we mentioned the CCPA has already, after just having been effective for a couple of years, is becoming the CPRA, and what that really is move even closer of the GDPR, adding some special considerations for sensitive data and other key GDPR concepts.
Aitken Thompson:
So it's my impression that people are aware that these laws do carry some potential stiff penalties and enforcement actions are available by governments potentially, and also potentially by individual people who had their data exposed. But I get the feeling that a lot of CCO's and GC's are still not taking the enforcement mechanisms as seriously as they should. Has that been your impression, or am I off on that?
Donovan Burke:
I think that has been true, although I think given that enforcement has, I believe it's trebled in the case of the European union enforcement actions and, really expensive ones like the Amazon that you mentioned that was $800 million or so ultimate hit to Amazon. So I think they're waking up and I think they should be. Let's take this in a couple of pieces. Private rights of action can get extraordinarily expensive in the United States where these GDPR like laws have been implemented, the private rights of actions are fairly limited today. They're not nearly as limited in the European Union. Although recent court cases have made it a little more difficult for folks to bring private rights of action. But I think there's been a lot of forbearance on the part of authorities that bring the enforcement actions apart from being sued by a person, the actual agencies that enforce these laws.
I think they've given people a break, because they realize that these are new laws, they've been changing so rapidly. It's really hard to figure out how to comply even the authorities themselves aren't sure how to enforce the laws until there's some more guidance from the promulgating authorities. And that's certainly been the case in California, and also been the case in the European Union, where until recently most of the enforcement actions were where there was kind of an obvious and urgent issue, a breach, where there was a data breach. That would be where the authorities would step in, but now in all jurisdictions, it seems like that break is over and there's enough guidance to know how to enforce, and so you're seeing a lot more actions in the European Union, for example, where there for failure to have a proper legal purpose or a lot of other more subtle aspects, apart from there just being a massive data breach, which is an obvious problem.
Aitken Thompson:
And when you say legal purpose, you mean legal purpose to have, and to share the data?
Donovan Burke:
Exactly, under the GDPR you have to have a legal basis for processing the data, and there are a number of bases that you can have, including a legitimate purpose or consent. And some form of that generally finds its way into the laws of any jurisdiction that has a GDPR like law. But the point I'm making is there are a lot of, for example, there are disclosure requirements, very specific kind of what you need to cover and disclose, and what you need to do in order to get the right kind of consent. And I think all of those types of more technical issues that the authorities have been willing to overlook because they've been in a state of flux. And what does that mean, and how do you do it? But I think they're getting to a point where they feel like people ought to know it enough at this point, and there's enough guidance to where these laws are going to be enforced.
Aitken Thompson:
Right. And you sort of getting into sort of the aspect of best practices, or the topic of best practices, certainly as CCO's and GC's, how we react to regulatory risk is in the main reaction, prospectively is to put in some best practices in place. Make sure you're following the correct procedures. But in the complicated regulatory situation, like data privacy is. How are companies handling these multiple geographies and jurisdictions and certainly slightly different requirements in each one, although they're sort of related? Is the answer just to apply the most restrictive rules globally, or do you create redundant systems and regionalize those systems in conjunction with where you are, where your data sits? Ultimately, what are the factors that go into the decision on how to, how to handle data?
Donovan Burke:
Well, the answer, is it going with the most onerous laws, the most demanding jurisdiction, or is it to really try to be more compartmental in terms of compliance? The answer to that is yes, it's both depending on your resources, and how the laws impact transacting your business. Really large scale enterprises that have a particularly heavy personal data component where it drives their revenues is critical core to their business. If the most onerous laws are antithetical to collecting and using the data that in a way that's most profitable for them, then obviously they're incentivized to try and have a different user experience for different jurisdictions, so that they can maximize the use of the data jurisdiction by jurisdiction.
Whereas other enterprises where the personal data component, isn't so important and where the data that they have to collect isn't really impacted over jurisdictions and there's less an incentive to behave differently, and to have a different experience jurisdiction by jurisdiction. And at the top level of all this, is money. No matter how large the organization, there are only so many resources that can be thrown at this particular aspect of doing business. And certainly you want to try and achieve an optimal level of compliance, but at the end of the day, for a lot of people in charge of these programs and enterprises, it's figuring out how best to leverage the resources that they have.
Aitken Thompson:
Absolutely. I believe that's more or less true of all compliance efforts, but certainly one as complex as this one. One follow up question on that obviously a short podcast is a textual analysis of these very complicated laws, are sort of well beyond our scope here, but it had occurred to me, and I wanted to ask you. As between the GDPR CCPA, are there actually conflicting requirements, with either, or that we have to think there may not be? But I'd love to ask the question.
Donovan Burke:
Yeah, there can be, the privacy laws themselves don't tend to be in conflict, but for example, the privacy requirements, as we mentioned at the beginning, these data privacy laws have an extended jurisdiction. So just because it's the GDPR and it's the European Union, it extends to really anyone who establishes a nexus with the European Union, which most large US corporations, for example have that nexus. And so often the conflict will come up in personal data, that's required to be disclosed in litigation and other administrative matters here, where our rules of litigation and our laws, rules, regulations, require disclosure of information that the similar laws in the European Union do not require. And so you may be required to disclose information pursuant to laws here, and disclosure of that information is in conflict with your obligations under the GDPR.
Aitken Thompson:
Got it, it's interesting, we've been talking mostly in the last couple minutes about sort of the compliance end of things, but CCO's are called chief ethics and compliance officers first for a reason. And so beyond compliance and beyond the sort of fear of enforcement actions, and balance saying compliance with business objectives, what are the positive, obviously these laws were created and are being enforced to protect people, and protect their data and their identity, and all sorts of other things. So there should be some positive in terms of compliance and following these laws. What do you see as a positive for that the CCO or GC you can point to, and sort of animate the discussion with, regarding these privacy laws regarding what's to gain from complying with GDPR and CCPA and the other regulations?
Donovan Burke:
Yeah, well the debate over whether data privacy and privacy generally is a good thing, was settled thousands of years ago, all these laws derived originally out of some of the original texts of the world's religions and then evolved into charters of the European Commission and the United Nations, and have found their way. So certainly there is a huge ethical component and a human rights component, to providing people with protection of their data, in addition to being perceived as a true ethical issue that it is a substantial, competitive advantage.
It's a market differentiator, consumers definitely will tend to gravitate towards a company that is perceived as taking the privacy of its data seriously. And surveys have identified it as the top ESG category for consumers. And it's also regarded by investors as a key ESG concern. And it's not just in the context of being attractive to the customers of a business, but as you well know, companies are looking at and buying and joint venturing and doing all kinds of business combination arrangements with other companies. And that is increasingly becoming a matter for diligence, and real consideration in terms of value and compatibility in doing these corporate transactions.
Aitken Thompson:
Absolutely. And certainly LRN has done a fair amount of research on this, and all our research points to the fact that data privacy along with other ESG issues are becoming more and more, very, very important issue for corporate boards, both public and private boards. Well clearly this is the conversation we could be having all day, but we're out of time now, Donovan. So thank you so much for joining me for this episode.
Donovan Burke:
Oh, I really appreciate you having me, the time flew.
Aitken Thompson:
Great. Thank you. My name is Aitken Thompson, and I want to thank you all for listening to the principled podcast by LRN.
Outro:
We hope you enjoyed this episode. The Principled podcast is brought to you by LRN at LRN. Our mission is to inspire principled performance and global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple podcasts, Stitcher, Google podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: Mobile devices influence nearly every aspect of our lives, including how we learn and process information. So, it’s no surprise that mobile is only becoming more important to ethics and compliance programs—especially when it comes to meeting employees where they are. LRN’s 2022 Ethics & Compliance Program Effectiveness Report confirms this. But how can organizations ensure that they are integrating effective mobile E&C solutions? In this episode of the Principled Podcast, host Carolyn Grace, content writer and podcast co-producer, talks with de Guise Vaillancourt, a lead project manager at LRN who specializes in mobile app development. Listen in as the two discuss how mobile solutions enhance E&C program effectiveness and what mobile considerations E&C professionals should take for the year ahead.
To learn more, download the 2022 E&C Program Effectiveness Report.
What You’ll Learn on This Episode:
[2:33] - Why does it matter to have mobile as part of a corporate ethics and compliance program?
[3:39]- Key special features of the mobile app.
[7:21] - The challenges around going mobile driving slow adoption.
[12:02] - Recommendations and encouragement for people who are just starting out.
[17:17] - The differences and similarities in mobile app development between the U.S. and Europe.
[20:07] - Key insights de Guise has learned from doing this type of work and how these insights can inform the way professionals approach mobile in 2022.
Featured guest: de Guise Vaillancourt is a lead project manager at LRN who specializes in mobile app development. In this role, he serves as the main contact between clients and product developers throughout the entire mobile project lifecycle—including design, content, user experience, customization, technical requirements and troubleshooting. de Guise has helped LRN launch over 20 apps for client partners in the last three years alone, thereby playing a significant role in shaping LRN’s mobile offering and its evolution.
Prior to LRN, de Guise worked on apps as vice president of international marketing for 20th Century Fox, where he contributed to development from predominantly the end-user perspective. Before that, de Guise was the executive director of global marketing at Avon Products. There, he managed and led the strategic planning, marketing, and product development for Avon's global product portfolio and built partnerships across 15 key international markets, helping transform Avon’s image into a modern beauty resource. de Guise earned his Master’s in I/O Psychology at New York University as well as a Master’s and B.A. in Macroeconomics and Finance from McGill University.
Featured Host: Carolyn Grace is a content writer on LRN's global marketing team and co-producer of the Principled Podcast. She specializes in writing compelling stories about ethics and compliance that resonate across business segments, industries, and personas while hitting critical KPIs for traffic and engagement. Topics she frequently covers include ESG, data privacy and protection, DEI, the role of boards of directors and leadership, corporate training and e-learning, and ethical corporate culture.
Prior to joining LRN, Carolyn was a writer and content strategist at Thinkso Creative, a boutique creative agency in New York City. At Thinkso, she wrote internal and external communications for clients in technology, nonprofit, law, logistics, and financial services sectors. Before that, Carolyn conducted trend research and cultural strategy at Horizon Media, specializing in entertainment, travel, media and technology, health and wellness, and food and beverage categories. Carolyn graduated magna cum laude from the University of Pennsylvania with a B.A. in American History and French Studies and a minor in Journalism.
Transcript: Intro:
Welcome to the Principled podcast, brought to you by LRN. The Principled podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Carolyn Grace:
In 1946, the first mobile phone call was made. Fast forward 75 years, and there are more mobile phone subscriptions than there are people on the planet. Mobile devices influence nearly every aspect of our lives, including how we learn and process information. So it's no surprise that mobile is only becoming more important to ethics and compliance programs. LRN's 2022 ethics and compliance program effectiveness report, which came out earlier this month, confirms this. But how can organizations ensure that they are integrating effective mobile E&C solutions?
Hello, and welcome to another episode of LRN's Principled podcast. I'm your host, Carolyn Grace, content writer and co-producer of the podcast at LRN. Today I'm joined by de Guise Vaillancourt, a lead project manager at LRN who specializes in mobile app development. We're going to be talking about how mobile solutions enhance E&C program effectiveness and what mobile considerations E&C professionals should take for the year ahead. de Guise is a real expert in this space, having helped launch over 20 apps in the last three years at LRN, thereby playing a significant role in shaping its offering and evolution. Prior to LRN, de Guise also worked on apps for 20th Century Fox and Garage Stores, most contributing from the end-user perspective, which makes a good countervail for the tech perspective. de Guise, thanks so much for coming on the Principled podcast.
de Guise Vaillancourt:
Oh, thanks for having me Carolyn, glad to be here.
Carolyn Grace:
I am so excited to dive into the world of mobile with you, considering how frequently you and I have collaborated on case studies and other LRN content that focuses on mobile-driven E&C solutions. I'd like to start with a broader question that I'm sure many of our listeners are asking themselves. Why does it matter to have mobile as part of a corporate ethics and compliance program?
de Guise Vaillancourt:
Well, I think it matters because basically, mobile apps put information directly in your hand and it travels with you wherever you may go, in a world we're increasingly globalizing. And when we're not globalizing, we're staying at home offsite. This is a really good tool to have. It greatly improves, I think access to thorny topics like ethics and compliance, bribery, data privacy and harassment aren't topics that you can easily raise with just about anyone, and sometimes could be delicate. So in that sense, the app is pretty discreet. So it's wide reaching, but discreet at the same time. So the app could reach employees who are a little hesitant about disclosing information to a live person, but then travels everywhere, everywhere an internet or a cell service is present. So I personally think that there's some handy features that E&C people should consider. I don't know, do you want me to mention a few?
Carolyn Grace:
Yeah, absolutely. Tell us.
de Guise Vaillancourt:
Well typically, most apps have a code of conduct section the code of conduct. So you can access the code of conduct quickly and it's broken down in sections and it's also searchable. We have much the same for policies, company policies that are segmented by topic areas and with direct links to their website with more information. We have helpline information. So if you're stuck in Santiago, Chile or something, and you need a helpline, you just get the app, go to the helpline, plugin Chile and up comes the number, press it, and presto you are connected. We have another cool feature I like is microcards. Micro cards are pretty versatile. Micro cards sometimes are referred to as quick learning topics and can include things like the modern-day infographics, which is kind of like a digital poster really. You can do text and charts.
There are responsive Q&As, so whenever you can get interaction, that's a good thing. And the feature I like the most are MP4 videos, because you want to make the app entertaining as well. Training, we usually can connect you to your LMS. Some companies have offered declaration forms or disclosures that work. A key feature are notifications, and notifications can be either direct or geo-based. So if you're a direct notification, you just send a partner or an admin could send an important note to their user base and it could be something like, "Hey, check out our new policy on data privacy.", or, "Hey, we're starting our new campaign a week earlier sort of thing, press here to learn more." So that's the idea of a direct notification. There are also geo-based notifications and they're kind of interesting because they only work when your phone goes from one cell tower to another cell tower that's an entirely different region or country.
So if I'm in New York and I'm taking off from JFK and then I land in Tokyo, your admin could pre-program a notification telling you once you land in Tokyo, "Hey, check out our meal limits in Tokyo that did you know they're 50,000 yen or something like that?" So there are a whole bunch of other things like who's who with avatars and GIFs, funding sources, bulletins, report a concern. There are tons of things that you could take and use and leverage sort of thing. But I will point out that despite the notifications, and I'm thinking that maybe some of your listeners will say, "Well, are you collecting PII or personal identifiable information?" And I want to assure you that we are not collecting PII in any way, shape or form.
Carolyn Grace:
Yeah, an important distinction to make for sure. I think all of those features that you have mentioned really bring it back to what you said at the beginning of your response that an app can be both so far-reaching and also so intimate and discreet when it needs to be, because you're totally right. I mean, these are very heavy topics and important ones to know, and to have the ability to not only put the frankly almost entirety of an ethics and compliance program into the palm of a person's hand but to do so on such a personalized basis. I mean, we experience that in every other app that we use, right? So it's almost a no-brainer. And that kind brings me to my next question, actually.
So as you know, LRN recently released the 2022 ethics and compliance program effectiveness report, which had some pretty interesting survey findings about mobile apps and mobile solutions. Most respondents shared that their organizations are making their E&C training platforms more accessible, in light of COVID and ongoing remote work conditions, but only 25% reported that they're using mobile devices to deliver training. That's just a five percentage point increase over for last year's data. What in your opinion could be some of the challenges around going mobile that are driving frankly what sounds a little bit like a slow adoption?
de Guise Vaillancourt:
Mm-hmm (affirmative). Yeah, that is an excellent question, that report, the 2022 E&C program effectiveness report is a very thorough report and really well done. However, having said that, it hurts all the more, but I have to agree, 25%, that's a pretty surprisingly low number. I could offer a few hypotheses. One, I could say something that younger people tend to spend a lot more time on their phones and download many more apps than they actively use. That's the key thing. If you can have an app, but if you're not using it, who cares? So I'm wondering whether it could be a generational thing, where the numbers will evolve as the younger generation gets older overtime in lieu of a sudden shift, kind of like a movement along a demand curve as opposed to a shift of a demand curve to borrow economic theory.
So that could be one reason. And then truthfully, E&C apps, Carolyn, they're rare and they're relatively new on the market. So adoption rates could be related to just sheer awareness, and even people's association with what a phone can and cannot do. People just may not associate ethics and compliance with their phone as much as they would their desktop. Human psychology could sometimes be strange in that way that they compartmentalize and they think, "Oh, okay, this type of topic, I go to an iPad to answer or I go to a desktop sort of thing, maybe not a phone." So I think it could be an awareness issue. And then if you look at socioeconomic factors, less developed countries, they're just getting a phone and cell service in which to install and use apps can be challenging, but numbers are showing that this segment or the users in less development countries are growing steadily.
It's not like an avalanche, but it is growing steadily. In more developed markets. One could argue that there are way too many apps out there already, making the app space extremely competitive. Even if there are not many apps in the E&C space, it doesn't matter. There are tons of apps. So when a user sees another app offering, they're kind of reluctant to download and go, "Oh Jesus, this is like my 200th app kind of thing." So that could be a reason as well. I think that we've looked at some adoption rates from some of the partners that we've had, and we're hovering above 10%. And I think that's a pretty good, that's a very good and strong adoption rate. So I'm not really worried about that. But I think unless something radical happens in the phone world or the app world, I think we are going to see a steady climb.
I mean, it could be at an increasing rate, but everything kind of points to a solid but steady climb. And then we can also help matters by thinking of different new ways of making our app more useful. And that's why we just release things like the iPad version of the app, which nicely caters to many salespeople that are in the field all the time or their ordering system is through an iPad. So it's just an easy dance over to the Connect app. So I think eventually, maybe the game-changer will be the app to LRN's other products, like maybe Console. I don't expect like a, as I said before, a shift in demand. I do expect a continuing growth, but a strong, healthy growth in demand.
Carolyn Grace:
Absolutely. And I think that's a really good level setting of the data and contextualizing of the data because you do make a great point that the idea of an ethics and compliance app is in of itself a very new concept in addition to just access to mobile devices in general. It's newer than say, Western audiences or even just our own company, tend to think about it. And so I think you mentioned the adoption rate within LRN's own product as an encouraging sign. I think another encouraging sign from the program effectiveness report is that the majority of respondents, 56% in fact did say that integrating major ethics and compliance program elements into a mobile app is a high priority for their program in the near future. What I'd like to know is what recommendations would you give to those folks who are just starting out?
de Guise Vaillancourt:
I think that the first thing is who you have on your team. I would try to make it as cross-functional, cross-generational, as representative of your company as possible. That being said, you can't have 50 people on a team to develop an app, no, but you could at least have some sort of consulting mechanism where you test out certain features or certain concepts. So that would be the first thing that I would say is even before you get going, make sure you're evaluating it from multiple perspectives, not just the human resource perspective or the ethics and compliance perspective. Do it from the 22-year-old temp that's been there for two years sort of thing. Maybe they have something to say that you never thought of. So that's one thing I would do. The other thing is I always like, whether it's an app or other things, especially when it comes to usage, I always like to keep things simple. Make your app easy to use if you can.
I realize that there is sometimes a lot of pressure to put everything in the kitchen sink in the app, but I think you need to start being choosy. You need to think, "Okay, well what kind of content makes sense to go in an app?" Does it need to become a repository of the bank of policies that you guys, that a partner keeps, or is it stuff that people are going to look at within 20 seconds? What do they need to know in 20 seconds? So that's the other thing I would keep in mind is understand how people use their phones and how they use an app. And you don't have the time that a desktop would afford you. So that's the other thing I would say. We have some apps. They have become these repositories for endless and detailed policies, often in 25 languages.
This makes the app a challenge to navigate for the end-user. But from our business perspective, it's also a nightmare for the admin person to manage such a thing. If you have like 100 different policies, 25 different languages and something changes in the policy, you're going to have to upload a lot of documents just to keep your app current. That's a turnoff, especially if you're spending way too much time on these things. So if the admin is turned off, well, he or she's going to be less of a champion for the app within the company. And you need that admin to be your champ in the company. So for multiple reasons, I would say just please try to keep it simple. Accept the idea that you are going to have to make choices and saying yes is easy. Saying no is hard because you have to kind of evaluate, okay, why can I let this person into the party kind of thing, or this policy into the app?
So base it on the fact that people will look at an app in a much shorter time period than a desktop. That could be a helpful guide into what kind of content you include or exclude from your app. I would get, in the idea of making entertaining, sure put some stuff in there like Q&As. Make contests out of it, make your own leaderboards sort of thing. That always helps. Get senior management to guest star in the app. Interview them. Film a video. We did have one CEO who welcomed his company to their annual campaign kickoff, but I haven't seen that enough. And of course, the higher up you go in the hierarchy, the more eyeballs or users it's likely to attract. So I would definitely get senior managers, not just the CEO. There are lots of other people that could get involved. It could be the country head of the Philippines. It could be the head of IT. It could be the head of anything, marketing even, God forbid, Carolyn, no just kidding, but yeah, so I would do that. I would use the notification feature a lot. That's a pretty unique feature that we do have is interact with your user base by using notifications, whether they be direct or geographic-based notifications. So those would be a few things I would think of.
Carolyn Grace:
Yeah, absolutely. And I think you make such a great point here that simplicity is so key, especially when you are thinking about the folks who are actually using the app, but you make a great point that getting to simplicity can be quite complicated, but there is clearly such a value in bringing multiple perspectives together in order to figure out what makes sense to our specific company, how are we going to get our specific employee base engaged and really trying to whittle that down to the need to know elements. I completely agree. Speaking of perspectives, actually, I know that you have worked on mobile app developments with both U.S.-based and Europe-based companies. What stands out most to you about the differences or similarities in these types of projects?
de Guise Vaillancourt:
Well, this last year, we developed apps actually for two European partners and they're now deployed and we have a new one that will be onboarding very soon, i.e. kicking off pretty soon. I guess the big thing, there are obviously cultural differences, but from a regulation point of view, straightforward, the GDPR data privacy rules and directives are definitely a big concern for our European partners, particularly because of the fact that our servers are based here in the United States. But we overcame this with these two partners. We adapted a few features to suit their rules and with legal and corporate IT's help, we were able to sign a data privacy agreement that assured the partners and made them a lot more comfortable that we were GDPR compliant. So that's one thing. I think with our European partners or our non-U.S. based partners, the translations tend to be very important because you basically get, everybody wants English, that's for sure, but they also want the home country or where they're operating in.
And they're not just content translations, they're user interface or UI translations as well. So that's a much bigger deal at least with our two European partners that we worked with over this past year. So our translation team in Mumbai, thank you very much. They've helped us streamline the process incredibly. So it's made our job on the app team a lot easier. I think the Europeans, just based on the size of their countries, Europeans tend to travel a little bit more internationally, whether within the EU or beyond the EU. So travel-related content like meal limits in specific countries, those things tend to be a little bit more important, but in the end, I think the app, it's a good tool and it really depends on the content you feed it. We can adapt it to a certain point, but at the end of the day, the important thing is that you have to, or the partner has to really think of ways of attracting users and usage that they need to view the app, not just as a tool, but an active tool.
Carolyn Grace:
That makes a ton of sense. I really resonate with the idea that the app is only as good as the content you feed it in the simplest of terms. But that piece is so important. With that in mind, I can only imagine that developing mobile solutions is a highly iterative process, especially for ethics and compliance programs, given everything that we've talked about so far. What are some key insights that you have learned from doing this type of work and how can those insights inform the way E&C professionals should approach mobile in 2022?
de Guise Vaillancourt:
Okay. Now you're going to think I'm contradicting myself, Carolyn. If you have a core team that's representing the partner, that's as small as could possibly be, that's a good thing. But then what that core team should do is that they should go back to a consulting group or a group that's representative of the whole company like I mentioned before and bounce ideas off of. Maybe it's wishful thinking, but it's nice when you can consolidate the decisions, the main decisions, not approval, but decisions in the hands of a fewer core team. Does that make sense or does that sound like I'm completely contradicting myself?
Carolyn Grace:
No, I think it makes sense if only because it highlights this duality that clearly, ethics and compliance professionals are experiencing when it comes to mobile solutions. There's the fact that this space is by nature, highly complex. And then there is the reality of the experience with a mobile app, whereas you said earlier, simplicity is key. So trying to figure out how those two realities can work in tandem is I can only imagine an ongoing problem to solve by ethics and compliance professionals and team members like yourself.
de Guise Vaillancourt:
Okay. So I'd also recommend upfront that colleagues in information security, IT departments and communications departments, especially if they're involved in branding, get involved before we even have a kickoff meeting. So there's certain parameters that are already set. There are no surprises as we develop the app.
Carolyn Grace:
Yeah. That makes a ton of sense and goes back to, I think what you said at the beginning, that there is definitely a lot of power in multiple perspectives. And at the same time, as you mentioned in your first response, the importance of keeping it simple and pared-down can still work to your advantage, but that doesn't mean you have to stay within that bubble. I completely, completely agree. de Guise, this has been such an insightful conversation. We could be talking about mobile and its impact on ethics and compliance for hours. And we have, outside of the recording studio and our other projects but it is time for us to wrap up, or I guess I should say hang up this episode. So thank you so much again for joining me today.
de Guise Vaillancourt:
Well, thanks for having me, Carolyn, it's been fun and it's always, I always get a kick out of promoting the app because I truly believe it's a great product.
Carolyn Grace:
Absolutely. And thank you all to our audience for listening. You can learn more about the importance of mobile solutions and LRN's mobile solutions by downloading a copy of the 2022 ethics and compliance program effectiveness report at lrn.com or by clicking the link in our show notes. I'm Carolyn Grace, and we'll see you next week on the Principled podcast.
Outro:
We hope you enjoyed this episode. The principled podcast is brought to you by LRN. At LRN, our mission is to inspire principled perform in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: Most ethics and compliance professionals have heard of the “seven hallmarks” of an effective E&C program that is enshrined in the U.S. Sentencing Commission’s Federal Sentencing Guidelines:
- Implementing written standards of conduct, policies, and procedures.
- Designating a compliance officer and compliance committee.
- Conducting effective training and education.
- Developing effective lines of communication.
- Conducting internal monitoring and auditing.
- Enforcing standards through well-publicized disciplinary guidelines.
- Responded promptly to problems and undertaking corrective action.
But where did these guidelines come from, and who is involved in the process of deciding these standards? In this episode of the Principled Podcast, host Eric Morehead of LRN’s Advisory group talks about the evolving role of the U.S. Sentencing Commission with Kathleen Grilli, the commission’s General Counsel. Listen in as the two discuss the history of compliance—going back more than 30 years—and unpack what sentencing data can tell us about E&C today.
Read the full Federal Sentencing Guidelines for an effective E&C program.
What You’ll Learn on This Episode:
[1:19] - The history of the sentencing commission and the different roles of the organization.
[2:36] - How did the sentencing commission become such an integral part of corporate compliance?
[6:40] - With whom does the sentencing commission consult with to find collaboration when considering revisions to guidelines?
[12:35] - The 2004 amendments and incorporating ethics into the criteria for an effective program and examples of how changes to the organizational guidelines can come about.
[15:36] - Does public comment have to come from advocacy organizations?
[17:01] - Trends seen in organizational data over the years.
[21:26] - Potential future changes to the organizational sentencing guidelines.
Featured guest: Kathleen Cooper Grilli is the General Counsel for the United States Sentencing Commission, having been appointed to the position on October 7, 2013. Ms. Grilli has been on the staff of the Commission since 2003, serving as an assistant general counsel from 2003-2007 and deputy general counsel from 2007-2013. As the General Counsel, Ms. Grill provides legal advice to the Commissioners on sentencing issues and other matters relating to the operation of the Commission. Ms. Grilli is the agency’s Ethics Officer and has conducted training on white collar crime and the organizational guidelines at numerous training events.
Prior to working for the Sentencing Commission, Ms. Grilli was with the Office of Staff Counsel for the Fourth Circuit Court of Appeals. Before relocating to Virginia, Ms. Grilli was a partner in a small firm in Fort Lauderdale, Florida, handling civil and criminal litigation. Her previous work experience includes serving as an Assistant Federal Public Defender in the Southern District of Florida and as an associate at Akerman, Senterfitt and Edison, handling commercial litigation. Ms. Grilli is a member of the Bars of Florida and Virginia. She received a Bachelor of Arts in International Relations, with honors, from Florida International University. She graduated cum laude from the University of Miami School of Law.
Featured Host: Eric Morehead is a member of LRN’s Advisory Services team and has over 20 years of experience working with organizations seeking to address compliance issues and build effective compliance and ethics programs. Eric conducts program assessments and examines specific compliance risks. He drafts compliance policies and codes of conduct, works with organizations to build and improve their compliance processes and tools, and provides live training for Boards of Directors, executives, managers, and employees.
Eric ran his own consultancy for six years where he advised clients on compliance program enhancements and assisted in creating effective compliance solutions. He was formally the Head of Advisory Services for NYSE Governance Services, a leading compliance training organization, where he was responsible for all aspects of NYSE Governance Services’ compliance consulting arm. Prior to joining NYSE, Eric was an Assistant General Counsel of the United States Sentencing Commission in Washington, DC. Eric served as the chair of the policy team that amended the Organizational Sentencing Guidelines in 2010.
Eric also spent nearly a decade as a litigation attorney in Houston, Texas where he focused on white-collar and regulatory cases and represented clients at trial and before various agencies including SEC, OSHA and CFTC.
Transcription: Intro:
Welcome to The Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business, and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Eric Morehead:
Why is the US Sentencing Commission involved in compliance and ethics? It's a question that both new compliance officers, as well as seasoned professionals, often ask. We've all heard of the seven hallmarks of an effective compliance program that are enshrined in the sentencing guidelines, but where did they come from and who is involved in the process of deciding these standards?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Eric Morehead with LRN's advisory services team. And today, I'm joined by Kathleen Grilli, the General Counsel for US Sentencing Commission. We're going to be talking about the Sentencing Commission, discussing a little compliance history going back more than 30 years, covering what the Commission's role is and was, and talking about what sentencing data might tell us about compliance today. Kathleen, thanks for coming on The Principled Podcast.
Kathleen Grilli:
Eric, thanks for inviting me.
Eric Morehead:
Can you tell us a little bit about the history of the Sentencing Commission itself and the different roles of the organization?
Kathleen Grilli:
Certainly. The Commission is an independent agency in the judicial branch of the federal government. It was established in 1984 by a bipartisan act of Congress called the Sentencing Reform Act of 1984. Congress tasked the Commission with the responsibility of developing federal sentencing policy. So the Commission's principle purposes are to establish sentencing policies and practices for the federal courts, including issuing guidelines regarding the appropriate form and severity of punishment for offenders convicted of federal crimes, to advise and assist Congress, the federal judiciary, and the executive branch in the development of effective and efficient crime policy, and to collect, analyze, research, and distribute a broad array of information on federal crime and sentencing issues. The Commission effectuates this mission in various ways through the guideline amendment process, our data collection research on the issuance of publications, and by providing training to judges, lawyers, and probation officers on federal sentencing issues.
Eric Morehead:
And historically, why and how is it that this Sentencing Commission became such an integral part of corporate compliance?
Kathleen Grilli:
Well, in 1984, when the Sentencing Reform Act was enacted white-collar crime scandals abounded, and the prevailing view was that corporate crime was a cost of doing business, Congress was concerned about inequities and sentencing and created the Commission to ensure that similarly situated defendants convicted of similar crimes received similar punishments. One of the perceived inequities was that affluent defendants were treated more leniently than indigent defendants.
Although the primary focus of the Sentencing Reform Act was individual defendants and not organizational defendants or companies, the Act did make changes to the law that impacted companies. It authorized courts to impose a sentence of probation, or fine, or both on companies, and further permitted companies to be subject to orders of forfeiture notice to victims and restitution orders. The Commission understood these changes to mandate that it developed guidelines for sentencing organizations in addition to developing guidelines for sentencing individual defendants.
This was quite controversial at the time and many in the business community openly opposed the Commission as it engaged in the process of developing the organizational guidelines. Back then, as I understand the historical record, there were no professional ethics and compliance officers, no professional organizations focused on ethics and compliance, no professional field of study, no business certifications in the topic. There was at least one voluntary association of defense contractors seeking to promote business ethics, and compliance programs in some form were recognized in the antitrust field but were not a prevalent part of corporate America.
So the Commission wanted to find a way to deter corporate crime. Because it arises when an employee or an agent commits a crime while acting within the scope of his employment, the Commission thought that self-policing by corporations was the most effective tool to accomplish the goal of deterring corporate crime. Corporate criminal sanctions are a monetary payment to the court and/or restitution to the victims. Since corporations are in the business of making money, the Commission came to the realization that financial incentives would probably be the best way to incentivize corporations to self-police.
The implementation of ethics and compliance programs was an outgrowth of the notion of self-policing. Under the chapter 8 guideline fine provisions, an organization has the ability to significantly reduce its fines by having an effective compliance and ethics program, reporting its crime to authorities, and cooperating with those authorities. The Commission thought that this punishment scheme would promote crime deterrence in this area of the law.
Chapter 8 was the product of years of work with input from a wide variety of sources. The Commission started work on it in 1986 and held several public hearings featuring witnesses from federal and state agencies, probation officers, academics, the corporate sector, and special interest groups. After publishing several drafts of the organizational guidelines and about five years' worth of study, the Sentencing Commission received and considered a broad array of public comment, including proposals for incorporating affirmative governance factors into the guidelines. These efforts were informed by staff and outside working groups, and the seven elements for an effective ethics and compliance program grew out of this collaborative process.
In addition, the Commission purposely drafted the elements in broad terms so that they could be individually tailored by a vastly different types of organizations to which they would apply.
Eric Morehead:
One of the things that I think comes up when you start talking about the role and the process of the Commission is this collaborative effort you mentioned. And the organizational sentencing guidelines have evolved since that first promulgation back in 1991, now, over 30 years. Can you talk a little more specifically about where the Sentencing Commission looks for that collaboration? Whom does it consult with when considering revisions to, not broadly speaking the guidelines, but maybe more specifically, the organizational sentencing guidelines?
Kathleen Grilli:
Sure, Eric. So I've already briefly described the multi-year pro that led to the creation of chapter 8. I would note that while the Commission has made over 800 amendments to the guideline manual, only two of those in the last 30 years have made substantive changes to chapter 8, where you find the organizational guidelines. The 2004 amendment and the 2010 amendment, both of which changes to the criteria for an effective ethics and compliance program.
Each of those changes became part of the Commission's amendment cycle in a different way. So let me just briefly describe how that cycle works. The amendment cycle is annual, it's scheduled around certain deadlines set by Congress in the Sentencing Reform Act, our organic statute. For example, the earliest that the Commission can deliver amendments to Congress is at the start of a congressional session in January. And the latest date for delivery is May the 1st. The Act requires the Commission to comply with a notice and comment provisions of the Administrative Procedures Act, which means the Commission has to publicize proposals for Commission action and receive and consider public input about those proposals.
So there are various opportunities for solicitation for public comment throughout the amendment cycle. The cycles typically starts in May or June when the Commission holds a planning session. At that session, they consider written materials that detail the work completed on priorities from the prior year and identifying any work that remained to be completed, and includes possible ideas for Commission action from a variety of outside sources. Correspondence, possibly received from judges and/or other members of the public. If we receive those suggestions outside of common period, what we do is we save them and we deliver them to the Commission during an open common period.
We look at case law, particularly focusing on opinions from circuit court of appeals that arrive at conflicting decisions on issues surrounding the guidelines. We look at other scholarly materials that suggest changes to the guidelines. Crime legislation is considered. Our helpline database is looked at to find frequently occurring questions that we receive on guideline issues. And our training staff provides input on questions that they receive while training on the guidelines around the country.
Sometimes, individual commissioners receive notes from judges or their other acquaintances containing similar suggestions. And the commissioners themselves often have ideas on policy issues that they want to address an amendment cycle. So they discuss these materials and they decide on a tentative list of priorities for the upcoming amendment cycle. We publish that in The Federal Register and on the Commission's website with a deadline for submission of public comment. And the Commission considers that public comment prior to deciding on its final priorities.
Certain organizations send a letter to the Commission every year, like the Department of Justice who provides the executive branch a suggestion, for Commission action, the federal public defenders who represent indigent defendants. They also offer suggestions. The Commission has standing advisory groups that represent specific interest groups. Privately retained criminal defense lawyers, probation officers, victims, and Native American tribes who also submit public comments.
And then we have certain advocacy groups that are regular submitters to the Commission. But in any given year, the Commission receives a variety of public comment letters from any number of organized groups and individual members of the public. The Commission reads that, decides on final priorities, votes on that at a public meeting, and then we begin our work. Work on these priorities is assigned to the staff of the Commission, which includes lawyers, social scientists, and training staff. And we assist the Commission in developing a robust administrative record on the issues under consideration. So we review case law, legislation, legislative history, Commission historical documents, and other scholarly or scientific literature. We also conduct data analysis using the sentencing data regularly compiled by the Commission. We meet with interested stakeholders to obtain additional information designed to inform the Commission's policy discussion.
The staff working groups or the teams report their findings to the Commission in written materials and in oral presentations at the Commission's regular monthly business meetings. Ultimately, these teams develop proposed guideline amendments for the Commissioner's consideration. Draft amendments are published in The Federal Register for a 60-day comment period after the Commission votes to publish those amendments at a public meeting. Those are usually held in December, January. And during the public common period, the Commission holds at least one public hearing, which invited witnesses testify on the policy changes under consideration.
After the hearing and review of all public comments, the Commission votes to promulgate amendments at a public meeting in April. The Commission delivers those amendments to Congress no later than May the 1st, at which point Congress has 180 days to review the amendments. Unless Congress enacts legislation, affirmatively disapproving the amendments, the guidelines automatically take effect at the end of the 180-day review period. So the 2004 amendment initially grew out of comments made to a group of seven new commissioners who were appointed in 1999. And they began hearing from these commenters that the organizational sentencing guidelines had been successful in inducing many organizations, both and indirectly, to focus on compliance and to create programs to prevent and detect violations of the law.
But these commenters also suggested that changes could and should be made to chapter 8, to give organizations greater guidance regarding the factors that are likely to result in effective programs. Among other things, the Commission was urged to expressly incorporate ethics into the criteria for an effective program. In light of this feedback, the Commission decided to create an ad hoc advisory group to examine the issue and develop proposals for its consideration. Among the members of that group were the current Inspector General for the Department of Justice, Mike Horowitz, the former Attorney General, Eric Holder, and many ethics and compliance professionals from both small and large organizations.
Not long after the formation of that group, Congress enacted the Sarbanes–Oxley Act, which directed the Commission to examine penalties for organizations. So the ad hoc groups work tied in very nicely to help the Commission respond to that directive. The ad hoc group did its due diligence, reviewing literature, public comment, soliciting feedback, conducting a hearing. And its work resulted in a draft proposal for changes to chapter 8 for the Commission to consider.
The Commission then went through the regular amendment cycle that I just described to you, which resulted in the 2004 changes. As you well know, Eric, since you were at the Commission in 2010 and worked on this policy issue, that amendment grew out of the Commission's catch-all priority for the miscellaneous guideline amendment issues. Then Commissioner, now Chief Judge for the United States District Court in DC, Beryl Howell, believed that chapter eight could be approved upon. And she was able to convince her colleagues to consider this issue. Because the Commission believed that the issue would be very important to the ethics and compliance community, the Commission, through its staff, Eric, made concerted efforts to bring the matter under consideration to the attention of the actors in that community, soliciting comment, and inviting witnesses from the ethics and compliance community to testify at a public hearing.
I must say, I have been on the staff of the Commission for 18 plus years, and that was the only hearing at which a miscellaneous amendment garnered two panels of witnesses at a hearing and more public comment than any other amendment under consideration during the amendment cycle. So that's a different example of how changes to the organizational guidelines can come about.
Eric Morehead:
And just to clarify one thing, you talked about advocacy groups, and earlier on mentioned that with the original promulgation in 1991, the Defense Initiative was involved. But does public comment have to come from advocacy organizations? Can it come from anyone?
Kathleen Grilli:
Public comment can come from anyone, and it can come in any form. Folks can email it to our Public Affairs Office. They can send a letter to a Commissioner saying, "Commissioner, I think you need to make this change to the guidelines." They can send it to a member of staff and we compile it, and keep it, and present it to the Commission, no matter who it comes from. In the past, in some of our other guideline amendments, the Commission has received and considered a huge amount of public comment that came from individuals out in the community who were not necessarily active at all in the criminal justice arena.
Eric Morehead:
Yeah. And I think that's an important point as that this process is very well documented and transparent. We see guidance on compliance coming from other regulators out there, but the process that goes on at the Sentencing Commission is something that really is public-focused. And I think that's an important distinction. One of the other key components of the Commission that you mentioned when you were talking about the role is data gathering, and that's gathering data on all the individuals and organizations who have either pled guilty, or been found guilty, and are now being sentenced in front of a federal court. What are some of the trends that we see when we look at organizational sentencing data over the years?
Kathleen Grilli:
Well, I'm glad you asked me about trends, Eric, because one of the things that we're working on right now is a publication to sort of commemorate the 30th anniversary of the organizational guidelines. And we're actually going to be taking a deeper dive into looking at trends. Because normally, when we report out data on the organizational guidelines, it's on an annual basis using our fiscal year data.
Well, let me give you some information about a couple of things that I do know about. And I have seen in the years that I've been working on this. First of all, in the 30 years since the adoption of the organizational guidelines, only 11 organizations have received a culpability score reduction for having an effective ethics and compliance program. I view this as a very positive statistic because the Department of Justice tells the business world that it considers ethics and compliance program when evaluating whether to prosecute an organization criminally.
Now, I know that there are other ways that organizations get sanctioned by regulatory authorities. Civil fines, non-prosecution agreements, and deferred prosecution agreements. But the bottom line is that Commission data reflects that very few organizations with an effective ethics and compliance program have been prosecuted and criminally sentenced. And I think that's a very big deal. I can tell you that the majority of organizations sentenced in recent years have fewer than 50 employees. And as I mentioned, the publication will be able to report whether that trend holds true over the almost three decades that we've been collecting data on organizational offenders.
In the last 20 years, we've seen a steady increase in the percentage of cases in which courts have ordered the development of an ethics and compliance program as a condition of probation. In FY 2000, only 14% of cases involve such a condition compared to nearly that 27% in FY 2020, our fiscal year. Likewise, we have observed an increase in the percentage of cases involving co-defendant individual offenders who were not high-level officials of the organization. In the fiscal year 2000, we observed only 31% of the cases involving a co-defendant who is not a high-level official compared to almost 60% in FY 20.
Eric Morehead:
I think that's a real key data point that can be helpful to organizations when they're talking to their employees about the potential risks involved in misconduct and compliance failures, that doubling basically, of the percentage of individual actual humans that might find themselves facing a federal criminal sanction.
Kathleen Grilli:
Yes. But it's also important to note that they are not high level officials, which might contribute to the fact that you haven't seen so many organizations sentenced in our dataset. That and the culpability score reduction.
Eric Morehead:
Yeah. There's a lot of conventional wisdom. I think that can get debunked by looking at the Sentencing Commission's data. There's that point that it's not all the high level officials, but also that it's smaller organizations because we the headlines that involve the Enrons and other major corporations all the time. That's what gets the ink publications about corporate misconduct. But when we look at the data, it tells a different story.
Kathleen Grilli:
Yes, it does.
Eric Morehead:
And then one other thing that I think is helpful when we're looking at this data is it gives a proper context to the organizations that are facing the most significant punishment, if you will. Because you mentioned before, non-prosecution agreements and deferred prosecution agreements and other regulatory settlements, but there are other consequences out there for organizations that take a federal conviction, including debarment from doing future federal work. And I think the most famous case also is Arthur Anderson, that ceased to exist because they could no longer audit public corporations after they took a federal conviction. So there's other consequences out there when organizations face this ultimate consequence. Last area I wanted to spend just a couple minutes talking about, Kathleen, is what we might see down the road. What are some potential future changes to the organizational sentencing guidelines? What might be over the horizon for people that are paying attention to this?
Kathleen Grilli:
Well, Eric, let me get out my crystal ball and see what I can tell you. First of all, let me just say that I need Commissioners.
Eric Morehead:
Yes. That's true.
Kathleen Grilli:
This lack of voting quorum of Commissioners for three years now, and I'm quite hopeful that sometime in the very near future, the president will be nominating a slate of seven to replace the terms of the Commissioners that have expired. And the one last man standing are acting here, judge Brier. So I don't know what the potential future is. What I can say is that the guidelines were purposely drafted. The organizational guidelines that is were purposely drafted to broadly apply to all types of organizations.
And the Commission has been loathed to make changes to those guidelines in the absence of a real hue and cry from either enforcement officials like the Department of Justice, or from the ethics and compliance community identifying a real need for changes. We are well aware of the fact that the two times that the Commission has made substantive changes to the chapter 8 guidelines, that it caused quite a ripple in the stream. And we're hearing a lot about the impact whether intended or not of the chapter eight guideline changes. So I think a new Commission would be loathed to take on consideration of policy changes in this area, absent that hue and cry. But I am not a presidential appointee. I'm simply the general Counsel of the agency. And I will go where my bosses tell me to go. So if they want to work on it, I say, Let's do it.:
Eric Morehead:
Wow. I hope that our audiences got a sense that there's a little bit more to the Sentencing Commission than just the seven hallmarks of the sentencing guidelines that they learned about when they first came into this area. But I'm afraid we're out of time for today. But Kathleen, thank you so much for joining me on this episode.
Kathleen Grilli:
Eric, thank you so much for inviting me. I really had a good time.
Eric Morehead:
Well, my name is Eric Moorhead, and I want to thank all of you for listening to The Principled Podcast by LRN.
Outro:
We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning, ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: The most crucial factor LRN has identified in our years of research is that a values-based approach to governance is essential to ethics and compliance. It builds and sustains ethical culture, which is the essential element of effective E&C programs. But what does that look like today, as our world continues to be disrupted by the COVID-19 crisis and the aftermath of racial and political unrest? In this episode of the Principled Podcast, host Susan Divers, Director of Thought Leadership and Best Practices with LRN’s Advisory group, talks about how values can sustain ethical performance—and even excel—in the face of change and adversity with Forrest Deegan, Vice President of Ethics and Compliance for Victoria's Secret. Listen in as the two draw insights from the 2022 edition of LRN’s annual Ethics & Compliance Program Effectiveness Report—available now to download.
What You’ll Learn on This Episode:
[2:17] - Reflections on the findings of LRN’s 2022 Ethics and Compliance Report.
[7:20] - The impact of core values vs. rules.
[9:02] - The surprising data and how access to data can drive improvements in collaboration.
[12:00] - The curse of compliance.
[13:22] - The two driving factors in demystifying your values and how boards discuss value.
[17:15] - What is causing ethics and compliance to lag behind in innovations compared to other departments?
[22:30] - The innovations of customized, remote-accessible training.
Additional Resources:
- Get the 2022 Ethics & Compliance Program Effectiveness Report.
- Subscribe to E&C Pulse, the LRN newsletter offering weekly insights on ethics, compliance, corporate culture, and reputation.
- Visit us for more information at lrn.com.
Featured guest: As of July 2021, Forrest is the VP of Ethics and Compliance for Victoria’s Secret & Co., responsible for overseeing the global ethics and compliance program. Forrest spent the prior six years as the first Chief Ethics and Compliance Officer for Abercrombie & Fitch Co., where he built A&F’s corporate compliance and third-party risk management programs. Forrest serves on the Editorial Advisory Board for Compliance Week and has served on the Leadership Team for the Retail Industry Leaders Association (RILA) Compliance Council. Forrest regularly speaks at national compliance conferences and international events, including those sponsored by RILA, Compliance Week and the Association of Corporate Counsel. Forrest was selected by Compliance Week as a “Top Mind" for 2018.
Forrest previously served as the Director and Senior Director of Compliance at A&F, where his responsibilities included a wide range of compliance program assessment, training and enhancement projects as well as international business development via joint venture and franchise.
Prior to moving in-house, Forrest worked for nine years at Arnold & Porter in Washington D.C., representing multinational pharmaceutical, financial and consumer products companies in advocacy and consulting capacities. Forrest clerked for Judge Kazen on the U.S. District Court for the Southern District of Texas, after receiving his J.D. with honors from Duke Law School and his B.A. from the University of Texas at Austin.
Featured Host: Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
Transcript: Intro:
Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Susan Frank Divers:
At LRN, the most crucial factor we've identified in our years of research and work with thousands of organizations worldwide, is that a values-based approach to governance is crucial. Being values-based builds and sustains ethical culture, which is the essential element of an effective ethics and compliance program. But what does this look like in a world that continues to be disrupted by the COVID crisis and the aftermath of racial and political unrest?
Susan Frank Divers:
Hello, and welcome to the first episode of season seven of LRN's Principled Podcast. I'm your host, Susan Frank Divers, Director of Thought, Leadership and Best Practices within LRN's Advisory Group.
Today, I'm joined by Forrest Deegan, Vice President of Ethics and Compliance for Victoria's Secret, and lecturer in law at the University of Chicago Law School. We're going to be talking about how values can sustain ethical performance and even allow organizations to excel in the face of change and adversity, during On Insights, from our 2022 edition of LRN's annual Ethics and Compliance Program Effectiveness report. And on Forrest's experience in the retail industry in particular.
Susan Frank Divers:
Before coming to Victoria's Secret, Forrest has spent two decades in ethics and compliance, including Chief Ethics and Compliance Officer for Abercrombie and Fitch. So Forrest, thanks very much for coming on the Principled Podcast, and let's jump right in.
Forrest Deegan:
Thank you, Susan. It's a pleasure to connect with you again.
Susan Frank Divers:
The same. We've had some interesting discussions preparing for this podcast about the 2022 Ethics and Compliance Program Effectiveness report. What surprised you, and what resonated the most, particularly with your experience in the retail industry throughout the ongoing crisis?
Forrest Deegan:
I'll start with what resonated the most. Preliminary matter, really enjoyed reading through the insights that were collected here. Reading through it I start with the resonation because there are a number of charts that go through the concerns that folks identified in the early days of the pandemic about the challenges of transitioning to a hybrid or remote model with respect to their controls, with respect to their ability to audit, and to support the programs. This comes across in both some of the stats around the activities they thought would be of concern and then what they actually worked on. And then looking at how training actually was supported, where obviously, people weren't able to travel. People weren't able to use all of their old tricks in this new time. And so starting off seeing the fears and the concerns that folks were raising in 2020, and that list itself was pretty fulsome and reminded me what it was like in the retail space with all of the uncertainty that came in the spring of 2020.
Forrest Deegan:
With the closure of the majority of all stores, at least temporarily in the US. I remember the day we were kicked out of our home office, I'm sure everybody has a similar recollection to mid-March, walking out with your computer in your bag and not knowing when you'd be back. This brought back some of that uncertainty. That resonated with me, but what also resonated with me was the introduction around values and how that programs that leaned in to their values did well. And this idea that kind of everybody took on new and different obligations with the pandemic, with a time of crisis. A time of crisis can be a time of unification. I certainly saw that to be the case. I remember that leaders at my company were voluntary take pay cuts, to make sure that folks and the staff could stay on so that we could avoid layoffs. There was an insistence on treating folks equitably within, right? So really living your values in those moments of crisis. This report speaks to both those fears and some of the solutions that came out of it.
Susan Frank Divers:
That's such an impactful example, because there's no rule that said that executives had to give up pay or benefits to keep other people employed. And we saw a lot of that last year in our report, and what's very heartening from LRN's point of view is, we've been saying for years, that values work better than rules as the basis for a program. And last year's report and this year's report, really proved that, I think in a lot of ways, and I look at stats like on page seven, that 82% of the programs we surveyed this year, that their ethical culture is stronger as a result of their experience during the pandemic. And you just opened it to that too, that people come together in a crisis, but relying on values was clearly the way to get through it.
Forrest Deegan:
The second part of your question was around things that might have surprised me in here. And honestly, the stat you just pulled about the 82% feeling ethical culture was stronger. That wouldn't surprise me a bit because it was 2021, not a 2020 stat. In fact the number went up, it seems like from the prior year's version of the report where it was 79%, the prior year, this year was 82%, that their ethical culture was stronger as a result of experiences coping with the crisis. So that was something that surprised me, that sentiment not only continued, but seemed to increase a bit because we've all heard about it and all have felt the fatigue in the past year as the uncertainty has continued as we've continued to have to be flexible in our approach. Yes.
Susan Frank Divers:
Forrest what you said was very impactful because one of the key findings, obviously in the report, that’s actually on page seven is that 82% of our nearly 1200 respondents worldwide reported that their ethical culture became stronger during the pandemic rather than weaker. And at LRN we've said for years, that values make an impact much more than rules and that's living proof that that's true. So I'd like your thoughts on that.
Forrest Deegan:
With respect to the second part of your prior question on what surprised me with respect to the study, I would have to say that that very stat, that 82% of the respondents last time felt that ethical culture was strong longer as a result of the experiences. That rose, that sentiment was an increase, improvement, from the prior year. That surprised me a bit because we've heard so much about and felt so much of the fatigue as the uncertainty has continued as the need to adjust our approach and our responses has just continued onward. I was pleasantly surprised to see that the prior version of this report had shown 79% felt that the crisis was a bringing folks to their ethics and compliance program in a stronger way to see that go from 79 to 82, a small improvement, but you're already really high to begin with. I was pleasantly surprised to see that in here. And honestly it does make sense with respect to that ongoing uncertainty that you do need to lean upon those core values to continue to navigate. You really have to love the question, not the answer when it comes to a challenge of this size and that is constantly evolving.
Susan Frank Divers:
That's putting it so well, that you have to love the question, not the answer. And we were frankly surprised last year, and then pleasantly surprised this year that this year's results confirmed what we saw last year. And I was just looking at the chart on 33 that talks about E&C resources and standing. And you had mentioned that people were understandably anxious at the outset as to how the programs would do and whether they would have resources or whether there would be widespread misconduct or circumventing of processes. And that didn't happen. And then E&C programs have come out strong and well resourced.
Forrest Deegan:
Just those stats on 33, surprised me a lot of different ways. The first chart talking about: do ethics compliance functions feel they have the sufficient resources and authority. Some of your respondents are at the 95% level, 92% level, even for your medium impact programs. And even the lowest impact were at 67%. Those are really high scores. Those are really high scores. And I think that's right. I think that is a reason for optimism right now with respect to our ability to respond as companies, right? If there is that availability of resources, but also the buy-in with leadership.
Forrest Deegan:
And there's another stat there that I also was surprised by how strong the respond were around access to data, right? The highest impact programs were 89% of them felt that they had appropriate access to data sources in the org, whether it was HR audit it InfoSec in order to do their work.
I think data component there is so critical and reflects buy-in from not just leadership, your tone at the top portion, but also from your cross-functional partners, right. Access to the data can really help drive improvements, yes, in the day to day operation of the program, but all also in your ability to support and inform cross-functionally. And so I think those things are married together, right? The access to information. It's a great example of something where it's not just resources, right? It's not just dollars and cents. It's also that buy-in as reflected through real collaboration and through real partnership.
Susan Frank Divers:
I agree with you. And also it's affirmation that programs have gone from being something the legal department does, or maybe the legal and ethics and compliance department does to something that the whole company does. And that's a really positive development.
Forrest Deegan:
I think, right. I've been in house for a decade now, I was in private practice for a decade before that dealing with a corporate compliance space and really seeing an evolution in terms of scope and approach during that time. And so things were ... we already had increasing expectations and an accelerating space when it came to this field, both due to our internal stakeholders, our boards, obviously regulators like DOJ, but also customers and NGOs. They keep ratcheting up the expectations and corporate compliance has proven to be a responsive and reliable partner. And so this is when you get into what I call the curse of competence, right? If you execute effectively, you're going to be asked to do more. I do think this is been a real opportunity and awakening to the valuation of controls and monitoring and our ability, as professionals, to not just focus on the have tos, right, those rules that we talked about at the top, but also the want tos, right, that corporate purpose, the values associated with it. I believe corporate compliance offers the opportunity to marry the want to and the have to, and frankly, that's the only way it works really well is if people understand how those rules, how those requirements tie back to why they want to be at the company, what they're hoping to accomplish with respect to company values.
Susan Frank Divers:
Forrest, That was very insightful what you just said. And I want to talk a bit more about the connection between values and making programs more accessible and employee focused. That's another theme in the report and we see progress and we see best practices emerging, but I would argue that they need to emerge much more strongly and quickly, but take us back a little bit to board's values and talk about how values, when you demystify them, involve really bringing people into the program with the want tos, as well as the must haves.
Forrest Deegan:
For me, the stats around accessibility, they make a ton of sense in terms of your high performing programs are going to be focused on making the documents available, making them searchable, simplifying where possible, translating into the languages that you're employees leverage, right? To me, those actions are, are really table stakes with respect to an effective program and the thoughtfulness and the idea of keeping the end user in mind, that sentiment, which, which drives accessibility, I think, is communicated to your employees, right? When they see that when they have the access to it, where the information is in a logical place, where it's stored where the other corporate documents or the other FAQs guidance they look for from the company for an IT issue or for a T and E report. If the guidance documents around your compliance program are as accessible, if not more accessible I think that alone sends a message.
I do think that the percentages around those that are for focusing on accessibility they were still right around the 50% mark. I think those numbers need to go up. I also think that to really drive home your value system and to demystify a program and what it means to act with integrity, not only do you have to make the documents accessible, you've also got to work on making them actionable, right? You need guidance that is relevant and actionable. You can have a clear rule that is simple to understand, but if it is unclear how to operationalize that, or how it deals how it is imported into the day to day running of the business, then it's just words on a page. Maybe they can get to the page easier now, but they still can't use it effectively. So I think that those two concepts, accessibility and utility are really what drive an ability to demystify what your program is about.
Susan Frank Divers:
If I hear you correctly too, you are also saying that it reflects respect for employees.
Forrest Deegan:
Yes. I think that's so important. I'm just passionate about that idea that you can send messages, right? How you present your information can tell a lot about what the company values and making it accessible, including in your language, from your corporate purpose, your value statements, how your CEO talks on a day to day basis. If those hooks are appropriately cascaded through your ethics and compliance messaging, it's clear to everyone in the organization that these are priorities, consistent with how we talk about hitting our numbers for the year, or consistent with talking about our expansion for the year, if we're using the same language and if it rolls up in the same way, that's how you ensure it is embedded.
Susan Frank Divers:
Yeah. I completely agree with you. It's tempting to want to spend more time in this area, cause we're both passionate about it. I will just close it out by saying that only 25% of the organizations this year reported that they're using mobile apps. And when you think back on the pandemic and how people were fighting for bandwidth and may have had children at home using bandwidth and computers, we've seen some stirring examples of companies like Dell, really putting big components of their program on mobile apps. And I hope we see more of that.
But just to look forward now, as we draw to the end, we saw a lot of innovation and pivoting, and yet we also saw some areas that lag behind where people haven't, perhaps, revised their training curriculum as quickly as you might expect or made some of these other innovations like mobile apps. First, why do you think that it is? And secondly, what do you see happening in the next couple of years in terms of best practices for programs?
Forrest Deegan:
To use mobile devices and investing in making your program documents, your governance materials accessible and your training included there in, I was surprised at that 25% number. But as I thought about that particular number and kind of what's next, it made sense because I'm reminded of my own mindset in 2020 and the idea that we didn't know how long this is going to last. And so I'm confident when it comes to some of training activities, some of the new technology investments, the answers that you've got for the most recent running of the survey, I think they reflect everybody's hope, and their investment in that, that first year, year and a half the pandemic that we can ride this out, right. We don't, don't have to start over again with the entirety of our program here. And I think that folks, by now, will have come to the realization that, look, we're not going to get back to a place where everybody is in the office on the same system during the same hours of the day.
How does our program have to in this, whether it's remote or hybrid, certainly transitional time, how do we meet our people where they are and where they're likely going to be for the time being? So I do think your answers will change going forward when it comes to investments in mobile, when it comes to investments in audit processes and controls that take into account the lack of that ability to look over the shoulder, the lack of the ability to rely on tribal knowledge. I think that's going to be the future for all of us. The other thing that looking at kind of where the investments were and they'll go next, what really spoke to me was the idea there was value in having a system in place, right? I think back again to 2020 and those folks that did not have systems in place that relied upon those in-person trainings or audits or what have you, they did have to start from scratch when it came to, how do I do this job, or demonstrate this control in a remote way.
Whereas if you had an up and running third party risk management system, you would have to make changes, you'd have to make tweaks to your risks and what they counted for based upon financial instability, operational constraints, but you were working from something. You were able to make adjustments and not start over. And so I think that contrast also, I think, will serve programs well, because the utility of these systems, I think has been revalued by companies because they see how capable they were of pivoting in ways that some of the more informal methods just were not.
Susan Frank Divers:
To take an example of what I think you're saying. It's interesting to me that a lot of top programs still relied on a tremendous amount of in-person training. Yes, in-person, training's more effective in a lot of ways. It makes those connections, but they may have neglected a bit, their online training and I'm reminded of one, CECO who described it as sheep dip training. As you point out we are where we are and we're not going back two years ago. And so I think the level of innovation we're going to see in areas like training, making it shorter, more video, mobile friendly, more tailored to employees roles in the company. It sounds like that will happen because people have come to realize that they have to rely on their system, that the systems have to be good.
Forrest Deegan:
I'm glad you brought up the idea of training and the different types that are available in an online way. A stat that isn't in here is, is the idea of shorter training, right? And I think that as we need to put more arrows in the quiver of online training of remote accessible training, that innovation is going to continue and that not only will training get shorter and more customized, but the location of it, the availability of the rule or the lesson, right where the potential action could be. You've got to approve the invoice, the guidance for that should be baked into the system. Same thing with, if you have to approve the use of a new vendor, right? The expectations of the company, they need to be right there. They need to be tied directly to the process itself. I think, again, that works towards the idea of embedding the rules and the system into your actual day to day activity.
Susan Frank Divers:
Very well put, more of a just in time approach and again, that emphasis on accessibility for people. Well, I could have this conversation all day and there are so many areas in the current Program Effectiveness Report that we haven't had a chance to talk about, but I know you have other things to do. And I really appreciate you spending the time with us today Forrest.
Forrest Deegan:
It's my pleasure. I appreciate the opportunity to do a deep dive into the report. I love a quote from page six about the idea of having a cut of core values translated into understood behaviors can be more potent and powerful than a thousand rules. I love that cascade down because I think that is the approach that works. And when you couple that approach, which requires consistent communication, when you couple that with the ability to measure response, the ability to track change behavior, that's how you win with respect to these clear communication and standards that are transparent and that people are held accountable to.
Susan Frank Divers:
Thank you, Forrest. Talking with you about the program effectiveness report is truly a pleasure. Before we leave the podcast and I close it out. Was there anything else that you wanted to talk about or any other insight that you wanted to share?
Forrest Deegan:
It's always dangerous to ask me that question, but if you don't mind, there was one other kind of collection of stats that really me just because I think that they inform one another. I think it was on page 11, there's a number of stats around what top rank programs are doing. One was almost three times anticipate greater engagement by the boards of directors and almost two times expect more regular engagement by leadership, right? So there's an expectation that the board and leadership are engaged with the program and on that same spit page, it talks about having policies that are simplified and streamlined and having training that is interactive and web based. And to me one leads to the other. If you have a program that is simpler to understand and has been streamlined and has been built in a way to make it interactive, it is going to be easier to support leadership engagement and the board of director buy-in, if you are giving leaders simpler rules that resonate and reflect the reality of the business, you're going to obtain that buy-in in a natural manner.
Forrest Deegan:
And if you're able to talk about the program and if they're able to talk about that program and have that engagement, then that drives that next level with the board of directors. And so I think you pat have to develop a virtuous cycle here of building a program that's based in the reality of your business that resonates with the values of the company and what the company's priorities are, which will allow your business leaders in talking about those business priorities, to use the same language, to pull the same levers when it comes to their engagement with your ethics and compliance program, it really has to be considered part of that whole in order to work.
Susan Frank Divers:
Oh, I love how you've articulated that virtuous circle between the values focus, the simplified employee-facing messages and mechanisms, and then leadership becoming more natural.
Forrest Deegan:
That really is the heart of demystifying your program, right? You've got to make it based in your reality. And you've got to use the language of leadership in order to get there. And if you're doing that, you will have your buy-in at the top and in the middle and it can drive all the way down.
Susan Frank Divers:
Well, that's a great note to end on. Forrest, thank you so much for spending time with us today and thank you to our listeners for joining us for another insightful conversation. My name is Susan Frank Divers, and we'll see you next time on the Principled Podcast by LRN.
Outro:
We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on apple podcasts, Stitcher, Google podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract:
“You don’t want to wait until you already know that there is a culture problem to really understand the culture of your organization. You should constantly be a student of the culture of your company, because we all know nothing can destroy an organization faster than a toxic culture.”
- Dottie Schindlinger
Culture is top-of-mind in the boardroom. How do you manage it and measure it? What does it look like to act decisively on culture, and what ethical implications come from those decisions? In this episode of the Principled Podcast, host David Greenberg talks about the critical role of boards in shaping ethical corporate culture with Dottie Schindlinger, Executive Director of the Diligent Institute and co-host of The Corporate Director Podcast for Diligent Corporation. Listen in as the two dig into the relationship between boards and ethics and compliance teams and discuss how that can inspire good governance. The key to success? Empathy.
Additional Resources:
Report: LRN Benchmark of Ethical Culture
Featured guest: Dottie Schindlinger is Executive Director of Diligent Institute, the global corporate governance research arm of Diligent - the largest SaaS software company in the Governance, Risk and Compliance (GRC) space. She co-authored the book, “Governance in the Digital Age: A Guide for the Modern Corporate Board Director,” and co-hosts, “The Corporate Director Podcast.” Dottie was a founding team member of the tech start-up BoardEffect, acquired by Diligent in 2016. She is the Board Vice Chair of Alice Paul Institute and is a Fellow of the Salzburg Global Seminar. She graduated from the University of Pennsylvania, and lives in suburban Philadelphia.
Dottie Schindlinger is Executive Director of Diligent Institute, the global governance research arm of Diligent Corporation. She co-authored the book, Governance in the Digital Age: A Guide for the Modern Corporate Board Director and co-hosts The Corporate Director Podcast. She helped launch and grow the start-up BoardEffect, acquired by Diligent in 2016. Dottie is Vice Chair of the Alice Paul Institute and is a Fellow of the Salzburg Global Seminar, and she is a graduate of the University of Pennsylvania.
Featured Host: David Greenberg serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. Mr. Greenberg’s previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.
Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee. As one of five senior vice presidents of the corporation, he served on the Management Committee, which oversaw all strategy and company operations. He was also a principal architect of the company’s very successful efforts to end the ‘tobacco wars’ which threatened the company’s very existence. Earlier in his career, Mr. Greenberg was a partner in the Washington D.C. law firm of Arnold & Porter and also served as Legislative Director and General Counsel of the Consumer Federation of America. He attended Williams College and has JD/MBA degrees from the University of Chicago.
Greenberg has testified before the U.S. Congress, the European Union, the Israeli Knesset and other governmental bodies over two dozen times and has appeared on ABC Nightline, the CBS Morning News, BBC Morning, and the PBS News Hour, and has spoken at leading events for CEOs and boards.
Abstract: Gone are the days of writing codes of conduct with pages of unreadable text, legalistic language, and corporate jargon. Today, codes are being designed visually and verbally to better develop ethical, values-based cultures. But how do you transform your code into a useful tool that helps people do the right thing?
In this episode of LRN’s Principled Podcast, we another favorite past conversation between Senior E&C Advisor Jim Walton and Mary Fair-Matthews, Senior Corporate Counsel and experienced E&C expert at Kellogg Company about how to create a code of conduct that inspires ethical behavior.
Listen in as the two discuss how Kellogg reinvented their code to further deepen their commitment to ethical conduct through a combination of reimagining code structure, developing a mobile app, and administering training.
Additional resources:
https://www.kelloggcompany.com/en_US/about-ethics.html
Featured guest: Mary Fair-Matthews has been with Kellogg’s Labor and Employment (“People”) team since June 2005. She has served in several capacities including providing legal advice and counsel in HR related matters, managing employment litigation and EEO cases, and supporting the Ethics and Compliance function.
In 2017, Mary began leading the global Ethics and Compliance function with the goal of continuing the legacy of driving a strategic vision for compliance. Mary reviews, evaluates, communicates and manages compliance concerns and policies. She also implements best practices in training and communication. Mary manages the global investigation function which is made up of a team of investigators around the world who are dedicated to maintaining confidential reporting mechanisms and a consistent investigation process to resolve employee concerns.
Prior to joining Kellogg, Ms. Fair-Matthews was a senior associate in Dykema Gossett where she represented corporations in various labor and employment matters. She was a judicial law clerk in the United States District Court for the Eastern District of Michigan. She also worked as an associate for Plunkett & Cooney.
Featured Host: Jim Walton is a member of LRN’s Ethics & Compliance Advisory Services Team – with over 25 years of professional experience in corporate, institutional and government settings, spanning the fields of ethics and compliance; environment, health and safety; and energy management.
Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics & compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third party due diligence reviews; and helping managers at all levels become better ethical leaders.
Jim is a Certified Compliance and Ethics Professional.
Abstract: In this episode of the Principled Podcast, we share a past conversation between Senior Ethics & Compliance Advisor, Emily Miner and her colleague Susan Divers, Senior Ethics & Compliance Advisor. The two talk about how values have the power to guide behavior, shape culture, and strengthen businesses—empowering them to outperform. But what exactly does it mean to take a “values-based approach” to ethics and compliance? Listen in and learn how companies can leverage core values to build effective ethics and compliance practices that drive better business outcomes.
Featured guest: Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
Featured Host: Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
We’ve officially wrapped season six of the Principled Podcast and taking a break for the holidays. Stay tuned for more conversations on culture, ethics, and compliance in the coming calendar year. Happy holidays!
Abstract: CEOs and former CEOs are a dominant force on the boards of major companies. They are also the most sought-after candidates when boards search for new directors. How do these company leaders, so accustomed to being the principal decision-makers in their companies, adapt to the more limited strategic oversight and advisory role that boards play? In our last episode of season six on the Principled Podcast, host David Greenberg explores the lessons that CEOs and former CEOs can bring to boards about purpose, culture, and values. Listen in to his conversation with Walt Rakowich, the former CEO of global real estate organization Prologis and current board director and audit committee chair for organizations including Host Hotels and Resorts, Ventas, and Iron Mountain, Inc.
Featured guest: Walter C. Rakowich is the former CEO of Prologis, a leading provider of distribution facilities and services with over $50 billion in assets and operations in the Americas, Europe and Asia. He joined Prologis in 1994 and was the Senior Vice President/Director of the company’s Mid-Atlantic region where he was responsible for expanding the reach of Prologis to the leading logistics markets in the Midwest and Atlantic states. From December 1998 to January 2005, he served as Managing Director and Chief Financial Officer and served as the President and Chief Operating Officer from January 2005 through November 2008.
Walt currently serves on the board of directors of Host Hotels & Resorts, where he is the company's audit committee chair and member of the governance committee; Iron Mountain Inc., where he is chairman of the audit committee and member of the governance and investment committees; and Ventas Inc., where he is chairman of the audit committee. He also serves on the advisory council of Gender Fair. He has served as a member of the executive committee and the board of governors for the National Association of Real Estate Investment Trusts (NAREIT), the primary industry group for REITs in the United States.
Walt earned his MBA from Harvard Business School and his BS, with distinction, in Accounting from The Pennsylvania State University.
Featured Host: David Greenberg serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. Mr. Greenberg’s previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.
Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee. As one of five senior vice presidents of the corporation, he served on the Management Committee, which oversaw all strategy and company operations. He was also a principal architect of the company’s very successful efforts to end the ‘tobacco wars’ which threatened the company’s very existence. Earlier in his career, Mr. Greenberg was a partner in the Washington D.C. law firm of Arnold & Porter and also served as Legislative Director and General Counsel of the Consumer Federation of America. He attended Williams College and has JD/MBA degrees from the University of Chicago.
Greenberg has testified before the U.S. Congress, the European Union, the Israeli Knesset and other governmental bodies over two dozen times and has appeared on ABC Nightline, the CBS Morning News, BBC Morning, and the PBS News Hour, and has spoken at leading events for CEOs and boards.
Abstract:
“To ensure adequate diversity of thought, gender and ethnicity, it’s critical that companies look beyond the traditional experience to recruit board members.”
- Kim Williams
To what extent has there been progress around inclusivity, diversity, and gender parity at the leadership level and in the corporate world in general? How do boards and oversight practices need to evolve to further progress and meet the challenges facing global companies today? In this episode of the Principled Podcast, Marsha Ershaghi Hames, Partner at Tapestry Networks, guest hosts a conversation about board diversity and how directors can ensure their companies do business the right way with Kim Williams, board member of Weyerhaeuser, Xcel Energy, MicroVest, and the E.W. Scripps Company. Listen in as Marsha and Kim discuss the critical role of boards in shaping ethical corporate culture, and how Kim’s experience as the only woman in the room shaped her roles as a corporate leader and board director.
What you'll learn on this episode:
[1:45] Kim’s background, education and career.
[4:45] - How being a woman has impacted Kim’s career path.
[8:20] - The responsibility held by corporations in shaping progress and change.
[12:02] - Instrumental figures and mentors who impacted the trajectory of Kim’s career.
[13:54] - How Kim landed her first board role and how the recruitment landscape has changed.
[17:03] - Emerging challenges boards of large global companies are facing today.
[20:23] - What role do boards play in influencing the shape of culture?
[25:25] - Cultivating society to support authenticity.
[28:16] - Board oversight of safety culture in cultivation ethical culture.
Featured guest: A 26-year career in the Investment Management business allowed Kim Williams to develop important skills which included strong analytical abilities, significant financial and strategic awareness, leadership and communication capabilities, which are always reflected in a professional and proactive attitude. This extensive business and analytical experience has translated into an active participant in the boardroom. As a corporate board member, Kim has been required to address important issues including challenging business conditions, changing business models, corporate restructuring, asset divestitures, management succession, activist shareholders and proxy battles.
Kim is currently a director of Xcel Energy, EW Scripps, and Weyerhaeuser Company. At Xcel, she serves on the Governance, Compensation and Nominating Committee and Chairs the Finance Committee. At E.W.Scripps, she serves as Lead Director, Chair of the Audit Committee and a member of the Governance and Nominating Committee. At Weyerhaeuser, she serves as a member of the Audit Committee and the Governance and Nominating Committee.
Featured Host: Marsha is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement.
Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc. a global governance, risk and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority.
Marsha has been interviewed and cited by the media including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics and more. She hosted the “PRINCIPLED” Podcast, profiling the stories of some of the top transformational leaders in business.
Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc. an integrative supply chain advisory firm and Compliance.ai, a regulatory change management firm.
Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.
Transcript: Intro: Welcome to the principal podcast brought to you by LRN. The Principle Podcast brings together the collective wisdom on ethics, business, and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Marsha Ershaghi Hames: How are boards of directors of major companies coping in 2021 with the increasing expectations from so many stakeholders? How can directors ensure that their companies are doing the right things and doing business in the right way? Hello, and welcome to another episode of LRN's Principle Podcast, where we continue our conversations about the critical role of boards in shaping ethical corporate culture. I'm your guest host Marsha Ershaghi Hames, a partner at Tapestry Networks. And today, I am joined by Kim Williams, an accomplished corporate leader, who currently sits on the boards of Weyerhaeuser, Excel Energy, where she chairs the finance committee, Micro Best, and the EW Scripps Company, where she chairs the board and is also chair of the audit committee. Kim is also involved in nonprofits that focus on women's issues. Kim, thank you for coming on today's Principle Podcast.
Kim Williams: Marsha, thank you for the opportunity to share something of my experience and my thoughts on board service with your audience.
Marsha Ershaghi Hames: Excellent. So let's jump right into it. I mean, you've had such an accomplished career in investment management. You retired as senior vice president, partner, and associate director of global industry research at Wellington Management Company, and then turned to a distinguished career of service on both corporate and nonprofit boards. Can you tell us a little bit more about your story, your background, and career?
Kim Williams: Thank you, Marsha. I grew up and was educated in the UK, where I graduated with a master's degree in economics. I had fully expected to find a position as an economist, as I assume that that's what my master's degree had prepared me for. But serendipity introduced me to the investment management business, a relatively underdeveloped industry at that time in the UK. I still can't remember how I discovered the opportunity. I only know it wasn't through the internet, as I grew up at a time before the internet, but the attractions of the industry was that they provided me with the opportunity to employ my analytical skills, work independently, and be judged on my own performance. I worked, initially, as an analyst for a pension fund, which at the time, was one of the largest internally-managed funds in the UK. And then when my husband and I moved to the US, I continued my career as an analyst, first for Luma Sales, and then for Wellington Management, where I completed a successful 20-year career, initially as an analyst, and subsequently, assuming a broader management role in the firm.
But then following 25 years of commitment to the investment management business, I chose to retire at what could be described as the pinnacle of my professional career. I was a partner of one of the largest investment management firms in the world. I'd been featured in Barons, and I had been repeatedly recognized as one of the best in my field. It was therefore with some trepidation that I embarked on a new adventure and left the comfort of my established career to apply my professional expertise in a different way and that, as a corporate board member. And as you mentioned, today, I currently sit on the board of three public companies.
Marsha Ershaghi Hames: Kim, what an illustrious story. And I'm so moved because one of the things that really has captured me is that when you began your career, pre-internet and all of that, in investment management, you were one of the relatively few women in that industry. I've read an article, as we were preparing for our conversation, profiling some of your intense dedication and commitment to women's issues, where you described your career start as one steeped in tradition but entrenched in misogyny. Can you share more with our listeners about how the sexism you faced, and even the experience of being and walking and taking your steps as the only woman in a room, shaped the early steps in your career?
Kim Williams: Yes, Marsha. I suppose I've never thought of myself as a trailblazer or as a role model during my career. But, as you mentioned, it was not uncommon for me to walk into a meeting 200 people and then to realize that I was the only woman in the room. And yes, this did bring some uncomfortable moments. I had portfolio managers tell me that women had no business in the investment management industry, that, as a woman, I was not equipped to follow engineering companies as an analyst, that my talents were better served focusing on consumer companies on two occasions, I discovered, after the fact, that had I not worked out, they would never have hired another woman.
And two particularly uncomfortable moments come to mind when I was still working in London and early in my career. A doorman directed me to the kitchen when I asked for the luncheon that I was due to attend. And if that wasn't bad enough, he was very unapologetic when I returned and informed him that I was actually a guest and not the help. In fact, he placed the blame squarely on me. I was a woman, so how was he expected to know that I was other than the help? And, on another occasion, a senior partner at an investment bank asked me if I had come to serve the drinks. These incidents were early in my career, but I think allowed me to develop an inner strength and fortitude and forced me to be more assertive and courageous than my personality might suggest. Further, it really made me more determined to demonstrate that I should be judged by my performance. But that said, I would also acknowledge that there is an advantage to being the only woman in the room. Management seldom forgot me, for better or worse. And, in spite of the challenges, I thrived in the environment. I love the daily stimulation, the constantly changing schedule, the need to respond to the immediate nature of events, and I grew to relish the challenge.
Marsha Ershaghi Hames: Kim, just the stories you're sharing, give me goosebumps. And what pains me is you were experiencing this as a pioneer at a time where you simply didn't even have the open forums to share your experience more publicly or more privately, as we do today. And I think as a mother of a daughter who's also in college right now pursuing her next chapter in life, our young women cannot be what they do not see. So if that doorman simply couldn't process or relate to how you had such a position of impact and influence in leadership, it's not just our daughters. It's our sons and it's our communities that just really need more role models like you. So if I take a step back and really reflect on the courage of this experience, when you look at progress today around inclusivity, around diversity, gender parity, if anything, in not only your industry and journey but, generally, in the corporate world, has there been progress? I mean, what is the responsibility of the corporation to be more, shall I say, intentional about supporting and shaping change and progress?
Kim Williams: On balance, I'd have to acknowledge Marsha that there has been progress, but still, I think we would all accept, remains a work in progress. Investors, interestingly, are demanding increasing diversity on corporate boards and in the C-suite, which may accelerate this process, because it's been clearly demonstrated that increased diversity contributes to enhanced financial performance. And I think this further reinforces the imperative of enhanced diversity, as we're not taking full advantage of valuable assets, but increased participation has been achieved by women in corporate board rooms. At the end of the first quarter of 2021, 24% of all board seats, in the Russell 3000, were occupied by women. And this is versus 15% in 2016. So some progress you can see, but I was somewhat shocked to see that there are still 5% of the Russell 3000 that have all-male boards and no female representation, and only 4% of S&P 500 companies have a female chair. And, in fact, an interesting fact, there are more male chairs called John in the S&P 500 than there are female chairs.
And I think looking to the C-suite, there, less than 10% of the S&P 500 have a female CEO. I'm actually proud to share and report that Jean Hynes assumed the position of CEO of Wellington management earlier this year, the first woman in that role. And Jean Hynes was previously the only second female managing partner. So some progress in the investment management industry, too. I do believe, to your point, Marsha, it's the responsibility of boards and management to be more intentional in ensuring increased diversity. I acknowledge that this requires boldness to accomplish diversity goals, and you have to overcome potential resistance or reluctance based on that unfounded belief that pursuing diversity goals requires a lowering of standards.
Increasingly, the next generation of talent is demanding a diverse workplace. And if you don't embrace diversity, you will not be seen as the employer of choice. I'm just speaking to my board experience. I'm proud to know that the boards on which I serve have broad diversity, thought, gender, and ethnic diversity, and each company has an emphasis and a commitment to achieving further diversity at all levels of the workforce. I would note, as you did earlier, that I chair the Scrips board, as well as its audit committee, and I chair the finance committee at Excel. And at Weyerhaeuser, two of the three committees are chaired by women.
Marsha Ershaghi Hames: Mm-hmm (affirmative). So while there is some progress, there's always a particular mentor or instrumental figure in all of our lives that either allows us to find the courage or see the examples of the how, the pathway forward. Were there any significant mentors or sponsors, in your journey, that really had an impact on the trajectory of your career path?
Kim Williams: Yes, indeed. And I'm grateful to those individuals who served as important mentors to me during my career and provided me with guidance and encouragement at critical points in my career. And this is not just in the investment management business, but also through my corporate board experience but not surprisingly, given the nature of and the challenges of both the industry and more moving into the corporate board world, they were all men, but they allowed me to seize the opportunities afforded me and capitalize on my abilities and develop new skills. They also provided me with important opportunities, but this has really encouraged me to seek out opportunities to support other women to realize their full potential. And I work actively, wherever possible, to advance and promote women.
Marsha Ershaghi Hames: Well, and building on that, when we talk about the board's own diversity, reflecting on its own culture and diversity, there's been a lot of conversation around the need to bring in other types of experiences and perspectives, more cognitive diversity into the boardroom. And a career like yours, in investment management, was not a typical background for a director when you joined your first board. Could you tell our listeners a little bit around the journey, too? How did you land that first board role? How have things maybe changed with CEOs and boards becoming a little more open to considering different skills and backgrounds for board seats?
Kim Williams: Yes, Marsha, indeed, you are correct. I had a very unconventional background for seeking a corporate board position. And when I embarked on my search, which was now some time ago, the majority of board members were either sitting CEOs or retired CEOs or other C-suite executives. But I was fortunate to encounter companies with a willingness to consider more diverse experience as they look to recruit board members. This was bolstered by the reputation that I enjoyed and the relationships and credentials that I had established during my career. When I was an analyst, I had covered both Weyerhaeuser and EW Scrips. And the company had a first-hand glimpse into the type of experience that I could contribute to the boardroom. Unless, anybody think that these CEOs were expecting a pass if I went into the boardroom, I enjoyed a particular reputation as a tough questioner. And there was actually a cell site analyst who wrote a report about my election to the Weyerhaeuser board, saying how courageous the company was in inviting me into the boardroom.
But I think it's increasingly clear that to ensure adequate diversity of thought, gender, and ethnicity, it's critical that companies look beyond the traditional experience to recruit board members. I would highlight potential areas of recruitment, such as executives with HR experience, given the heightened focus and scrutiny on talent management and human capital management. I'd also look to the role of the chief information officer to strengthen the oversight of cybersecurity risk. And then a word about financial analysts, who bring both analytical skills but also investor perspectives, which I think are increasingly important, into the boardroom. And I'm seeing that happen. And many of my former investment colleagues and partners, both male and female, currently sit on corporate boards.
Marsha Ershaghi Hames: Well, I like that you've really also highlighted that there is, at times... And I think the pandemic revealed this quite a bit. There is an importance to break the groupthink, to have the courage to ask, or to be a little more investigative around some of the uncomfortable issues, because we saw, with risk, talent, all of these matters unfolding over the last 18 months, it takes those skills and experiences to be able to step in and courageously ask what may be an unpopular question to move the organization forward. So turning to some of your current board service, what are some of the more challenging or emerging challenges that boards of large global companies are starting to face today as we sort of... I don't even know if we could say we're coming out of the pandemic, but we learned a lot. And how do boards and oversight practices need to really start to evolve to meet these challenges?
Kim Williams: Well, before I answer that question, Marsha, I'd like to just reflect on that previous comment that you made. When I think about diversity, I think about it in its many facets. And indeed, when I think about recruiting and look to who we should bring onto the corporate boards I currently sit, I really think about "What do I not know, and what expertise do I need in the boardroom in order to unearth those issues that somebody else has the ability to define?" I think diversity, in thought, is just as important as all the other areas of diversity in order to make sure that we're getting the best questions asked and the best results for a corporation, absolutely.
But thinking about this question that you've posed to me now, I think the simple thing would be, where to begin? The last 18 months have been unprecedented for many people, obviously not just corporate boards. We've been dealing with the challenges of COVID, a virtual work environment. And the companies I'm involved with, employees had to continue to operate, either to deliver TB news or provide wood products or to simply keep the lights on in our service territories. And the challenge to during this period was really keeping those employees safe and adapting to a work environment which was often from home and making sure that the necessary technology was available to employees and that the appropriate control environment was there. And, on a number of boards, we were meeting weekly, of course, remotely, but given the uncertainty of the time and the lack of visibility, this became necessary.
But now, the issues that we face, while, as you mentioned, we continue to deal with COVID, we have the issues of the return to the office and the implication of vaccine mandates and how they affect the companies. We have cybersecurity and increased ransomware threats and attacks. And also, we're dealing with the issue of the Great Resignation. Demographics were really already presenting a challenge with baby boomers retiring at unprecedented levels. We are having additional pressures as employees are reassessing their priorities and leaving the workforce or moving to different opportunities. So this is forcing us to address the future of work and the role of technology and how technology might play a role in providing solutions.
And then, of course, there's the topic of ESG and EDI, talent management, and the reporting requirements around those and which committees should be addressing each of these individual topics. And then, of course, climate change. These are in no particular order and doesn't reflect how I, or any of my board, set priorities. But I would also just reiterate that, coincidentally, we, as a board, are also charged with the regular work of the board, with the oversight of strategic direction, the review of management succession, management talent and performance, capital deployment, and the review of the appropriate capital structures, holding management accountable for delivering financial results, and ensuring the integrity of the financial results. So I'm sure I've left something out, but as you can see, this is a very full plate that we have.
Marsha Ershaghi Hames: And with this very full plate, I mean, it's overflowing, from cyber to talent to capital matters. You've been a part of our conversations with the Ethics Culture Compliance Network focused on oversight of culture. How can a board really... I mean, culture itself isn't a standalone topic on an agenda. And as you've mentioned, as we're transforming how we work, how we recruit talent, how we develop the next generation of leaders, in this new digital world, how can boards potentially approach thinking differently around oversight of culture, or what role can the board play, if any, in influencing the shape of culture in this new world?
Kim Williams: Well, I think boards have an important role, Marsha, in ensuring that managements are overseeing culture. And, in fact, boards themselves should be ensuring that the mission, vision, and values of a corporation are really reflected in the culture of the enterprise and then holding managements accountable for this. I think that, to the extent everything begins with tone at the top, but it's then also important for boards to really understand and appreciate if that tone at the top and that mission statement really translates into other levels in the organization. I think that's been one of the things that I have found a challenge in over the last 18 months, with everything being done remotely, because I enjoy spending time in the divisions with employees below the C-suite, where you have the opportunity to really understand and appreciate if what is being articulated by senior management is really being embraced and incorporated into the enterprise writ large.
I, particularly, also really rely on internal audit to be an auditor of corporate culture. And again, they have been challenged with being able to go out into the operations and into the day to day of the employees. So I think that's something that, really, I look forward to getting back on the road and traveling to see people. But I think that there just are many opportunities that boards have in order to really encourage management to act boldly, to be held accountable, and to make sure that the appropriate KPIs are included in compensation metrics to understand how managements are approaching talent management, particularly differently, if they have not achieve the desired diversity objectives. And I think it's, it's also important to focus on strategies to foster inclusion within an organization be because it's not just sufficient to attract a diverse workforce, you then have to retain them.
And so we also own need to recognize that this perhaps comes back to know some of the challenges around this. I think we need to recognize that there will be those in an organization who do not embrace the fact that we need a more diverse, inclusive workforce and may even feel threatened and believe will be at risk as the company pursues additional diversity. So I think it's the challenge of management and the board to really reinforce this as a priority, why it's a priority and that it will contribute to a better performing organization as a whole, not just will better some members of the community at the expense of others. And then just, finally, boards really do have an important oversight role. And I, particularly, have been involved with interactions with identified high performers in organizations to demonstrate the type of opportunities that are available, particularly to young women, and to provide guidance in how they might view their upcoming challenge and overcoming those challenges. But I do think, finally, it's that importance of reinforcing this as a priority of the board.
Marsha Ershaghi Hames: So you really are touching on a number of points. And one thing that pops in my mind as you describe this opportunity of intentionality and the potential of some individuals feeling threatened or fearing some of the diversity, as I think of authentic leadership and how can we cultivate societies and communities and corporate work horses and cultures that really support that sense of authenticity, I know that, in a lot of the research we're seeing around the new generation that's in the workforce, they desire to work and be aligned. And you mentioned this, values-oriented organizations and authentic and committed and intentional organizations. So it's not just recruiting diversity, but it's identifying ways to retain and support those voices, so...
Kim Williams: I think, Marsha, that you raise a very good point there. I am fortunate, in my board service, to be involved with three companies who have very well-articulated mission, vision, and values, which frankly, we are finding as a competitive advantage as recruit people. And I think it's important... Again to highlight something that you said, it's important to think about all of the stakeholders that are involved with that, because it not just about one particular group, but you have to include whether it's viewers of the television stations that watch our programming, whether it's the communities that are taking electrical service in our service territories, or whether it's what we're doing in terms of environmental stewardship at Weyerhaeuser. These things are all very important in really speaking to being able to attract and retain talent, to make sure that people actually feel proud when they work for you.
Marsha Ershaghi Hames: It's so true. It's so true how much we are connecting purpose and commitment with organizations to impact. And we're seeing more and more that, with gen Z especially, they want to work for organizations that not only fulfill what they're passionate about but are contributing to the communities that they serve and that they work in. But we're reaching in near the end of our time together, Kim, and I want to touch on one point, which I think is really crucial for us to discuss and that is safety. You serve on the boards of companies, where safety is critical, and it serves actually as a key performance indicator. It's really a part of the value and mission and purpose of the organization. What lessons can you share with listeners around board oversight of safety culture, and how can this help apply to our listeners thinking about cultivating ethical cultures across an organization?
Kim Williams: So when we were initially having those conversations about ethics and the ethical value of companies and how you monitor that, it really made me think about what we're doing both at Excel and at Weyerhaeuser on safety and creating a safety culture. And those two organizations have very dangerous occupations, and it's of utmost importance that we ensure that our workforce returns to their families safe every night. And, in order to do that at, and to foster a culture of safety, it has to... Again, tone at the top, making sure that this is something that is embraced by everyone, not just the senior leadership but the board and all members of the community and employees. And I think where the board has a role to play is that conveying to the employees that it is a priority for us.
On both those boards, we begin every board meeting with either a safety moment or an update on safety to just reinforce the notion that to create a culture, you really need to continue to do it because culture is something that can be very fragile. If you don't continue to reinforce it, it might not survive. And so, again, I think it just has to be something that's ingrained in the culture and is part of what you do on a day to day. I notice that, in my own actions, when I'm at home, I don't do anything that could be considered unsafe. And I'm always encouraging those around me to make sure that they are operating and working in safe conditions. But again, it's really about tone at the top, board engagement with the broader workforce to convey that safety really is a key principle. And I think you can do that with culture. And the notion that establishing a strong tone with respect to an ethical culture... And while you might have a performance-driven culture, that doesn't preclude you from also having an ethical culture, because it has to be demonstrated that financial results cannot be when you jeopardize ethical standards.
Marsha Ershaghi Hames: That is a great way to end. Ethics is non-negotiable, and performance shall be achieved and pursued but not at the expense of how we get there. So, Kim, clearly this is a conversation we could be having all day. I've really enjoyed learning. I've learned so much from you, and I hope that we have the opportunity to continue the dialogue in a future podcast, but we're out of time for now, so thank you for joining me on this podcast.
Kim Williams: Thank you, Marsha. It was a delight, and I really enjoyed it, so thank you for allowing me to share my story.
Marsha Ershaghi Hames: Absolutely. And to all of our listeners, I'm Marsha Ershaghi Hames, with gratitude for tuning in to The Principle Podcast from LRN. And I'm going to sign off. Thank you.
Outro: We hope you enjoyed this episode. The Principle Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures, rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract:
“As things are changing in the world in which we live, they are changing in the boardroom as well. If you are going to be successful as a company or board, the culture plays such a mission critical role in that for the long term.”
- Pat Condon
Audit committees play a central role in ensuring the financial integrity of public companies and consequently serve as a backbone for overall board governance. They also provide a great deal of the oversight for boards on issues like corruption, fraud, and cybersecurity. But how do audit committees impact the culture, ethics, and compliance of major companies? In this episode of the Principled Podcast, host David Greenberg explores this question with Pat Condon, Audit Committee Chair and board director of Entergy Corporation. Listen in as the two discuss the various priorities of board committees and how they help shape a board’s impact on corporate culture.
What you'll learn on this episode:
[2:40] The overall architecture and role of audit committees.
[4:30] How the roles of the audit community have evolved during Pat’s time in the field.
[5:20] How corporate culture informs Pat’s decisions as a board member and audit chair.
[8:05] Advice for ethics and compliance officers to build a stronger relationship with the audit community.
[11:32] Can audit communities pay enough attention to corporate ethics and compliance discussions?
[16:39] How can culture be measured?
[20:00] The evolving expectations of stakeholders of major companies.
[22:15] What do boards need to change to keep up with evolving expectations?
Featured guest: Pat Condon joined Deloitte & Touche LLP as a partner in 2002, where he provided various consulting and attest services to clients and held a number of regional and national leadership positions until his retirement in 2011. Prior to joining Deloitte & Touche LLP, he was a partner at Arthur Andersen LLP where he provided similar services to clients and held similar leadership positions.
In addition to serving on the board of directors and chairing the audit committee of Entergy Corporation, a Louisiana-based integrated energy company, Pat also serves on the boards of Urban Gateways, a Chicago-based 501(c)(3) organization whose mission is to educate and inspire young people by delivering high-quality, accessible arts experiences that advance their personal and academic growth; and the Brother Rice High School Foundation, also a Chicago-based 501(c)(3) organization. From May 2012 until its December 2015 sale to The Kroger Co., he also served as an independent director and chair of the audit committee of Roundy’s, Inc., a leading Midwest grocery company located in Milwaukee, Wisconsin. And from March 2012 to May 2017 he served on the board pf directors and chaired the audit committee of Cloud Peak Energy, a Wyoming-based coal producer.
Featured Host: David Greenberg serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. Mr. Greenberg’s previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.
Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee. As one of five senior vice presidents of the corporation, he served on the Management Committee, which oversaw all strategy and company operations. He was also a principal architect of the company’s very successful efforts to end the ‘tobacco wars’ which threatened the company’s very existence. Earlier in his career, Mr. Greenberg was a partner in the Washington D.C. law firm of Arnold & Porter and also served as Legislative Director and General Counsel of the Consumer Federation of America. He attended Williams College and has JD/MBA degrees from the University of Chicago.
Greenberg has testified before the U.S. Congress, the European Union, the Israeli Knesset and other governmental bodies over two dozen times and has appeared on ABC Nightline, the CBS Morning News, BBC Morning, and the PBS News Hour, and has spoken at leading events for CEOs and boards.
Transcript: Intro: Welcome to The Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
David Greenberg: Audit committees play a central role in ensuring the financial integrity of public companies, and consequently serve as a backbone of overall board governance. They also provide a great deal of the oversight for boards on issues like corruption, fraud, and cybersecurity. But how do audit committees impact the culture, ethics, and compliance of major companies?
Hello, and welcome to another episode of The Principled Podcast. I'm your host, David Greenberg, LRN's former CEO and now special advisor. I also serve as a board member, governance committee chair, and sit on the audit committee of International Seaways, one of the largest global oil tanker companies.
Today, I'm joined by Pat Condon, audit committee chair and board director of Entergy Corporation, an integrated energy and utility company serving millions of customers in Arkansas, Louisiana, Mississippi, and Texas. We're going to be talking about the various issues and priorities of board committees and how they help shape a board's impact on corporate culture. Pat is a real expert in this space, having served as a director and audit committee chair for both Roundy's, a leading grocery company, and Cloud Peak Energy, a major U.S. coal producer. A former Big Four accounting partner, Pat has also served on the boards of 501(c)(3) organizations such as Urban Gateways and the Brother Rice High School Foundation. Pat, thanks for coming on The Principled Podcast.
Pat Condon: David, I'm happy to be here. As you and I have talked, the role of the audit committee has certainly evolved over the years. I go back long enough that when the audit committees first started, the role was a very narrow one. And we're here to talk about some of the nuances that have evolved over the years, so I'm happy to be here.
David Greenberg: That's great. And before we dive in too deep, let's just set the stage. Why don't you describe, based on your experience, the overall architecture of what audit committees do and the role that they play?
Pat Condon: Well, the role is oversight of financial reporting and the related internal controls behind all of that, the review of filings, earning releases, et cetera. A major role that's evolved is risk oversight, and we have oversight of the independent auditor. Ethics and compliance taking on a greater role than it probably had years and years ago. Oversight of internal audit, a mission critical role. Interactions with the other committees of the board, as well as the management of the company. And some of the committees these days, there are overlaps and responsibilities, and so that's an important part of the job. And then any kind of external communications that we might do, which is typically in filings with the SEC or otherwise.
All of that, by the way, and we're here to talk about culture. And all of that plays a role in company culture, as you can well imagine. Just a simple thing like internal controls, well, culturally is the company weak or strong? So it's a mission critical role, is the assessment of company culture as it relates to these and many other things.
David Greenberg: Pat, how have you seen the role of the audit committee and the chair change over the time you've been doing that kind of job?
Pat Condon: As I said, it's become much broader in scope than it was originally, and it's also much more overt, in a sense, with things like organizational health. When we look at ethics and compliance, for one. We look at organizational health, workplace violence, employee relations. And you get down to things like what's happening as a result of changes in the workplace? Which there have been over the last two years, as we all know, very significant changes.
David Greenberg: You've mentioned culture and ethics a couple times. You and I were both participants in the recent Tapestry-LRN Summits on ethics and culture. Tell us how you think about corporate culture and how that informs what you do as a board member and audit chair?
Pat Condon: I think it's a critical role of every board member to do his or her assessment of company culture. Not only while you're a board member, but you think about going onto a board, I think an important part of your deliberations is what does the culture feel like? But to me, it's a very mission critical part of a company's existence. Things like the new workplaces they talk about at the future of work, for example, they are part of an evolving culture which I think we all have to pay pretty close attention to. And while that was changing some over time, I think the pandemic has accelerated the change. We can certainly see that in who's in the office when and who's doing what and how. Introduction of robotics and other things into the workplace, really changing... They call that the future of work, but it's pretty real and it's happening now.
David Greenberg: Would you say that from when you started as a board member until now, we've moved to a point where there are more discussions about culture, ethics, and the outside world, than when you began?
Pat Condon: I think we talked about it when I began. And again, I spent a lot of time in boardrooms back in my old profession as well, so I can include that. But the volume is much louder now than it was before. There are any number of reasons for that, but you can see it in society as well. And most companies, they do reflect society. To be successful, you better reflect society. And so as things are changing in the world in which we live, they're changing in the boardroom as well. Again, you come back to if you're going to be successful as a company, as a board, et cetera, et cetera, the culture plays such a mission critical role in that for the long term. You can be short term successful with what I'd call less desirable culture, but I don't think you'll last long.
David Greenberg: So one of the biggest parts of our audience for this podcast are chief ethics and compliance officers and their teams. As an audit chair, what's your advice to them on how best to build a strong relationship with the audit committee and its chair?
Pat Condon: Relate. So, I'm not a shy, retiring wallflower, nor or I think most of... So the key is to talk. And maybe it's me, but... And of course in my capacity, I need to avoid being management. On the other hand, healthy discussions with the officers, including the chief compliance officer, I'm pretty frequent in that. And again, I come back to this two dimensional world we're living in right now. It's much tougher to make some assessments, and therefore my conversations have probably picked up the pace a little bit because of the lack of face-to-face time that we could spend together. Whether it's over dinner or lunch or anything, those are times when you can get a good three dimensional judgment of character, culture, et cetera.
David Greenberg: When you think about the chief ethics and compliance officers you've worked with, how's the board view them? Do they have the status of other senior officers, or more importantly, do they have the status they need to be effective?
Pat Condon: I can't speak for the world, but I can tell you that my experience right now is yes, without question. The relationship to the C-suite... In fact, sitting in the C-suite is probably a good way to put it. And then the board is very, very, very, very interested in what they report out. And whether it's the results of employee health surveys or anything else, they all play a role in that. And so I would say that... Well, certainly every one of our board meetings, we get a report, and I will have looked at it closely beforehand, had a discussion about it.
David Greenberg: Do you have a relationship with the chief compliance officer in between board meetings and committee meetings?
Pat Condon: Probably not as much as the internal auditor, but yes, I am not afraid to pick up the phone, and I've certainly told her that if she has any reason whatsoever to call me, to pick up the phone. So it's a good relationship, and I think it needs to be. I mean, it needs be a crystal clear two-way street.
David Greenberg: Do you see, for example, good level of cooperation between say internal audit and ethics and compliance, or can you tell from where you sit?
Pat Condon: Yes, absolutely. I mean, I think it's, where necessary, there's parts where the roles overlap and become... Collaborative is the wrong way to put it, but each has a role to play. So at least in what I'm observing, yes, there's a relationship and it's a strong one, as well as with the other members of the C-suite.
David Greenberg: So, Pat here's what I think is one of the tougher questions for audit chairs and audit committee members. I sit on the audit committee at International Seaways, and the agendas are just crushing in terms of absolutely mandatory, legally required things that have to be done. So my question is can audit committees pay enough attention to corporate ethics, culture, and compliance? And if your experience with that says the answer is yes, talk a little bit about how you've accomplished that.
Pat Condon: Well, I try to leverage as best I can all of those things, so I'm pretty active when it comes to pre-meeting material interactions, but we don't have... The agendas are busy, and especially depending on the time of year. But there's a lot of prep that goes into the meeting on both sides, and optimizing the prep certainly helps, as well as making the reports tell the story they need to tell, but do it in a succinct way. And that frankly, is evolving. Whether you're dealing with ERM or compliance, the nature of the way the reporting is going is I would say evolutionary and probably always will be.
But the nature of, for example, corporate risk has become much more sophisticated. Part of it's technology, part of it's the work. So you know as well as I and pretty much any other director, how much more education we do these days than we did maybe before. But it's incumbent upon the director, in my view, to keep himself or herself current when it comes to rules, regulations, and the state of the art as it relates to all of those roles.
David Greenberg: You said that the reporting in this area and other areas is evolving. Are you feeling like it's becoming more strategic in nature and the board members are getting a deeper sense of what's going on, or not?
Pat Condon: I believe so. And again, I think the fact that we all... There aren't many shy, retiring wallflowers at the board level, and so where anybody feels... Sometimes the board, somebody will call me directly and ask about things. But I think everybody's invited to weigh in on the nature of the reporting that's done. And the questions, you can tell by the questions, that the interest level is high in this area.
David Greenberg: One of the series of letters that I hear from almost every board member I talk to is are the leters ESG? So how is your board dealing with ESG? Is it an audit committee matter, a full board matter, someplace else?
Pat Condon: E, all the above. And from things like... Just take an example: what's reported in the 10K. Typically, that would not have fallen anywhere in the... So sorting out who's going to review it. What, for example, the external auditor might do with some of that. Because the nature of a lot of that reporting is it's things that weren't there before, so all of a sudden it was how do we know that what's going in there is correct? Who's looking at it? So we know that's been parsed out and that it's being done.
But part of it is... I come back to what does your company believe its mandate is? So for utilities right now, all of that stuff is incredibly relevant. So whether it's how are we producing every kilowatt hour, whether it's interactions with the regulators, whether it's what's the nature of our workforce, what's the composition? How is it by level of the organization? I mean, we do look at every one of those things. And so I think that at least the companies with which I'm familiar, they had all... Before it became a public mandate, it was evolving in the boardroom anyway.
David Greenberg: So you and I have been involved in a bunch of conversations about corporate culture, and particularly how hard it is for boards to get a feel for it and how hard it is for companies to have good measurement and metrics. What's your view on how boards can play a role to focus management's attention on this so that when we talk about culture, we're not just guessing at it, but we have have some measures that can be tracked and management can influence them over time in the right direction?
Pat Condon: I think when it comes to the measures, we are at an evolutionary point, because they've been squishy at best historically. I do think that more and more companies are having independent reviews of their culture. Having said that, there's so many different aspects to it. Again, I come back to as a board member, I would take every opportunity I had to, whether it was a corporate lunch, a dinner, and thank goodness the companies with which I've been involved would invite folks who were not part of the C-suite.
And in addition to the social part of it, I would do my best to ask and gauge the responses about are we culturally directionally correct? Whether it's safety, employee relations, any number of things that embody culture, that was my way of assessing it. I don't think the metrics are... How would I put this? We have generally accepted accounting principles. I don't think there are any generally accepted ethics principles that you can say that you would... On the other hand, there are companies who do go in and make those cultural assessments.
So I think it's evolutionary. I think all you can do is make sure that... And you can listen to the management team and draw your own conclusions about whether culture's important in the C-suite. In my case, fortunately it is, and we do frequently have conversations about culture itself.
But you get into things like... And you know this as well as I. When you got a lot of contractors, you can set the ground rules, but they better be reflective of your culture, and you better be prepared to impose disciplines when things evolve in a way other than you would like them to. And most companies do use a lot of contractors, but they can influence culture if you're not careful. And if it's positive, it's great. If it's negative, that's something you really need to look for.
David Greenberg: So stepping back a bit and reflecting, how do you see the evolving expectations of stakeholders as it relates to major companies, and what's that mean for boards?
Pat Condon: The question is, the first thing is, who are your stakeholders? And I think that's also in an evolution, because corporations are more and more considered, I'll call them citizens, than they might have been before. And so I think the world of ESG, people who might not hold a share of the company still have a reaction, and they can influence you either in your stores or... On the other hand, if you're a necessity, whether if you're a power company or... The stakeholders, the customer side of it's mission critical. So I think the stakeholder evolution, if I can put it that way, is healthy for society, but it's imposing burdens we haven't experienced before. But having said that, I am watching mostly positive reactions to that.
Now, it doesn't mean that everybody who says something about your company is going to portray their perspective. They're not necessarily going to be factual in what they have to say. And so there are times when you're out there talking about, maybe indirectly, that message and what's incorrect about it, or just sometimes you got to be direct. How would I put this? Social media's probably created a lot of perspective that didn't exist before, because pretty much anybody can have an expert opinion now, and that's sad, but true.
David Greenberg: Yeah. Thinking about all that, what do you think boards need to change to keep up with these evolving expectations?
Pat Condon: I think you just got to have your ear to the ground at all times, as well as your hands, and make sure that you're in sync. I think you can look at other companies and what they're doing. Certainly, you need to be in communication with your stakeholders virtually continuously. And evolve as you need to, because just as human nature has evolved, so has the corporate nature, and it will continue to do so.
David Greenberg: Pat, have you seen on your boards pressure, expectation, for the CEOs to take a position on social issues and things going on in the outside world?
Pat Condon: I think my experience is maybe a fortunate one, but the answer to that is yes, and I believe it's as it should be. And it can be a real strength to a company where you've got a CEO who's not just aware, but is a believer, if I can put it that way.
David Greenberg: So, Pat, any closing thoughts you want to leave with our audience about directors, boards, audit committees, how to work with them?
Pat Condon: The world of cyber is not going to go away, and it's something we all need to be tuned into. And you see it every day on the news about invasions of your personal space, but the corporate side, it's no different. ESG, mission critical, and I think we just need look to excel in that area. I forget who it was, eternal vigilance is forever the price of freedom, but eternal vigilance is something that you just got to be tuned in.
I think the future of work, and we didn't talk about the intergenerational differences as it comes to that, but those are all things that are very, very relevant. And there's lots of things published on it. There's lots of things you can attend on it. But I do think it's something you need to tune into, because the pandemic and the change in the workplace environment, and I continue to add in the introduction, almost the virtual concurrent introduction of robotics in certain parts of the business are really going to change the future of work in a way that we need to stay close to.
David Greenberg: Well, I think that's a great place to wrap up for now. Pat, it's been really great having you on the podcast. We thank you and hope you'll come back again, because you certainly outlined a number of issues that are worth talking about.
Pat Condon: I'm happy to, and I have to say I enjoyed preparing for this with you, so look forward to doing it again.
David Greenberg: That's a wrap.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures, rooted and sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: In this episode of the Principled Podcast, we share a past conversation between Ethics & Compliance Advisor Arieana Thompson and her colleague Emily Miner, Senior Ethics & Compliance Advisor. The two talk about the Benchmark of Ethical Culture, a new study from LRN. In this global benchmark survey of 8,000+ employees at corporations around the world, LRN examines the underpinnings of corporate culture and its influence on employee perceptions and performance. Listen in as Arieana and Emily explore how ethical culture doesn’t just protect business assets and reputation; but also propels the bottom line.
You can get a copy of the LRN Benchmark of Ethical Culture here.
Featured guest: Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Featured Host: Dr. Arieana Thompson believes in transforming the modern-day workplace through thought-provoking, evidence-based insights.
Arieana is a subject matter expert in executive leadership, succession management, ethics and compliance (E&C), wellness cultures, and employee development. Arieana has experience advising in external and internal capacities and professional speaking. Arieana offers professional and wellness coaching, helping leaders and individuals to harness natural strengths and reduce stress.
As a scientist-practitioner, Arieana actively researches and publishes employee well-being, organizational culture, and leadership thought-pieces in both industry and peer-reviewed academic journals (see links in the "Featured" section below). These publications enable executives to create and sustain values-led, profitable, and creative companies.
Abstract:
“You don’t want to wait until you already know that there is a culture problem to really understand the culture of your organization. You should constantly be a student of the culture of your company, because we all know nothing can destroy an organization faster than a toxic culture.”
- Dottie Schindlinger
Culture is top-of-mind in the boardroom. How do you manage it and measure it? What does it look like to act decisively on culture, and what ethical implications come from those decisions? In this episode of the Principled Podcast, host David Greenberg talks about the critical role of boards in shaping ethical corporate culture with Dottie Schindlinger, Executive Director of the Diligent Institute and co-host of The Corporate Director Podcast for Diligent Corporation. Listen in as the two dig into the relationship between boards and ethics and compliance teams and discuss how that can inspire good governance. The key to success? Empathy.
What you'll learn on this episode:
[1:52] What was on the minds of those at Diligent Institute during their recent corporate culture roundtable?
[5:32] Boards’ and Directors’ struggles to measure culture and progress.
[8:25] Underlying driving factors of conduct.
[14:13] - Discussion of cancel culture and reputation preservation.
[17:38] - The importance of identifying your company’s purpose.
[19:52] - The key ethics issues challenging boards right now.
[24:28] - The looming threat of cyber crime.
[27:46] - The shifting relationship between boards and ethics and compliance teams.
Additional Resources:
Report: LRN Benchmark of Ethical Culture
Featured guest: Dottie Schindlinger is Executive Director of Diligent Institute, the global corporate governance research arm of Diligent - the largest SaaS software company in the Governance, Risk and Compliance (GRC) space. She co-authored the book, “Governance in the Digital Age: A Guide for the Modern Corporate Board Director,” and co-hosts, “The Corporate Director Podcast.” Dottie was a founding team member of the tech start-up BoardEffect, acquired by Diligent in 2016. She is the Board Vice Chair of Alice Paul Institute and is a Fellow of the Salzburg Global Seminar. She graduated from the University of Pennsylvania, and lives in suburban Philadelphia.
Dottie Schindlinger is Executive Director of Diligent Institute, the global governance research arm of Diligent Corporation. She co-authored the book, Governance in the Digital Age: A Guide for the Modern Corporate Board Director and co-hosts The Corporate Director Podcast. She helped launch and grow the start-up BoardEffect, acquired by Diligent in 2016. Dottie is Vice Chair of the Alice Paul Institute and is a Fellow of the Salzburg Global Seminar, and she is a graduate of the University of Pennsylvania.
Featured Host: David Greenberg serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. Mr. Greenberg’s previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.
Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee. As one of five senior vice presidents of the corporation, he served on the Management Committee, which oversaw all strategy and company operations. He was also a principal architect of the company’s very successful efforts to end the ‘tobacco wars’ which threatened the company’s very existence. Earlier in his career, Mr. Greenberg was a partner in the Washington D.C. law firm of Arnold & Porter and also served as Legislative Director and General Counsel of the Consumer Federation of America. He attended Williams College and has JD/MBA degrees from the University of Chicago.
Greenberg has testified before the U.S. Congress, the European Union, the Israeli Knesset and other governmental bodies over two dozen times and has appeared on ABC Nightline, the CBS Morning News, BBC Morning, and the PBS News Hour, and has spoken at leading events for CEOs and boards.
Transcript: Intro: Welcome to the Principled podcast brought to you by LRN. The Principled podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
David Greenberg: Culture is top of mind in the boardroom. How do you manage it and measure it? What's it look like for boards to act decisively on culture? And what are the implications of those decisions? Hello and welcome to another episode of the Principled podcast. I'm your host, David Greenberg, LRN's former CEO and now special advisor. I'm also on the board and chair the governance committee of International Seaways. Today, I'm joined by Dottie Schindlinger, executive director of the Diligent Institute and co-host of Diligent's podcast, The Corporate Director. We're going to be talking today about the critical role of boards in shaping ethical culture. We'll be touching on the relationship between boards and ethics and compliance teams and how that can promote good governance. Dottie is a real expert in this space. She brings over 20 years experience in governance related roles, including serving as a director, officer, committee chair, senior executive, governance consultant and trainer for public, private and nonprofit boards. Dottie, thanks so much for coming on the Principled podcast.
Dottie Schindlinger: It's my pleasure, David. It's great to be with you.
David Greenberg: Dottie, Diligent sponsored a recent round table for directors on corporate culture. What was on their minds?
Dottie Schindlinger: Well, thanks for asking, David. Listen, culture has been a top issue on the minds of corporate directors for a few years now but really very much so in the past two years during this pandemic. It's been really fascinating in our conversations with directors all throughout this period of time, the word that keeps coming up over and over again is empathy. That empathy has now become a key skillset for directors and senior executives of organizations to really make good decisions. And I think corporate culture in particular has been a little bit in the crosshairs because of all the rapid change and the seismic type of change that organizations are going through.
Think about back in March of 2020, when basically every company that could had to move to 100% remote operations with no advanced warning and with no planning and think of the impact that it had on corporate culture. When what seemed to be a two week hiatus from the office turned into, in some cases, an 18 month long hiatus from being together in the office. I think the directors are really watching corporate culture very closely. And then of course you have other pressures taking place, everything from ESG, what's happening in terms of our workforces, the huge talent crunch that we are under right now that the competition for talent at an all time high. Culture is definitely on the minds of corporate directors and we spent a lot of time talking about that in this round table.
David Greenberg: Speaking of all the time out of the office, what are the directors saying about there are companies and boards being back in the office?
Dottie Schindlinger: Well, it's very uneven. For some organizations they've been fully back in the offices for a long time. And by the way, I feel like it's really fair to point out that even during the pandemic, something on the order of 62% of jobs in the US cannot be performed remotely. And so I feel like we have to just call that out for a moment and acknowledge that being a remote worker was really kind of the reality for a privileged few in the workforce and not the many. But having said that, it's still very uneven the experience. We're seeing a lot of interest on the part of workforces when they can perform jobs remotely to continue doing so. And then we're seeing also a lot of desire from people together that they miss each other, that they miss the kind of give and take that happens when you get together physically in a space and you have the opportunity to run into somebody you haven't seen in a long time. Someone who's maybe not on your team but an adjacent team and just have those impromptu water cooler conversations that I think we all treasure.
It's a very mixed experience. For some people it's better to stay remote, especially if, for example, you're the parent of young children and childcare continues to be an issue. You may want to have the flexibility that being a remote worker brings to your schedule. It's definitely not a universal and because it's not universal and because this all full disease of COVID just keeps rearing its ugly head and we have new variants happening, it's hard to plan. If you're in any position of leadership and you're having to plan, when should we go back to the office? And what should be the protocol to keep the workforce safe? These questions don't have simple answers and the answers themselves continue to evolve as the disease evolves. It definitely is requiring everyone to be a little bit creative and to stay on their toes.
David Greenberg: Got it. Going back to the discussions on culture, did measurement come up? How are boards and directors struggling with trying to measure culture and make real metrics on culture so that progress can be measured?
Dottie Schindlinger: Yeah, it's a hard thing to measure, isn't it, David? Trying to measure cultures a little bit like saying we're going to measure love. How do you actually approach that? But we also know that when there is a toxic work culture, it is palpable. People recognize when there's a toxic work culture, you can almost see it in the faces of the people on the team. There are some measurements that are quite helpful. I don't know if you're familiar with a project that was put together by a group called Glassdoor in combination with the MIT Sloan School, something called the Culture 500. And what they basically did was use some AI tools to investigate hundreds of thousands of submissions from Glassdoor reviews of employees to look for patterns. And then they measured companies on the S&P 500 on nine different variables trying to determine the health of culture. And kind of work, I think is really very interesting. If you haven't checked it out, I'd recommend that you look at the Culture 500 and just take a look at that website and see how they approached that.
It's that kind of measurement that I think is going to make the difference. When you can really see big data sets and look with AI fueled tools for patterns and try to uncover what can we really learn from all these reviews? You're not looking at individual reviews and reacting to individual reviews but you're looking for commonalities and themes and patterns across thousands of entries. That then does give you a fairly accurate picture of what's happening with culture within a company. I think if you're a director these days, you should be paying attention to these kinds of tools. These are the kinds of things that are going to make it easier for you to provide that kind of oversight on culture, especially because that is so hard to do.
I can say this from personal experience, I'm on the board of a small nonprofit organization that recently had some challenges around culture. And we've been meeting remotely for a year and a half because of COVID. We haven't been physically on site at the nonprofit organization and frankly, we didn't really have a good sense for what was happening there day to day. And so it took having some conversations with the staff to try to understand what is actually happening here? And it's just really hard to get the tools that you need to have that visibility if you're not boots on the ground every day. And frankly, that's just not the reality for board members, even outside of the pandemic. We're not boots on the ground every day at the organizations that we oversee. Having these kinds of tools that give us better insight, I think are going to be increasingly important as we start to think about how to measure culture.
David Greenberg: The other thing I've seen some boards turning their attention to is kind of trying to capture some of the underlying drivers of conduct, both good and bad. Things like trust, fear, belief that management acts on its values. And if boards can get underneath the surface like that, you were talking about empathy. I think those are the kinds of things that we're going to have to be able to measure and assess because otherwise we're just asking people in engagement surveys how they're doing, whether they go out to lunch with their boss, whether they can bring their dog to work and that's not really what's driving behavior.
Dottie Schindlinger: It's really true. And David, one of the recommendations that came out of this round table that I think gets at that question of trust is look, I think boards are very used to evaluating the performance of their C-suite executives and especially of the CEO and really understanding, do we have a feeling of trust with this individual and with this team? Do we have trust in their capability as leaders? But it can be incredibly powerful for the board to get some reports from skip level employees. Not the C-suite and not even their direct reports but one level down and really kind of getting a sense from that layer of the organization, how do they think the C-suite is doing in terms of whether they can be trusted to lead the organization in the right direction? That kind of an approach, sort of that 360 degree evaluation can be so helpful to understanding the culture of the organization, especially if that kind of information is coming anonymously and is done regularly.
You don't want to wait until you already know that there's a culture problem to understand the culture of your organization. You should constantly be a student of the culture of your organization because let's face it, we know nothing can destroy a company faster than a toxic culture. Truly. We just see every example of that ripped from the headlines. We know that to be true. And so if you're maybe once a quarter, two times a year doing a big 360 degree pulse check of the whole company to understand the culture, really asking people culture specific questions, that's going to give you, I think, a very good sense for how things are going within the company and just it's not necessarily the only data point that you'll use but it does give you a very different view than what you're hearing just in conversation with the C-suite executives.
David Greenberg: Yeah. You mentioned toxic cultures. Do you have any recent examples in your experience of a board acting decisively on corporate culture where there was a problem like that?
Dottie Schindlinger: Well, there's many as you know but I'll share just one. And I feel comfortable sharing this one because it has been very widely publicized and we've also featured the executive vice president and general counsel a couple times at events that we've held at Diligent. And that's the story of Wynn Resorts. I think everybody remembers a few years ago that there was a very well publicized #MeToo campaign around Steve Wynn, who was the founder, chairman and CEO at the time and he was found to be guilty of sexual misconduct and he was ousted from the company. What may not be as widely known is as part of that process, about half of the board was also ousted from the company because as they began to do their investigation, what they learned was that it wasn't just a matter of there being one bad apple but it was truly endemic in the culture.
There was a culture of intimidation and harassment almost at every level of the organization. It absolutely was the tone at the top playing out through the entire organization. And so they felt that they really needed to kind of start fresh and they brought in many more women onto the board. They brought in much more diversity onto the board and that was true throughout the leadership of the company as well. And they began to really work from the frontline employees all the way up to the top of the organization to really get to know what that culture had been like and what would be the things that they really needed to work on and correct. And one of the things I think is quite remarkable is that when we think now about what was happening during the pandemic, so all of this happened at Wynn a few years ago but then came the pandemic.
And at the beginning of the pandemic, Las Vegas was shut down completely and as you can imagine for a company like Wynn Resorts, this was an existential crisis. If they couldn't operate their business at all, it might have very quickly spelled the end but because they'd been doing all this hard work around culture, they knew that one of the most important things that they could do would be to retain their workforce for as long as humanly possible. And so they made cuts every possible little place they could without cutting staff. And they actually did not furlough staff, I think, longer than any other resort or casino in the Las Vegas area. And that's really saying something.
Now, eventually they did have to make some adjustments as the pandemic continued month after month. But I think they've now hired back basically everyone that they furloughed. They really just focused so much on retaining their workforce, protecting their workforce and really making sure the workforce knew how valued and how trusted they were. And I think that speaks to the hard work that they did around culture. I don't know that that would've been their priority in years past but they knew moving forward, this had to be priority number one for them and it really showed in the choices that they made.
David Greenberg: Very interesting. And I'm speaking to you from one of the Wynn hotels right now, where I'm having some strategy meetings. The service is great, the place looks great so they seem to have weathered the storm.
Dottie Schindlinger: That's great to hear.
David Greenberg: How are you experiencing and talking to boards, their dealing with all of the issues related to reputational risk and cancel culture?
Dottie Schindlinger: Yeah, it's a great question. And I think we hear about cancel culture and the concerns there. I think it certainly is a bigger concern for certain industries, rather others. If you are a consumer products company, obviously this is a huge concern for you. It's something that can absolutely spell the difference between success or failure and really on either side. You can have a social campaign go extremely well as in the case of Nike a few years ago, in terms of their support of Colin Kaepernick, that that actually ended up paying huge dividends for the company and really put them in a strong position. And it can go exceptionally poorly. I think of an example like United Airlines when the video of them dragging a passenger off the plane went viral. And quite frankly, even than three years after that incident, their stock price really was continuing to underperform their peers. You can really see how these things can light a fire and go very, very broadly.
We do this report every month at Diligent Institute called the Director Confidence Index. And back in February, we were curious to know, how did directors feel about reputational risk? And in particular, we wanted to know, how did they feel about the fact that CEOs were becoming much more public faces of companies and taking to the podium to speak on issues that are kind of unrelated to corporate performance but are related more to social issues. Things that they felt might be of concern to their key stakeholders.
And what we thought was pretty fascinating was that 54% of the directors we asked said that their CEO had made a public statement to address a social or political event occurring in 2020. And that was more than double the rate that we found four years ago. It is absolutely true that there is more happening around reputation management and reputation generation for corporate leaders. But only 16% of the directors that we surveyed said that they encouraged their CEO to speak publicly on any issue he or she deems appropriate. 42% say they would encourage the CEO to speak out but only to the extent that the issue relates directly to the company's mission or values. And about 32% said CEOs should always stay silent on social issues. It's clear that there's not a lot of consensus among directors about the best way to do this.
What I would say is I think a lot of directors that we speak with are telling us, "Look, it doesn't matter whether you like it or not, you may have to enter the fray because to be silent can sometimes do more damage than to say something. And so you do have to really think about how are you guarding your reputation? What are you aligning your reputation too? And I think probably the best true north is how does this relate to your company's values? What are the things that you are trying to put out to market as your core values? And how does this relate to what you value? I think that's really the best way to approach when to speak out, how to speak out and who should speak out.
David Greenberg: I think it also helps when companies have a clear sense of purpose, why they're on this planet and what their relationship is with society. If they can define that and understand that, then it may help them understand the issues where really there's very little choice and a lot of need to actually speak out because it connects to who they are and why they're here.
Dottie Schindlinger: Well David, I completely agree. And I would say in that same survey, 57% of directors told us they're more concerned about reputational risk today than they have been in any prior year. And I think that is because there has been this pressure being placed on companies by institutional investors, by the business round table, by just societal opinion.
Again, going back to the fact that we're in this talent war, you've got to attract and retain top talent. And the way to do of that is to make sure that you have a clearly stated company purpose, that that purpose of your company is tied to something broader than generating positive returns for shareholders and that it's something that your workforce, your customer base, your partners can all buy into and sort of see a role for themselves in. And I think that's just a much taller order than we've had in years past. I think that the job of a director is getting precipitously harder but if you can have that stated company purpose, it can make other things easier to say no to and make it a little clearer what you have to say yes to.
David Greenberg: And one of the things that I've taken to the boardroom from my experience as a senior executive at what at the time was a Fortune 10 company, is that the truth is making a return for shareholders and all of the compensation bells and whistles that comp committees have ever created, you add all that up and it wasn't enough to get a lot of us up in the morning. If there wasn't a greater purpose to what we were doing the company was really missing something in terms of getting discretionary effort even out of its most senior leaders.
Dottie Schindlinger: Yeah. I think that's very true. That connects to sort of what makes us human, doesn't it? That we're all, we're purposeful beings, human beings and we want to know that we're connecting to some broader purpose. It's not just we're doing it for the sake of doing it. And I think that's true for board members too. I think board members feel far more motivated to maybe go on a limb and tap into their personal networks and express empathy and have compassion for things that they feel they connect to. I think everybody wants to feel they belong.
David Greenberg: For sure. When we drill down a little bit, what are some of the key ethics issues you see challenging boards?
Dottie Schindlinger: Well, first of all, just the number of ethics issues challenging boards has exploded. There's many more things that board members have to keep their eyes on these days. I would say some of the big ones, issues around the pandemic dealing with sort of public health issues, making sure that local regulations and workplace safety are being managed correctly. Again, those are not easy issues, but they need to be thought through.
Diversity equity and inclusion is a big one. I think there's been so much energy being put into this area ever since the murder of George Floyd and the many corporate commitments that were made to try to change the nature of systemic racism and really address historic inequity. And these things require ongoing attention. This is not something that gets fixed in a couple of months. We're talking about a system that goes back 500 years, so it's going to take some time to get this right but it needs for us not to take our foot off the gas, to really kind of keep going. Also issues related to sexual harassment, those continue to be things that we see plague companies and just continue to need to be addressed.
Those are things I would say are really top of mind over the past couple of years but I would also add there, there's sort of a huge ethical dimension to climate change. Right now we're just finishing up the COP 26 conference that's happening in Glasgow. And there's a lot of concern out there that we're not going to be able to meet the climate commitment that we need to meet to keep the ocean temperature level down to 1.5 degrees Celsius above where it was. And I think that has huge, huge implications for every company. Everything from global supply chain, to workforce, to our ability to just conduct business in this new unknown future with bigger, more horrifying storms.
And there's some ethical dimensions there. If we're not making choices that are in the best interest of the planet, not only can they be really harmful to our business and our balance sheets, but they're harmful to our own ability to exist. I would call that a bit of an ethical conundrum and that is a huge issue that I think boards are going to have to get better at addressing, frankly, just better at being able to have those conversations at a strategic level in boardrooms. It really does connect to the ability for the business to exist and thrive. We have to just get better at making sure we're talking about these things all the time.
David Greenberg: You've just made a pretty good case that the issues that boards confront and discuss are changing. Do you see a related change in the profile of public company board members?
Dottie Schindlinger: We've started to see that. We did a report in July called Beyond the C-suite and it was looking at the changing trends of the profile of new director hires of public companies. And what we saw is that while the vast majority of new hires of directors are still current and former CEOs, CFOs and COOs, there is year over year, a growing number of new director hires that are coming into the boardroom with different skillsets. We're talking about people that come into the boardroom with technology backgrounds, legal backgrounds, ESG, HR, sales and marketing. Just kind of nontraditional profiles for board member hires. And this is not an accident. We are seeing this wide array of areas of risk that boards are now being asked to tackle and really have no choice but to tackle. Things like cyber risk, for example.
10 years ago, I think you'd be hard pressed to find a board meeting that spent a very much time talking about cyber risk outside of a very small number of companies. Now, I think you'd be hard pressed to find a board meeting that doesn't touch on cyber risk probably at least a little bit of every board meeting at most companies. And so we're seeing this big shift in the kinds of things that directors have to deal with. And as a result, you need different talent. You need people that come from different areas of expertise and bring fresh perspective into the boardroom conversation.
David Greenberg: Yeah. I can tell you that cyber risk comes up on the board at International Seaways very regularly and every time it does, it scares me to death because it's very hard to deal with. It's very hard to know and you have very good people inside and outside the company who can help but it's really fast moving and it's just one of those things that keeps you up at night.
Dottie Schindlinger: And I hate to say it but probably should. Probably should keep you up at night. The terrifying numbers that I hear, I believe that now cyber crime as an industry, if you look at it as an industry, has top $6 trillion a year, which Larry Clinton who's the president of the Internet Security Alliance always has this great line, which is, "If cyber crime was a country, it would be big enough to qualify for entrance into the G7." Thinking about any individual company trying to tackle such a behemoth is kind of outrageous.
I think what we need to think about is how are all of us as companies, as governments, as citizens banding together to fight this insane criminal enterprise. It's the largest criminal enterprise on earth. It's I think at this point, something like double the size of the illicit drug trade. It's massive. We all have to play our role in fighting this and none of us are going to be successful alone but of us can take our eye off the ball. We all have to pay attention. We all have to be a little bit paranoid all the time for bad things not to happen.
David Greenberg: Yeah. One of the things that worries me, you've referenced the war for talent a few times and I wonder if the good side is winning the war for talent in the cyber area?
Dottie Schindlinger: Not even close. Not even close, David. Right now, the estimated number of unfilled cybersecurity professional jobs globally is three million. And there's just not even a pipeline to fill that many roles. Unfortunately this is a definite area of concern. I would say any of you listening to this podcast, if you have a young person in your life who's trying to figure out what career to go into, suggest they go into cybersecurity, we need them in the fight.
David Greenberg: One of the things I've seen in terms of the changing profile of directors is that I would say three years ago, you would have been hard pressed to find even one or two members of public company boards who had spent a major part of their time as working chief ethics and compliance officers and now I've identified about a dozen. There's a little boomlet in that area that I hope will continue.
Dottie Schindlinger: That's a tiny little boomlet.
David Greenberg: I know, I know. Well, you got to start somewhere.
Dottie Schindlinger: You got to start somewhere. I would agree with you. I think that's a positive trend. I'd love for it to actually be large enough to be a trend but it's positive to see that we definitely saw that there are more individuals with legal expertise being welcomed on to boards. And hopefully that means that they come in the door with some deeper understanding of ethics and compliance issues maybe than others. And I think we definitely could see more of that because as we've been speaking through this whole podcast, the ethical and moral dimensions of business, I think are getting far more complex. And so you need people who sort of understand ethics and compliance in a real way to be able to help guide strategic decisions that have ethical and compliance dimensions to them, which I think is all of them. I think we could all do with an ethics and compliance expert on our boards.
David Greenberg: Here, here. A lot of this audience listening to this podcast today, come from the ethics and compliance community so I wanted to be sure to ask how you see the relationship between boards and the ethics and compliance teams out there and whether it's changing and how it may need to change more.
Dottie Schindlinger: Great question. I do think it is changing and I would be disingenuous if I said it was changing everywhere at the same pace. That's not true. It's fits and starts. But I do think that there's a greater recognition on the part of many companies that the ethics and compliance team is not the team to call in when things have already gone wrong but that in actual fact, they can be very strong strategic partners in future decision making. You can bring in the ethics and compliance team to help you think through investments that you're planning to make. You can bring them in to help you think through ways that you could potentially be greening your business to potentially add to the bottom line. You can bring them in to talk through workforce issues and the fight for talent, and retaining and attracting of top talent. What are some ways to think about that from sort of the ethical dimension?
Frankly, I think it behooves you to use that team in a strategic way to just help make better, more nuanced decisions and play out in advance what are the ethical dimensions of this decision that we're going to make? Again, business now moves at the speed of a tweet. Never forget that every decision you make is going to be scrutinized and it's going to be scrutinized in the marketplace of Twitter. And so if that's going to be the case, it probably makes sense for you to check in with the ethics and compliance team about what might be some things we should be prepared for as we make this decision? And I don't know that that's been the traditional way that those teams have been leveraged. I think more so they've been brought in after the fact to help fix something that's gone wrong or they've been brought in when there's some check the box exercise around training that needs to happen. And I just think that's an under utilization of a really great resource in your company.
David Greenberg: Dottie, that is a fantastic place to end today because we're just about out of time. It has been an enormous pleasure to talk with you about the evolution of boards in shaping culture, ethics and compliance and the role of boards in what is an ever changing world. Thank you for joining me on this episode and I hope we can continue our conversations.
Dottie Schindlinger: Thank you so much, David. It's been such a pleasure.
David Greenberg: And thank everyone out there for listening. I'm David Greenberg and we'll see you next time on the Principled podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts or wherever you listen and don't forget to leave us a review.
Abstract:
“ 7-10 people fear the weaponization of misinformation, but what's changed in the last year or so is assumptions of who we think the weaponizers of fake news and misinformation largely are.”
- Dr. David M. Bersoff
Trust has been a leading concern throughout institutions, globally. So what are the overarching trends around trust? What actions can institutions take to gain back trust? How can you build and regain trust once it’s been lost? In this week’s episode of the Principled Podcast, we’re sharing a past conversation we had with Dr. David M. Bersoff, Head of Global Thought Leadership Research at Edelman Data and Intelligence. David takes us through the findings from Edelman’s Trust Barometer, an annual trust and credibility survey that looks at what it means for organizations to build trust with people. This topic aligns closely with LRN’s recent Benchmark of Ethical Culture report, which measures trust and other dimensions of ethical culture. The report is available to explore. Check it out here.
What you'll learn on this episode:
[1:07] Why is a business found to be the most trusted institution globally?
[3:51] What are some overarching trends on trust founded in the 2021 Trust Barometer Report?
[14:59] How has COVID affected people’s trust in societal institutions?
[18:00] What can be done to reduce the trust chasm? What are some ways to get people together again on basic facts?
[22:03] What are the differences between trusts between a country and region?
Additional Resources:
Report: LRN Benchmark of Ethical Culture
Article: Yes, you can measure ethical culture
Featured guest: Dr. David M. Bersoff, Ph.D. oversees Edelman’s global Thought Leadership research including the annual Trust Barometer and Brand Trust studies. In this capacity, he is responsible for questionnaire development, leading all data analysis and insight gleaning activities, and developing new frameworks for understanding trust, credibility, and consumer-brand relationships.
Prior to joining Edelman Intelligence, David spent 18 years as consumer insights and marketing strategy consultant at The Futures Company. In his last 5 years with the organization, he served as its Chief Insights Officer and was a member of its global board of directors.
Prior to entering the consulting world, David spent 12 years engaged in social science research at various Ivy League institutions, including 4 years as an assistant professor of social psychology and research methodology at the University of Pennsylvania.
Transcript: Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Host: Hello everyone. And welcome to another episode of LRNs Principled Podcast. My name is Ben DiPietro. I'm the editor of LRNs E&C Pulse Newsletter. You can find that on our website lrn.com. Click the resources tab and click newsletter, please subscribe, we'd love to have you. With me today is Dr. David M. Bersoff. He's the Head of Global Thought Leadership Research at Edelman Data and Intelligence, and you would know them better as the people who put out the trust barometer for the last 20 years, and they have a new, a very interesting one out in 2021. And so we welcome David. And how are you, David? Thanks for taking time with us today.
Dr. David M. Bersoff: Pleasure to be here. Thank you for having me.
Host: In 2021 Edelman found business to be the most trusted institution globally. Why is that? And have the other institutions faltered leaving business standing alone, or has business simply outpaced media, NGOs, and government and building trust among people?
Dr. David M. Bersoff: All four institutions that you just mentioned actually are more trusted now than they were when we first started tracking trust among the general population back in 2012, but two things have conspired to put business in the number one position. The first is that it's actually experienced some good double digit growth in trust over the past 10 years or so, unlike media and NGOs, which have gone up but gone up relatively little and while the government has also gone up, which is surprising to some, started from the much lower position. So at the end of the day here, we find business is number one, and you can really understand what that looks like and why that is when you divide trust into its two constituent parts. So there is perceptions of ability or competence and there's perceptions of ethics or fairness. And what we see is that despite the fact that as I said, all the institutions have enjoyed some trust gains since 2012, government and media are generally seen as not terribly competent and not terribly ethical. NGOs are seen as ethical, but not terribly competent.
Business is the only institution that's really seen as both. And that's actually a bit of a change from last year. Last year business was seen as competent, but not terribly ethical, this year they're the only institution that's really seen as both. And so it's not as if the other institutions have fallen away, it's more that business has really come through more than the other institutions, particularly I think in the context of the pandemic. And if you look at the institutions across the last 10 years, you could see government has in many places, ground to a halt due to excessive partisanship, media has in many ways, turned into assess pool of ideological warfare. NGOs just haven't been seen as stepping up in these times of crisis. And so in many ways, business has been the most reliable agent of positive change in this country. And I think that's why it's rewarded with this trusted status.
Host: You mentioned you've been tracking a lot of this since 2012. What have been the three biggest overarching trends report has found since then? And any thoughts on what you see coming ahead in the next three to five years that might bring with us and how will AI impact this whole notion of truth and trust?
Dr. David M. Bersoff: Yeah, let me pull that apart a little bit. Actually I want to cheat a little and call out four trends rather than three. Let me start with number one, the worsening trust gap between the more affluent top 15% of the population and everybody else. So the gap, the trust gap, in institutions between the more affluent and everybody else was 16 points this year, which is tied for the record. But what's even more telling is that back in 2012, there's 22 countries that we can track all the way back to 2012, back in 2012, only seven out of 22 countries had a double digit trust gap between the top 50% of the population and everybody else. In 2021, 21 out of our 22 countries had that double digit trust gap. And I think part of the reason why we're seeing that trust gap broadening across more markets is because of what's known as that case shape recovery.
So we're in the middle of this pandemic and what we're finding is that certain people are recovering more quickly than others. Some people at least, from a financial point of view are almost whole, if not even a little better off than they were while other parts of the population are stagnating or even doing worse than they were a year ago. And part of the problem or the issue of why this is important is that if you have two segments of the population and there are different trajectories, so one is looking towards a future that looks good. The other is looking towards the future that doesn't look so good, suddenly you have two big constituents in the population that are not equally invested either in change or in protecting the status quo. And that's destabilizing when you have a society that can't decide whether it needs to change this dichotomy, the sense in which I have more of a investment in keeping things the way they are, and you have more of an investment in changing. That's the wedge that pop opens the door on populism.
That's why we're seeing populism cropping up in countries around the world, because there is this disconnect where some people are differentially benefiting from what's happening from the status quo. Others are seeing themselves left out, left behind and are anxious for change. That's the first one. The second one is the change in flow of influence and information from a top down dynamic to a more horizontal pattern. So these days, and this wasn't always true, you're more likely to be convinced of something by your peers or by people you know than by experts and authority figures. And this, in my opinion, has actually been a debt negative for trust and stability and has hastened trend number three, which is one of the big themes this year in our study, which is the breakdown of the information ecosystem.
So we're in the midst of an infodemic, which has become so extreme. We describe the world as being in a state of information bankruptcy, basically our information ecosystem, it's structurally unsound, it's built on a flawed business model and it's unable to meet its obligations. Now, this idea that the information ecosystem has been compromised by bad actors isn't really new. We've had a question in the survey for several years now about, do you worry about fake news and false information being used as a weapon? And globally, we find that about seven to 10 people do fear the weaponization of misinformation, but what's changed in the last year or so is assumptions or who we think the weaponizers of fake news and misinformation largely are. I think two, three, four years ago, people were thinking about Eastern European troll farms or cyber terrorists or Asian bot shops.
And what's been made apparent by the pandemic, the fear around local issues such as the election in the US is that these days misinformation is largely a home grown phenomenon. And as a reflection of this, and this is one of these data points that really just have me shaking my head. More people today are worried that their own government leaders are purposely misleading them than they are, that other countries are contaminating our media with false news. So this whole questioning of the media inputs, of the information ecosystem, trust in media, trust in information and data, this is huge. And it's really come perse forth this year as a major problem. And then the fourth trend that I'll mention is this anointing of business. So we've been talking for years, that business needs to become engaged in social issues, they need to be citizens of society, they need to look beyond their bottom line. That's been talked about under the context of things like purpose or CSR, but what we're really seeing is the evolution of that into something much more extreme.
And what we're seeing this year and last year a little bit, is that people have placed business on a pedestal and conferred upon it the responsibility for our future, as well as all the hopes and expectations that responsibility entails. This is way more than being a business that does good, this is business being called upon in many ways to be our savior, to bail us out. As the only adult left in the room, we're looking to business to fill leadership void left by media and NGOs and government. And the fact remains that business just isn't designed for that and CEOs aren't trained for that task. So while opting out of being the people's hero is not really an option, success is also not a shirt. I think it's going to be a major existential crisis for business over the next several years of can they live up to these new hopes and expectations and aspirations that have been heaped upon them and heaped upon them because they are the only institution that's both trusted and competent.
So those are the four big trends that we've been tracking that have all in some ways come to us for this year.
Host: It's interesting you say that because your report also found that most of the respondents identified "my employer" as the institution that they trusted most, which again, refers to the two you're talking about. So what responsibilities do employers then have in virtue of that trusted status? You mentioned they're not necessarily equipped for this nor trained. Is that going to become a necessary part of this job to be a leader you're going to have to navigate this world. And so you better learn it to be qualified to get the positions?
Dr. David M. Bersoff: So essentially at the level of business first, before I get down into the employer, the fundamental role of business is in the midst of being redefined to include expectations of contributing to society beyond supplying, products, jobs, and philanthropic dollars, what I was referring to. As I also said, these expectations are way beyond what can be accomplished with CSR as a bolt on corporate function. And so what we're seeing is that doing good and being values driven is basically becoming an intrinsic part of what it means to be a trusted company and good public standing. So as a result, values and purpose are going to have to become part of the corporate DNA of any enterprise that hopes, And we've got data to support all of this, that hopes to retain customers over the long-term, keep their best employees and attract investment money. All of those stakeholders are looking for business to do this. It's not a choice for business, it's not a choice for CEOs.
That said, within business, my employer holds a very privileged position of trust. We find that 76% of people trust their employer to do what is right. And that's a number that's been very stable over the past four years. So while we sometimes see some gyrations and trust associated with the other institutions, that trust in employer is high, consistent and rock solid. And I think it enjoys the special status for several reasons. First, the employer-employer relationship, it's a personal relationship. So you know your employer in general, they know you, it's a local relationship. It's a consistent presence in your daily life. And one of the things we're seeing these days is that trust has become more local. And third, you have leverage over your employer. So via collective action, employees do have the power to get their employers to change policies and get involved in issues. And these attributes all help to spawn and drive that trusting relationship.
But beyond that, what makes this relationship special and important is that employers have power, they have resources, they have exponentially greater wherewithal to get things done than I do as an individual. So this relationship between employer and employee is not just a close, trusting relationship, it's a personal relationship with a rich, connected and powerful other, and it's the only such relationship most people have in their lives. And so you can understand why there's so much emotional energy around the employer, and you can also understand why we are highlighting the importance of that relationship. Because this relationship is I've described it, it puts employers and I would argue a unique position to supply their employees with what they're currently seeking most ardently, which is trustworthy information, reassurance about their future and the opportunity to create positive change.
And these are becoming responsibilities of the employer to supply their employees with these things, which they can't get elsewhere. And in general, I think it's going to be difficult for untrusted institutions to rebuild trust in themselves in order to regrow trust needs a toehold. And from what I'm seeing, employers are that toehold and they really need to embrace that role. I think things are going to get better. The information problem is going to get addressed. Trust is going to be renewed, not so much from one grand gesture, but the actions of thousands of employers working with their employees and growing or regrowing that trust and faith in the system from the ground up.
Host: I'm wondering how you saw that last year obviously COVID has been here for a year now, we're recording in March. How has it affected people's trust in the societal institutions? And do you see it lasting or what's the lasting impact from that?
Dr. David M. Bersoff: Yeah, no, it's an interesting question. So we collect our trust data in October, November, and we really sit in January and of course, we released data in January of 2020, which of course, was prior to the pandemic, really becoming a reality, certainly in most of the Western countries. And then of course, it burst onto the scene and it had a huge impact on everything and every body. And so we went back out into the field to see what if anything the pandemic had done in terms of institutional trust. And what we found is that there was a trust search, trust in all the institutions actually went up and government in particular saw this big upward movement in trust. And it was actually at that point, the most trusted institution. Now, it's not unusual to see something like that in times like this it's that rallying around the flag idea or the circling the wagons that when you're in the midst of a crisis, people really rally around their institutions.
And for some, it's an act of faith, for some it's an act of hope, for some it's the product of psychological necessity because the prospect of living through a major crisis at the mercy of untrustworthy institutions is just a little too scary to contemplate. But the idea is you do tend to see trust surges around events like this. And then the question becomes, is that search a bubble or is that a real change in the status of that institute? So like I said, we went out mid year, we saw the surge. We asked ourselves, is that a bubble or not? We're back out in the field at the end of 2020, which was at that point, close to a year into the pandemic. And what we found is that faith or hope or psychological defense mechanism that had caused trust to go up had collapsed in the face of the realities of a pandemic that just wasn't being well-managed.
And as a result, the trust bubble burst and all of these institutions, which had this opportunity to burnish their image, they had this influx of faith and trust. Most of them squandered it, government squandered it more than any of the other institutions. But in general, that's been the story, that bubble has already burst to a large point. So the crisis itself increased trust, but how the institutions responded and reacted to that crisis has proven to not be up to the expectations of people. And that bubble has burst.
Host: I was struck mostly for, by the trust chasm you described. And I'm wondering, obviously, COVID, must've played into that some as well, what can be done to reduce that gap? And do you think it would ever be fully erased? Is there some way to get people together again on basic facts and at least understanding what the day of the week is or what time it is or anything?
Dr. David M. Bersoff: The trust gap, trust chasm, I don't think will ever be fully erased for the simple reason that that top 15%, the more educated, the more affluent, the more informed will always be in a better position to harvest the benefits of society or capitalize on the status quo. So there's always going to be a trust gap there, but what can and needs to be addressed is that the gap needs to be closed such that at least the top and the vast middle are not living in two separate trust realities. Because what we find in many markets is that the well-off are living in a world in which institutions are trustworthy and can be trusted while the mass population is living in a world where institutions are largely untrustworthy.
And that dual reality, again, feeds into two groups of people that aren't on the same page, that don't see the same needs, that don't see the same problems that need to be fixed, and you can't get anything done when you have that bifurcation difference of experience, different realities, societies, especially democracies tend to grind to a halt if there's too many people split between two different realities. In terms of how to address that, I think the first thing that needs to be done is a dismantling of the structural inequalities within society. So you don't get these K shape situations. You need to have a situation in which if there's prosperity, everybody is sharing in it. So maybe not to the same degree, the same level, but if the country's doing well, almost everybody in the country is doing well. If the country isn't doing well, then almost everybody in the country isn't doing well. And so it gets everyone on the same page, we're all in the same boat. When you've get that separation, that's a recipe for disaster. And that separation tends to be driven by structural inequalities.
And you see that around the issue of racism and structural inequalities around racism and how that basically pushes people off in two different trajectories. The society as a whole needs to address the issue of structural inequalities. And then the other thing that I think is important that societies aren't generally good at is change management. So we found in the 2020 barometer, actually, that 57% of respondents are worried that people like them are losing the respect and dignity that they once enjoyed in this country. And so, while I think part of the trust chasm is driven by economics, differential economics, structural inequalities, the other part of the trust chasm or another part of the trust chasm is driven by this sense among sizable number of people of being left behind, being left out, losing dignity, losing attention, not mattering anymore, not mattering anymore is huge.
People don't take that lying down, it's not something they can accept and feeling like you're being left out or left behind or not considered, that drives sense that the things aren't fair, that our institutions lack ethics, that I have to take all I can get now, without any concern for the future generations, it really moves people to extreme behavior. It moves them to selfishness. It moves them to scapegoating, immigrants, minorities. It really is a very pernicious element within society. And I would rank it second to the infodemic as an embedded attitude or perspective that's really making things unstable, unpleasant and leading into a lot of the polarization and polarity that we're seeing in society today.
Host: The barometer also breaks down findings by country and region, as it is worldwide. What are the biggest differences in trust between the US and China, the US and Europe, Latin America, and anything in these particular areas surprise you from the findings?
Dr. David M. Bersoff: Yeah, sure. Actually, can I just go back to, I wanted to finish my answer to the other question. So I detailed the aspect of social inequalities, and I explained the problem of people being left behind. And so the cure for people being left behind is really this idea of better change management. What our institutions need to do to increase their efficacy and foster a spirit of cooperation versus entrench against within society, they need to make change seem less threatening and more inclusive. And at the same time, they need to make the people who will inevitably be disrupted by change, feel as protected and respected as possible. Change is going to happen. Change has to happen. Change needs to happen. What we've traditionally been very bad at is managing that change, acknowledging that certain people aren't going to benefit from that change, that helping people see their place in this new future that we are creating and protecting those who will be hurt by the future.
Until we start doing that, you're going to continue to see that gap because change, progress, innovation is inevitable. We need to find a way of making that inevitable change less threatening big portions of the population in order to address that gap between the trustors and the non-trustors.
Host: It sounds like a big task for education, and we should committed that we make to it. They're all tied together that way. The barometer breaks down findings by country and region. So what are some of the biggest differences you see between trust in the US and trust in China and the US and Europe and Latin America?
Dr. David M. Bersoff: Sure. So we do look at trust by country and region, but that said, we don't really encourage looking at trust in one country versus trust in another country because there's different response tendencies at different parts of the world. And so you have a country like China, they tend to be more agreeable. They tend to agree with statements. They tend to use the higher ends of scales, et cetera. And so yes, there is a big trust difference between China and the US. China, when you look at the data, it looks to be a more trusting society and more trusting of its government. Now, part of that could be because China, they emerged more quickly from the pandemic, they had stronger economic growth, there's less governmental polarization preventing progress, but it's also likely partially due to the fact that as I said, the Chinese tend to be more positive than the Americans do.
But what I do find that's really interesting in terms of the US versus China, is that when you look at how the rest of the world perceives China and the US and the trustworthiness of the Chinese government and the US government, what you find is that neither of these most powerful countries in the world, the natural candidates for global leader in this time of crisis, neither one of them is trusted by the rest of the world. So here you have the two most logical countries to take a leadership position in the world. They have very different governments, very different political systems, very different histories, very different philosophies. And yet neither one has been able to win the confidence of the rest of the world. There is now this open position as the defacto global leader. And right now the two most logical suspects for occupying that position just are not from a position or from the point of view of trust, equipped to be in a leadership position.
Host: And the same for Europe and Latin America?
Dr. David M. Bersoff: One of the big dividing lines, it's not so much region as it is developing versus developed markets. So that's why you see some skews for North America and Western Europe versus Asia and other places we look at, it's not so much geography as developing versus developed. And what you find is that developed markets tend to be less trusting than developing markets and the people in those markets tend to be less positive. And I think part of the reason for that, we get people who are somewhat puzzled. It's like, well, life in America is so much better than life in India or life in China, how come our trust numbers aren't higher? And so I talk about the fact that when people are assessing how they're doing, they don't compare themselves, people in the US sitting around the dinner table, assessing how they're doing. They're not sitting there looking at their lives and saying, "Well, at least we're doing better than the Chinese." They're looking at their lives and they're saying, "Am I doing better than my parents? Are we doing better than we were doing five years ago?"
You compare yourself to other groups that are like you, or you at a previous point in time. And in some, in a country like the UK or France or the US, there's going to be more and more people saying, "You know what? My parents actually did better than I am, or you know what? I actually feel like I've lost ground over the last five or 10 years." That's going to lead you to distrust institutions, to lose faith in the system even if your benchmark day to day life is objectively higher or better than people in developing markets. But those people in developing markets, they're sitting around the dinner table and they're saying, "You know what? We have more freedoms than our parents and grandparents did. We're doing better than them. We're more educated or more advanced. We have more things. And you know what? We, as a family are doing better than we were five or 10 years ago." That does a lot to drive the sense that our institutions are trustworthy, the country's on the right track, things are okay, things are looking good.
And that results in some of these regional differences where the more developed countries just appear to be less trusting, less optimistic, less faith in the system, than some of these developing markets, even though the standard of living in those developing markets, isn't as high.
Host: It's a question of forward momentum, yeah. I guess if you're moving forward, you're feeling positive.
Dr. David M. Bersoff: Exactly. It really is about that momentum. It doesn't matter how well you're doing, if you see yourself going backwards, that's all you need. Then it's like, life sucks. And on the converse, if you see things moving up and getting better, you can absorb a lot of punishment, a lot of hardship when you're looking towards a future that's brighter than your present.
Host: I really enjoyed this. Let me get you out of here with one last question then, are you hopeful as you're speaking about hope for the future of truth and why or why not?
Dr. David M. Bersoff: So when I look towards the future in general, I keep in mind that this country survived McCarthyism and survived the Cold War, the Cuban Missile Crisis, unrest, lies and misinformation around the Vietnam War, the Civil Rights Movement and all the protests of the 60s. So the country has come through tough times and seemingly attractable differences in our values before, and so that, our history gives me hope. But to the point you were raising, I don't think that unless until we cure the infodemic and emerge from information bankruptcy, I don't see a way forward. And what that means at a foundational level, until the rewards in society. And those rewards could be money or power or influence until those rewards are greater for spreading truth than for spreading lies and are greater for facilitating cooperation rather than fomenting divisiveness, especially democracies, we're going to continue to founder and suffer and weaken our societies.
Certainly, I think business has a big role to play in fixing some of these problems, particularly around information, but ultimately, we also need government and media to start working again. And as bad as January 6th was as a watershed moment of distrust and misinformation, I still don't believe we hit rock bottom, even with that event yet. And I do worry that it might take an even bigger shock particularly to this country before we shake ourselves out of that, before there is a greater reward for truth over lies and for cooperation over polarization.
Host: Certainly sobering as we go forward. And we joked before about agreeing on what day it is, but there are probably some people who would argue. It's scary.
Dr. David M. Bersoff: Absolutely.
Host: Hopefully, we'll figure this out as we go, but I want to thank you so much, David. This was really interesting and great. You guys do such a great job with this report and it's always a wealth of information. And I know our listeners are fascinated by it as well as I am. So thank you very much and stay safe. And we look forward to seeing you again in the future.
Dr. David M. Bersoff: You bet. Thank you.
Outro: We hope you enjoyed this episode. The Principal Podcast is brought to you by LRN. At LRN our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on apple podcasts, Stitcher, Google podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: How are boards of directors of major companies coping in 2021 with the increasing expectations from so many stakeholders? How are boards equipping themselves to meet the challenge of overseeing large global organizations? In this episode of the Principled Podcast, Marsha Ershaghi Hames, Partner at Tapestry Networks, guest hosts a conversation about the critical role boards play in shaping ethical corporate culture with Don Cornwell, an accomplished corporate leader who currently sits on the boards of AIG, Natura & Company, and Viatris. Listen in as Marsha and Don talk about the importance of intention when making decisions at the board level—especially as it relates to diversity, mentor sponsorship, and professional guidance.
[1:28] Guest Don Cornwell’s diverse background and pioneering career journey.
[3:25] Where are we now in terms of diversity on Wall Street?
[9:22] Where is the U.S. going wrong in terms of maximizing capital and production?
[13:12] How can boards and corporate leaders take the first steps to open doors and drive intentional sponsorships while navigating DEI?
[21:08] How can boards begin to transform their own culture?
[26:09] How boards can take action to cultivate ethical culture given the context of these times.
Additional Resources:
Article: Father and Son Investment Bankers Describe Wall Street Regrets [Subscription required]
Featured guest: Don Cornwell retired as chair and CEO of Granite Broadcasting Corporation in 2009, a company he founded in 1988. Granite developed from an entrepreneurial idea into a diverse company operating 23 channels in nine television markets and became one of the nation’s 25 largest television station groups.
Previously, Don was employed for 17 years in the Investment Banking Division of Goldman Sachs. While at Goldman Sachs, he was engaged in public and private financing and merger and acquisition transactions for publicly traded and privately-owned companies, with a primary focus on consumer product and media companies. In addition to transaction responsibility, he served as the chief operating officer of the Corporate Finance Department from 1980-1988.
Currently, Don serves on the board of directors of AIG, Inc., Natura Holdings, Viatris Inc. and Blue Meridian Partners, Inc. Don is also a trustee of Big Brothers/Big Sisters of NY. At AIG, he is Chair of the Compensation and Management Resources Committee and a member of the Nominating and Corporate Governance Committee.
Don served on the boards of Pfizer from 1997 to 2020, Avon from 2002 to 2020, and CVS Caremark Corporation from 1994 until 2007. At Pfizer, he was Chair of the Audit and Regulatory and Compliance Committees and a member of the Nominating and Corporate Governance and Science and Technology Committees. Viatris was created as a public company as a result of a strategic merger of Pfizer’s Upjohn business with Mylan Inc. At Avon, he was Lead Director of the board, Chair of the Finance and Strategic Planning Committee and a member of the Nominating and Governance and Audit Committees. Avon was acquired by Natura in 2020.
Don previously served on the board of Occidental College, the Advisory Council of Harvard Business School, the MS Hershey School and Trust, the Wallace Foundation, the Edna McConnell Clark Foundation and as Chair of the Board of the Telecommunications Development Fund appointed by the Chairman of the FCC. Don received his BA from Occidental College in 1969 and MBA from Harvard Business School in 1971 and has been honored as Alumnus of the Year by both institutions.
Featured Host: Marsha is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement.
Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc. a global governance, risk and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority.
Marsha has been interviewed and cited by the media including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics and more. She hosted the “PRINCIPLED” Podcast, profiling the stories of some of the top transformational leaders in business.
Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc. an integrative supply chain advisory firm and Compliance.ai, a regulatory change management firm.
Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.
Transcript: Intro: Welcome to the Principal podcast brought to you by LRN. The principal podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Marsha Ershaghi Hames: How are boards of directors of major companies coping in 2021 with the increasing expectations from so many stakeholders? How are boards equipping themselves to meet the challenge of overseeing large global organizations? Hello, and welcome to another special episode of the Principled podcast, where we continue our conversations about the critical role boards in shaping ethical corporate culture. I'm your guest host, Marsha Ershaghi Hames, a partner at Tapestry Networks. And today, I'm pleased to be joined by Don Cornwell, an accomplished corporate leader who currently sits on the boards of AIG, Natura & Company, and Viatris. Don, thank you for coming on the Principled podcast.
Don Cornwell: Marsha, thanks for the invitation. I look forward to our conversation.
Marsha Ershaghi Hames: Excellent. So Don, let's share with listeners a little bit. You've had a very unique background from your early career at Goldman Sachs to founding and leading Granite Broadcasting, which at its peak, was the largest African American-controlled television broadcasting con in America. You've continued to lead a distinguished career of service on both corporate and nonprofit boards. Could you tell our listeners just a little bit more about your amazing journey?
Don Cornwell: Well, I've done a lot of moving around for a kid who was born in segregated Oklahoma in 1948. My family moved to the Pacific Northwest when I was five, so they could frankly continue their careers as educators. And so I lived in Tacoma, Washington, until I graduated high school in 1965, then left to attend Occidental College in Los Angeles, followed immediately by a move to Boston to attend Harvard Business School. And from there, often New York to join a considerably smaller Goldman Sachs. As you know, I left Goldman Sachs in 1988 after 17 years. I started a business, you've referenced it, Granite Broadcasting Corporation, and we built that for 20 years. And then I left the company and essentially went into so-called retirement, which I've failed at miserably and have continued to serve on corporate boards. You didn't mention, I have to mention, Pfizer and Avon and CVS. I've been very proud of my association with all three of those companies. So I wouldn't want to pass that.
Marsha Ershaghi Hames: Well, you mentioned your journey with Goldman Sachs. You had joined their investment banking department in the early '70s. And I actually was reflecting on that fantastic interview with Bloomberg, the profile with you and your son last year. Your story is very pioneering for African Americans working on Wall Street. As you look back on that experience, what are some of your observations on diversity on Wall Street, and essentially the being the only one in the room? Has there really been progress?
Don Cornwell: So I did the interview, the Bloomberg interview with my son, because I thought it provided a context of experience by African American professionals over a significant period of time. I started at Goldman Sachs in 1971 and he joined, I should say, after I graduated from Harvard Business School. And he joined Morgan Stanley in 1998 after he graduated from Stanford Business School.
I am shameless about promoting the article. So if any of your listeners have an interest, they should check it out. On your question, so I would say the industry is making what I call directionally correct movement. That's a good thing, but I guess I'm at an age in life where I can say that I think the progress is too slow and I think it's not deep enough. And so in making that comment, I can point to some really terrific success stories at various financial firms. And by financial firms, I'm incorporating everything from banks and insurance companies to the typical Wall Street firms that you think about.
But in thinking about those success stories, I'm hard pressed to find what I would call an adequate pipeline of aspiring and qualified young professionals available for the succession planning of the future. I've found, in my career, that when you build a pipeline, and that's something that Pfizer talks about a lot, but when you build a pipeline of talent, the issues that we're discussing become somewhat moot. However, when you don't have a pool of talent, you then find yourself scrambling to, and I put quotes around the word "improve," from a very unimpressive baseline.
And frankly, in this day and age, that does not go unnoticed by shareholders, and stakeholders, and society. So I guess I would give the industry a mixed grade. I think it's getting better. I think that there's some great success stories that I read about and know about, but much more work to be done.
Marsha Ershaghi Hames: Speaking of that, I actually read another article or a derivative article. And I read a quote here that said "Wall Street has a problem with black excellence." And most super successful people on Wall Street are just excellent at what they do and how they got there. However, when someone is excellent as an African American, it is not embraced. How does that sort of land with you or resonate with you?
Don Cornwell: Well, it's an interesting observation. I don't know where it comes from. I think I would sort of turn it just a little bit to say that I felt, in my time, that the process of growing in a career, no matter who you are, requires an effect. What I would describe as someone who intentionally wants to see success. So the observation, to be candid that I've made about the financial community, I think, is a problem across industry and the country. I think we simply have not done enough to hire, encourage and retain young people of color, or women, in general industry.
I think that we leave a lot of talent behind. We're getting better, but we leave a lot of talent behind. So when I talk about, I have a theme of being intentional about a success experience, I can certainly say that each and every one of the success stories that get spoken about a lot, people like Ken Chenault that Ken Frazier, just to name a few, and I can name many, many others, that they can point to those moments in their careers where they were given a helping nudge along the way.
And so I'm sort of simple minded about it, which is that if people in power want to see success in that regard, they have to be intentional about it. It has to be something that's on their mind. They have to insist on it. And quite frankly, when decisions, tough decisions. Have to be made as to whether somebody's performing or not, they have to be willing and not afraid to call it. Because as I said, everybody isn't going to make the cut, but it's great if people can feel comfortable that they have that opportunity.
In the Bloomberg interview, and I hope you don't mind my going on at lengthy here a little bit, but this is one of my favorite topics. I spoke about intentional sponsorship. That's my theme. And I spoke about it in context of senior managers. I read, referenced a fellow that I called my very best boss ever. He has unfortunately passed away. His widow read the interview and called me and was quite amazed at how I felt about this. And I think she understood things that I had said to her over the years about how important he had been to my life and my family's life in terms of my own success.
So I always say that during that eight year period, when I had his sponsorship within Goldman Sachs, and by the way, he wasn't necessarily a great guy. I've had people contact me after the interview and say, "Well, he wasn't very nice to me." And so I get that, but I do know that once he asked me to join his team, then I became part of the team and he became my advocate. And that was the best period of my career at Goldman Sachs.
And quite frankly, my worst periods were when I didn't have that guidance. I think, and I hope you'll let me go on just a little bit longer, but I think that as a country, we're not maximizing our human capital. We see that every day as we work our way through the pandemic. I mean, think about it. Human capital, with a bit of help from our global partners, came up with multiple ways to stop the coronavirus. Okay. I mean, that's amazing if you think about it. I mean, we're all somewhat concerned these days about the continuation of variants and issues about whether you get a boost, et cetera. But the facts are is that we found a way, in a very, very short period of time, to bring a halt to this really vicious virus. And so that's the wonder.
On the other hand, we are also picking up the newspaper and learning that we are short of people to do the most basic jobs, as well as, quite frankly, many of those requiring much more in the way of skills. As a country, I think we've given up on our public education system. It used to be an advantage for us. We spend a lot of time bashing teachers and so forth, and fighting about the curriculum and so forth.
We're resisting efforts to train people. We need the labor, but we don't want the cheap labor coming across the border, even though we don't necessarily have the labor to fill many of those jobs. And I'm going to be a little controversial in my next comment, and you guys can edit this out if you want. But I have long said that the country long benefited from structural inequity/ if you think about the quality of teachers we had many, many years ago, when one of the best jobs available to a bright woman or a person of color was as a teacher. And I used my mom as an example, she finished first in her class in college in 1942. There were no corporations or financial institutions on her campus aggressively recruiting, particularly at an HBCU.
And so society benefited because you had this class of individuals who were largely directed into a profession that was the best available to them, and we're indebted to them, but that's changing. And without getting into the debate about teachers, and quality, and what have you, that's changing. And that's a debate for another day, but it goes back to my opening comment, which was that we're not spending enough time maximizing human capital. And I think that's a problem. And it ties back to DEI. It ties back to ESG. It ties back to a lot of things that we might talk about. So I'll pause there. I know I'm talking too long.
Marsha Ershaghi Hames: No. Yeah. So first of all, Don, I mean, you are touching on some very, very timely issues that, I mean, companies are exploring ways to essentially future proof talent models that clearly we've got an inequity, as you say, of infrastructure and how organizations go to recruit and build their pipeline. So when I sometimes hear the comments of, "There isn't a pipeline," or "We are not able to build a pipeline." Sometimes, I often think, "Where are you looking?"
And there are some organizations today that are starting to try to build bridge around skill mobility, bridges into minority serving institutions. You mentioned HBCUs. But to go and to build recruitment pipelines to offer opportunities in other types of fields that may not have been historically or traditionally built into that recruitment infrastructure. So you're really touching on an important point that we probably should set up another conversation to unpack acutely.
However, you earlier also mentioned this kind of societal shift that's a lot of pressure from company consumers, and stakeholders, and investors on companies to take more responsibility. And I like how you share your reflection on that intentional sponsorship by this mentor in your life. I am wondering, in the area that you sit today from your vantage point, how can boards, how can corporate leaders take those first steps to, whether it's mentorship programs, or to be more prescriptive or surgical in driving this notion of, "We need to open doors. We need to find ways to design more intentional sponsorship."
Are these conversations happening within the board? Because I know, again, this is unique to your story. And I've heard other similar stories where it was that one mentor or sponsor who took them under their wing and just offered the difficult, often difficult guidance, to chart out the path. But how can we do more of that? Because clearly, the pressure's there for companies to take responsibility, but it's the how part, it's the pragmatic. What are the steps to activate that? What are your thoughts on that and what are you hearing or observing from where you sit today?
Don Cornwell: So I think every board room where I have the honor of residing, the topics on the table, the topic is one of discussion and there's work being done and reporting out on the topic. So I think it's on the agenda. I'm not sure, from my perspective, whether corporate boards today really recognize that these societal forces that we think about, how powerful those items are for the future, that we get very caught up in a variety of other topics, which are also very, very important.
And I'm sure you'll ask me about a few of those at some point here. But I do think that, and to some degree, this kind of gets to one of the notions that I have about the composition of boards, which is the notion that we actually need more people in the room with not only courage to ask tough questions, but also a wider lens in many instances, because I'm not sure that we're really necessarily seeing what's coming at us from a lot of different angles.
If I can go back to the comments I made about diversity and inclusion, and a little bit ESG that you had asked about that, I really think these are societal forces that are starting, whether we want it to or not, to drive the corporate board agenda. So just a couple of thoughts. Can you imagine what the board discussions in Facebook are like these days? Or if you've been following Netflix. Could be a more successful company, quite frankly than either of them. All right.
I mean, Facebook was founded... My daughter is 36 now, and she's a 2007 graduate of college. And I remember when she was a freshman, she and all of her friends were talking about whether or not they would sign up for Facebook, which had only been started maybe two years before they were to be freshmen. And Facebook's the bad people, there's all kinds of negative things being said about Facebook, but just look at the corporate and business success or Netflix. I mean, my God. How many times did I find the little red envelopes around my house that had never been returned? And talk about a success story.
But what are they talking about at those boards? They're talking about all the issues that here on cable television 24/7. At Netflix, you're talking about comedian who has decided to be less than politically correct in the way he talks about things. And so that raises all kinds of challenges about speech and what's appropriate. But then you move from that and you've got, [inaudible 00:16:55] Exxon. My God, what could be more... There it is, Exxon. And you literally have activists find a way with major shareholders to challenge their corporate strategy. And it's front and center around climate and sustainability. What are you doing? And they end up changing out board members.
And then there's one that you may or may not have heard of, but I pay a lot of attention because of my history in the broadcast business. It's a company called Tegna, which is essentially the old Gannett company's television station group, which is quite a large group. And they have been under attack for three years by a very, very sophisticated activist shareholder. And his primary focus, his primary focus has been on the treatment of people and particularly the treatment of people of color within the company. And it's been kind of a fascinating thing to watch. The corporate, the board has succeeded in being reelected each year, but the noise gets louder and louder. And at the current time, that activist has now joined forces with one of the major private equity firms and has made it an offer to who buy the company.
And so that board is very much under siege. And so I see these forces from society demanding a seat at the table. And quite frankly, these are not the topics that are ever at all candor on the agenda in most instances. You get me started on this, so I apologize, but you think about the tensions that corporations are having to navigate as between national and global interest. Anybody that's doing business in China, those of us who deal with compliance, and risk, and what have you, we spend all of our time thinking about China as a compliance issue. But you've got geopolitical stuff there. I mean, don't go to China and start talking about your great relations in Taiwan. And they've got their views about data privacy. And quite frankly, beyond China, just across the globe, there are views about that.
And so that's my way of saying that boards are being forced by the outside world to think about stuff, including the issues... DEI is not just a, "Oh, we got to check that box." Okay. In my opinion, it's part and parcel of so much that's going on out there that boards are having to deal with. Then, of course, we've got to deal with cyber. I mean cyber's going to destroy us if we're not careful. Compliance and ethics is an amazingly significant issue. If you saw yesterday that the whistleblower in the LIBOR scandal is getting a $200 million payout. That's going to motivate a few people.
And then I always finally point out, and by the way, we're hopefully coming out of a pandemic and we're going to be worrying about organizational culture, given that most of us have spent two years working remotely, and we got to figure out how to get back together again. So longwinded answer to your question and hopefully a little bit helpful.
Marsha Ershaghi Hames: Yeah, no, no, very helpful. And I'm glad you've touched upon what we're witnessing in terms of this societal shift and the increased pressure from investors, regulators, employees, other stakeholders, just the demands on companies to show progress. Business resiliency, environmental climate transaction plans. And then, of course, there's no question in terms of not only human capital. And I don't really like the phrase human capital. Or natural capital sometimes is also on the climate stuff, but it's really our people, our talent and the innovations and the diversity of how they bring ideas to the table, can really transform and create a certain agility to business progressing. And as this is continuing to capture the board and corporate leaders' attention, I like the phrase when you said boards really are starting to get forced to think differently.
And I want to unpack that a little bit. So you touched on culture. I want to start with this notion of transforming board culture. And you mentioned earlier having the courage on the agenda to maybe ask more difficult questions. But how can boards, or you have had such a distinguished career, both as an executive and on serving boards. How can boards really start to begin to transform their own culture? Before boards can take the step for oversight of culture within the organization, how do they turn the mirror back and reflect on themselves and take the steps to really help cultivate a transformation within their own board culture?
Don Cornwell: Yeah. I'm probably more of a pessimist in all these things than many. And I don't know if that's helpful or unhelpful. My experience has been that crisis tends to drive focus, and we all get very comfortable doing what we do. We do it every meeting, whether it's four meetings a year or 10 meetings a year, whatever the case may be. And then it's when all of a sudden, we get something that comes in, sort of a curve ball that we're forced to try to get smarter. And so my best board experiences have been in situations where there is what I would describe as intentional diversity of voice around the table. And diversity has always thought about it from the context of gender, and ethnicity, and what have you. And I think those are very much part of it, but I also think that diversity of voice in terms of experiences and worldview is just so important.
I have found that when you have that... So you have to start with the notion that you are not going to figure it all out, okay? That bad stuff will happen. And so you want to be prepared to react, but then you should spend time, not only trying to figure out the root cause... But I guess I think it was Andrew Grove, the guy who founded Intel. He had a book called Only the Paranoid Survive. And I've always found that to be, at least that my business experience, just so true. That there's a need to constantly scan the horizon, looking for what's coming over the hill, that you could just not imagine. And so I think that best boards are trying to find ways to empower the management teams, to scan the horizon, to think about risk, think about the unimaginable, think about what you do when the unimaginable happens.
That's, I guess, my belief about it. I know a lot of people think that a lot of it has to do with the books and records and the control and so forth. And it certainly does, but I will tell you that I can go back and look at scandal after of scandal and crisis after crisis. And you discover that all that stuff that I just described, the books and records and stuff all seemed totally fine until you discovered that something else was going on that was much more difficult.
And so I'm a big believer in trying to inject a bit of imagination, creativity, energy, new ideas, new perspectives in the boards. I'm a believer in having boards that have some longevity and some experience. I enjoyed, in my long career on the Pfizer board, ultimately being the one that the new directors would turn to and say, "Don, why did we do that?" Okay. And there was great value to that, but it was also time for me to go. And that I'm pleased to say that one of the people that was recruited in the context, not to replace me, but in the context of my leaving, Scott Gottlieb. Scott and I had gotten each other in a year of overlap, and anybody who's watched television, he's a very, very bright young person.
And I just think that people who come to the party with different sorts of experiences can just bring so much to a board. And I urge boards to do that. I think some are trying hard. I think some are still, in my honest opinion, still checking boxes that satisfy the New York Stock Exchange, or some perceived notion of best practices, and not necessarily bringing enough wisdom and perspective to the boardroom table that can hopefully help management as they try to navigate their way through increasingly difficult times. So I'm talking too long. I'm going to stop there.
Marsha Ershaghi Hames: No, then you're actually spot on, Don. I mean, when you say "Crisis tends to drive focus," I mean, and clearly you're drawing from, you've served on boards of so many highly regulated industries. You mentioned Pfizer, you've got pharma, you've got finance services and so forth. Tell me, when there is crisis, when there are ethical lapses, what role can boards do, especially in these times with these shifts that we're discussing in society? How can they really take action to cultivate ethical culture in the organization? What are the steps they can take there?
Don Cornwell: So I don't want to get too specific, but I lived through one with one of my former boards, where the company ended up making a settlement with the government and writing a very, very large check to compensate for all sorts of perceived and admitted sins. I think that out of that, both management and the company clearly recognized that this had been an issue and that we needed to figure out how to do better. But the focus, which I greatly appreciated, and I had a little bit to do with leading, though lots of others were leading the charge, the focus had to do more with root cause, and how do we get there? What could we do to change? How could we make sure that the organization knew that that certain behavior was not part of what that company wanted to convey to the outside world?
So that really became a major investment of time and resources on the part of the company and with regular reporting to the right committees, audit, and regulatory and compliance, and then ultimately, to the board, about just what was being done, not only to prevent a repeat of what had happened, but also to what was being done to make sure that, within the culture, everybody sort of knew what was expected? And to be candid, it was made a lot easier because the CEO was not, in any way, either conflicted or hesitant. Very strong views on the issue. And quite frankly, personally, very embarrassed by what had happened. So that's what I call, what do you do afterwards? And so you deal with it. I mean, we did the usual stuff of figuring out who needed to be appropriately treated, fired, terminated, remediated, what have you. We went through all that.
But I think that the bigger learning, I think, for this company, and very much into it as I was leaving the board and I'm very much hoping that that will continue to be the case, was really what I would describe as, "So let's scan the horizon. Let's figure out how to identify the next issues and see if we can get ahead of it." And I mean, they literally formed a... I guess I hate to call it a committee, but I guess it's a committee, that on a regular basis, was effectively reviewing, within this particular part of their business, sales practices and new developments, et cetera, and looking at where there might be issues, my contribution, which I think they followed, was to find the person in their organization that nobody tended to like, who was not afraid to say, "But, sounds good, but..."
And to empower them to find ways to reward the person for bringing an independent and a challenging viewpoint. That's hard in organizations. I don't know how well they did with that. I think they did some of it, but the point is that you're trying to be ahead of it. You're trying to recognize that bad stuff happens. That you can talk to the cows come home, but bad stuff happens and it will happen. And people for either evil reasons or innocent reasons sometimes go over the line, go where they shouldn't go. You just have to recognize that that's going to be the case.
From a board perspective, I always took the position you have to recognize that. You have to make sure managers know that bad news can be delivered safely, that you're not going to all of a sudden have the hanging party go out because someone came in and told the audit committee that there had been an issue, but that what you really wanted was, "So how do we find this out? What are we doing about it? What do we think the causes were? What can we do better?" And then you go through the checklist.
So again, not sure if I responded to your question, but I do think that boards are having to organize themselves around these challenges. And in my opinion, there are no right answers. There's no exact answer to any of it, which is why I always argue that you got to talk about it a lot. You got to recognize that sometimes the agenda of that's laid out isn't necessarily the agenda that you really need to be focusing on, and at least have some discussion about that, so that the person who might have a different idea can feel empowered to bring that idea up. Anyway, I'm going to stop there.
Marsha Ershaghi Hames: You're hitting really excellent points. I feel like we could continue this for
a good another hour because culture in and of itself, it's so elusive. And to your point, there's the agenda. And then there's the fuzzy noise. And how do we extract that clear focus? And while, so glad you said this, bad stuff happens, it'll continue to happen and crisis continues to unfold.
However, I think it's, how do organizations take a step back and try to see, what are the lessons that we can learn? How can we be a little bit more acutely aware to try to identify these signals early? And how do we really foster a culture where management is also comfortable coming in and escalating, or bringing these to our attention sooner? Or what are the challenging questions we can ask of management to try to uncover these issues sooner?
So it's sort of a mutual dialogue here, but clearly, Don, this is a conversation we could probably continue to have, but we're reaching the end of our time. And I have learned so much from you. I feel like I was intentionally sponsored today. So many new ideas are sparked in my head. So thank you so much for sharing your time and for joining us on this episode today. And I want to say to our listeners, this was a real special treat. We're just so thrilled to have Don share his reflections and experiences here. And I'm Marsha Ershaghi Hames. With gratitude for tuning in to the Principled podcast from LRN, and I'm going to sign off. Thank you.
Outro: We hope you enjoyed this episode. The Principled podcast is brought to you by LRN. At LRN, our mission is to who inspire principled performance in global organizations, by helping them foster winning, ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: Gamification involves more than just shooting lasers and collecting gold coins. When done well, it has the power to enhance learning experiences and influence the way people make decisions. In this episode of the Principled Podcast, LRN Learning Director Kai Merriott speaks with Johnny McMonagle, one of LRN’s lead Creative Designers, about how to leverage gamification effectively when developing E&C training. Listen in as Kai and Johnny discuss the process of identifying the right opportunities for gamified learning, the importance of telling the right story with training material, and their favorite gamified elements—including a 3D-printer of doughnuts.
What You’ll Learn on This Episode: [1:25] What is gamification?
[3:02] What comes first - the story or gamification?
[7:40] The significance of using music in games.
[10:07] Making a game intuitive for the user.
[16:33] How long should a game really be for optimization?
[19:35] How to ensure a game reflects the specific task at hand.
[20:40] How important are the visual components of the game?
[26:19] How to keep a game engaging and relevant by tracking progress.
[29:10] What would the best and worst gamified courses look like?
Featured guest: Johnny McMonagle brings over 20 years of experience in e-learning and instructional design to LRN. As Lead Designer, he leverages his graphic design and animation skills to develop interactive elements for training software that create more engaging learning experiences and encourage ethical behavior. He also works collaboratively with clients and internal stakeholders to ensure these learning products deliver effectively on key business objectives. Johnny specializes in drawing, illustration, and character and concept design.
Prior to joining LRN, Johnny was the Lead Designer at Interactive Services, where he developed interactive training elements using Flash and Photoshop. Before that, he worked as a graphic designer at the e-learning company MindLeaders. Johnny received his diploma in classical animation at Ballyfermot Senior College in Dublin, Ireland.
Featured Host: Kai has worked in learning management and instructional design since 2001 and has worked at LRN (formerly Interactive Services) since 2013. As a Learning Director, he designs creative learning programs that focus on changing behavior, with a particular focus on pushing visual design and creating compelling animations and videos. He also leads and monitors his team’s instructional design approaches.
Kai has designed training on a variety of topics within compliance—including diversity, code of conduct, information security, anti-bribery, and money laundering. He’s also created training on brand awareness, systems training, social media policies, food safety, sales, customer service, and marketing. He has created these programs for companies all over the world including Bloomberg, Amex, Finra, Facebook, Kraft-Heinz, AIB, Johnson & Johnson, Deloitte, Morgan Stanley, Intel, BlackRock, State Street, BNY Mellon, and Colgate.
Several of Kai’s training programs and videos have won awards from Brandon Hall and other training institutions. He earned his MA in creative writing and BA in English at University of Chichester in Sussex.
Transcript: Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Kai Merriott: When you hear the word gamification, what comes to mind? Do you think of shooting lasers and collecting gold coins or about influencing the way people make decisions? Too often organizations lean on gamification for the sake of making their ethics compliance program look more tech-savvy. So how can you ensure you develop gamification in a way that enhances training? Hello, and welcome to another episode of LRN's Principled Podcast, I'm your host Kai Merriott a learning director at LRN. And today I'm joined by Johnny McMonagle one of our lead creative designers for LRN, we're going to be talking about gamification in learning. So, Johnny, is a real expert in this space with more than 20 years of experience designing interactive graphic elements for e-learning and training software. So Johnny, thanks for coming on the Principled Podcast.
Johnny McMonagle: Hey Kai, thanks for having me, looking forward to this discussion.
Kai Merriott: So Johnny we've obviously worked together on many gamified learning projects in the past but just for the purposes of this conversation, how would you describe gamification and meaning the way that we talk about it?
Johnny McMonagle: Yeah. I think our approach to gamification is to make our training a lot more engaging, it's going to stand out from your normal e-learning and normal training and that is going to look and feel very different. It's going to be engaging, it's going to be enjoyable and it'll be short to the point, but the experience will actually be a pleasurable one and that's where the element comes in, that it's not just education it's actually a fun thing to do.
Kai Merriott: And these sort of gamified elements on top of that is in there so, well, it's fun and it's engaging but also it has game mechanics as well like I suppose scoring.
Johnny McMonagle: Yeah, we do that. Apart from the visuals, you will look at a screen and you will see things that you'll see on an arcade game, you'll see a score, you'll see a play button, you might hear the music and the sound effects that you're used to from games and you'll know the second you sit down to do it you're not just clicking next, you're seeing the elements that go into making a game.
Kai Merriott: So when I think about all the projects we've done together which have those gaming mechanics and the gaming elements, I kind of think that every gamified course has really two distinct elements that make it really sort of compelling and engaging and the first is I think a really good story from beginning to end, you put that story element in there that kind of drives you from one part of the learning to the next, but also really good interactivity. Let's start from the beginning in terms of, what do we actually think about first usually? Do we actually start with the story or do we start with what gaming elements can we put into this training?
Johnny McMonagle: Yes. And I've seen that where I think we always start with the story because the story will drive everything. How do we get from A to B on your learning journey? What is it we're trying to do? So we start with a story and we'll tell the story and everything will evolve from there. For example, a recent course I did was on global trade and we said, well, what is the story here? The global trade it tells itself, you're going to go around the world, you're trading with different countries so we said, how are we going to make that work?
And I said to the learning manager, I said, well, how about this? I found an image, it was a little plain going around the globe, I said, well, that's you, you're the character, and we're going to go from A to B and we're going to learn things as you go. Every destination is going to have a consequence and at the end of it you have learned something. And it led to itself that it looked like a game board, it felt like a game and every step of the way it felt you were learning but it was very game-like, and that was the story that led all of those decisions that we put into it and it worked very well.
Kai Merriott: And I think if you were to try and do it the other way around, you kind of start, oh, we know we've got 10 gaming elements to choose from and now let's try and build a story from that, that just never works, does it?
Johnny McMonagle: No, it's kind of working backwards where you're shoehorning just for the sake of it and I've seen it never gels, there are too many different elements just they don't work. We've seen that in putting sound effects into a quiz, it doesn't make it a game, it's just window dressing. I think it has to be more cohesive and it has to have a strong narrative and all the different elements from the visuals, the style of writing, the sound effects, it all has to tie in. And with the idea of gamification in your mind you have to think, does this play, does it feel like a game? I think that's what you're striving to do.
Kai Merriott: Yeah. And I think it's funny you said earlier about, you can't just put sound effects on a quiz and call it a game, I think that's absolutely right. I think you start with that really strong story but then I think we do layer it with sound effects and I think we shouldn't forget that either.
Johnny McMonagle: Yeah. I think sound effects are very important and they can really enhance the whole experience, it's just one of the many elements and it's a very rich element to have and it can add so much to the experience. We were saying before about sound effects in games, we hark back to the beginning of games, the arcade games again and we all respond to those. We know what a good sound sounds like and we know what losing a life sounds like just from our shared memories of arcade games and home video systems. These are common things that we all understand, we all can respond to and it really does enhance it but having it on its own you need to think of the other elements too and they all have to come together to make that cohesive game experience that feels like a game.
Kai Merriott: Yeah, absolutely. And I'm thinking about the sound effects, I think we slightly age ourselves, don't we? When we talk about arcade games.
Johnny McMonagle: This is true. Yes. Like the coin slot in the arcade. Because it's funny in saying that though, I think to this day we still harp back to the early Nintendos and we know what that sounds like. And even for people who've never played a game of any age, we go, yeah, I am now playing a video game. It is kind of a universal and nearly a timeless thing that we can all relate to it in the same way.
Kai Merriott: Yeah. There's something almost instinctive about, you said earlier, about the noise that means you've won and the noise that means you've lost a life.
Johnny McMonagle: Yeah. I think it's some sort of shared global experience that no matter where we're from we know what it sounds like. Even if it's a mobile game or a contemporary platform or whatever, we know that means you've just won something, that means you've lost something, it's kind of just a unit universal language.
Kai Merriott: Yeah. And I think as well we're kind of lucky in the age we live in which is that mobile games are so popular because I think they also do the same thing. They're very arcade game-like, very bright and colorful and kind of a lot of sounds, lots of music to convey a particular emotion, what do you think about the use of music in games and how important is that?
Johnny McMonagle: Yeah. The use of music can really enhance it and it's a very important thing to consider and it sets the tone for the whole experience. And again, there is the universal thing of we know exciting music to suit the tone if that's what you're aiming for, we know cinematic, we know that if we want this to be dark and somber that's what we do, as you would if you were scoring a piece for a drama you speak the same sort of language. It's funny you mentioned mobile gaming and the target audience for mobile gaming wouldn't be what you would normally think of gamers. And today's gamers I think most people think of people sitting with five monitors, they have the best chairs, they've all the gear, that's what gaming is, but there's also the mobile thing.
So it's every walk of life will have this experience, you wouldn't think of them as your typical gamer but they will engage with this kind of game and they do, they wouldn't call themselves a gamer but they do play these games. And I think that's what we aim for is to say, well, what is it that engages the non-gamer to play a game? It's something that is appealing to people who don't play games, it's something that'll engage them, it's something that they want to come back to and that they'll respond to it positively.
Kai Merriott: So you mentioned gamers with their five monitors and I think you're right, I mean, there's a real important distinction I think to be drawn here between what we do when we talk about gamified learning and the people who are obsessively gamers, or even just casual gamers but more of the console type gamers. I think ours seems to be more like the mobile games.
Johnny McMonagle: I think so. It has to be much more direct, it has to be for somebody who's never played a game, who's aware what a game is. They look at it, they can tell immediately how to play the game, they go, there's the start button. Once they start playing they don't want rule books, they don't want all that, they want to get in and start playing and so from the get-go it should be intuitive, and if it isn't intuitive, if it takes too much explaining, then it's not working. It has to be an immediate thing for people who are time-poor, for people who, as I said, aren't gamers, they want to look at it and go, I like the look of this, I want to press that play button and after I press that play button I want to keep clicking things, I know what I'm doing all the way to the end of the game.
Kai Merriott: Yeah. Let's talk a little bit about that, making it intuitive. Because again, probably showing my age, I remember the old days of you take home a game and it comes with a sort of novel-like instruction manual, I mean, they still does this now, right? There's a picture of a controller and there's 1,000 things around it telling you what each button does, but, I mean, we can't really do that in gamified learning, can we?
Johnny McMonagle: No and nor do we want to. It's like, we don't have the time, we're too busy in our lives, we have too many things going on. We have this training set aside we want to get there immediately and say like, if it's too complicated you're just going to disengage with it, if you don't automatically immediately know what you're going to do then I think we're failing, that's what we come into. The mobile version is a strip down to the bare element of, what is a game? And it is, does it look good? Does it look like something I want to play? Will I understand it? Am I daunted by it? Then it's not working, does it look like something I can dive into? Then it is work.
Kai Merriott: Yeah. I was thinking of Tetris actually and how much we all never had to learn Tetris.
Johnny McMonagle: That's it. From the second you saw it on screen you knew what to do and, yeah, no rule books, no help button, no nothing. You go, I know what to do, and within seconds you learn, oh, I didn't get that right, you hear the sound, we can all hear it in our memories, that sound, and you get the little endorphins when you get it right and there's the little positive thing. And you get that within moments of picking it up for the first time and that's the beauty of a game like Tetris. As you, I don't think that anyone ever read how to play Tetris, I'd say they are few and far between, so that's what we are aiming for is that immediacy.
Kai Merriott: Also, I think the simplicity of the gamification options. So if you think about what that means, well, we named a few already so for instance, you lose a life, you have three lives and you lose three and then you're kind of kicked out of the game, you could have what we call internally power bars which is health bars that go up and down as you go, whether you answer a question right or wrong, I mean, there's lots, lots, and lots and lots of different options. We also have branching which is another kind of a popular gaming thing that we do where if you get a question right then the story changes and it's different than if you get the question wrong and you go down a different path. So, so many options but we shouldn't use them all, should we?
Johnny McMonagle: No, because then I think we're overcomplicating. Use it if there's a reason for it, if it helps the narrative of that story we talked about then absolutely. And I like the branching one and it, again, harps back to the old adventure games even in the books, here's your choice, and whatever one you make you go off in a different direction and you're controlling that. You'll always come to the whatever conclusion, we make sure they come to the conclusion they have to, but having that choice is a great thing. But as you say, we don't have to throw all the whistles and bells there all the time but whatever helps the narrative is what we're aiming for.
Kai Merriott: So it's back to story again, isn't it? You choose it as it is.
Johnny McMonagle: I think it is always about the story.
Kai Merriott: Yeah. Because I think back to the course we did together and obviously, we were not going to name any particular client names, but we did one for the cybersecurity course we did, which was seen as being a game, everyone calls it a game, but it only really I think had one gamified option in there, maybe two. And I'm thinking of the one we did, it was a cybersecurity where it was all based around a 3D printing donut machine and you had four donuts I think and then if you answer a question wrong then you lose a donut and that was number one, and then number two was, I think there was a very small amount of branching in there. But even then it was just to show you a little different animation depending on whether you got it right or wrong.
Johnny McMonagle: And that was it, it was very multimedia-rich. It was music, it was bright engaging graphics, it was animation, it was sound effects. And they were all matching, the music suited the primary colors, even the sound effects of the good and bad results that all came together very well and it all sounded like it all belonged as part of the same product and that was a very successful one. And again, the story was you're starting at the start, I think you were getting parts or ingredients, and everywhere along the way there was somebody trying to foil you and your job was to make sure you foiled that hacker. It was about cybersecurity so we invented this character who was trying to stop you on your way and it had a little sound effect, little evil cackle, and stuff like that. And it was a very engaging little game, it was very short but it got the point across, it was all about cybersecurity and all that entails, and it feels very well received.
Kai Merriott: Yeah. I think it had one of the biggest take-ups of any training, not just gamified training but any training for that particular organization.
Johnny McMonagle: That's right. And a lot of that was just the fun of it and was immediately easy to play, you got immediately from the start you go, I like these graphics, I like that music, there's the play button. And I think we made a short intro animation to tell you this is what's going to happen, watch out for whatever we call the baddie and now go, learn this here, he'll try to trip you up on the way but go and answer these questions. And behind all that, it is just an e-learning quiz, but with all these things around it, it's so much more engaging. And it just showed there with the take-up as people were coming back to do it again and talking about it, comparing high scores would be the old way of doing it, but it worked just very well.
Kai Merriott: And I remember even though it was our training every time I went back to test the course during the production process I found myself getting drawn into it every time, I just kept playing it.
Johnny McMonagle: I think I've done that too. In the current one I'm working on we've come up with a new way if you win, a different little game piece for every successful thing. And as we're developing it I found myself playing the game because there's the little reward of the endorphins, the little positive sound, and something glows or sparkles every time you get it right. And then they're going, yeah, bear with me I'm just playing this game, and that shows that it's doing its job.
Kai Merriott: We touched upon earlier about, I think, particularly the cybersecurity one being a short game, because if you think again of gamers back to the five monitor guy, the games they play last for, I say not in one go but sometimes it is, 10, 20, 30 hours of gaming just in one game. We obviously can't get away with that, can we?
Johnny McMonagle: No. And I think no matter how good it is and how engaging it is, I think brevity is the key, I think less is more because the novelty will wear off. I think there's no set limit about how long it should be but I think if you have too much of a good thing too, yeah, kind of enthusiasm wins. And I think for us as contemporary workers we don't have that hour, so if we can do it in half an hour or 45 minutes and they've enjoyed that very much, that's better than dragging it out and turning it into a chore.
Kai Merriott: I think the key time is actually 20 minutes, but whether we actually achieve that, I don't know, that's the kind of the dream, the 20-minute game.
Johnny McMonagle: Yeah. I think 20 minutes is a perfect round number, I think any longer than that then you are pushing it. I know it depends on the content, it depends on the partner, but ideally we'd be trying to say, no, trust us on this, keep it around to 20 minutes and everyone will enjoy that bit a whole lot more.
Kai Merriott: And it's back to this - people being time poor, isn't it? Because games are seen as a bit of frivolity. And if we're saying to people, right, you're going to spend three hours on this game, well, I think you're right that they would get bored but also they just won't have the time.
Johnny McMonagle: Yeah. And touching on that, the gaming frivolity, is we have to sell this idea that gaming isn't a waste of time, it isn't a distraction, and maybe it goes back to teaching children that learn through play. And I think we never grow out of that, we do enjoy playing, we enjoy games, but it's not frivolous because actually, we are learning through this. And for employees, for staff and all that, it isn't a waste of time at all, it's like, you must do this training and you're going to enjoy it and that's a nice thing for everybody. If you're going to enjoy the training then everybody wins.
Kai Merriott: Yeah, absolutely. I think it seems to be not just in gamified learning but just in every kind of training that idea of people really not having much time trying to cut things down to the chase because this is not a university, they're not on three-year courses, they have 20 minutes to do a job and they need to learn how to do it quickly.
Johnny McMonagle: Yes, absolutely. I think we can all find in our daily working lives we can put aside 20 minutes and we can justify that 20 minutes and we will learn something. I think it's looking at the modern workplace as well, we have to take in consideration that we just don't have the time. So I think we can all agree we can make time for 20 minutes and that would be our optimum amount of time. And if we're not achieving that in 20 minutes then maybe we're not doing it right.
Kai Merriott: I think that's right. What I often do is when we look at the information that needs to be covered as part of this game, I try and sort of throw away everything that isn't related to the task in hand. I think that's true of e-learning in general, I think it's especially true of games that really should reflect the role that you're doing. So everything in that game should be practical knowledge that you can go away and do something with rather than something that's it's kind of just knowledge and awareness.
Johnny McMonagle: Yeah, that's right. I think it's always focused on what it is, is the goal of this game, what is the endpoint of the story we're telling, and don't try to be all things to all men, don't try and overload it and just keep it to a thing. If they need more information they can always go to different resources but for our games, we have to just focus on it, keep it very direct to the point, here's what you're taking away from this game, from this training. There are other ways of delivering information but with a game, we keep focused on what we need to tell, what we need to impart.
Kai Merriott: Yeah. So I think you did touch upon earlier about the kind of visual side of the game. So we talked about the music, the sound effects, and what about the visuals, the way it looks, how important is that to the game?
Johnny McMonagle: Well, I think that's extremely important obviously as a graphic designer. One thing it is again, it's the universal language off game, it is, what does game mean to you? What does it mean to me, to the seasoned gamer, to someone who never plays a game? I say, if you're walking through the office you look over your colleague's shoulder and there's something on that screen that looks engaging and fun and doesn't look like your stack e-learning, it doesn't look like there are two people in business suits shaking hands and a bit of text, next screen, here's two different people in business suits doing something.
And that's the kind of thing, it has to look better than that, it has to look, I say fun without saying frivolous, it has to be a lot more engaging. There has to be something that separates it from your usually learning and I think that could be elements on the screen where you've done something with the graphics, there's something different about it and it can be anything but it has to stand apart or other elements on the screen too like scoring or a meter or something like that where you're immediately going, what is that? So you know from a glance that's a game.
Kai Merriott: Yeah. I think having its own unique identity. I always think of games like Candy Crush which it's not a game I particularly play, I don't think it's really marketed to people like me, but it's got such an identity and the color scheme and the noises, going back to sound effects again, it all says, this is a game that even the sound effects and the colors are going to get you as high as the sugar from the candy.
Johnny McMonagle: Those endorphins again, it's that thing of going, yeah, I'm going to have fun playing this, it's going to put a smile on their face, I'm going to enjoy doing it. And that's again if you saw a picture of it, it doesn't even have to be a live version just a picture of it, you know that's a fun looking game, I'm going to enjoy spending time with this. And I think that's, yeah, we try to do that with our games, we try immediately to go, is this training? Because this looks like something fun.
Kai Merriott: Yeah. And again, I think the visuals go back to the story again and say, what is the story? The story is X or Y, and then from there, you can kind of come up with a brand identity. Because I was thinking about back to our cybersecurity game with the 3D printing donut which is a mad idea, and I think I seem to remember back in the early days, the brand that was suggested that was floated around was actually quite almost movie-like and a little bit subdued and probably wouldn't quite have fitted the idea. Do you remember it?
Johnny McMonagle: Yeah. I remember the brand in particular. Many partners they're very aware of their own brand and they want to see their own brand back at them with that, we kind of threw that through book out. We said, well, for this game you're going to get your loco and that's about it, we kind of rewrote it and they agreed that this was the way to go. Is that what you're referencing?
Kai Merriott: That's right. And I think it was what we decided because I think we both said that the original brand was quite subdued given that the idea was so mad. So we kind of went for a much more pastly almost and I think it was basically Simpsons inspired brand because of the donuts, I suppose.
Johnny McMonagle: Yeah, I think so. I think everyone now you see a donut with pink frosting on you think Homer Simpson, I think we all do. But that was a point, as we said, well, here's your color palette, blah, blah, blah, here and so on, but look at these visuals. And I think they came around very quickly and they said, no, this looks really nice, we get it, we're responding well to it so we don't need to stick with that. And they went for that mad idea, as you say, their brand palette didn't suit so it didn't take much convincing, it was a strong idea that worked.
Kai Merriott: Yeah. And it really did and that's a project I'm very proud of as well. So I was thinking again of, going back to the gaming options, we touched upon those before, we talked about lives, we talk about scoring, but of course, when you're kind of coming up with this brand identity in this game, you don't really use terms like lives and percentages in scoring you again, presume do you want to tie that back to the story.
Johnny McMonagle: Yeah, that's right. Because yeah, the use of lives and all it is going back to our arcade games but that was literally you had your three little characters and you lose a life. And then it depends on your story, that doesn't make sense for the stuff we've done, well, you're not actually losing a life. When we think, what are you gaining? What are you losing? And in that way then I say in global trade, we had a thing we said, well, if you go to a certain jurisdiction and you get this question right then your project goes ahead and you've done well.
If you get the question wrong in this particular jurisdiction, there's going to be consequences maybe that's your project is delayed or you've actually broken some global trade thing, you're going to face legal sanctions and we tie that into the real-life, that training, they need to know this but we've made it a game and we go, there is a big legal sign coming up going, you're in trouble, or we go, you've got this right, here's a little trophy, with a sound effect, a little glow, it all ties back to what you were saying.
Kai Merriott: Yeah. And like the lives turned into donuts, and another one we did quite recently was on agile at the agile process. So the original gaming option, if you like, was a meter that goes down, if it goes down to zero then you get kicked out of the game. Now, we didn't want to just call it a meter so we actually made it a race between two companies who were developing a very similar product. And so if you answer the questions correctly then the meter goes towards you and then if you answer incorrectly the meter goes towards the other company, the rival company.
Johnny McMonagle: Yeah. And that was a clever use of a very standard functionality of your progress bar basically telling you, yeah, you've answered these right and every time you do it goes up and increments up to the right or vertically and that's standard. But we say, well, how does it tie into our story? And then we had one for alcoholic spur company and we got the same idea, on the left you have a glass with nothing in it, on the right you have a glass that gets full every time you get something right. It's the same principle of the progress meter but dressed up for gaming and for gamification and that's a simple little thing you can do to tie in the game and make it relevant, make it suit the context. And people will react to it a lot better than you boring zero to 100 that they're so used to seeing and it just doesn't feel like a game, it just feels like standard learning.
Kai Merriott: It's that simplicity again.
Johnny McMonagle: Yeah. It's something that you can respond to immediately, you don't overthink it. You could see it a glance I know what's happening here and you want to get up to the right and you want to get up to the top of the screen, you know every time you're getting something right it's going up in increments and you're enjoying getting it there and it's your mission to get it there. And if you get it wrong, if it says retry, you're going, of course, I'll retry, I've enjoyed that, I really want to get that glassful or win that contract or whatever it is, that donut machine. It's an easy win but give it some thought, tie it into the design of the whole thing, and again, back to your story, how does this help sell the story?
Kai Merriott: Yeah, absolutely. Because we're not dealing with, going back to the five monitor guy, I like the five monitor guy that you came up with, going back to him, I mean, thousands and thousands of hours, millions of dollars spent on those sorts of games, it does not need to be complicated to be a game and I think we've proven that time and time again.
Johnny McMonagle: Yeah, I think it is. It just uses the fundamentals of what a game is that we can all respond to, that we can all relate to, we know immediately what it is, we recognize it when we see it, we know what it is when we are playing it, we respond to it, we know what we're doing and we enjoy it and we want to play it. We enjoy doing it so much that we'll play it again, we'll come back to it if we don't do well, we play until we win it.
Kai Merriott: And I was thinking of, if we were to create a game that absolutely breaks all the rules, so we were talking about things like we have a great story, we have really interactivity that kind of tells the story, it's nice and short, it has a really nice visual identity and it uses sound effects and music and, I want to say, in an appropriate way because we've talked a lot about the fun side of it, but actually it doesn't need to be fun, it can also be dramatic as well. But what would the worst gamified course you can think of look like do you think?
Johnny McMonagle: Well, yeah, getting all those things wrong or even that they don't match, that the visuals don't match the sound effects, that the sound effects sound like they're from a completely different product, that the music it sets completely the wrong tone, things like going, well, why I press something, something odd happens, why did that happen? What do I do next? If you get lost anywhere in the middle of it, if you have any doubt what you're doing, if you have to be reaching for the help button you're not doing it well, we haven't done our job well, if someone has to go, how do I play this again? Or I can't remember what I'm doing, what's the point of this? Then we haven't done our job, that's where the simplicity comes into. And all the elements have to work together or else it's jarring and it feels off and all those things would make it to me just a bad game experience, would be bad training but as a game it just wouldn't work.
Kai Merriott: Yeah. It seems that games are particularly unsympathetic when you get one element wrong. It's almost not too grand a point and it's almost like poetry where every word is absolutely key versus a novel where it doesn't matter if there's a few dodgy sentences in this, it's absolutely you find, but with games, everything has just to be perfectly in place.
Johnny McMonagle: Yeah, no, absolutely. It all has to work together cohesively and the wheat from the chaff is just saying it just should work. And all these, we talked about all the different building blocks, say, that go into it, they all have to just keep it simple, does this element work with that element and all put together, is it doing what we plan to do? Well, somebody just comes and sits down beside you, will they be able to play this and will they enjoy it? Will they respond to it the way we want them to? And if we get all those things right anyone should be able to do that.
Kai Merriott: Fabulous. I think we've basically covered everything that we need to cover today and I think we're running out of time anyway. So, Johnny, it's been great having you on the Principled Podcast, I hope you come back and speak with us again soon.
Johnny McMonagle: Thanks Kai.
Kai Merriott: Thank you all and thank you all for listening. My name is Kai Merriott, we'll see you on another episode of the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN, at LRN our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more and if you enjoyed this episode subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen and don't forget to leave us a review.
Abstract: Values have the power to guide behavior, shape culture, and strengthen businesses—empowering them to outperform. But what exactly does it mean to take a “values-based approach” to ethics and compliance? In this episode of the Principled Podcast, Emily Miner, Senior Ethics & Compliance Advisor, speaks with fellow LRN colleague Susan Divers, Director of Thought Leadership and Best Practices, about the difference between rules and values in the context of E&C. Listen in as the two discuss how companies can leverage core values to build effective ethics and compliance practices that drive better business outcomes.
Featured guest: Susan Divers is a senior advisor with LRN Corporation. In that capacity, Ms. Divers brings her 30+ years’ accomplishments and experience in the ethics and compliance area to LRN partners and colleagues. This expertise includes building state-of-the-art compliance programs infused with values, designing user-friendly means of engaging and informing employees, fostering an embedded culture of compliance and substantial subject matter expertise in anti-corruption, export controls, sanctions, and other key areas of compliance.
Prior to joining LRN, Mrs. Divers served as AECOM’s Assistant General for Global Ethics & Compliance and Chief Ethics & Compliance Officer. Under her leadership, AECOM’s ethics and compliance program garnered six external awards in recognition of its effectiveness and Mrs. Divers’ thought leadership in the ethics field. In 2011, Mrs. Divers received the AECOM CEO Award of Excellence, which recognized her work in advancing the company’s ethics and compliance program.
Mrs. Divers’ background includes more than thirty years’ experience practicing law in these areas. Before joining AECOM, she worked at SAIC and Lockheed Martin in the international compliance area. Prior to that, she was a partner with the DC office of Sonnenschein, Nath & Rosenthal. She also spent four years in London and is qualified as a Solicitor to the High Court of England and Wales, practicing in the international arena with the law firms of Theodore Goddard & Co. and Herbert Smith & Co. She also served as an attorney in the Office of the Legal Advisor at the Department of State and was a member of the U.S. delegation to the UN working on the first anti-corruption multilateral treaty initiative.
Mrs. Divers is a member of the DC Bar and a graduate of Trinity College, Washington D.C. and of the National Law Center of George Washington University. In 2011, 2012, 2013 and 2014 Ethisphere Magazine listed her as one the “Attorneys Who Matter” in the ethics & compliance area. She is a member of the Advisory Boards of the Rutgers University Center for Ethical Behavior and served as a member of the Board of Directors for the Institute for Practical Training from 2005-2008.
She resides in Northern Virginia and is a frequent speaker, writer and commentator on ethics and compliance topics. Mrs. Divers’ most recent publication is “Balancing Best Practices and Reality in Compliance,” published by Compliance Week in February 2015. In her spare time, she mentors veteran and university students and enjoys outdoor activities.
Featured Host: Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Transcript: Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.
Emily Miner: Rules are good, but values are better. Values have the power to guide behavior, shape culture and strengthen businesses, empowering them to outperform. But, what exactly does it mean to take a values-based approach to ethics and compliance?
Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Emily Miner, senior ethics and compliance advisor. Today, I'm joined by my colleague Susan Divers, director of thought leadership and best practices. We're going to be talking about how companies can leverage core values to build effective ethics and compliance practices that drive better business outcomes.
Susan brings more than 30 years experience in both the legal and ENC spaces to this topic area. With subject matter expertise in anti-corruption, export controls, sanctions and other key areas of compliance.
Susan, thanks for joining me on the Principled Podcast.
Susan Divers: It's my pleasure, Emily. It's always so nice to talk to you.
Emily Miner: Yeah. So Susan, your background has given you a unique perspective on this topic of rules versus values. You're a former chief ethics and compliance officer, a member of the DC bar and you're a qualified solicitor to the High Court of England and Wales.
Having sat on both the legal and ethics and compliance sides of the table, can you break down the idea of rules are good, values are better for our listeners? What does that really mean? What are values and why are they "better?"
Susan Divers: Well, that's a great place to start, Emily. There are a couple of really key points to make in this area.
The first is that it's not an either or choice. It's not like you have values but you don't have rules, and you should never have rules without values. One way to think about it is that rules provide the structure for an organization in its compliance area, but values provide the motivation and are what actually lead people to do the right thing, even if it's not required.
Values are positive and aspirational. If, in our dealings with each other, we think about treating each other with respect, then there's not a rule for every occasion where we interact but there is a value, which is respect. Even if I disagree with you or you disagree with me, we're going to accord each other that basic respect.
It's a really fundamental difference. Another way to think about it that I like as an analogy is that rules are the skeleton, if you will, but values are the blood and the heart in our own natural systems. So, why are values better? Values ask people to live their values, in a sense, and make them real. They ask people to consider much more than whether they're breaking a rule or going to break a law, because that's a pretty minimal standard. When you do that, you're encouraging people to do the minimum, but we can talk about that a little bit later.
Does that make sense?
Emily Miner: Yeah, it does. Maybe to put it another way too, what I'm hearing from you, rules are what you can and can't do, whereas values might be what you should and shouldn't do, so to your point about there not being a rule for every occasion. Although, I do appreciate your skeleton analogy, as we're coming into the Halloween season, so apropos.
Susan Divers: Great.
Emily Miner: Following up on that, can you share some real world examples where you've seen this, as you put it, it's not an either or, it's a both and, but where you've seen the rules are good, values are better premise play out?
Susan Divers: Sure. Well, I'm going to start with actually a family example and then give one or two corporation, organization examples.
When I talk about this in front of compliance conferences and all, I usually ask people in the audience to raise their hand if they've ever raised teenagers and a large number of people do. To just take that example, if you say to teenagers, "You can't do this. You can't have people over if we're not home. You can't have an unauthorized party. You can't do this, you can't do that," it tends to sound like blah, blah, blah. And then, they think about ways to get around that, in my experience.
But if you say to them, "This is our family and we're all in this together. We all depend on each other's behavior to make it work. If you do things behind our back that could trigger bad consequences for all of us, that affects the family as a whole. And, it also means we can't trust you. We're asking you not to do these risky things." That's a much more motivating and respectful way to approach it.
In companies and organizations, approaching people with respect and saying, "The rules are there as guidance, but we don't want you to meet the minimum. We want you to think of the organization as a whole, and to think of our brand and what we're trying to do, our mission and our purpose, and tailor your behavior to that. Not to arguing about whether it's not okay to spend $1000 a person on an elaborate dinner but it is okay to spend $1000 on an elaborate golf outing." It's really a very profound difference in focus.
Emily Miner: Yeah. That idea of leading with your values and that being a demonstration of respect and an extension of trust to employees, I think is really powerful.
As you know, a lot of my work at LRN centers around understanding organizational culture and what motivates employee behavior. When I have conversations, focus groups and interviews with people in our client-partner walls, that's such a big theme, always. This idea of feeling respected and feeling trusted, "Treat me like an adult," so going back to your example of the teenagers. Just being real and talking about it openly, there's no smoke and mirrors behind it.
Yeah. Thanks for sharing that. Good tips as well, for when my children become teenagers.
Susan Divers: Yeah, fasten your seatbelt.
Emily Miner: Yeah. We're talking about ethics and compliance. The global regulators are obviously key stakeholders in the design and implementation of an ethics and compliance program. Regulators being the ones that set out the policy requirements, IE the rules for organizations. But, we're seeing now that regulators around the world are also talking about the "culture of compliance," to quote the Department of Justice, and they're talking about the role of values. Which is really a shift from the language that was used, even just a few years ago.
When did you notice that shift? And, what do you think catalyzed it?
Susan Divers: It definitely started happening as early as 2012. I think it was Mary Jo White, when she was the Chairwoman of the SEC, gave a speech and she said, "You have to focus on your culture." That was shocking at the time, because up to that point ... There's some very interesting things written in this area. There's a BSR white paper from 2017, for example, that talks about how, up until around then, compliance and ethics had been criminalized in the sense that there was a criminal justice approach. "This is the rule, you can't break it. If you do, you can go to jail and get fired."
Okay, but that doesn't encourage me to do the right thing, if there's no rule. Or, to err on the side of doing the right thing, even if it's legitimately gray. And as I mentioned before, it encourages gaming the system, arguing, "Well, I didn't actually breach that rule. My behavior may have been bad, it may have been terrible even, but it didn't actually breach a rule so you can't do anything to me."
So regulators finally caught up with that idea, because even though Sarbanes-Oxley, which was put in place after the Enron scandal largely, and other very detailed laws ... I think Sarbanes-Oxley, I saw somewhere, weighs 30 pounds if you put it all in one place, in terms of printed pages.
Emily Miner: Wow.
Susan Divers: Yeah, it's kind of scary. Sarbanes-Oxley didn't really change behavior. We then had the financial crisis and regulators started realizing that the answer to better behavior, preventing misconduct and generally being more effective might not be just layering on more rules and more rules. Ethics and compliance officers realized that the more effective approach might not be always getting up and screaming about penalties and all the bad things that could happen.
But again, taking a much more positive approach and saying, again, "We're all in this together. We're going to trust you to do the right thing, even if it costs you and the company an opportunity. We're not going to rely strictly on your having to look up pages and pages of complex policies to try to figure out what you're actually supposed to do. We're going to encourage you to seek guidance, and we're going to have a welcoming attitude towards questions. We're not going to say, 'What did you do, why are you asking that?'"
As a former senior executive at AECOM once put it, it's a shift from being a cop to a coach.
Emily Miner: I love that, a cop to a coach. One of the other trends or shifts in the regulator space has been around accessibility. I'm coming back to that, in listening to what you were just saying, because values, when shared and understood across an organization, allow for a more simplified, accessible approach to how we govern our behavior. To your point, not having to look up pages and pages, and parse out whether this crosses that line versus this other line. But really, just more fundamentally, is this aligned with who we are, what we believe in, what we stand for, so it's a powerful tool from an accessibility and simplification standpoint, too.
Susan Divers: Yeah. It's your North Star. It's a lot easier to look up and see the North Star than it is to read a policy on Foreign Corrupt Practices Act.
Emily Miner: You mentioned AECOM. You were in-house for a long time, as a chief ethics and compliance officer, starting up two ethics and compliance programs including at AECOM. Were you always oriented towards this idea of rules and values? Or, were there certain experiences in your professional career, or your personal life with your teenage sons, that impressed upon you the value, the benefit of a values-based approach?
Susan Divers: Well, I was really lucky when I started at AECOM because I had amazing colleagues. It was a perfect storm of goodness. The head of corporate communications, who later went on to win every imaginable award including having his picture up in Times Square because he won the Arthur Page Award. And then, the head of internal audit who came on, the three of us really worked together. We quickly got it, that making good ethics part of our brand and our mission was very feasible at AECOM. Our mission was to enhance the world's natural built and social environments in which we operate, and that was back in the early 2000s before people were even thinking about ESG.
The company really lived up to that. They did a lot of very creative and very far-seeing work on a pro bono basis of what does a sustainable look like. We said, rather than, again, make this the cop shop, let's make it part and parcel of what we do. We did, in terms of communication and in terms of the way we ran the program. And then as a result, we won, unexpectedly, World's Most Ethical Company on our first year of trying. I think we got it five years thereafter. That became part of our brand. We had a little toolkit that you could put into a bid, an RFP response, that said, "This is what we've won and this is what our program looks like," and we really walked the walk as well as talked the talk.
That really resonated at AECOM, people liked that. And we had a great ethics and compliance web page, if I do say so myself. It was interactive, it was engaging, it was kind of fun. We'd have quizzes, we'd do profiles of people who did the right thing, even if was difficult. That kind of momentum tends to breed more momentum in that direction. Occasionally, I found myself talking people out of abandoning a bid or something. I'd say, "Well, there's a way to mitigate that risk effectively."
That was a nice place to be. It really was a good illustration of how values can be the life, and the blood and the heart of an organization's program.
Emily Miner: Yeah. Thank you for sharing that. I think, just when you were talking about the ethics and compliance web page and the interactivity, and quizzes and stories, those are all such powerful engagement techniques. You're right, it's catalytic, where there's a spark and then it leads more rippled effect, if you will. People want to be highlighted for doing the right thing. How great to say, "My company is globally recognized as one of the most ethical companies. I've got to make sure that I help us live up to that standard." Thank you for those specific examples.
Getting into specific examples, we encourage our client partners to take a values-based approach to ethics and compliance. What are some of the other ways that that looks like in practice?
Susan Divers: As you know, every year we publish a Program Effectiveness Report, which is really our flagship piece of research every year. Last year, we highlighted stories of companies really using values to keep it together during the pandemic crisis that unfolded last year. The stories are very inspiring. I'd urge everyone listening to go download our most recent Program Effectiveness Report 2021 off our website.
But, one in particular really struck me and that was Braskem. Wherein they needed to keep plants operating in order to keep the electrical grid in the United States healthy and fully operating. There's no law or rule in the world that would allow you to compel employees in those circumstances to self-isolate at a plant for 30 days at a time. But, what they did is ask employees if they would do that and people volunteered. They went and slept, ate at the plants, for 30 days at a time. Of course, the company paid them extra and ensured that they had facilities, and lodging and food.
But, they're very proud of that experience and it was something that brought the company together. And again, just as we were talking about AECOM, people were proud of the fact that they had an ethical company. At Braskem, the same thing happened. There wasn't a rule that says, "You must do this," because then people would have resisted it, most likely. But, it was a value that this is what we do, this is consistent with our mission and this is consistent with doing the right thing by the social environments in which we operate in our communities. It's really a great example.
I could go on and on, there are many other examples, too. But generally, during the pandemic people really rose to the occasion. Used values such as making programs much more people centered. In the past, it's part of the legacy of a very legalistic approach, programs have been way too legalistic. There's not been that much regard for the impact on people, or as you were talking about, simplicity.
So for example, Dell moved big chunk of its program onto our Catalyst app and is even moving more onto Catalyst app because employees had limited bandwidth. They needed to be able to take training, if they were standing in a grocery line with a mask on, rather than be chained to a desktop.
Again, it's the most powerful way to really motivate people and to change behavior for the better.
Emily Miner: Yeah. The Braskem example, it's so inspiring. I know that there are so many other examples out there, of organizations and people that really rose to the occasion and demonstrated the best of humanity as the COVID crisis was first unfolding, and still today.
You also talked about our flagship research. I think we can probably put a link to the report in this podcast page so that people can access it. But, as director of thought leadership for advisory, you lead this research and have for many years. What does the data tell us about the prevalence of values, or values orientation, or values-based approach in ethics and compliance, or the impact of such an orientation?
Susan Divers: Good question and that's something we look at every year as you know, Emily. What it shows is that the most effective programs, there's a very strong correlation between having an effective ethics and compliance program and being values-based, it just works better. If you look at our report, and we ask questions about organizational justice, which is just a key plank of having an effective ethics and compliance program, having a values-based approach is just much more effective than relying simply on rules.
It's also, as we've talked about, much more consistent with the epiphany that regulators had, I guess almost 10 years ago, where they realized that the regulation heavy approach had its limitations. We see this all the time in our research, that a values-based approach simply works better.
Emily Miner: Yeah. I think one of the data points that was really compelling for me in our research that we did this year was how the percentage of organizations who said that they relied on their values to help them navigate the COVID crisis. I don't know that I was necessarily expecting it to be such an overwhelming percentage. It was incredibly gratifying to see that.
I think it's one of those situations where we could have all gone in one direction or another, and it's really encouraging that so many organizations, COVID has been a catalyst for them to really connect more deeply with their values. I know that you've already talked about how it seems as if this is shaping how ethics and compliance programs are evolving, beyond just the crisis response. But really, what is a new normal moving forward, such as the example of Dell bringing so much of their program onto a mobile app. That way, it's accessible to employees any time, anywhere.
Susan Divers: Yeah. And interestingly, I just looked at our report last year, and 79% of all of our respondents, who were about 600 respondents worldwide, said that their ethical culture got stronger as a result of their response to the pandemic. I don't think we're respecting that really, but it's very encouraging and very heartening because people came together and helped each other through the crisis. Our data shows that boards rose to the occasion, senior leaders rose to the occasion and largely, managers rose to the occasion.
And again, it was an effort to pull together and help each other. It's really an inspiring story.
Emily Miner: Yeah, absolutely. So Susan, for our listeners who might be just starting to build out an ethics and compliance function in their organizations, what key steps would you recommend they take to ensure their program leads with core values? What's square one?
Susan Divers: Well, square one is to realize that you can do it, that it's not an either or choice.
I think the first thing is to avoid what I would call blind benchmarking, where a lot of times, I think people when they start out, they want a compliance program in a box, so that means a checklist. The regulators are pretty adamant that that's the wrong approach because every company has different needs and different risks. You can be small and high risk, you can be large and be relatively low risk. You can have data privacy risks but other companies don't. You can have corruption risks but other companies don't.
So what you need to do first start with your risks. And then say, "Okay, what are the values-based approaches we can take to mitigate those risks?" And then, you still have your infrastructure but you gear your training towards encouraging people to act with integrity in every circumstance that they encounter. We recommend, in our policy simplification work, that you make that very explicit, very simple. You can say, "We act with integrity everywhere, every time, in every circumstance."
Instead of parsing through to see if you can offer a grease payment to jump the queue at customs, you rely on that principle. And that actually is easier for new programs, in some ways. Because if you get that right, you've got a really good basis to build on. And then, you incorporate those values in the infrastructure that you build out, whether it's communications, whether it's training, and even audit and assurance can be infused with values as well as policies.
So you're starting from the right place, you're not building up some elaborate scaffolding. I saw one of the airlines bragging about a five page rule book, but they're also the airline that's had major scandals with people following procedures blindly and dragging people off of airplanes. So get it right from the very beginning and first, you'll be more effective. And then secondly, you'll save yourself a lot of grief down the line.
Emily Miner: Yeah, absolutely. It's a gift, in some sense. Maybe this is a tougher question. For those organizations that have more mature ethics and compliance programs, that might already have that scaffolding in place, what steps should they think? Or, what would you recommend they take to keep their program on the right track and centering their values?
Susan Divers: Well, to go back to the old maxim, "What gets measured, gets done," and really looking at your ethical culture. You just can't leave it on autopilot. You can't leave your risk analysis on autopilot, either. Your ethical culture and your risks are very inter-related.
So spend time, of course, you work in that area and I do too, to some degree, of looking at ethical culture and saying, "What are the levels of trust and respect in the various business units or areas of the world? Are there hot spots? Are there places where there are lagging indicators that we can delve deeper into and really understand what some of the dynamics are?" Places where organizational justice isn't strong or retaliation is high. You have to spend time on it. It's like watering the roots of the plant.
And then, you have to be willing to really talk about values. Again, a lot of companies, they get it right in the code of conduct. And, they put the code of conduct out there but they don't really talk about values. I know you did some work a couple of years ago in this area, with a values jam for the UN Global Compact, which was able to be done online. People appreciate that. People across the company like it when they're asked meaningful questions about values and whether the company's living up to that. I think that's absolutely fundamental to keeping it going, and keeping it real and keeping it alive.
Emily Miner: Yeah. It creates more ownership too, when people are involved in the process and their perspective is invited, or their invited to share their perspective. So that it's not this top down talking point mandate, but really is something that is discussed and explored at all levels of the organization.
Susan Divers: I couldn't agree more.
Emily Miner: Well, Susan, it is always such a pleasure to talk to you about these topics. Thank you for joining me on this episode.
Susan Divers: It was my pleasure, Emily. I feel the same way, it's always nice for us to get a chance to talk about important issues.
Emily Miner: To all of you listening, thank you. My name is Emily Miner and we will see you next time on the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And, if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts or wherever you listen. And, don't forget to leave us a review.
Abstract: What work is being done to heal the community-police relationship? What role can E&C training play to help foster that collaboration? In this episode of the Principled Podcast, host Katy Brennan, Advisory Thought Leadership & Strategy Lead at LRN, explores what building a healthy, scalable, community policing model looks like with Nadine Jones, Co-Founder of The Initiative: Advancing the Blue & Black Partnership and Vice President, Corporate Counsel at Kuehne+Nagel Group. Listen in as the two discuss how The Initiative works to end systemic police violence and heal the relationship between law enforcement and the public—and ultimately build healthier communities.
Featured guest: Nadine Jones is a graduate of Howard University School of Law and a seasoned Vice President of a multibillion global logistics company. She is a collaborative leader, solutions-oriented, and has expertise in developing and maintaining a corporate ethics & compliance program for a multi-billion logistics company. As a graduate of Howard University School of Law, Nadine also has a strong sense of social justice and equity. In June 2020, she co-founded along with two other Howard Law alumni an organization called The Initiative: Advancing the Blue & Black Partnership (“The Initiative”). The Initiative was established to end systemic police violence and implement a collaborative approach to building healthy, scalable, community policing models.
Featured Host: Katy leads thought leadership for LRN, having spent more than 15 years at the intersection of business’ responsibility to society. Katy is responsible for the development of a thought leadership agenda and roadmap and manages alliances with key stakeholders for LRN. She also co-leads LRN’s Living HOW Council, a cross-functional group of diverse voices across the company who ensure LRN’s philosophy, values and Leadership Framework help inform and guide all aspects of our business.
Abstract: How are expectations of global companies changing? How do leaders from the non-profit world contribute to corporate boards—and what can companies learn from directors who come from that sector? In this episode of the Principled Podcast, host and LRN Special Advisor is joined by Helene Gayle, the President and CEO of the Chicago Community Trust. The two discuss how board directors can continue to evolve and improve their oversight of and engagement in corporate culture. Listen in as David and Helene explore the similarities and differences between corporate and non-profit boards, and how global companies are faring throughout the pandemic.
Featured guest: Dr. Gayle has been president and CEO of The Chicago Community Trust, one of the nation’s oldest and largest community foundations, since October 2017. Under her leadership, the Trust has adopted a new strategic focus on closing the racial and ethnic wealth gap in the Chicago region.
For almost a decade, Dr. Gayle was president and CEO of CARE, a leading international humanitarian organization. An expert on global development, humanitarian and health issues, she spent 20 years with the Centers for Disease Control, working primarily on HIV/AIDS. She worked at the Bill & Melinda Gates Foundation, directing programs on HIV/AIDS and other global health issues.
Dr. Gayle was born and raised in Buffalo, NY. She earned a B.A. in psychology at Barnard College, an M.D. at the University of Pennsylvania and an M.P.H. at Johns Hopkins University. She has received 18 honorary degrees and holds faculty appointments at the University of Washington and Emory University. She serves on public company and nonprofit boards, including The Coca-Cola Company, Organon, Palo Alto Networks, Brookings Institution, Center for Strategic and International Studies, New America, ONE Campaign, Federal Reserve Bank of Chicago, and Economic Club of Chicago. She is a member of the American Academy of Arts and Sciences, Council on Foreign Relations, American Public Health Association, National Academy of Medicine, National Medical Association, and American Academy of Pediatrics. She has authored numerous articles on global and domestic public health issues, poverty alleviation, gender equality, and social justice.
Featured Host: David Greenberg serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. Mr. Greenberg’s previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.
Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee. As one of five senior vice presidents of the corporation, he served on the Management Committee, which oversaw all strategy and company operations. He was also a principal architect of the company’s very successful efforts to end the ‘tobacco wars’ which threatened the company’s very existence. Earlier in his career, Mr. Greenberg was a partner in the Washington D.C. law firm of Arnold & Porter and also served as Legislative Director and General Counsel of the Consumer Federation of America. He attended Williams College and has JD/MBA degrees from the University of Chicago.
Greenberg has testified before the U.S. Congress, the European Union, the Israeli Knesset and other governmental bodies over two dozen times and has appeared on ABC Nightline, the CBS Morning News, BBC Morning, and the PBS News Hour, and has spoken at leading events for CEOs and boards.
Abstract: How do you measure ethical culture? And how do those measurements influence business outcomes? In this episode of the Principled Podcast, Ethics & Compliance Advisor Arieana Thompson talks with her colleague Emily Miner, Senior Ethics & Compliance Advisor, about the 2021 LRN Benchmark of Ethical Culture—a new study from LRN that will be released in the coming weeks. In this global benchmark survey of 8,000+ employees at corporations around the world, LRN examines the underpinnings of corporate culture and its influence on employee perceptions and performance. Listen in as Arieana and Emily explore how ethical culture doesn’t just protect business assets and reputation; but also propels the bottom line.
Featured guest: Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Featured Host: Dr. Arieana Thompson believes in transforming the modern-day workplace through thought-provoking, evidence-based insights.
Arieana is a subject matter expert in executive leadership, succession management, ethics and compliance (E&C), wellness cultures, and employee development. Arieana has experience advising in external and internal capacities and professional speaking. Arieana offers professional and wellness coaching, helping leaders and individuals to harness natural strengths and reduce stress.
As a scientist-practitioner, Arieana actively researches and publishes employee well-being, organizational culture, and leadership thought-pieces in both industry and peer-reviewed academic journals (see links in the "Featured" section below). These publications enable executives to create and sustain values-led, profitable, and creative companies.
Abstract: How are boards of directors of major companies coping in 2021 with the increasing expectations of so many stakeholders? How can directors help companies manage their way through myriad changes in the competitive environment, advances in technology, and new mandates from government and regulators? And how are boards able to oversee critical non-financial issues like corporate culture, ethics, cybersecurity and ESG? In this episode of the Principled Podcast, David Greenberg—LRN’s former CEO and now special advisor—continues the conversation about board engagement with Jonathan Day, CEO of Tapestry Networks. Listen in as David and Jonathan discuss the current issues facing boards of directors and how they impact board oversight of corporate culture, ethics, and compliance.
Featured guest: Jonathan Day is an advisor and coach to chairs, CEOs, and heads of major government agencies. He has worked extensively with groups of senior leaders (boards, top executive teams, etc.) tackling difficult and potentially divisive questions, developing a global reputation for expertise in organization and governance, strategic problem solving, and complex team interventions. He has deep academic experience, including collaborations with top research professors, and is an expert at translating leading-edge theory into practical action programs that build institutions. “I have been exposed to a lot of different academic disciplines: psychology (clinical and cognitive), sociology/anthropology, theology and philosophy, economics and finance, engineering. The broad range has given me an eclectic set of mental tools.”
Before Tapestry, Jonathan was a practice managing partner, EMEA, at Heidrick & Struggles, where he worked in leadership consulting and executive search in the CEO/Board and higher education practices. Prior to joining Heidrick & Struggles, he spent nearly two decades in leading management consulting firms, first as principal at McKinsey & Company from 1990 to 2004 and then as managing director at Monitor Group from 2004 to 2008. “I think the consulting process is much more like a therapeutic process than it is a science or engineering. It means someone is helping the clients, individuals, or groups confront the outside world.”
Jonathan has a MA in divinity from the University of Chicago, a BA and MA in psychology from Johns Hopkins University, and did PhD studies in cognitive psychology from Stanford University.
Jonathan is married with three children. He speaks, reads, and writes French and enjoys chamber music, sailing, cookery, writing, and travel.
Featured Host: David Greenberg serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. Mr. Greenberg’s previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.
Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee. As one of five senior vice presidents of the corporation, he served on the Management Committee, which oversaw all strategy and company operations. He was also a principal architect of the company’s very successful efforts to end the ‘tobacco wars’ which threatened the company’s very existence. Earlier in his career, Mr. Greenberg was a partner in the Washington D.C. law firm of Arnold & Porter and also served as Legislative Director and General Counsel of the Consumer Federation of America. He attended Williams College and has JD/MBA degrees from the University of Chicago.
Greenberg has testified before the U.S. Congress, the European Union, the Israeli Knesset and other governmental bodies over two dozen times and has appeared on ABC Nightline, the CBS Morning News, BBC Morning, and the PBS News Hour, and has spoken at leading events for CEOs and boards.
Transcription: Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business, and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
David Greenberg: How are boards of directors, of major companies coping with the increasing expectations of so many stakeholders? How can directors help companies manage their way through myriad changes in the competitive environment, advances in technology, and new mandates from government and regulators? And how are boards able to oversee critical non-financial issues like corporate culture, ethics, cybersecurity, and ESG? Hello, and welcome to another episode of LRN' Principled Podcast. I'm your host, David Greenberg, LRN's former CEO and now special advisor. And today I'm joined by Jonathan Day, CEO of Tapestry Networks, which is at the center of many important discussions on boards of directors and the issues confronting them. Jonathan and I have been working together on a major initiative related to board oversight of corporate culture, corporate ethics, and corporate compliance. So I'm really looking forward to digging in on the subject of boards. Jonathan is a real expert in this space based on his leadership of Tapestry and past work with McKinsey, Heidrick & Struggles, and Monitor. Jonathan, thanks so much for coming on the Principled Podcast.
Jonathan Day: Thanks, David. It's great to be here.
David Greenberg: So Jonathan, first, tell our listeners about the core of what Tapestry Networks is about.
Jonathan Day: Well, we're here to help the women and men who lead the world's most complex companies, do their work better and do their work with more confidence. And most of that involves working with non-executive directors whose roles have become really complex in the last few years. We do all of this through peer learning. So the leaders are learning from one another, rather than from professors, or consultants, or us. It's an unusual model, but it works. Now just to make this concrete, in 2020, we conducted about 130 meetings, most of them virtual, and we held around 500 very confidential director conversations individually, in small groups, in large groups. And these are directors of companies like JP Morgan, Walmart, Microsoft, BlackRock, GM, Apple, Facebook, Nestle, Zeeman's, SAP, large complex global companies. And all of this has given us a view of the anthropology of the modern boardroom.
David Greenberg: Terrific. In that regard, Jonathan Tapestry and LRN just wrapped up a major study and summit meeting on board oversight of ethics, culture, and compliance. What to you are the major takeaways from this effort?
Jonathan Day: Well, the study was a lot of fun. We talked to many directors, many chief ethics and compliance officers, and the companies involved had a combined capitalization of just under $5 trillion and they operate on six continents. What I think makes this study different is that you could say it offers the voice of the director. Even those chief ethics and compliance officers were also directors of other companies. So these are perspectives straight from the boardroom. And David, for me, there were three big findings. First, boards can see the critical importance of culture and they are taking responsibility for shaping it and for shaping compliance in their companies. This is not easy. Walmart, for example, has 2.3 million workers around the world. Their board has a total of 12 members, and yet their boards are taking on this challenge. Of course, they rely on the CEO and the top management to drive a lot of the work, but they themselves feel responsible and the world is holding them responsible when violations occur.
That's the first finding. The second is that many directors don't feel that they're in a very good position to sort of re-culture or to give management practical guidance and moving it in the right direction. They get lots and lots of data, but they often struggle to filter out that clear signal from noisy data. One director said culture is harder. You know it when you see it. You can use surveys, but they're not as helpful as actually knowing people. And another director said, we need a more direct pipeline to the workforce and decision makers in the field. As a director, you need to have your ear to the ground. Well, that sounds great, but let's go back to Walmart. Those 2.3 million workers are in 10,500 stores in 24 countries. That's a lot of ground for 24 ears of those 12 directors to cover.
Third, a big part of this comes down to trust. How can we get to a place where senior management feel very comfortable saying in a board meeting, we have a bad culture or an ethics problem in this part of the company. And here's what we're doing to fix it. There are a lot of incentives for that executive to say everything is just fine. One director in fact said that when she sees a drop in the number of speak up calls, she worries that there's a problem. And equally when management does bring problems forward, does the board say, okay, we're going to work with you to put this right, or is bad news really unwelcomed in the boardroom.
David Greenberg: Jonathan, let's step back a bit from that. You and colleagues at Tapestry are in dialogue almost every day with dozens and dozens of board members. What are some of the most pressing issues they want to talk about today?
Jonathan Day: Well, ethics and culture are very high on that list. For example, how to tie compensation to culture, ethics, and compliance. You can do this for safety, deaths on the job leading to bonus cuts or cancellations, but it's not so easy to financially reward executives for creating positive trust filled cultures. You could do this, but it's a subjective judgment and making that judgment requires not only wisdom, but immersion in the culture. A lot of time, maybe a lot of travel. Not so easy these days. Boards are also intensely worried about how they are overseeing cybersecurity, mostly because pretty much every company has become digital, maintaining privacy and security for the millions of customers that a large enterprise can have. This can be a multi-billion dollar task. As airplane controls become entirely digital, as cars become more and more autonomous, as power grids are digitally controlled, lives could be at stake.
And yet directors of some of the most digitally sophisticated companies in the world tell us, we may be doing a good job in our oversight of digital risk, but we may not. We have no easy way even to tell how well we're doing. Cybersecurity is also a function of culture and trust. Are employees comfortable coming forward to talk about a weakness that they've come across? Do employees trust company policies on cyber and not seek work arounds? So cybersecurity, a big concern for directors.
And finally, David, you mentioned ESG and this exploding call for companies to deliver financial profitability and great performance on the environmental, social, and governance agenda. Well, this has board members awake at night and working hard. Providing reliable data on financial performance isn't easy, but they know how to do that. They've been practicing it for decades. Providing reliable data on past environmental impact like carbon emissions, that's a lot harder and the standards for doing that are in flux all around the world. But providing trustworthy of how the company is going to transition to zero emissions over the next 20 to 30 years, that's really hard. And I'll just note that every one of these challenges that I mentioned, ethics, cybersecurity, and ESG requires a strong culture, requires trust. Culture is at the root of every one of these challenges.
David Greenberg: So Jonathan, you've outlined some of the things that are on the minds of board members. What do you think are some of the hardest parts of the job of being a director these days?
Jonathan Day: So one is this idea that the board can be, as they say, noses and fingers out. Well, if that was ever true, it's dead today. Boards have got to engage very intensely in some cases. And they've got to look for the areas where they're not engaging intensely, but should be. Sometimes you'll even see the word intrusive engagement or intrusive oversight. And yet if the board gets too intrusive, senior management is going to feel maybe correctly that the board doesn't trust them. And they'll start pushing every decision up to the board or they'll act out in some other way. And that's not good. Trust inside the board is also critical. Are board members having the tough conversations they need to have with one another. Second, trust is hard to maintain on the outside. Board members are under intense scrutiny these days. Rating agencies and proxy advisors maintain scorecards on every individual director recommending to institutional investors, whether to vote them in for another year or kick them out.
And institutional investors are very open that they're willing to vote out directors who are not working in the ways that they think they should. Once upon a time, a director's job was almost entirely private, not really subject to intense scrutiny, no longer. A compensation committee members said the Wall Street Journal knows the conclusion of our meetings even before we get a copy of the minutes. Society expects that transparency and society has ways of getting it and society reacts to what it learns. Consumers vote with their pocket books, talent moves to companies that have purposes beyond profit. And I would say a board member who isn't ready for that intense public exposure is going to have a rough time.
David Greenberg: Yeah. So that leads to the question from your point of view, is the modern board up to the task of these multiple challenges or maybe better said more positively, what capabilities and experiences are boards most in need of today?
Jonathan Day: Well, David, the women and men who serve on these boards have my intense admiration. They work very hard. I think in many cases they're not paid enough and they bare more and more risks almost by the week, but they are struggling to balance a massive set of responsibilities against the limits of a group of part-time directors who meet maybe six times a year. That's not much. What I'm about to say is a personal view, but I think we will see more examples of full-time or near full-time board service, non-executive service. The governance pundits in the US talk about the value of separating the chair's role from the CEOs. And they point to countries like the UK, where this is done. Well great, but some of those public company, non-executive chairs in the UK are paid well into seven figures and they work full time often with staff to support them.
In the financial sector, especially there are audit chairs who are full-time, not even board chairs, but audit chairs are nearly full-time and paid accordingly. So time I think, is the first of the capabilities. I think another capability is a connection with younger employees and customers. In one of our networks, the average age of directors is well into the 70s. Now I've never met a collectively wiser group. They're truly amazing, but in many cases, their customers could be their great grandchildren.
And so there's a point of connection there that's hard to forge. Boards are working very hard to increase their own diversity, but there's still a long way to go. And the digital universe that's driving many of these companies is evolving so quickly that it's tough for many directors to know even where to begin as they master it. I'm going to add one capability that is just over the horizon, but it's approaching fast. Most of us learned corporate finance based on concepts of the capital markets that took form starting roughly in 1960 and concepts based on assumptions, for example, that all equity shareholders have identical preferences, but most of those assumptions no longer hold. We're driving around a city based on a map that doesn't reflect most of the huge changes made in the last 50 years. And sometimes we're wondering why we're getting lost. And so I think boards need to catch up on these changes as well.
David Greenberg: I think it would be interesting, Jonathan, for you to talk a little bit about why you say all equity shareholders don't have identical preferences anymore. In other words, I think what you're saying is the theory was all equity shareholders care about the same thing, which is the growth and the value of their shares.
Jonathan Day: Well, I could drone on about this for much time than we have, but let me give just two examples. When is the time horizon? You have shareholders, if you want to call them shareholders that are really algorithms that are trading in and out of companies, not in hours or minutes, but in fractions of seconds. So they have very, very short term time horizons and traders that are seeking a short-term volatility in the companies.
And then on the other hand, you have the big index funds and their managers sometimes describe themselves as almost shareholders in perpetuity. So the time horizons for shareholding are all over the map. The second is the simple assumption that what everybody wants is measurable economic value profits, but over and above the risk adjusted cost of capital. It just not the case any longer. You have very sophisticated investment managers that are saying we are prepared to trade some profitability for higher performance on climate, or social goals, or better governance. We talked about ESG. So the simple assumption that all investors have the same preferences are no longer a fact. Those are just two examples, but there are others that we could provide.
David Greenberg: So one of the consequences of what you're saying really reflects the mushrooming expectations on companies today. They seem to be growing by the day. How do you make sense of that? And what are you hearing about that from directors?
Jonathan Day : Well, yeah, the expectations are definitely there and there's even this idea out there that governments have become incapable of taking action and making changes and that companies should do it all. And you get this idea both from the left and from the right that companies should solve all the problems of healthcare, and climate change, and inequality. And I would say that no company, no matter how clever, or large, or powerful can set social policy for the world. Jeff Bezos and Elon Musk may have spaceships, but I really don't think we want them to be controlling nuclear missiles or tanks.
So I think companies need to find ways to work more effectively with governments and with regulators so that each can play its part. The biggest companies really are playing multi-national roles and they have to think about issues like diplomacy and statecraft, and yet they can't step in and displace the governments that ultimately have responsibility for that. So all of this I think is going to require a lot more work on the part of boards. And a lot of that comes right back to culture, and ethics, and trust.
Can't get away from that. It keeps coming back into the conversation.
David Greenberg: Jonathan, clearly this is a conversation we could be having all day, but we're out of time for now. Jonathan Day of Tapestry Networks, thank you for joining me on this episode. My name is David Greenberg, and I want to thank you all for listening to the Principled Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principal performance in global organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcasts on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Abstract: Gone are the days of writing codes of conduct with pages of unreadable text, legalistic language, and corporate jargon. Today, codes are being designed visually and verbally to better develop ethical, values-based cultures. But how do you transform your code into a useful tool that helps people do the right thing? In this episode of LRN’s Principled Podcast, Senior E&C Advisor Jim Walton talks about how to create a code of conduct that inspires ethical behavior with Mary Fair-Matthews, Senior Corporate Counsel and experienced E&C expert at Kellogg Company. Listen in as the two discuss how Kellogg reinvented their code to further deepen their commitment to ethical conduct through a combination of reimagining code structure, developing a mobile app, and administering training.
https://www.kelloggcompany.com/en_US/about-ethics.html
Featured guest: Mary Fair-Matthews has been with Kellogg’s Labor and Employment (“People”) team since June 2005. She has served in several capacities including providing legal advice and counsel in HR related matters, managing employment litigation and EEO cases, and supporting the Ethics and Compliance function.
In 2017, Mary began leading the global Ethics and Compliance function with the goal of continuing the legacy of driving a strategic vision for compliance. Mary reviews, evaluates, communicates and manages compliance concerns and policies. She also implements best practices in training and communication. Mary manages the global investigation function which is made up of a team of investigators around the world who are dedicated to maintaining confidential reporting mechanisms and a consistent investigation process to resolve employee concerns.
Prior to joining Kellogg, Ms. Fair-Matthews was a senior associate in Dykema Gossett where she represented corporations in various labor and employment matters. She was a judicial law clerk in the United States District Court for the Eastern District of Michigan. She also worked as an associate for Plunkett & Cooney.
Featured Host: Jim Walton is a member of LRN’s Ethics & Compliance Advisory Services Team – with over 25 years of professional experience in corporate, institutional and government settings, spanning the fields of ethics and compliance; environment, health and safety; and energy management.
Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics & compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third party due diligence reviews; and helping managers at all levels become better ethical leaders.
Jim is a Certified Compliance and Ethics Professional.
Abstract: As our world continues to witness converging crises of health, economic stability, climate change, and inequality/injustice, ESG seems to be having a moment. However, forward-thinking organizations understand that ESG—and its business expectations—represents a movement. In this episode of the Principled Podcast, LRN Senior Advisor Emily Miner talks with Che Sidanius, Global Head of Financial Crime & Industry Affairs at Refinitiv, about environmental, social, and governance initiatives—also known as ESG—and where organizations currently stand when it comes to ESG commitments, activities, analysis, and measurement. Listen in as Emily and Che explore how different parts of the world execute on ESG, what factors are at play when implementing ESG strategies, and how “green crime” threatens the environment, business, and security.
Featured guest: As the Global Head of Regulations & Industry Affairs at Refinitiv, Che Sidanius manages how regulatory changes around financial crime affect the company’s risk and supply chain business globally. His responsibilities include proposing courses of action to address regulatory changes and drive execution throughout the organization. Prior to joining Refinitiv, Che worked at Big 4 consultancies within Capital Markets Advisory. He also spent part of his career as a Senior Advisor at the Bank of England as well as a Senior Examiner at the Federal Reserve Bank of New York during the 2007-09 financial crisis.
Featured Host: Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.
Show Notes: [3:57] How has Covid accelerated the focus on ESG?
[5:58] What are the three pillars of ESG and how are they connected?
[8:30] How is ESG being addressed?
[10:15] Is there a spectrum in regards to where businesses stand on their prioritization of ESG?
[16:12] Who are the role models in Europe and the U.S. for their ESG prioritization?
[18:15] How will the new SEC Climate Task Force change the business landscape?
[23:20] What are Refinitiv’s strategies for addressing ESG?
[26:40] What is Che’s personal drive when it comes to ESG?
[28:56] What would Che tell a young child who wants to know how these systems of environmental damage can be repaired?
Transcription: Intro: Welcome to the Principled podcast brought to you by LRN. The Principled podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Emily Miner: As our world continues to witness converging crises of health, economic stability, climate change, and inequality and injustice, ESG seems to be having a moment. However, forward thinking organizations understand that ESG and its business expectations represent a movement. Hello, and welcome to another episode of LRN's Principled podcast. I'm your host, Emily Miner, senior ethics and compliance advisor. And today I'm joined by Che Sidanius, the global head of financial crime and industry affairs at Refinitiv, a London stock exchange group business. We're going to be talking about environmental, social, and governance initiatives, also known as ESG, and where organizations currently stand when it comes to ESG commitments, activities, analysis, and measurement. We'll also explore how different parts of the world execute on ESG, and what factors are at play when implementing ESG strategies. Che, thanks for coming on the Principled podcast. Can you start by introducing yourself to our listeners? Your title is global head of financial crime and industry affairs, which might not scream ESG to many of our listeners. What's the connection?
Che Sidanius: Absolutely. So first of all, thank you so much for the invitation, and thank you Emily for hosting this webcast. I'm delighted to be joined with you. So broadly, let me take a step back. In terms of my role with Refinitiv, we are a big believer that in order to tackle many of the issues that we face today, including sustainability and ESG as a measurement of trying to address the issues around allocating or shifting the allocation of capital to industries and sectors and companies, we're trying to do the right thing and at the same time, engage with policymakers, and helping them to understand what some of those challenges are, including data standards and data taxonomies, in order for us to achieve that goal.
Why am I here? What's the connection between the financial crime? It's, there's a convergence between the financial crime activities that we're seeing, particularly related to environmental crime and what we call green crime, which is the intersection between illicit proceeds of illegal logging, illegal wildlife trafficking, illegal fishing, and many of the other aspects that influence and impact our environment and sustainability and the ESG agenda.
So I work as a function of that. I work very closely with our sustainable finance team, with our ESG team, and in fact, to allow our ability to combine our data sets that we both have, to enable both companies and sectors and policymakers to make more informed decisions, and not just looking at environmental crime or sustainability agenda as purely as an act of trying to meet the Green Deal and many of the aspects of the green deal that any organizations [inaudible 00:03:32], but actually to look at it more holistically. So just as the sustainability team and the ESG team are doing more to look at our financial crime data, we at the same time are looking at ESG data in a different way that we haven't done in the past. And I think that this acceleration of both of those issues are only going to gain momentum in the future.
Emily Miner: Thank you Che. When we were talking earlier, you mentioned that COVID is also accelerating the focus on ESG. Why is that?
Che Sidanius: Absolutely. We launched a campaign about a year and a half ago... more than a year and a half ago, almost two years ago, on a theme that we called green crime, which is that we were actually seeing the increased activity and potential impact of environmental crime issues that it has on sustainability, as I mentioned with fishing, illegal logging, et cetera. And this is before COVID. When COVID happened, that was a game changer in terms of awareness that in fact, our interaction with the wildlife and interaction with the wet markets and the trading of wildlife had an actual incredible impact in terms of spreading potential diseases.
The awareness of the economic consequences, the social consequences, the consequences to the health of our families, has now reached a point where maybe two years ago this would've been, "Oh that's a very interesting idea, but I don't see how that's relevant," when we all know now that these things are not just about climate change that's the happened in the future, but in fact they have a real impact on peace and security right now. And so that really is why COVID has been a real game changer in terms of raising awareness on this issue.
Emily Miner: Yeah. When you put it like that, I'm thinking about all the interconnected elements, and it's really actually quite mind-boggling to think about how COVID, and health, and markets, and countries, and people, and goods and services, and movement, ideas, how the movement of all of those things kind of are putting us where we are today. So maybe with that kind of big, sometimes overwhelming picture in mind, can I ask you to break down ESG into the E,, the S and the G, and talk about where we are right now with respect to our understanding of what that is, and kind of current activities and measurements related to the three pillars?
Che Sidanius: Yeah, absolutely. So historically up until today, the major focus has been on the E, or the environmental piece. The European Commission, the US, and many of the jurisdictions are really focused quite a bit on what should be reported, what are the data taxonomies around that, and making sure that there's some kind of consistency in terms of what companies and organizations should be required to report. And there's of course a healthy debate about what should be voluntary versus what should be mandatory. The G however has received some attention, but the S has received very little attention. In fact, no one actually knows what the S actually means.
And I mention the S, because it is connected to the E. The labor rights, and the human rights, and diversity and inclusion are very much connected to the environmental consequences, so that we see that in many parts of the world, including the middle east, including the US, we're even talking today what's happened in Louisiana. They have consequences in terms of human movement, and also criminal actors taking advantage of that. So we tend to think of the E and the S and the G as though they're separate pieces, when they're in fact very much connected. And we know that from, again, from a financial crime perspective, that criminals are interconnected, they're global, they're very sophisticated. Companies are interconnected, they're global, and it's really about causing real focus into these issues.
So I think a lot of great work is done on the E. We still have some work to do on the G, but the S I think is another piece that's going to receive increased focus. And we, very quickly, I'll very quickly draw attention to a paper in fact, that that was launched and published a few months ago. That was the leadership that was Thomson Reuters Foundation, to look at the S. To actually say that, you know what, while there's more for us to do, there's enough data there for organizations and institutional investors to look at, and there's an incredible weight and much more work for us to kind of really push in terms of policy reforms, to make sure that the E as much as received attention, that the S, that receives equal amounts of attention as well.
Emily Miner: Yeah. Actually to that point that you were making around how the S, the social aspect is connected to the E, the environmental aspect, I just read yesterday that the US Federal Health Department is creating a new office to address climate change as part of their broader health equity agenda. So again, that connection between the environment and how that's impacting society and inequality and justice.
Che Sidanius: If I could Emily, on that, there's no question that regulators, policymakers are paying more attention to this now than ever. We know that the SEC, the Securities Exchange Commission, has made some very particular statements on this. The European Central Bank has made some very particular statements on this. And so the time for the industry at large to translate its language regarding what they say from a marketing perspective to actual action is the disconnect that we need to close.
And we of course as a company are committed to this, and we can talk about that, but there's no question that this is the way of the future. As I've said before, companies and industries can either, [inaudible 00:09:42], lead, follow, or get out of the way. But there's no question that as the title rightly makes the point, that the ESG is not a moment. It is a movement. We're going to see the greatest wealth transfer happen between one generation to another. Wide estimates in terms of what that transfer is, but it's somewhere around $30 trillion, and that is quite an astounding number. So I think it's an important piece for organizations to get on top of.
Emily Miner: Yeah, absolutely. And you just mentioned the need for these efforts to be more than just marketing initiatives, and I want to kind of focus on that for a little bit, because we also have the stakeholder capitalism movement that intersects with ESG in a lot of ways. And there's a debate playing out right now in the pages of the Wall Street Journal about whether any of this talk is actually translating into action. We're two years out from the Business Roundtable's new declaration of the purpose of a corporation, and some say this is all hot air, whereas others are citing meaningful progress, albeit slow. Where do you fall down on this debate? The spectrum from nothing's happening at all, to yes, things are changing? So where do you come down on this debate in general, but then also in particular in relation to ESG, our topic today?
Che Sidanius: No, it's a great question, and there is a spectrum. There's a spectrum in terms of organizations who are still driven by short-term profit-making versus a longer, more sustainable economic model. There's also debate about publicly traded versus privately held organizations, where the publicly traded organizations are still driven and still much pressured by the investor community to focus on short-term profit. And there's a wide spectrum, and I guess my point is the following. There's no clash between short-term profit and long-term profit. There is a clash however between short-term opportunism and more of a longer-term sustainable agenda. And this has to do as much with, if you look at the diversity of boards, that have been shown to be more stable, incomes and profits have been more stable over time. There's a connection between organizations who are committed to a more sustainable business practice and a more stable and profitable sort of trajectory in terms of where they go.
And yes you can make the argument, yes CEOs, they're being pressured by shareholders to continue to deliver [inaudible 00:12:26] profit incentives. But there also needs to be a recognition that there's a longer play here. There's a play with the brand, there's a play about doing the right thing. And those things, as I said, the next generation, they will care. They will vote with their feet. They will vote with their asset allocation. And the institutional investor community is starting to respond to this. There's a piece here about educating the industry and also educating the policymakers. There is no clash between stakeholder capitalism piece and a shareholder capitalism piece, that the two are becoming much more intertwined in a way that you haven't seen before. And again, it gets into, do you want to lead on that discussion? Or do you want to pretend that nothing's going to change?
Emily Miner: Yeah, I've read a statistic recently that right now, 65% of the workforce in the United States is looking for another job. So again, kind of bringing back the connection to COVID in all of this. But that's a really staggering percentage. That's I think higher than it's ever been. And so when we're faced with a situation where we already have labor shortages and it's really a labor market, the companies that are leading with their values, leading with their purpose, treating employees equitably, paying living wages, doing the right thing publicly and behind closed doors, those are really the organizations that are going to come out ahead. And you cited some research, there's so much out there about how organizations that do the right thing also outperform on their bottom line. So it's, I feel like the question about whether there's an ROI there really should be laid to rest.
Che Sidanius: You're right. I mean, there's a point that we collectively, that we certainly as a company and many others, have to communicate that the UN social developmental goals and many other goals regarding a more sustainable sort of future economic model, it's not just the right thing to do but it actually pays off. It gets into the short-term-ism versus the longterm-ism.
And I'll just give a very brief example. So Refinitiv, so while the name is fairly new, we used to be part of Thomson Reuters. We're a fundamentally data and technology company, we always have been. Ended up, we got started in the 1830s, right? So how did we get started? We got started in the fact that we used carrier pigeons to carry stock prices between Aachen Germany and Brussels. Now, we've come a long way from carrier pigeons, right? But the fundamentals of what we do, data, providing data to organizations and companies and others who need it, is the same.
And it's the same thing with this. We will need to adapt. We need to adapt, and organizations will need to make a choice in terms of where they fit into that, because we have every intention to continue as we did in the 1830s, to continue that journey in the next 270 years as well. But look, sustainability and ESG are... I think it's fairly uncontroversial to say that these are some of the biggest challenges facing all of us, and it's not a company problem. It's not a policy problem. It's not a civics problem. It's all of our issue. And it's really about how we as a company and how the private industry plays a role in doing that. Because as I said, it's either you adapt or you don't.
Emily Miner: I didn't know that origin story of Refinitiv, that's really incredible. So you're based in the UK, Refinitiv is based in the UK, and the E within ESG is more regulated in Europe than it is in the US where I sit. As you look at kind of the landscape at a federal level, who are the role models out there?
Che Sidanius: Yeah, I think there's multiple role models. I think certainly within Europe from a federal perspective, to put it in US terms in terms of state versus federal, the European Commission and the finance ministers in Europe have put a great emphasis and priority in translating the Green Deal, their own version of the Green Deal into action, and part of those discussions as an advisor to that. But the US is also, in many aspects is also a leader. We have mayors of cities, and we have states in the US who are really taking action as well.
Now, unfortunately from my perspective, there might be a disconnect, historically might have been a disconnect between the federal action versus the state, if you will. And I think that these things will come into their own, and it's not just a question of protecting the status quo versus innovating. But we all know the impact and the role of climate change that it has, we all know that the impact of human trafficking as an example, and also the opportunities that it provides in terms of investing in technology.
And that will be the future, just like oil was the future in the beginning of the 19th century, data and technology is the new oil, if you will. And so that is the direction of travel. And I think it's only a matter of time before the US and many other jurisdictions and countries who are doing incredible work here can join forces to actually amplify, to force multiply all these actions in a way where maybe we haven't seen in the past.
Emily Miner: Yeah. And kind of following from that point, you mentioned the SEC earlier, the Securities and Exchange Commission. And they've recently announced that they're creating a task force, or have created a task force, on climate and ESG and are looking into climate disclosures. How do you think that is going to change the business landscape when it comes to advancing the ESG agenda? I'm thinking of other kind of international climate policy where the US has been a participant, but not a ratified member because of our political situation and it's more challenging to get consensus around that. But then we have from the business regulatory perspective some movement here that was recently announced. What do you think is going to come of that?
Che Sidanius: Yeah, so I think there's two parts to this. The first is, as you mentioned, the announcement by the SEC is certainly not isolated. There's been announcements by many regulators. The G20 and ECB, European Central Bank, and many others. New York Fed, a former employer. That's the direction of travel, and they will do more work in this space.
The issue that we need to resolve in a way is consistency in terms of definitely varied data and IT specific issues regarding standardized definitions as an example, right? So during the work we did with the Thomson Reuters Foundation, when we dig into the S as an example, as a company we have 140 different data points when it comes to the social part. But when we dig into it, there is a lack of definitional issues that ensures consistency in terms of what human rights actually means. There's a gulf and a gap in what diversity actually means, because it will be country specific, historically context specific, and there needs to be a discussion around, okay, if we're going to require organizations to report and then to manage, then we need to begin a discussion of what we're actually trying to capture, and making sure that there's consistency internationally on these issues.
So I think that that is where we need to go, and I know that in many jurisdictions there's an active debate in terms of data taxonomy. And just as in the financial crime space, going back to that with the interlinkages, 20 years ago, there was an active discussion in terms of many of the predicate offenses actually meant an evolution of financial crime like environmental crime, which is very much connected to ESG.
And the ESG, that discussion is just starting to develop in terms of making sure that there's some consistency, and also a public/private sector dialogue on key indicators. What should we focus on? And also not for just to be about carrying a stick in terms of punishing countries or companies, but also providing an incentive for companies to do the right thing. And then you can get into the capital regime from a financial sector perspective, in terms of allowing for banks to benefit of capital relief if they're actually deemed to be doing the right things on reporting and all the rest of it. So it's a complex answer to a complex issue, but again, there's no question that the train has left the station. Now it's really about how we can collaborate in a more effective way to get to the right place that we all want to be.
Emily Miner: Yeah. The examples that you shared were really helpful in just kind of explaining the complexity behind all of this. You're right. We can all agree on the goals or the outcomes that we're looking for, but then the how do you get there, and the nuances and language and definitions and historical context that you were mentioning... I know when, after George Floyd's murder, LRN kind of took the opportunity to reflect on how we are encouraging diversity, equity, and inclusion in our own four walls so to speak as well as what we're doing in the broader community. And we had a series of conversations with our colleagues around the globe, and diversity meant very, very different things depending on what country we were calling in from, because of the different historic, political, cultural differences that we were all bringing to the table. And it was really fascinating and productive to explore those differences and figure out, how do we normalize all of this so that we can make progress, and what are those metrics, and how are we measuring, et cetera. So yeah, thanks for sharing that.
We've been talking a lot about ESG from a kind of a global landscape, and I want to bring it down to Refinitiv. So this is a core part of your business, is to, as you've talked about, providing technology, data, expertise to your clients to help them make sustainable investment decisions, mitigate their risk, et cetera. How are applying this internally, taking your own medicine so to speak? What's Refinitiv's ESG strategy, and what's it look like?
Che Sidanius: Absolutely. So sustainability is a core part of our ethos. And really when you think of what Refinitiv is, we're a collection of businesses, but sustainability is a key part of it. A, what are we doing to apply our own medicine, we have we think fairly ambitious plans in terms of our own carbon footprint, meaning reduction of travel. We're committing to 65% of our suppliers to give us a science-based emission plan in terms of what they're doing to address some of these things, by 2025 by the way, so just in a few years' time. We're encouraging volunteering. We're committed to be one of the top three providers of sustainability, sustainability data for other companies and organizations and policymakers, which also means of course very engaged on the policy front. We are an advisor and a knowledge provider to the UN on its own sustainability task force, to the European Commission, the World Economic Forum, et cetera, et cetera.
So beyond the data piece, we're very engaged on the policy piece as well. But beyond that, beyond that, and you mentioned diversity and inclusion, we're incredibly committed to this as well. And while we focus a tremendous amount on gender and gender diversity, which is a critical issue, we're also committed to minority inclusion, all across all our businesses and all across where we have a presence. So we're 190 countries, we have a global presence, and we're deeply committed to these issues.
And you're right, George Floyd personally was a... how can I put it? It was a horrible event. I myself know that incident and watching that video brought my own history and my own memories that I had suppressed, in fact for a long time. And I could have been George. And so I personally committed to this issue as well, and working very much with the executive leadership team to make sure that we move beyond marketing statements into actual action, because A, I think it's the right thing to do, B, I think it only represents the community and the global community that we serve. And third, I wanted for us to be known as a place that fosters diversity, that propels diversity, promotes diversity. And at the end of the day, it just makes more business sense because of all the reasons that I mentioned that actually companies who are more diverse end up doing better, longer term. So, so hopefully that gives you a sense of our commitments on these spots.
Emily Miner: It does, and thank you for sharing them, and also for kind of the personal lens that you're bringing into your work at Refinitiv and being one of those agents for change. Staying on the personal topic for a bit, what's your drive when it comes to ESG, how did you fall into this? Or did you fall into this? Is this a more kind of intentional kind of life journey that has gotten you to where you are today with ESG being such a central thread to the different activities that you're involved in and leading at Refinitiv?
Che Sidanius: Yeah no, it's a good question. I think it's a combination of both. It's a combination of looking at the environments, and looking at where we can play a bigger role. And I know for a fact that our CEO and our executive leadership team is putting a great emphasis on these issues. I also see the connection as we talked about between the environmental crime agenda and what we call green crime in sustainability. They're in fact very much joined. Just because it's new and evolving doesn't mean it's actually new, really. It's been there all along. We just haven't paid attention to it. And I think that we can do more as a company in terms of what we can influence, the value that we think that we bring to the table.
And of course personally, how can I not as a citizen of the world look at what's happening and be... We all live under different jurisdictions, but we can see day-to-day the impact of climate change. And it's really about the question that you asked, that I asked myself. Well, what are you doing about it? Now I guess that's a... mission is a bit of a strong word, but it's certainly an intent, to leverage whatever I can bring, whatever effect that I can have as small as it may be, but it's, it's causing, making sure that you can look my son in the eye, certainly to show him, this is an issue that I know it's going to affect you more than it's going to affect us. My question is, what role do you have to play in that? And I think we all have a role to play in that.
Emily Miner: I have a fun as well, he's four, and he loves animals. He wants to be a marine biologist when he grows up so that he can save all the animals. And we read these National Geographic books about different animals, and they kind of always close with a description of the threats to those animals, they're endangered or at risk. And so often, it falls into what you talked about, is green crime. And he always asks me, what can we do about this? And I tend to respond with a kind of a four year old version of regulatory and economic incentives, and addressing those. What would you say to my four year old?
Che Sidanius: Well if I'm lucky enough to meet him, and that is a profound question that I'm not quite sure in do justice, but what I would say is a few things here. The first is the incentives piece. When need to have an incentivized culture built from the investment community to incentivize organizations to take action on these, and then for the allocation of capital to vote. We also need incentives from the regulatory community, and I think here specifically as an example of the supervisors in the banking community for example, who are an incredible, important piece, to allow regulators to really change the capital and how they're being allocated, what the expectation is. In both, there's a stick of course with increasing capital, for organizations who are not doing the right thing if you will. There's also a carrot in ensuring that you can lower their capital when they are doing the right thing.
And what does capital mean? Why is it so important? Capital is a direct influencer in terms of return on equity. It can be a direct influencer on return on investment, ROI. And the same thing for credit agencies, who have an incredible amount of influence in terms of rating companies, assets, securities, as a function of the environmental impact that those securities' assets may have. And so the green crime agenda or the green deal agenda should be incorporated with credit agencies. Why? Because they impact the cost of funding, they impact the cost of liquidity. So I think that once we have that type of a common approach with many of the actors that have a significant influence on behavior, and let's assume that humans are economically driven persons that respond to the incentives around them, then let's start there.
And then of course there's awareness raising, but the planet is raising our awareness by itself, so hopefully that's not a very controversial statement in terms of what we need to focus on. But I think that would be my long-winded answer Emily, and making sure that we pinpoint the nervous system of the financial system that has a significant influence on behavior.
Emily Miner: Yeah. Thank you. My four year old is about to turn five, so I think he's just about there to be able to internalize what you just said. Well Che, there's so much that we can unpack here, but we're running out of time for today. It's been really wonderful having you on the Principled podcast, and I've really enjoyed this discussion. To those of you that are listening, my name is Emily Miner, and thanks for tuning in. Thanks so much, Che.
Che Sidanius: Thank you, Emily.
Outro: We hope you enjoyed this episode. The Principled podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more, and if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen, and don't forget to leave us a review.
Abstract: Instructional design sits at a unique point within ethics and compliance programs, combining stakeholder expectations with the learner experience to create education that impacts how we think and act. In this episode of the Principled Podcast, LRN Senior Advisory Learning Solutions Manager Damien DeBarra talks with LRN Learning Director Alexis King about the role of the instructional designer as listener, facilitator, and change-maker. The two explore how instructional design can help organizations look inward to understand potential risks to their culture, and how learning can fill those gaps. Listen in as Damien and Alexis discuss building accountability into E&C programs and the voices needed to be part of that effort.
Featured guest: Alexis King has built corporate ethics and compliance programs that ignite tangible culture change for more than 15 years. As a Learning Director at LRN, she collaborates with clients to create effective learning solutions for their unique needs and designs online, blended, and facilitated education experiences that emphasize learner engagement. Before joining LRN, Alexis spent more than 10 years as a Learning Manager at Interactive Services. Prior to that, she worked as a Senior Instructional Designer and Task Lead at C2 Technologies. Alexis holds an M.Ed. from the Peabody College of Education and Human & Development at Vanderbilt University. Her BS is also from Vanderbilt University.
Featured Host: Damien DeBarra brings more than 20 years’ experience to the instructional design and strategic workforce planning spaces. As a Senior Advisory Learning Solutions Manager at LRN, he focuses on creating training solutions that ensure business buy-in and connect hiring practices to day-one learning roll-outs. In the last few years, Damien has helped organizations such as United Airlines, Sun Life Financial, SITEL, Astellas, MFS Investments, and SAP create 90-day action plans for their solutions and develop supporting communication strategies. He has worked with over 200 clients in areas ranging from retail to pharmaceuticals, call centers to nuclear plant manufacturing. Prior to LRN, Damien spent more than nine years as the Learning Solutions Director and Head of Instructional Design at Interactive Services. He has also worked as an instructional designer at NCALT, Electric Paper, and Epic. Damien received his BA from Maynooth University.
Abstract: Evidence is mounting that corporate culture eats corporate strategy for breakfast. In this episode of the Principled Podcast, LRN Special Advisor David Greenberg, who is also on the board of International Seaways, is joined by Dr. Marsha Ershaghi Hames, Partner at Tapestry Networks, to talk about recent findings in their joint survey of board members from major corporations on ethics, culture, and compliance. While board members agree that activating culture and ethics from the boardroom is important, there is less clarity around how to make this happen. Listen in as Marsha and David discuss the genesis of the study and key themes that emerged from these candid conversations with corporate directors.
Featured guest: Marsha is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement.
Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc., a global governance, risk, and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority.
Marsha has been interviewed and cited by the media, including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics, and more. She hosted the “PRINCIPLED” Podcast, profiling the stories of some of the top transformational leaders in business.
Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc., an integrative supply chain advisory firm, and Compliance.ai, a regulatory change management firm.
Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.
Featured Host: David serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. His previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.
Mr. Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership, and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications, and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee.
“You’ve got to dive deep into the bedrock, and that starts with activating trust and zeroing in on culture, and it starts with the board.”
- Dr. Marsha Ershaghi Hames
Abstract: Evidence is mounting that corporate culture eats corporate strategy for breakfast. In this episode of the Principled Podcast, LRN Special Advisor David Greenberg, who is also on the board of International Seaways, is joined by Dr. Marsha Ershaghi Hames, Partner at Tapestry Networks, to talk about recent findings in their joint survey of board members from major corporations on ethics, culture, and compliance. While board members agree that activating culture and ethics from the boardroom is important, there is less clarity around how to make this happen. Listen in as Marsha and David discuss the genesis of the study and key themes that emerged from these candid conversations with corporate directors.
What you'll learn in this episode: * [2:03] Who is Tapestry Networks and how was this report made? * [5:11] What is David’s perspective on this report and why is this report so timely? * [7:26] Why is ethical culture a business imperative? * [9:34] Apart from trust, what were the other big themes in this report? * [14:46] Why do board members struggle to make a home in ethics and compliance? * [17:12] Did the chief E&C officers’ views differ from others in the report? * [21:22] How can this report be leveraged in the E&C community?
Featured guest: Marsha is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement.
Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc., a global governance, risk, and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority.
Marsha has been interviewed and cited by the media, including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics, and more. She hosted the “PRINCIPLED” Podcast, profiling the stories of some of the top transformational leaders in business.
Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc., an integrative supply chain advisory firm, and Compliance.ai, a regulatory change management firm.
Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.
Featured Host: David serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. His previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.
Mr. Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership, and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications, and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee.
Transcript Intro: Welcome to the Principal Podcast, brought to you by LRN. The Principal Podcast brings together the collective wisdom on ethics, business, and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
David Greenberg: Hello, and welcome to a special episode of the Principal Podcast by LRN. This is first in a series of conversations this season about the role of the board in shaping ethical corporate culture. And we're presenting all of this in association with Tapestry Networks. I'm your host today, David Greenberg, Special Advisor at LRN and a member of the Board of International Seaways, the second largest global oil tanker company. Today I'm joined by Dr. Marsha Ershaghi Hames, partner at the management consulting firm, Tapestry Networks. We're going to be asking each other about activating culture and ethics from the boardroom, a major study we co-authored that examines boardroom oversight of culture, ethics and compliance. Created from in-depth interviews with 40 directors, occupying 80 seats at global public companies, the study is a window into how directors think about, feel about and act on culture, ethics and compliance. Today we're going to be focusing on the big themes that emerged. In later podcasts, we'll be inviting participants in the study to join us to dig deeper into the findings and implications. Marsha, thanks so much for coming on the Principal Podcast today.
Marsha Ershaghi Hames: It's great to be here, David.
David Greenberg: Before we dive into the results, let's talk about how activating culture and ethics from the boardroom came to be. Can you tell us about who Tapestry Networks is and how this report was created?
Marsha Ershaghi Hames: Yes. Yeah. Thank you. And good afternoon, everyone. It's great to be here. And a little background, I think on Tapestry and then we'll kind of jump into the report. So Tapestry Networks' mission has been to help leaders of the most important institutions in the world do their work most effectively and with great confidence. And each year hundreds of independent directors and senior executives participate in our networks and our research initiatives, and they represent large, global organizations from North America and Europe. And our focus is to design networks, and these are across financial services, corporate governance and healthcare, to really kind of center conversations and candid dialogue from these top leaders on the pragmatic realities of leading these organizations and complex firms. And last year, while the pandemic challenged the resiliency of so many of these organizations, we were noticing that in a lot of the dialogue, it pushed leaders to surface and adopt kind of what is our broader view of risk and responsibility?
And so in collaboration with LRN, and specifically, David, you and I had a number of conversations as we sort of started to explore, is there something there that we need to really unpack? The ethics culture and compliance forum came together. And we brought together directors and executives to begin exploring what is the role of values? What is the role of corporate culture and ethical decision-making in helping organizations secure long-term sustainability and viability for business? And we had a series of meetings last year. So we kind of kicked off in July, kind of at a mid point, we're a year now, and concluded at the end of last year. And when we concluded these sessions, the input from all of the participants in the dialogue was that we all kind of collectively stepped away and said, we need to go out. We need to go out and assess these current realities of board oversight of corporate culture.
We need to understand from the director perspective, what is practical here? How is information being received? What is being measured? What do they need to investigate more? How do they need to build and bridge some of this dialogue? So when we kicked off 2021, our goal in collaboration with LRN was to conduct this study to glean the perspectives of sitting public company directors, and activating culture and ethics from the boardroom reveals these insights. These were confidential discussions, as David mentioned, with 40 directors representing 80 public company board seats. So fascinating, fascinating work, and looking forward to discussing it more.
So, David, maybe we can actually turn to you and get started. You've been in ethics and compliance for two decades and a board member at three companies since a decade and a half ago. So what is your perspective on this report and why do you think the work that we've done here together is so timely?
David Greenberg: Marsha, I think it's not only timely, it's overdue. The issue of where was the board has been an issue for the whole 20 years I've been associated with ethics and compliance. It's the first question people ask in the aftermath of a serious scandal or major corporate misconduct, where was the board of directors? And the truth is, that's a question that chief ethics and compliance officers and their teams can't always answer. [crosstalk 00:05:49] ... are obviously a huge force in the conduct and culture of a company. But what directors say, do and influence from the boardroom is often a bit of a black box to the ethics and compliance community, even within the same company. So boards are really fairly new at this. Even though ethics and compliance has been around for 20 years, it comes on top of so many other things that boards have to do.
And so many processes, and procedures and structures at the board level that are already well-ingrained, it's hard to add these new topics, even as important as this one is. And we know from the perspective of CECOs, how they feel about boards and board oversight, because we've been talking to them for 20 years. But also, LRN did a study of this a couple of years ago, talking to 25 chief ethics and compliance officers from global companies, again, off the record with no one being quoted. And the results were that CECOs are really disappointed in the amount of time, priority, resources, focus and strategy they get from the board. They're asking for more. And I think we're seeing in this study, that boards are also asking themselves for more. So Marsha, let me turn it back to you and ask, in the report we say ethical culture is a business imperative. Why do we say that?
Marsha Ershaghi Hames: Yeah. So there's no question, as you sort of point to, that boards play a significant role in shaping the conduct and the culture of a company. Every time there is a lapse or a scandal, as you mentioned, the number one headline or question is where was the board? However, I'd like to call out that an interesting kind of component that surfaced throughout our conversations was the importance of extending trust, and the currency of trust and where that plays in this notion of building business. So trust is hands down one of the most valuable assets a company can cultivate. Within an organization, trust can percolate into culture. And outside an organization, it translates into loyalty. And we've seen this play out with countless examples, even most acutely during the pandemic. And we've seen how the erosion of trust can impact business, and confidence and consumer loyalty, and how deep trust and consistency of trust can build communities and can help sustain business.
So a trust-based culture is an ethical culture, and this is the business imperative that was evident and it was coming through threads of conversations that board members really hallmark they care deeply about this. And it's not just that the directors care about this and that the executives care about this, but investors are demanding ethical cultures. They want to see businesses that are investing in trust-based ethical cultures. But it's important to get the foundation right. And I think this is where we're going to dig deeper too in this study, you've got to dive deep into the bedrock, and that starts with activating trust and zeroing in on culture, and it starts with the board.
David Greenberg: So Marsha, you talked a lot about trust, but I'd also like you to talk a little bit about the other big themes that came out of this study of the points of view of 40 directors of some of the biggest companies in the world. So what were some of those other themes?
Marsha Ershaghi Hames: Yeah. Yeah. So, first of all, I mean, a big kind of, I would say macro theme was the importance of embedding practices around ethics and compliance programs into all segments of the business. So culture change tends to be catalyzed by having a very clear and ethics and compliance strategy. And one big theme was that ethics and compliance doesn't have a home. And I think we're going to try to get into that a little bit later. But without sort of finding a home for it, where does it sit? Who oversees it? We're not really focusing on assessing, measuring, keeping a pulse on it. And that kind of reveals theme number one, which would be measurement. So measuring, what are we measuring? Are directors really positioned to even interpret the metrics and the data that is sort of emerging from what chief ethics compliance officers, and CHROs and other kinds of stakeholders are presenting to the board. Is the board's view sometimes refracted through this management filter?
So some of that we're going to unpack a little bit more over the course of actually our upcoming summit. A second big kind of theme was oversight. So lots of conversations around structures and processes, and this is a challenge. So one of the questions that emerged was how can boards really ensure there's adequate time and space being sort of devoted to focus on culture, ethics and compliance matters? Several directors had examples of committees, subcommittees that have been formed around which committees might or should have ownership. Is culture a committee issue or a full board matter? Several raised questions around how necessary it is to consider bringing in someone with a background with a chief ethics and compliance officer background or equivalent, with that kind of expertise onto that board, would that sort of change the dimensions of the types of questions being asked and the types of challenges being investigated?
Another big theme was accountability. So again, several directors discuss the importance of building better bridges with management and to engage more directly with management on matters of culture. There were several directors who've mentioned that there's a lot of reports on activities, so they're looking at all these different metrics, but one, I think very in particular highlighted the need for directors to be able to sit back and look for key signals. There's a lot of noise, a lot of activities, but what is the true narrative that we're seeing here? How do we sort of interpret that? And who and what function is really accountable? So I would sort of summarize the four themes as it all starts and ends with trust, however measurement continues to be a challenge, oversight, instructors, and processes and accountability.
So, when we were having these conversations, directors continue to sort of pound the table to reaffirm that the words of one that's a corporate culture eats corporate strategy for breakfast. And something that I found really compelling during these 40 interviews was how directors pounded the table to reaffirm that in the words of one, corporate culture eats corporate strategy for breakfast. And this really underscores LRN's long held view, that compliance is principally an outcome of values-based ethical cultures and not a driver of them. What did you think about this consensus from directors in the study?
David Greenberg: Marsha, to me that's the absolute bedrock foundation of everything that needs to happen now. It's really fantastic that the directors almost to a woman and man get the idea that if we're going to get the outcomes we want, we've got to get culture right. But as you said in discussing the themes about trust, and accountability and measurement, beyond the consensus of culture really matters, directors are still unclear on the path forward. And in fact, sometimes they even fail to make a connection between ethics, and compliance and culture. By that, I mean, we had a few comments from directors that culture's really hard, compliance is much more straightforward, but the truth is doing the right thing in a company or in any organization is really a complex set of interactions that is very hard to get right.
So I think it's why it's important that we continue this conversation and continue the exploration, because I think we learned that director's hearts are in the right place, but some of the mechanisms to take that feeling forward still need a lot of work. Marsha, we talked about the idea of board members struggling with ethics and compliance finding a home. What did you make out of that? You mentioned it before, but drill down a little bit
Marsha Ershaghi Hames: Yeah. Yeah. And I think that this theme came up in a number of different segments of conversations, and it really comes down to creating a focus. So creating a board focus gives ethics culture and compliance a true home. And without a home, there is no oversight, or responsibility, or regular pulse on that strategy. There's no regular check on what's the progress? Are we moving forward? Have we stalled? Who are the stakeholders we need to bring into the conversation? How do we assess and measure the data that's presented to us? So without a home, these conversations are not happening. And as you and I know, last couple decades, what gets measured gets done, what gets measured gets the attention. So without a true home, there's no way to have the accountability and the standing anchor for directors to sort of watch, and assess and to challenge management, ask the right questions.
How is the program being designed? Are we capturing the right metrics? Are we able to link these data points into the narrative that gives us a pulse on culture? Now, we had some mixed responses from directors in terms of where this should truly sit. And a few directors, as I mentioned earlier, mentioned that within their organizations, they've designed and developed some subcommittees. Now we know that there are some components sometimes, let's say compliance of risk may be under audit, or there may be a subcommittee to audit. Certainly as a number of directors pointed to some of the survey in HR and people workforce data being presented in comp committees. However, there were, I would say across the board, directors were saying that culture is a full board matter and it comes up at the full board, but it needs to have a more focused home.
And I think this is where a nice springboard to the types of conversations we're going to have over the next few weeks, where we sort of learn from each other and directors will share how they are approaching this, how they are thinking about this and the need to really find a true home for ethics and compliance.
David Greenberg: Thanks, Marsha. Another really interesting aspect of this study is that 10 out of those 40 board members either are or were chief ethics and compliance officers in their executive lives. Did their views differ from the others?
Marsha Ershaghi Hames: Yeah. Well, they essentially brought a stronger, more grounded view that carried greater emphasis. One of the CECOs said that essentially you bring a current credibility on the subject to the board. So it makes it very clear to the CEO and it makes it very clear to the board that I understand how these priorities live, unlock and reveal themselves. And they emphasized certain pragmatic steps in our conversation. So one of the areas of emphasis from CECOs that contributed to this study, CECOs that are former CECOs or current CECOs who sit on boards, is that it's important to link and incentivize culture. So finding strategies or examples that they had shared around linking ethical outcomes to compensation is important to at least put on the board and start to have a conversation around. Another area that they really emphasized was it was very critical for the board to have deliberate dialogue around culture that's grounded in metrics.
So start identifying what needs to be measured. How do we sort of find the examples and hallmarks of metrics and data that would be representative collectively of culture? Also, they emphasize thirdly, that organizations can't play culture, they need to do culture. So there needs to be a responsibility to stop talking about it, but to start creating and building a strategy. Going back to our conversation on, we need to find a home for this, we need to bring in the right stakeholders to challenge, and ask the questions and start to build a plan. And then lastly, this sort of resulted in the importance of giving a culture a home at the board. But I'm curious, you are a former chief ethics and compliance officer. You also have served on a number of boards. What do you think are the key stake aways from this report, both for chief ethics and compliance officers, and for the teams and staff that they're building within their organization?
David Greenberg: I think the report says a few things loud and clear, and I think I could sum it up by saying it is an endorsement of the view that ethics and compliance has to be strategic. It has to be values-based. It has to focus on creating cultures, not on creating rules, procedures and programs. Ethics and compliance has got to go deep into the drivers of both misconduct and the kind of behavior that we want to inset. Ethics and compliance and the CECOs who drive it have to help companies, and their boards and their teams find metrics that really allow for tracking and improving culture. Must focus on core issues, like trust, fear, organizational justice, willingness to speak out, willingness to listen and hear. So one way I've characterized this is, CECOs and their teams have to play big, not little.
It's time to have a clear strategy that encompasses how to build and maintain an ethical culture. It's time to move away from reporting on activities, to having a discussion with their boards about the culture drivers of misconduct, having a narrative about what's happening in the company, why and what needs to happen to change it, having a new set of metrics that measure what matters, like trust, fear, justice, and how to knock down the barriers to what we call a true speak-up culture. And it's time to find a way to strengthen their relationships with their boards inside and outside of board and committee meetings. That's what I'd say, if I were a CECO still, I'd be taking away from this, Marsha.
Marsha Ershaghi Hames: And then David, then how do you think our colleagues in the compliance and ethics industry could use or leverage this report in bridging and building conversations with their own peers, senior executives and their board members?
David Greenberg: Well, I mean, I think CECOs need to start a deeper conversation with management and with boards on issues like board training, board reporting, the board relationship with ethics and compliance. They've got to find a way to elevate. They have to find a way to kickstart a stronger relationship with members of boards and members of the key committees. They have to have a discussion with directors about, are we doing the right kind of training? Are we doing the right kind of reporting? Do we have the right metrics? What does good oversight look like? Do we have a real culture strategy as it applies to doing the right thing? Do we have the right structure? What's our relationship, both inside the boardroom and outside the boardroom, and how do we strengthen it? How do we find the themes, narratives and trends and talk about them and not talk about activities?
I can tell you as a board member, there's no other function, or no business unit, or no executive who simply stands up and talks about activities. And that's been the tradition of ethics and compliance. We've got to shift the focus to outcomes, not to activities.
Marsha Ershaghi Hames: I couldn't agree more. And I think this report really points to a lot of that. So fascinating, fascinating.
David Greenberg: Marsha, I think this is a conversation we could have all day and we will continue this conversation in future podcasts. But we're out of time here today. So my name is David Greenberg. My guest has been Dr. Marsha Ershaghi Hames from Tapestry Networks. And I want to thank you and everyone for joining us on the Principal Podcast by LRN.
Outro: We hope you enjoyed this episode. The Principal Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Trust has been a leading concern throughout institutions, globally. In this episode, Dr. David M. Bersoff, PhD, Head of Global Thought Leadership Research for Edelman Data & Intelligence joins us to talk about the overarching trends around trust, what institutions can do to gain back trust, how the trust barometer can help identify the differences in trust between nations, and how build and regain trust once it’s been lost.
“ 7-10 people fear the weaponization of misinformation, but what's changed in the last year or so is assumptions of who we think the weaponizers of fake news and misinformation largely are.”
- Dr. David M. Bersoff
David oversees Edelman’s global Thought Leadership research including the annual Trust Barometer and Brand Trust studies. In this capacity, he is responsible for questionnaire development, leading all data analysis and insight gleaning activities, and developing new frameworks for understanding trust, credibility, and consumer-brand relationships.
Prior to joining Edelman Intelligence, Dr. Bersoff spent 18 years as a consumer insights and marketing strategy consultant at The Futures Company. In his last 5 years with the organization, he served as its Chief Insights Officer and was a member of its global board of directors.
Prior to entering the consulting world, David spent 12 years engaged in social science research at various Ivy League institutions, including 4 years as an assistant professor of social psychology and research methodology at the University of Pennsylvania.
Transcription:
Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Ben DiPietro: Hello everyone. And welcome to another episode of LRNs Principled Podcast. My name is Ben DiPietro. I'm the editor of LRNs E&C Pulse Newsletter. You can find that on our website lrn.com. Click the resources tab and click newsletter, please subscribe, we'd love to have you. With me today is Dr. David M. Bersoff. He's the Head of Global Thought Leadership Research at Edelman Data and Intelligence, and you would know them better as the people who put out the trust barometer for the last 20 years, and they have a new, a very interesting one out in 2021. And so we welcome David. And how are you, David? Thanks for taking time with us today.
Dr. David M. Bersoff: Pleasure to be here. Thank you for having me.
Ben DiPietro: In 2021 Edelman found business to be the most trusted institution globally. Why is that? And have the other institutions faltered leaving business standing alone, or has business simply outpaced media, NGOs, and government and building trust among people?
Dr. David Bersoff: All four institutions that you just mentioned actually are more trusted now than they were when we first started tracking trust among the general population back in 2012, but two things have conspired to put business in the number one position. The first is that it's actually experienced some good double digit growth in trust over the past 10 years or so, unlike media and NGOs, which have gone up but gone up relatively little and while the government has also gone up, which is surprising to some, started from the much lower position. So at the end of the day here, we find business is number one, and you can really understand what that looks like and why that is when you divide trust into its two constituent parts. So there is perceptions of ability or competence and there's perceptions of ethics or fairness. And what we see is that despite the fact that as I said, all the institutions have enjoyed some trust gains since 2012, government and media are generally seen as not terribly competent and not terribly ethical. NGOs are seen as ethical, but not terribly competent.
Business is the only institution that's really seen as both. And that's actually a bit of a change from last year. Last year business was seen as competent, but not terribly ethical, this year they're the only institution that's really seen as both. And so it's not as if the other institutions have fallen away, it's more that business has really come through more than the other institutions, particularly I think in the context of the pandemic. And if you look at the institutions across the last 10 years, you could see government has in many places, ground to a halt due to excessive partisanship, media has in many ways, turned into assess pool of ideological warfare. NGOs just haven't been seen as stepping up in these times of crisis. And so in many ways, business has been the most reliable agent of positive change in this country. And I think that's why it's rewarded with this trusted status.
Related article: People Place More Trust in Business
Ben DiPietro: You mentioned you've been tracking a lot of this since 2012. What have been the three biggest overarching trends report has found since then? And any thoughts on what you see coming ahead in the next three to five years that might bring with us and how will AI impact this whole notion of truth and trust?
Dr. David M. Bersoff: Yeah, let me pull that apart a little bit. Actually I want to cheat a little and call out four trends rather than three. Let me start with number one, the worsening trust gap between the more affluent top 15% of the population and everybody else. So the gap, the trust gap, in institutions between the more affluent and everybody else was 16 points this year, which is tied for the record. But what's even more telling is that back in 2012, there's 22 countries that we can track all the way back to 2012, back in 2012, only seven out of 22 countries had a double digit trust gap between the top 50% of the population and everybody else. In 2021, 21 out of our 22 countries had that double digit trust gap. And I think part of the reason why we're seeing that trust gap broadening across more markets is because of what's known as that case shape recovery.
So we're in the middle of this pandemic and what we're finding is that certain people are recovering more quickly than others. Some people at least, from a financial point of view are almost whole, if not even a little better off than they were while other parts of the population are stagnating or even doing worse than they were a year ago. And part of the problem or the issue of why this is important is that if you have two segments of the population and there are different trajectories, so one is looking towards a future that looks good. The other is looking towards the future that doesn't look so good, suddenly you have two big constituents in the population that are not equally invested either in change or in protecting the status quo. And that's destabilizing when you have a society that can't decide whether it needs to change this dichotomy, the sense in which I have more of a investment in keeping things the way they are, and you have more of an investment in changing. That's the wedge that pop opens the door on populism.
That's why we're seeing populism cropping up in countries around the world, because there is this disconnect where some people are differentially benefiting from what's happening from the status quo. Others are seeing themselves left out, left behind and are anxious for change. That's the first one. The second one is the change in flow of influence and information from a top down dynamic to a more horizontal pattern. So these days, and this wasn't always true, you're more likely to be convinced of something by your peers or by people you know than by experts and authority figures. And this, in my opinion, has actually been a debt negative for trust and stability and has hastened trend number three, which is one of the big themes this year in our study, which is the breakdown of the information ecosystem.
So we're in the midst of an infodemic, which has become so extreme. We describe the world as being in a state of information bankruptcy, basically our information ecosystem, it's structurally unsound, it's built on a flawed business model and it's unable to meet its obligations. Now, this idea that the information ecosystem has been compromised by bad actors isn't really new. We've had a question in the survey for several years now about, do you worry about fake news and false information being used as a weapon? And globally, we find that about seven to 10 people do fear the weaponization of misinformation, but what's changed in the last year or so is assumptions or who we think the weaponizers of fake news and misinformation largely are. I think two, three, four years ago, people were thinking about Eastern European troll farms or cyber terrorists or Asian bot shops.
And what's been made apparent by the pandemic, the fear around local issues such as the election in the US is that these days misinformation is largely a home grown phenomenon. And as a reflection of this, and this is one of these data points that really just have me shaking my head. More people today are worried that their own government leaders are purposely misleading them than they are, that other countries are contaminating our media with false news. So this whole questioning of the media inputs, of the information ecosystem, trust in media, trust in information and data, this is huge. And it's really come perse forth this year as a major problem. And then the fourth trend that I'll mention is this anointing of business. So we've been talking for years, that business needs to become engaged in social issues, they need to be citizens of society, they need to look beyond their bottom line. That's been talked about under the context of things like purpose or CSR, but what we're really seeing is the evolution of that into something much more extreme.
And what we're seeing this year and last year a little bit, is that people have placed business on a pedestal and conferred upon it the responsibility for our future, as well as all the hopes and expectations that responsibility entails. This is way more than being a business that does good, this is business being called upon in many ways to be our savior, to bail us out. As the only adult left in the room, we're looking to business to fill leadership void left by media and NGOs and government. And the fact remains that business just isn't designed for that and CEOs aren't trained for that task. So while opting out of being the people's hero is not really an option, success is also not a shirt. I think it's going to be a major existential crisis for business over the next several years of can they live up to these new hopes and expectations and aspirations that have been heaped upon them and heaped upon them because they are the only institution that's both trusted and competent.
So those are the four big trends that we've been tracking that have all in some ways come to us for this year.
Related Article: Culture and Trust are Keys to Confronting AI Challenges and Opportunities
Ben DiPietro: It's interesting you say that because your report also found that most of the respondents identified "my employer" as the institution that they trusted most, which again, refers to the two you're talking about. So what responsibilities do employers then have in virtue of that trusted status? You mentioned they're not necessarily equipped for this nor trained. Is that going to become a necessary part of this job to be a leader you're going to have to navigate this world. And so you better learn it to be qualified to get the positions?
Dr. David M. Bersoff: So essentially at the level of business first, before I get down into the employer, the fundamental role of business is in the midst of being redefined to include expectations of contributing to society beyond supplying, products, jobs, and philanthropic dollars, what I was referring to. As I also said, these expectations are way beyond what can be accomplished with CSR as a bolt on corporate function. And so what we're seeing is that doing good and being values driven is basically becoming an intrinsic part of what it means to be a trusted company and good public standing. So as a result, values and purpose are going to have to become part of the corporate DNA of any enterprise that hopes, And we've got data to support all of this, that hopes to retain customers over the long-term, keep their best employees and attract investment money. All of those stakeholders are looking for business to do this. It's not a choice for business, it's not a choice for CEOs.
That said, within business, my employer holds a very privileged position of trust. We find that 76% of people trust their employer to do what is right. And that's a number that's been very stable over the past four years. So while we sometimes see some gyrations and trust associated with the other institutions, that trust in employer is high, consistent and rock solid. And I think it enjoys the special status for several reasons. First, the employer-employer relationship, it's a personal relationship. So you know your employer in general, they know you, it's a local relationship. It's a consistent presence in your daily life. And one of the things we're seeing these days is that trust has become more local. And third, you have leverage over your employer. So via collective action, employees do have the power to get their employers to change policies and get involved in issues. And these attributes all help to spawn and drive that trusting relationship.
But beyond that, what makes this relationship special and important is that employers have power, they have resources, they have exponentially greater wherewithal to get things done than I do as an individual. So this relationship between employer and employee is not just a close, trusting relationship, it's a personal relationship with a rich, connected and powerful other, and it's the only such relationship most people have in their lives. And so you can understand why there's so much emotional energy around the employer, and you can also understand why we are highlighting the importance of that relationship. Because this relationship is I've described it, it puts employers and I would argue a unique position to supply their employees with what they're currently seeking most ardently, which is trustworthy information, reassurance about their future and the opportunity to create positive change.
And these are becoming responsibilities of the employer to supply their employees with these things, which they can't get elsewhere. And in general, I think it's going to be difficult for untrusted institutions to rebuild trust in themselves in order to regrow trust needs a toehold. And from what I'm seeing, employers are that toehold and they really need to embrace that role. I think things are going to get better. The information problem is going to get addressed. Trust is going to be renewed, not so much from one grand gesture, but the actions of thousands of employers working with their employees and growing or regrowing that trust and faith in the system from the ground up.
Ben DiPietro: I'm wondering how you saw that last year obviously COVID has been here for a year now, we're recording in March. How has it affected people's trust in the societal institutions? And do you see it lasting or what's the lasting impact from that?
Dr. David M. Bersoff: Yeah, no, it's an interesting question. So we collect our trust data in October, November, and we really sit in January and of course, we released data in January of 2020, which of course, was prior to the pandemic, really becoming a reality, certainly in most of the Western countries. And then of course, it burst onto the scene and it had a huge impact on everything and every body. And so we went back out into the field to see what if anything the pandemic had done in terms of institutional trust. And what we found is that there was a trust search, trust in all the institutions actually went up and government in particular saw this big upward movement in trust. And it was actually at that point, the most trusted institution. Now, it's not unusual to see something like that in times like this it's that rallying around the flag idea or the circling the wagons that when you're in the midst of a crisis, people really rally around their institutions.
And for some, it's an act of faith, for some it's an act of hope, for some it's the product of psychological necessity because the prospect of living through a major crisis at the mercy of untrustworthy institutions is just a little too scary to contemplate. But the idea is you do tend to see trust surges around events like this. And then the question becomes, is that search a bubble or is that a real change in the status of that institute? So like I said, we went out mid year, we saw the surge. We asked ourselves, is that a bubble or not? We're back out in the field at the end of 2020, which was at that point, close to a year into the pandemic. And what we found is that faith or hope or psychological defense mechanism that had caused trust to go up had collapsed in the face of the realities of a pandemic that just wasn't being well-managed.
And as a result, the trust bubble burst and all of these institutions, which had this opportunity to burnish their image, they had this influx of faith and trust. Most of them squandered it, government squandered it more than any of the other institutions. But in general, that's been the story, that bubble has already burst to a large point. So the crisis itself increased trust, but how the institutions responded and reacted to that crisis has proven to not be up to the expectations of people. And that bubble has burst.
Ben DiPietro: I was struck mostly for, by the trust chasm you described. And I'm wondering, obviously, COVID, must've played into that some as well, what can be done to reduce that gap? And do you think it would ever be fully erased? Is there some way to get people together again on basic facts and at least understanding what the day of the week is or what time it is or anything?
Dr. David M. Bersoff: The trust gap, trust chasm, I don't think will ever be fully erased for the simple reason that that top 15%, the more educated, the more affluent, the more informed will always be in a better position to harvest the benefits of society or capitalize on the status quo. So there's always going to be a trust gap there, but what can and needs to be addressed is that the gap needs to be closed such that at least the top and the vast middle are not living in two separate trust realities. Because what we find in many markets is that the well-off are living in a world in which institutions are trustworthy and can be trusted while the mass population is living in a world where institutions are largely untrustworthy.
And that dual reality, again, feeds into two groups of people that aren't on the same page, that don't see the same needs, that don't see the same problems that need to be fixed, and you can't get anything done when you have that bifurcation difference of experience, different realities, societies, especially democracies tend to grind to a halt if there's too many people split between two different realities. In terms of how to address that, I think the first thing that needs to be done is a dismantling of the structural inequalities within society. So you don't get these K shape situations. You need to have a situation in which if there's prosperity, everybody is sharing in it. So maybe not to the same degree, the same level, but if the country's doing well, almost everybody in the country is doing well. If the country isn't doing well, then almost everybody in the country isn't doing well. And so it gets everyone on the same page, we're all in the same boat. When you've get that separation, that's a recipe for disaster. And that separation tends to be driven by structural inequalities.
And you see that around the issue of racism and structural inequalities around racism and how that basically pushes people off in two different trajectories. The society as a whole needs to address the issue of structural inequalities. And then the other thing that I think is important that societies aren't generally good at is change management. So we found in the 2020 barometer, actually, that 57% of respondents are worried that people like them are losing the respect and dignity that they once enjoyed in this country. And so, while I think part of the trust chasm is driven by economics, differential economics, structural inequalities, the other part of the trust chasm or another part of the trust chasm is driven by this sense among sizable number of people of being left behind, being left out, losing dignity, losing attention, not mattering anymore, not mattering anymore is huge.
People don't take that lying down, it's not something they can accept and feeling like you're being left out or left behind or not considered, that drives sense that the things aren't fair, that our institutions lack ethics, that I have to take all I can get now, without any concern for the future generations, it really moves people to extreme behavior. It moves them to selfishness. It moves them to scapegoating, immigrants, minorities. It really is a very pernicious element within society. And I would rank it second to the infodemic as an embedded attitude or perspective that's really making things unstable, unpleasant and leading into a lot of the polarization and polarity that we're seeing in society today.
Ben DiPietro: The barometer also breaks down findings by country and region, as it is worldwide. What are the biggest differences in trust between the US and China, the US and Europe, Latin America, and anything in these particular areas surprise you from the findings?
Dr. David M. Bersoff: Yeah, sure. Actually, can I just go back to, I wanted to finish my answer to the other question. So I detailed the aspect of social inequalities, and I explained the problem of people being left behind. And so the cure for people being left behind is really this idea of better change management. What our institutions need to do to increase their efficacy and foster a spirit of cooperation versus entrench against within society, they need to make change seem less threatening and more inclusive. And at the same time, they need to make the people who will inevitably be disrupted by change, feel as protected and respected as possible. Change is going to happen. Change has to happen. Change needs to happen. What we've traditionally been very bad at is managing that change, acknowledging that certain people aren't going to benefit from that change, that helping people see their place in this new future that we are creating and protecting those who will be hurt by the future.
Until we start doing that, you're going to continue to see that gap because change, progress, innovation is inevitable. We need to find a way of making that inevitable change less threatening big portions of the population in order to address that gap between the trustors and the non-trustors.
Ben DiPietro: It sounds like a big task for education, and we should committed that we make to it. They're all tied together that way. The barometer breaks down findings by country and region. So what are some of the biggest differences you see between trust in the US and trust in China and the US and Europe and Latin America?
Dr. David M. Bersoff: Sure. So we do look at trust by country and region, but that said, we don't really encourage looking at trust in one country versus trust in another country because there's different response tendencies at different parts of the world. And so you have a country like China, they tend to be more agreeable. They tend to agree with statements. They tend to use the higher ends of scales, et cetera. And so yes, there is a big trust difference between China and the US. China, when you look at the data, it looks to be a more trusting society and more trusting of its government. Now, part of that could be because China, they emerged more quickly from the pandemic, they had stronger economic growth, there's less governmental polarization preventing progress, but it's also likely partially due to the fact that as I said, the Chinese tend to be more positive than the Americans do.
But what I do find that's really interesting in terms of the US versus China, is that when you look at how the rest of the world perceives China and the US and the trustworthiness of the Chinese government and the US government, what you find is that neither of these most powerful countries in the world, the natural candidates for global leader in this time of crisis, neither one of them is trusted by the rest of the world. So here you have the two most logical countries to take a leadership position in the world. They have very different governments, very different political systems, very different histories, very different philosophies. And yet neither one has been able to win the confidence of the rest of the world. There is now this open position as the defacto global leader. And right now the two most logical suspects for occupying that position just are not from a position or from the point of view of trust, equipped to be in a leadership position.
Ben DiPietro: And the same for Europe and Latin America?
Dr. David M. Bersoff: One of the big dividing lines, it's not so much region as it is developing versus developed markets. So that's why you see some skews for North America and Western Europe versus Asia and other places we look at, it's not so much geography as developing versus developed. And what you find is that developed markets tend to be less trusting than developing markets and the people in those markets tend to be less positive. And I think part of the reason for that, we get people who are somewhat puzzled. It's like, well, life in America is so much better than life in India or life in China, how come our trust numbers aren't higher? And so I talk about the fact that when people are assessing how they're doing, they don't compare themselves, people in the US sitting around the dinner table, assessing how they're doing. They're not sitting there looking at their lives and saying, "Well, at least we're doing better than the Chinese." They're looking at their lives and they're saying, "Am I doing better than my parents? Are we doing better than we were doing five years ago?"
You compare yourself to other groups that are like you, or you at a previous point in time. And in some, in a country like the UK or France or the US, there's going to be more and more people saying, "You know what? My parents actually did better than I am, or you know what? I actually feel like I've lost ground over the last five or 10 years." That's going to lead you to distrust institutions, to lose faith in the system even if your benchmark day to day life is objectively higher or better than people in developing markets. But those people in developing markets, they're sitting around the dinner table and they're saying, "You know what? We have more freedoms than our parents and grandparents did. We're doing better than them. We're more educated or more advanced. We have more things. And you know what? We, as a family are doing better than we were five or 10 years ago." That does a lot to drive the sense that our institutions are trustworthy, the country's on the right track, things are okay, things are looking good.
And that results in some of these regional differences where the more developed countries just appear to be less trusting, less optimistic, less faith in the system, than some of these developing markets, even though the standard of living in those developing markets, isn't as high.
Ben DiPietro: It's a question of forward momentum, yeah. I guess if you're moving forward, you're feeling positive.
Dr. David M. Bersoff: Exactly. It really is about that momentum. It doesn't matter how well you're doing, if you see yourself going backwards, that's all you need. Then it's like, life sucks. And on the converse, if you see things moving up and getting better, you can absorb a lot of punishment, a lot of hardship when you're looking towards a future that's brighter than your present.
Ben DiPietro: I really enjoyed this. Let me get you out of here with one last question then, are you hopeful as you're speaking about hope for the future of truth and why or why not?
Dr. David M. Bersoff: So when I look towards the future in general, I keep in mind that this country survived McCarthyism and survived the Cold War, the Cuban Missile Crisis, unrest, lies and misinformation around the Vietnam War, the Civil Rights Movement and all the protests of the 60s. So the country has come through tough times and seemingly attractable differences in our values before, and so that, our history gives me hope. But to the point you were raising, I don't think that unless until we cure the infodemic and emerge from information bankruptcy, I don't see a way forward. And what that means at a foundational level, until the rewards in society. And those rewards could be money or power or influence until those rewards are greater for spreading truth than for spreading lies and are greater for facilitating cooperation rather than fomenting divisiveness, especially democracies, we're going to continue to founder and suffer and weaken our societies.
Certainly, I think business has a big role to play in fixing some of these problems, particularly around information, but ultimately, we also need government and media to start working again. And as bad as January 6th was as a watershed moment of distrust and misinformation, I still don't believe we hit rock bottom, even with that event yet. And I do worry that it might take an even bigger shock particularly to this country before we shake ourselves out of that, before there is a greater reward for truth over lies and for cooperation over polarization.
Related article: Three Ingredients for Fostering a Culture of Trust
Ben DiPietro: Certainly sobering as we go forward. And we joked before about agreeing on what day it is, but there are probably some people who would argue. It's scary.
Dr. David M. Bersoff: Absolutely.
Ben DiPietro: Hopefully, we'll figure this out as we go, but I want to thank you so much, David. This was really interesting and great. You guys do such a great job with this report and it's always a wealth of information. And I know our listeners are fascinated by it as well as I am. So thank you very much and stay safe. And we look forward to seeing you again in the future.
Dr. David M. Bersoff: You bet. Thank you.
Outro: We hope you enjoyed this episode. The Principal Podcast is brought to you by LRN. At LRN our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on apple podcasts, Stitcher, Google podcasts, or wherever you listen. And don't forget to leave us a review.
Cheryl Curbeam, chief risk and compliance officer at Corteva Agriscience, talks about her journey from engineer to compliance officer; how the pandemic has prompted changes to how her program operates; and how to find and grow a diverse group of talent for careers in the ethics and compliance profession.
“No longer can you just have a conversation with someone that sits next to you, or in the hallway. People have to be more intentional about it, so we have had to step up our messaging about the hotline.”
- Cheryl Curbeam
Cheryl Curbeam is the chief ethics and compliance officer for Corteva Agriscience, a global agriculture company that launched as a publicly traded company in June 2019. Cheryl leads a global team to implement a new ethics and compliance program that inclkudes the creation of its first Corteva Code of Conduct, an Ethics and Compliance Hotline, employee training and certification, compliance policies, and mobile app. Full disclosure: Corteva is an LRN partner, and we worked with Cheryl and her team in helping them create their code.
Prior to her career at Corteva, Cheryl had progressive leadership roles at DuPont including assignments in operations, sales and marketing, and compliance. She holds a master of science degree in mechanical engineering from Massachusetts Institute of Technology, and a Bachelor of Science in Mechanical Engineering from University of Tennessee. She is also a certified Corporate Compliance and Ethics Professional and Six Sigma Master Black Belt.
What You’ll Learn on This Episode:
[1:29] How has Curbeam’s career path led her to her current position at Corteva?
[3:23] How is Corteva’s E & C program structured and who does Curbeam report to?
[4:35] What are Corteva’s core values and how are they implemented in the structure of their E & C program?
[6:19] How has Covid changed the way that Corteva trains and communicates with their employees?
[9:28] What does Curbeam anticipate the lasting impact of Covid will be in the business world?
[10:37] How has Corteva conducted employee onboarding during the pandemic?
[11:34] What is Curbeam’s perspective on the call for racial justice during the summer of 2020?
[13:46] What can the E & C community do to promote more diversity?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
Transcription:
Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.
Ben DiPietro: Hello, everybody and welcome to another episode of season five of LRN's Principled Podcast. My name is Ben DiPietro. I'm the editor of LRN's E&C Pulse Newsletter. You can find that on our website, lrn.com, click the resources tab, and then click on the newsletter tab. And please sign up. We'd love to have you as a subscriber.
With me today is Cheryl Curbeam, the Chief Ethics and Compliance Officer for Corteva Agriscience, a global agriculture company that launched as a publicly traded company in June of 2019. Cheryl leads a global team to implement an ethics and compliance program that includes the creation of the company's first ever code of conduct, an ethics and compliance hotline, employee training and certifications, and a mobile app. Let's welcome, Cheryl. How are you today? And thank you for taking time.
Cheryl Curbeam: I am well. Thank you, Ben, for the opportunity to speak with you today.
Ben DiPietro: It's good to have you here. So tell us a bit about your journey in the world of ethics and compliance. How did you become interested in this? And tell us a little bit about the career path you've taken to get where you are now at Corteva.
Cheryl Curbeam: I would like to say that Corteva sells... People think we're an ad company, so that can mean a lot of different things, but I wanted to let you know that we sell seeds, we sell crop protection and digital solutions for farmers.
So how I started my journey is I'm a mechanical engineer by training, have both a bachelor's and master's in mechanical engineering. And so it's not likely that I would have ended up in ethics and compliance, but I spent the first third of my career in operations and aspirations and leadership assignments. The second third of my career was spent in sales and marketing, and I had some really fun jobs in sales and marketing. And one of those fun jobs was to provide and support the fibers and fabrics that go into firefighter clothing. It was one of the best jobs ever, but it required a lot of travel. And I was out of my home three out of the four weekends. I was gone 80% of the time. And around that time I got married and had children and it just became so challenging with the travel and managing my personal life.
And so I started to think about other career options for me. And then I looked for roles within the business because I love the sales and marketing side. So I started doing compliance for the business, which led to corporate compliance for the company that I was with. I was with Heritage Legacy Company [Ducon 00:02:56] at the time. And then I was asked to join Corteva in 2018, before we launched our company and I had the privilege of being promoted into the role for Chief ethics and Compliance Officer. And so I've added now data privacy to my responsibilities as well as enterprise risk management.
Ben DiPietro: And so tell us a little bit about the program then. You've basically clearly started everything. How is it structured and who do you report to?
Cheryl Curbeam: Our Ethics and Compliance Program is structured globally. So we have major commercial regions around the world. So we have an ethics and compliance officer in each of the major regions. So we have one for US and Canada. Another person covers Latin America. One covers Europe, one covers Africa, Middle East, and one covers Asia-Pacific. So, that's also the way that we're structured with data privacy. My role reports into the general counsel, who's also our board secretary. And then we also have a governance structure. So our executives sit on what we call our Ethics and Compliance Committee and we meet quarterly and they provide oversight for our program, for our policies and our initiatives. And then I also have regular updates with our board of directors. So, that's how we're structured.
Ben DiPietro: So tell us a bit about the company's core values and how those values are reflected in your culture and your code and the role that E&C plays then in disseminating those values and making sure everybody in the company knows of them and is working to adhere to them as much as they can.
Related article: Best Codes Drive and Reinforce Values, Ethics
Cheryl Curbeam: I really like that question because the purpose of our company, we think we're here to feed the world. And so the official purpose of our company is to enrich the lives of those who produce and those who consume and sharing progress for generations to come. And I love the part about our purpose being for not only for me, but for people that come behind me.
So everything we do kind of starts with our purpose, our code, which LRN helped us to develop. And our supplier code of conduct start with our purpose. And then we talk about our values. So we have six key values. One of the values is around be upstanding, which we have owned that in the ethics and compliance space, but the other ones are to enrich lives, to stand tall, to be curious, to build together, and to live safely. So our code is titled, We Are Upstanding. So, it's a flip on the value be upstanding. And everything that we do, all the courses that we launch through LRN start with We Are Upstanding. So that's one message that we keep core to us in ethics and compliance. And when we launch our annual training, we have a Be Upstanding month. And that month is, and we started this last year, dedicated to webinars and activities, and also just a fun and creative way to launch our annual training campaign.
Ben DiPietro: Obviously COVID is impacting you guys the way it's impacting everybody. How is it changing the way you try to maintain continuity in your messaging and training and support for employees?
Cheryl Curbeam: I think COVID has had an impact on everyone. And when you think about 2020, and some of the keywords and phrases, you think about pandemic, you think about Zoom, you think about racial reckoning, you think about the presidential election, all of those things in addition to COVID kind of have merged together and they will probably always be with us.
So it was a year for us and it still is a year of resilience. And so everything that we thought about for 2020 and 2021, everything has to be thought of in a virtual content. All of our training is now virtually delivered, but we've been very creative. We get to see the creativity of our employees, of how to not only title things, but make things interesting and interactive. And we've trained outside of our online training. Just in the webinar format, we've trained over 11,000 of our employees that way.
Another key shift for us and probably for all companies is how you conduct ethics investigations. Instead of flying to a location and conducting in-person interviews, we really had to shift the way that we interview and collect information so that it's in a virtual format. And we've had to even hire external investigations companies to help us and assist us with some of the more complex investigations.
And I think one of the key things that has changed is how we get employees to speak up and seek help and how we're able to detect issues in the workplace because no longer can you just have a conversation with someone that sits next to you or in the hallway, people have to be more intentional about it. And so we have had to step up our messaging around the use of the hotline, how it works, how it's managed by a third-party vendor. It's a great way to report things anonymously. Those are some of the key changes that we've had to really think about.
And the last thing I want to mention, I don't know if other companies had to deal with this, but we've had to really address the use of social media. And so with the monumental, I call it presidential election that we had in the US last year, people have felt free to share their opinions and ideas. And we certainly don't look at employee's personal social media accounts, but when issues are brought to us, we have to remind our employees that what they say and what they write, whether it's within the company, but also in social media has a reflection on who we are as a company. And so we've had to really think about sharing that message with our employees, that we are not actively looking at their social media, but what they say and what they write, reflect positively and negatively on our company.
Related article: Adapting to change: Training Your Global Virtual Workforce
Ben DiPietro: Beyond remote work then, what do you think would be the lasting legacy of this pandemic and the way it changes the role of ethics and compliance and the [inaudible 00:09:29]?
Cheryl Curbeam: My perspective is that let's face it, we're never going to be traveling at the same levels we were traveling before the pandemic. And so, we have to adjust. It's not just a temporary adjustment to a virtual and remote workforce. I think it's a permanent one. And we have to adjust and continue to communicate how the employees can speak up and seek help. So I don't think that's going to change either. And I think another lasting legacy which I spoke about is how we do investigations. So, that'll be a permanent change.
But I think the thing that I haven't really touched on is the hiring of talent, which I think is a real positive. I've had the pleasure of hiring three people on our team remotely. And I think what that does is you no longer have to restrict people to a geography to get great talent. And I think that's a great positive, that no longer will you have to require that people be in one of our three headquarter locations or be near one of our major global centers in order to be in ethics and compliance.
Ben DiPietro: How do you do the onboarding? It's sort of different now.
Cheryl Curbeam: That's another great question. So we do all of the talent scouting virtually. We do the interview panels virtually. People meet into a Zoom room. We also onboard them virtually. We have a phenomenal ethics and compliance team, but we also have phenomenal IT support. And so they shift them the computer, they set up a virtual onboarding session for their computer and phone. We set up mentoring appointments virtually. So everything that we do to onboard new employees is virtual.
Ben DiPietro: You mentioned a little bit before last year was a bit of a strange one, certainly politically. And also part of that was the cry for racial justice that led to worldwide protests following the killing of George Floyd by Minneapolis police, which no doubt effected you as a woman of color. Can you talk about since all that's happened, what are you thinking and are you hopeful that it will lead to some meaningful change?
Cheryl Curbeam: So for the audience, yes, I am a black woman. I'm the proud mom of two black teenage boys. I'm married to a black husband. So for me, the killing of Mr. Floyd was one of several horrible killings that we've had to witness, unfortunately, through social media or through the news channels. Because I deal with this probably every day, for many black families this is the reality that we have to deal with about personal safety. I am hopeful. I'm very hopeful. My faith gives me a lot of hope. It was deeply painful to actually witness Mr. Floyd being killed. I think one of the fortunate parts, if you can even say that was that other people got to witness it too. And what gave me hope was that the global community responded, they responded by using peaceful protests. And really companies responded as well by making hopefully meaningful change about the way we tend to look at people.
And so I've been doing a lot of reading and reflection on my own, but I have a great homework assignment for anyone that is listening and someone who wants to read a good book. So I've been digesting a book called Caste by Isabel Wilkerson, and it really parallels the US culture with Indian culture, with some very horrible things that happened during the Holocaust. And it just, it really provides a picture on structural or systemic racism just to give an understanding of how we got to where we were to see how big the problem is. And I am very hopeful that once you understand the problem, you can fix the problem.
Ben DiPietro: Yes, let's hope as we go forward here. Let me ask you one final question and I thank you again for taking time with us today. Really appreciate it. You mentioned businesses sort of have stepped up to a certain degree after this season of racial awareness. What can the E&C community do now to bring more diversity to its ranks?
Cheryl Curbeam: Yeah, so we means me. So what can I do? What can others do? Ethics and compliance unfortunately, isn't one of those careers that many people aspire to right out of the university setting. We typically don't hire current college graduates into these roles. I think there's a wonderful opportunity to either bring in new talent from the outside or develop talent from within the company. I'm a great example of someone who was promoted from within my company. I had a great leader who saw that I could potentially do compliance work for a business and then for the company and then for Corteva. So developing talent from within is a great way to bring diversity into the ranks of ethics and compliance.
Cheryl Curbeam: And another great way that I have also used is to hire external talent and to be very intentional about having a diverse set of candidates to draw from, to personally interview, to panel interview, and to also make sure that we have a diverse set of people looking at the candidates. I recently became aware of a few organizations that we have used to seek out new talent, the National Association of Black Compliance and Risk Management Professionals is one of them. There's several women in compliance organizations. And just really intentionally finding candidates that meet our criteria, I think is one way to really help, to find and broaden the pool of talent for ethics and compliance.
Ben DiPietro: That's great to hear that, they're actually creating those kind of associations and doing that networking to help bring their profiles up so people know they're there and to have people make sure that they're being interviewed and getting those opportunities. With that, I want to thank you so much for being with us. And I look forward to seeing you again when we're all allowed to be outside. Until then, stay safe, Cheryl.
Cheryl Curbeam: Thank you, Ben. Thanks for the opportunity.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcasts on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
Eric Flesch, CEO of Colombia-based oil and gas company Promigas, talks with LRN’s Ben DiPietro about being an ethics and compliance leader in Latin America, and why it is so important he lead by example when it comes to asking employees to adopt and live the company’s seven core values.
“The seven values that we have in our company are respect, integrity, solidarity, responsibility, commitment, excellence, and entrepreneurship. So every person has to not only understand what each of those values means, but they also just accept them...and work on a day-by-day basis with those values.”
- Eric Flesch
Previous to becoming the President of Promigas, Eric Flesch held the position of president at the Argos Corporation in the US, a company that he was involved with for 39 years through various positions and in which, since 2005, he played a strategic role in the expansion and growth of the organization in the US. Flesch has a degree in civil engineering from Universidad del Norte, with an MBA in finance and marketing from West Coast University. He also has taken executive leadership courses from institutions such as Stanford, Harvard, Berkeley, and Northwestern, among others.
What You’ll Learn on This Episode:
[1:19] How has Flesch’s career path led him to his current position at Promigas?
[3:07] What are the values that form Promigas’ culture and how does Flesch instill these values in new employees?
[5:39] How important is it that the employees hear from Eric Flesch and other leadership about the importance of ethics and values?
[7:08] Why does Promigas place such a high importance on ethics while other companies in Latin America seem not to?
[10:06] How has Promigas changed as a result of the cultural assessments they have done with LRN?
[11:11] Has Flesch seen changes in the assessment process throughout the years?
[11:42] How has Covid impacted Flesch’s work and what are the long-term changes that he anticipates as a result of Covid-19?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
Transcription:
Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.
Ben DiPietro: Hello everyone and welcome to another episode of season five of LRN Principled Podcast. My name is Ben DiPietro. I'm the editor of LRN's E&C Pulse Newsletter. You can find that on our website, lrn.com. Click on the resources tab and click on newsletter. We hope you can sign up, we'd love to have you. With me today is Eric Flesch. He is the CEO of Promigas, a Colombia base oil and gas company. We are very glad to have him with us today. Welcome Eric, and thanks for taking some time to join us.
Eric Flesch: Hey Ben, how are you? Thank you for this invitation. I'm very pleased to join this podcast with you and all your team.
Ben DiPietro: Good. We're glad to have you here. Tell our listeners a little bit about Promigas, what it does, where it operates and how long you've been CEO and give us a brief rundown of your career path and how it's led you to where you are now.
Eric Flesch: Promigas is, I will say the largest public company, gas company in Colombia. It's listed in the stock market, was founded 45 years ago, and actually it has operations in Colombia and Peru. We are a cluster of 20 companies that, let's say, report to Promigas, are part of the Promigas group of companies. And basically we are in the transportation, the gas transportation and gas distribution business, also in the power distribution and gas services, engineering, of course, for gas projects. So we are, let's say, a company that leads the gas market in the transportation and gas distribution business in Colombia. Promigas is based in the main office in Barranquilla, which is on the Caribbean, on the north coast of Colombia. But we have other offices for our companies throughout the whole country. And of course, in Peru, in Lima and Trujillo also we have offices there. I joined Promigas almost three years ago. So my background, I'm still an engineer. I worked many, many years in other industries, in cement. Some of those years of experience were in the US and now I'm back in Colombia almost as I said before, three years ago, and leading this company.
Ben DiPietro: Interesting journey that you've taken then. Tell us a little bit about the values that form the foundation of Promigas' culture. How do you instill these values in employees, especially new employees as they come on board?
Eric Flesch: Promigas, one of the main focus of the company is to have a very strong corporate governance. And as part of it, we have our values which are very important for every employee. Not only to understand what those means, but also to take them, to take a lead at those. The seven values that we have in our company are integrity, solidarity, responsibility, commitment, excellence, and entrepreneurship. So every person has just, not only to understand what each of those values mean, but also just they accept them, they declare as part of the company that they work in the day-to-day basis with those values. And of course, we, in our, in the way we perform, in the way we think, in the way we make decisions, those values are part of it. It's not only a theory that is in a PowerPoint is something that is part of us, part of our DNA.
Related Article: 6 Steps To Using Integrity And Compliance To Create A Culture Of Ethics. - Interactive Services
So every person in the company, which in total, we are over 3000 people in the cluster of 20 companies, as part of Promigas, they take those values as part of each one of them. And in our decisions, in our day-to-day is a natural part of our work. So, we feel very pleased that this is the way we work. And we periodically twice a year, three times a year, we just train our people and we have some kind of, let's say training sessions or conversations where we refresh those values. So, I will say proudly that everybody, all our people over 3000, they take those values as part of them. And they take it for every decision and every performance we do in our company.
Ben DiPietro: So how important then is it, that the employees hear from yourself and the other senior leadership and the board about the importance of ethics and values and creating the culture of compliance, transparency, and diversity that you're aiming to do?
Eric Flesch: It is extremely important, leadership means that the leader of the company in this case, myself has to in some way be an example about how to perform in the company and I like to be very close to each one of our employees, we have a plan to have a corporate video conference every quarter, over 1000, sometimes over 2000 of our employees can join in our video conference where we share the results of our company. We share our projects, the way we think is we are going to in the future, et cetera, et cetera. And also as part of these conversations our values and we like to listen to our employees, they ask questions and we are very open and we encourage to have a very close relationship with each one of our employees. That's the kind of management we deploy in Promigas everyday.
Ben DiPietro: Why does the company then place such a high importance on ethics as not as many companies in Latin America seem to, and what types of investments do you make in your E&C program to ensure it has the capability and gravitas to enact the agenda that you're setting out. And how has this differentiation paid off for you on the business side of the operation?
Eric Flesch: I would say Latin America and especially Colombia, which is part of the Caribbean, Latinos. The Latino culture is more informal. And in some way, if you compare the culture with any other company in Europe or the US, the DNA of a person is definitely totally different. So, we respect that culture, the natural culture of every person, but we don't negotiate and we encourage all of our employees, every employee to take the corporate culture. So we tell them look, we respect the natural culture, we respect that you like to dance, or you like to sing or you like to be outspoken, you like to be Latino, be Caribbean, that's okay. But regarding our corporation, we have with corporate culture, and this is what we would like to be, and this is what we like just to work with you along the coming years.
And those values are something that we invite everybody to take them and we implement training sessions to make sure everybody understands, everybody agrees. If anyone has a question, we make sure through, let's say tests, very friendly tests on the computers to people to respond, case studies, et cetera, where we differentiate the way we should act, we should make decisions we should perform. And we are very, let's say jealous or we're very strict that anyone has the perfect understanding of our ethics in the company.
As part of our corporate governance, this is a key piece. We are listed in the stock market in Colombia, also we issue bonds internationally. Two years ago, we issued some bonds in the US very successfully. And as part of these results, as part of this culture, our company is very well valued and the pay-off is that, we can just go and launch some bonds or launch some kind of, let's say programs that the market takes, because our company right now enjoys a very high reputation, as part of the ethics, as part of the corporate governance, which is very strong and is an example for any company in Latin America and the region.
Related Article: Key Role For E&C In Promoting Environmental, Social, Governance
Ben DiPietro: To that end, Promigas has been a long-time partner with LRN and we've helped you conduct three cultural assessments over the past seven years. How has your company changed as a result of these assessments? What have you learned about your culture from these assessments that surprised you either in a good way or bad way?
Eric Flesch: You're right. In the last seven years, we have had those assessments and every time our results are better and better and better. That is very encouraging for us because we made sure that by having our people with a perfect understanding on ethics, perfect understanding on how to behave in the company and understanding the corporate culture, this is for Promigas very, very important to let us just think internationally. As I said before, to do things like bond issues and all those kinds of things. So we see that paid off. And of course, by measuring the way we are progressing, we just adjust our programs, just to keep that track of getting better and better results on those measures.
Ben DiPietro: Have you seen some changes in the questioning? Has it been the same assessment each time? How is that assessment part of it evolved if you have?
Eric Flesch: We have seen some adjustments and for good and this is a feedback, constant feedback on our programs. And of course, this led in Promigas to get better results on the program itself.
Ben DiPietro: Obviously COVID-19 is changing the way we all work, live and interact. How has it changed the way you're doing your job? And what do you think will be the lasting impacts that occur because of this pandemic, as it relates to working in offices and just doing business?
Eric Flesch: Well, this COVID pandemic is something that no one had it in mind before. It was some thinkable that these would have had happened, but happened. And of course, when we realized last March 2020 about the pandemic, we made several decisions. First, we wanted to just ensure that there were workers, our employees, to have a good health just to protect them and to protect their families. So, we decided to organize everybody to work from home office and Promigas was supplying and was supporting to have everybody in their homes, their computer, their chairs. The ergonomic chairs they use in the office, the modem, the internet, et cetera to have a very good communication. Second, our other target we have at the moment was to ensure that we were rendering a good public service, transmitting gas, to all the industry, the commerce, and the residents in Colombia and Peru. As of today, after almost a year of this pandemic, I can say proudly that our service has been excellent.
We haven't had any trouble, we haven't had any interruption at all. And that was a result of our plan just to have everybody working with a good communication as if we were in our office, like normally. So the mutual work, I would say, has been outstanding the way we have done that as of today. Last, we focused on the communities in Colombia, Peru. Colombia and Peru are countries where poverty is high. And there are communities where we take gas to some regions in Colombia with a huge needs. And we decided to give our support by donations. So we decided to donate around $7 million, 6 million of that to Colombia and around 1 million to Peru, basically for three things, one to the health, let's say, the employees to have all the PPEs, second to support hospitals to buy respirators, and third to buy and to support rural communities by giving them basic needs like food or clothes or whatever that they would need at home.
Related Article: Covid: Doing What’s Right Requires Trust, Connection
So we decided to do that and in both countries, Colombia and Peru and everybody, those communities were very, very grateful with Promigas. This is part of what Promigas work with communities in the past before. Not by giving those high donations but we are also part of those communities and we are just trying to give all of our support to them by offering [inaudible 00:14:59], by helping kids to learn by building schools, et cetera, et cetera. So those were the main three things we decided.
And since that moment, March of 2020, up to now, we have still about 65% of our employees working in home offices. And then the others who are coming to the office, we have all the plan to keep them protected, not to put them at risk of getting infected. So all of that value of safety by having all those guidance on health and all those checkups and everything, we just follow that in a very strict way. That's the new, let's say, work that we adjusted our company mutually and so far, I would say we have been very, very successful and we have to be hope that after, we have now the vaccine in the near future, gradually we could come back again to the office to work as it was the normal work before.
Ben DiPietro: Yeah. It's hard to believe it's been a year already. It's amazing. Yeah. It seems like so much longer in a lot of ways. That's a be nice to get back out and hopefully soon. I want to thank you again for taking time with us. I appreciate it. And I hope you stay well and safe until we can all get vaccinated and get back out into the world. So, thank you very much, Eric. We appreciate you.
Eric Flesch: Thank you for your invitation, Ben. It has been a pleasure just to be with you and anytime you're more than welcome.
Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
Compliance executive and board and executive advisor Tiffany Archer of Panasonic Avionics shares how her study of psychology underpins her approach to ethics and compliance; what the differences are between diversity, equity, and inclusion, and why those distinctions matter; and how a company needs to look “below the iceberg” to find its true culture.
“It’s critical that we take time to get to know and understand our employee base, to uncover their values and beliefs that underlie they behaviors. When you’re armed with that information, you’re able to stand up meaningful, relevant, and actionable plans to advance an organization’s diversity, equity, and inclusion initiatives.”
- Tiffany Archer
Tiffany Archer is a board and executive advisor, ethics and compliance officer, regulatory attorney, and D&I nonprofit advisory board/faculty member with 18+ years in Fortune 500 companies and AmLaw 100 law firms. Today, she is on the compliance leadership team for Panasonic Avionics Corporation, the global leader for in-flight entertainment and communications, providing solutions to 300+ airlines. At PAC, Tiffany, a strategic and practical business leader, is the lead ethics and compliance attorney for the Americas and Europe.
Tiffany has been a compliance lead for teams up to 500+ internal stakeholders (Audit, Finance, Trade Compliance, IT, and HR), outside counsel, and vendors. She has led the design of global compliance programs impacting 10+ countries, as well as cross-border internal investigations. Her focus includes the Foreign Corrupt Practices Act (FCPA), Anti-Money Laundering (AML), Bank Secrecy Act (BSA), U.K. Bribery Act, and Anti-Kickback Statutes. As part of her regulatory relations and enforcement actions work, she has developed legal strategies and navigated inquiries from DOJ, SEC, FDA, FINRA, OFAC, and others.
Tiffany is a co-chair of NYCBA’s General Corporate Ethics and Compliance Sub-Committee, and a member of NYCBA’s Compliance Committee. She was a 2020 Finalist in Compliance Week’s Excellence in Compliance Award for Anti-Corruption and featured in Modern Counsel. She is an active speaker and author, with 7+ events by Ethisphere: The Global Ethics Summit, CenterForce USA, LEC Experience LATAM (Brazil), and others, as well as 5+ articles in International Financial Law Review, New York Law Journal, and more. She has been a guest lecturer at 3 law schools.
Before law school, Tiffany served in world-class financial services and consulting institutions, where she worked at the intersection of data, risk management, and operations at the inception of Big Data and Artificial Intelligence (AI). She draws passion and excitement from analyzing the ever-evolving legal, ethics and compliance space through a behavioral science lens, in her efforts to combat financial crime and mitigate risk.
What You’ll Learn on This Episode:
[1:22] How has Archer’s career path led her to her current position at Panasonic Avionics?
[3:29] What does Panasonic Avionics do and what kind of work does the E & C program do to promote their culture?
[6:01] What is Archer’s perspective on diversity, equity and inclusion?
[9:58] What are some things that companies can do to improve their diversity, equity and inclusion programs?
[12:56] What role do company boards play in forwarding the discussion on diversity, equity and inclusion
[13:56] What are the next steps for advancing racial justice from a business perspective?
[17:33] How has Covid impacted Archer’s work and what is her focus moving forward?
[20:33] Who are the mentors in Archer’s career path and what advice would she give to someone wanting to get into the E & C field?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
Transcription:
Speaker 1:
Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.
Ben DiPietro:
Hello everybody, and welcome to another episode of season five of LRN's Principled Podcast. My name is Ben DiPietro. I'm the editor of LRN E&C Pulse newsletter. You can find that by going to lrn.com, clicking on the resources tab, and then clicking on the newsletters tab, if you can subscribe we'd love to have you.
With us today is Tiffany Archer. She's a board and executive advisor and ethics and compliance officer, a regulatory attorney, and a faculty member with more than 18 years experience in Fortune 500 companies, and AmLaw 100 law firms. Today, she's on the compliance leadership team at Panasonic Avionics Corporation, global leader for in-flight entertainment and communications. Welcome, Tiffany, glad to have you with us today.
Tiffany Archer: Thank you so much, Ben. I'm really excited to be here.
Ben DiPietro: So tell us a little bit about how you became interested in ethics and compliance. Then take us through your journey that's led you to your current role at Panasonic Avionics.
Tiffany Archer: First, I've always been a people person and incredibly fascinated by what it is that makes them tick. So while in college, I chose to major in psychology to learn more about human behaviors, motivations, mental states, decision-making processes. Later went on to law school and after graduating, I joined a major international law firm where I specialized in white collar crime and securities enforcement. So of course, my cases focused on corruption, bribery, money laundering, and other heavily regulated conduct. I was always interested in digging into the why, behind the decisions that these individuals or corporations made. And also to look a little more into what it is that really motivated the behaviors that led them down the path of wrongful conduct. So after nearly six years in private practice, I decided to switch gears and I moved in-house and have since held multiple compliance roles. The passion that I've always had for psychology and for connecting with, and understanding people is a key pillar of my personal compliance practice.
Interestingly, many people consider compliance officers as police officers of sorts. Frankly, it's not unusual for the compliance function to be referred to as the department of no. With that in mind, I prefer to take a people centric and empathetic approach to compliance. My priority is to connect with people, learn more about their values and their beliefs, and really use that information to guide their behaviors so that they can make ethical decisions, and do the right thing even when no one else is looking. So ultimately on my compliance journey, I landed at Panasonic Avionics, where I'm currently the regional ethics and compliance officer and corporate counsel for our Europe and Americas regions.
Ben DiPietro: Tell us a little bit about Panasonic Avionics and what it does? Then how your compliance team works to help create that culture you're talking about. Then how do you measure the success of your team in that particular area?
Related Article: 6 Ways Compliance Training Can Measure Employee Performance
Tiffany Archer: Sure. So Panasonic Avionics manufacturers in flight entertainment systems. Essentially those are the TV screens that you see on the seat backs of airplanes. We also provide connectivity services and then on the ground engineering support. Our focus is on innovation and most importantly, providing the best possible passenger experience. To bridge the chasm between compliance and culture within Panasonic, we partner very closely with our chief culture officer. One of the tools I would want to highlight here today is to measure the culture, we use anonymous pulse surveys, which are sent out quarterly. Essentially the purpose of those is to check the vitals on our employee population, find out how they feel about the culture of the company. Then we take those actionable data points from the surveys and use them to address concerns that intersect with the company culture. And we formulate ways to make improvements.
Our chief culture officer does an incredible job of keeping our employees informed. I think it's quite clever actually. After each survey she sends out what's called a "So what, now what?" message. Essentially, what she's communicating is through this survey you've identified, "So what are the issues or the problems that you'd like addressed?" And "Now what?" is how she plans to put into effect initiatives or procedures to address those concerns. Panasonic's Compliance Department's mantra is compliance is our foundation. So not only do we measure our success by the implementation of the data points from the surveys, but we also measure it through our stakeholder satisfaction with our responsiveness to their needs.
Ben DiPietro: That “So what, now what?” is really interesting because it shows the people that you're listening to them. That's so much more important to building that trust. That's going to get you to create the culture you're trying to achieve.
Tiffany Archer: It's really about keeping those lines of communication open. I think our chief culture officer's initiative with the “so what, now what?” really makes people not only see that she's listening and that we're listening, but that we're actively responding. So it's really important to keep that dialogue open and to continue to show forward progress.
Related Article: Building A Speak-Up Culture
Ben DiPietro: So I know you have a big interest in matters of diversity, equity, inclusion. We both last year we're part of an LRN Consero round table on that topic. At the time I asked you about the differences between the D, the E, and the I, in that equation. I thought your answer was really excellent, and I think our audience would love to hear what you have to say about that.
Tiffany Archer: Thank you, Ben, for highlighting this. Diversity equity and inclusion is such an important initiative and movement for me. Thank you for giving me the opportunity to talk a little bit more about what those letters mean to me, specifically. So not only are there differences in what the D diversity, E equity, and I inclusion pillars represent, each word also has a distinct impact on an organization's initiatives. Starting first with diversity, right? The focus is on creating an environment that's representative of the intersectionality between gender, race, sex, age, LGBTQIA, and many other identities. In my view, this pillar is particularly important because what many organizations I've seen do is have a one-dimensional perspective as it relates to that. For many of them, historically, everyone in the institution for the most part looks the same. They come from the same backgrounds, they belong potentially to the same country club. They went to the same schools I could go on but I think you get what I'm driving at.
The thing is it's not too late to attack this root cause. No doubt it will be challenging to make the shifts since people are so used to the status quo. What the leadership of these organizations should recognize is despite the rocky road ahead, having to pivot towards a more diverse culture should not be considered a penalty. In fact, it's an opportunity for growth and expansion, and new or different ideas and perspectives, which can ultimately lead to a transformative experience for the organization.
Now, under the equity pillar, the focus is more on fostering an environment where all employees have fair and equitable opportunities, right? They're looking for fairness when accessing resources, despite being amongst the majority who may not look like them. I thought it would be salient to use myself as an example here. I've spent much of my life competing with those who don't look like me, and for the listeners here today who may not know, I'm a Black woman of Jamaican descent, and I've always had to be the best and focus on not othering myself. There've been occasions where particular outcomes made me sit back and wonder, "Did I miss this opportunity or was I not selected? Or was I not appropriately rewarded because I don't look like the person that I was being compared against? I've definitely... I'll share a personal story here, walked into interviews where the interviewer was questioning whether I was in fact Tiffany Archer, because they didn't expect me to look-
Ben DiPietro: This is true.
Tiffany Archer: ... [crosstalk 00:08:52] but true. Sad, but true. But ultimately it shouldn't matter. You look like or what you sound like. The comparison should be on more substantive qualities and merit and what you bring to the table. Lastly, with the I. Inclusion, which is the practice of providing equal access to opportunities and resources for people who might otherwise be excluded or marginalized. The goal here is to create an environment where employees feel welcomed as a member of the organization. And that should be the priority. They want to be appreciated and recognized for who they are. And organizations, policies, and procedures should be carefully drafted to ensure that employees have that opportunity to feel that sense of belonging. One of my favorite quotes in this DEI realm is by Verna Myers, where she says diversity is being invited to the party and inclusion is being asked to dance. I like to add that equity would be allowing everyone the opportunity to actually pick the songs.
Ben DiPietro: So now that you've laid that out as the framework, what are two things companies can do to improve their D, E, and I programs? How does the company get started on this process?
Tiffany Archer: So first and foremost, leadership buy-in is paramount. Without a commitment from an involvement by leadership, employees will question how serious the organization is about undertaking this transformational process. Then secondly, companies have to commit to not applying a one-size-fits all approach or an off the shelf solution to address the myriad of D, E, and I issues that may exist. How does one get started? How does an organization tackle this? Frankly, we could probably have an entire podcast on this topic. But seriously Ben, many companies I'm seeing now they're forming task forces D, E, and I committees, retaining consultants all in an effort to kick off their transformational processes. I think these are helpful solutions, but only so long as that they're tailored for the company and its specific culture and values.
Related Article: Diversity, Equity, and Inclusion Cannot Be Just An Internal Intitiative
On the topic of culture, I want to highlight Edward Hall's culture, iceberg theory. I'm a huge proponent of his work. He was an anthropologist and a cross-cultural researcher who came up with this theory in 1976, on how you can address organizational culture. It's really quite simple, this theory. Basically, an organizational cultures like an iceberg, a very small portion of the culture, roughly 10% is exposed on the surface, right? Making these areas really easy to identify, and you can address in quick time any sorts of issues or problems you might see. But where the real work and the important cultural data points lie are below the surface. That's around 90%. These include things like cultural beliefs, people's ideas, thought patterns, their unconscious biases. So the real onus is on the D, E, and I team to engage their stakeholders in meaningful discussions, right? Gathering qualitative and quantitative data around behaviors, customs, core values, religious beliefs, and other characteristics.
An iceberg model shows that you can't judge a book by its cover or that 10% of the iceberg that's exposed. It's critical that we take the time to get to know and understand our employee base, to uncover their values and beliefs that underlie their behaviors. When you're armed with that information, you're able to stand up meaningful, relevant, and actionable plans to advance an organization's diversity equity and inclusion initiatives. So the big takeaway is digging deeper into the layers of the iceberg will allow the team to learn the challenges and pain points in the diversity equity inclusion program, and begin that longer journey of creating an action plan that specifically meets the needs of the employee population.
Ben DiPietro: That sounds like where maybe the board needs to get in. So what role does the board play in folding this discussion and getting deeper down into that iceberg?
Tiffany Archer: Well, again, as I said earlier board involvement and commitment and buy-in is key. We need board members to echo the same sentiment and messaging. We need the board to acknowledge that this process may be a long, arduous, challenging process, but we're committed to that process. I think also the board needs to echo the sentiment that it's going to take a lot of work, and despite the obstacles we're going to commit to moving forward. So I think, not only should leadership be doing that but the board should also have an active role in making sure that there's continuous forward progress in connection with these initiatives.
Ben DiPietro: Pushing forward all this D, E, and I discussion too has been the support for racial justice that poured out into the streets all over the world last year, after the killings of George Floyd and so many others. What are the next steps to advance this issue from a business perspective and how can organizations help do their part here?
Related Article: Diversity, Equity, and Inclusion Cannot Be Just An Internal Intitiative
Tiffany Archer: This is a sad topic. These tragic events have put a spotlight on the importance of addressing a long-standing crisis affecting people of color. You know, you raise George Floyd. We all know he died because we watched as an officer kneeled on his neck until he could no longer breathe. Breonna Taylor, another person of color was wrongfully shot dead while asleep inside of her home. Rayshard Brooks, another person of color was shot in the back as he was approaching his vehicle where his children were sitting. These are all circumstances where police officers prioritized power over judgment or procedure. These killings amplified the deaths of people of color at the hands of police and elevated the prominence of racial inequality and disparity in policing. Each of these were victims of racial profiling and they each suffered unjust and untimely deaths. With that, I think it's so very important that we don't allow the passing of these events and individuals to become the passing of an opportunity to proactively address and work towards a solution to this historical problem.
As far as how businesses can help, they can play a key part in this by keeping these issues alive in front and center, and at top of mind. Again, we don't want the passing of these events to be a passing of an opportunity. I think they can leverage this opportunity by standing up as ambassadors of change. I would say that the reliance on two key guideposts would be really helpful in this realm. So the first one would be acknowledgment, right? And going back to leadership. It's paramount that leaders, the board, et cetera, are vocal about their commitment to the fight for racial equality, and enterprise-wide messaging would be the first step. Then secondly, action. You have to walk the talk if you truly have any interest in moving the needle. Even if the movement are just small steps, that forward cadence is critical.
Related Article: Showing Up: LRN Launches New Anti-Racism Course
So I advocate that businesses need to reassure employees that by really doing the work, not just through activities, like issue specific training on unconscious bias or diversity or sensitivity, but also focusing on developing equitable opportunities for growth and advancement, and not penalizing marginalized employees when they speak out. Again, as I said earlier, these will be difficult conversations and change will not happen overnight. But I think the most important thing that organizations need to demonstrate is that they're committed to the cause. Not only from the perspective of what is happening in the streets, but also from the perspective of what's happening within the walls of their offices.
Ben DiPietro: Also, I believe they have a role to play in helping to reform police as well. We had an excellent podcast at the beginning of season four, with Florence Chung. [Listen to the episode] She's a member of the Hetty Group. Her job is to make a bridge between communities and police departments and try and rebuild some of that trust. She was talking about how business can be such a great mentor for departments that don't understand how to execute change management and all these things that businesses do very well. So there's a definite tie in and a role for them to play.
Tiffany Archer: Yeah, absolutely.
Ben DiPietro: The other topic dominating our world is COVID-19. It's obviously having a big impact on companies and their ENC programs and cultures. What have you learned about your program as a result of the pandemic, and what should the focus be on as you move forward?
Tiffany Archer: A key theme that has come from this pandemic is the level of resilience our program has demonstrated. I know I'm proud of it, and I'm sure my colleagues would say the same thing. The aviation industry sadly suffered a tremendous blow between the travel bands, reduced flight capacity and routes, people's fear of flying because of COVID protocols. It's really been a challenging time, but nevertheless, our program's commitment to compliance has been unwavering. As I said earlier, compliance is our foundation. We've adapted to this new normal, and we've remained connected to our stakeholders. We make connecting virtually and regularly an absolute priority, and continue to reassure them that we are here to help. We've really tried our best to turn a dark and dreary time into something lighter and more personable and relatable. So for example, we've created a number of communication initiatives. One of which includes vignettes, where we have compliance character avatars work through COVID related or other challenging scenarios that our staff may face during this time. And kind of walk them through how best to deal with the circumstances or challenging decisions that they're confronted with.
We've also focused on reminding employees that PAC's culture is rooted in honesty and integrity. There really should be no fear of speaking up if there are any questions, or concerns or something just doesn't feel right. For me personally, I found that the most success is in reminding my stakeholders that I'm a confidant and a business partner. I spoke earlier about not just being the department of no. I really do, do my best to be empathetic, and compassionate, and understanding, that everybody is going through a different circumstance, and one person's challenge might be very different from another's. But it's critical to continue to have these discussions and these dialogues to instill trust. When they trust me, I know that if the need arises, they'll come to talk to me to work things through.
My role isn't to be a bottleneck it's to assess the facts, determine how to facilitate the outcome that they're looking for, but in a way that comports with our policies and procedures. Finally, I've spent a lot of time encouraging my stakeholders to consider their mental health, and their self-care regime, and to try to keep their spirits and mental fortitude up. We are all in this together. We are embracing the worst of times. But the key to getting to the other side is going to be through persistence and resilience, and that's the message that I try to communicate regularly.
Ben DiPietro: That is such an important topic, and it's going to be with us for years to come I believe as the fallout from all this. Now let me ask you one last question. I want to thank you so much for your time today. This has been so much fun. Tell me about one or two of your mentors who have helped you work your way up in this profession? Then offer a piece of advice to young people, looking for a career in ENC.
Tiffany Archer: One key mentor in my life is Marcia Narine Weldon. She went to Columbia University and is also a Harvard Law School grad. She's an attorney and a University of Miami Law School professor. She was formerly a chief compliance officer and deputy general counsel. She's played an integral role in really guiding me towards overcoming imposter syndrome, encouraging me to push past my internal boundaries. To continue to learn, to strive, to grow towards things that maybe I didn't think I was capable of, but because of her push and her encouragement I kind of stepped out and tried to do more.
The second part of your question you asked me, one tip I could give younger people who are looking for a career in ethics and compliance? I would say that for those who are looking to foster a culture of compliance and have a successful career in compliance, they need to keep in mind that their emotional quotient trumps their intelligence quotient, or their IQ every time. So you may have gone to the best school, or you may be the smartest person in the room, or have the most experience in a particular industry but if your emotional potion is weak, or if you lack the ability to demonstrate empathy and emotional intelligence, and develop strong relationships, and diffusing conflict, and building trust with your teams, all of that may prove to be a very challenging feat. So I would say EQ trumps IQ every time.
Ben DiPietro: That's a great way to end. Thank you so much, Tiffany. This was wonderful. I had such a good time talking with you. I look forward to working with you again in the future. Best of luck until then stay safe. Hopefully, we'll see you when we can all come outside and play.
Tiffany Archer: Thanks so much, Ben, and same to you. Stay safe and I'll see you on the other side.
Speaker 1: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire Principled Performance in global organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. If you enjoyed this episode, subscribe to our podcasts on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. Don't forget to leave us a review.
Hiltrud Werner, Volkswagen’s head of integrity and legal affairs, talks with LRN’s Ben DiPietro about the work to change the company’s culture after its reputation-damaging emissions scandal; how COVID-19 has made that task more difficult; about the need for quotas to get women on boards; and what E&C people can do to make themselves ready for board service.
“Everyone has understood that it’s not enough to overcome the diesel scandal; we need to be a scandal-free company...so we have to make sure that our culture is strong enough to make us robust, and that people will speak out if they have the feeling that something is wrong.”
- Hiltrud Werner
Hiltrud Dorothea Werner, a German business executive, joined Volkswagen in 2016 as the head of group audit, and was appointed in 2017 to the company’s Board of Management, responsible for integrity and legal affairs. In her role at Volkswagen, Werner oversees the compliance and integrity teams, and legal affairs. She is tasked with restructuring the compliance culture.
Werner is a member of the supervisory board of Audi AG, Porsche AG, Seat SA, and Tration SE. She began her career in 1991 at the consulting firm Softlab Gmbh as a project manager, and moved to BMW AG in 1996, where she held various positions in IT and audit. In 2011 Werner joined MAN SE as chief audit executive for the MAN Group, then became head of group internal audit at car supplier ZF Friedrichshafen in 2014.
Werner was born 1966 in East Germany, and earned an economics degree from Martin Luther University of Halle-Wittenberg. She is married and has two children.
What You’ll Learn on This Episode:
- [1:25] How has Werner’s career path led her to her current position at Volkswagen?
- [3:47] What did Werner learn about VW’s culture in light of the emissions issues? How did she and the board enact the changes they did?
- [5:21] What was the program that was in place at VW to encourage employees to come forward with concerns? How has it been strengthened?
- [6:58] How challenging was it to get buy in at VW on these new programs? How is progress measured?
- [8:47] How has COVID-19 impacted her planning and implementation of these goals?
- [10:23] As someone who sits on a board representing ethics and compliance, what are some things the E&C community does well and what are some areas for growth?
- [13:17] Germany recently passed a law mandating a percentage of board members be women. Are these laws necessary for diversification and why are so many companies resistant to this change?
- [15:15] What advice does Werner have for E&C professionals for what they need to do to make themselves attractive candidates for board service?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
LRN’s Ben DiPietro speaks with Juan Ignacio Diaz, chief compliance officer for the U.S. and Latin America for Siemens USA, about how COVID-19 has forever changed the workplace; the importance and necessity of being a champion for diversity, equity, and inclusion; and why the job of ethics and compliance isn’t for the faint of heart.
“This job never ends. When you are in compliance, you never say, ‘I did it, that’s it, we made it,’ because the risks are always there...It’s a constant effort that we have to do every single day.”
- Juan Ignacio Diaz
Juan Ignacio Díaz is senior vice president and chief compliance officer for Siemens USA, based in Atlanta. Diaz is responsible for the overall strategic management and direction of the compliance organization in the United States and Latin America. Since joining the company in 2008, Diaz has served in various functions in Mexico, Chile, and South America, first as general counsel for Chile and then for the South American region.
In 2013 he was appointed CEO for Siemens Chile, and was responsible for its mobility division. In 2018 he was named Siemens country CEO for Mexico, Central America, and the Caribbean. He served as board member for Siemens Gamesa Latin America, and as a vice president of the World Energy Council (Chile & Mexico).
Díaz holds an MBA from UAI-Chile, a master of laws from Duke University, and a law degree from UFT-Chile. Prior to joining Siemens, he worked as an attorney at Cleary Gottlieb Steen & Hamilton LLP, and before that as a lawyer for LATAM Airlines.
What You’ll Learn on this Episode:
- [1:30] What sparked Diaz’s interest in ethics and compliance, and how has his career path led to him to where he is?
- [3:30] What does Siemens do?
- [5:35] As the compliance chief for both the U.S. and Latin America, how does Diaz structure and operate the program for each region?
- [7:00] What are the biggest adjustments Diaz has made to his program in the past year due to the pandemic?
- [10:13] What diversity and inclusion policies has Diaz implemented, and what, if any, issues has he faced?
- [11:27] What can companies do to create a better pipeline for people of color and people with diverse backgrounds?
- [13:08] Who has been a mentor to Diaz, and how have those relationships helped him?
- [14:29] What advice does Diaz have for individuals interested in ethics and compliance?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
Amy Mertz Brown, chief compliance officer for Gurstel Law, talks with LRN's Ben DiPietro about the differences of practicing ethics and compliance for a government agency and in the private sector, and how growing up in Hawaii allows her to incorporate the Aloha Spirit into how she connects with people to spread the E&C message.
“That’s one of the biggest challenges in the private sector, bringing those entity-wide issues down to a personal level, and show folks why they need to follow those rules so that the organization can be on the right side of the compliance line.”
- Amy Mertz
Amy Mertz Brown has more than 30 years of experience as a leader, lawyer, and compliance professional. Since August 2020, she has served as Chief Compliance Officer at Gurstel Law Firm, P.C., a creditors’ rights firm headquartered in Golden Valley, Minn. She leads the firm’s regulatory compliance with federal and state law concerning creditors’ rights and consumer rights, as well as compliance with operational requirements for the firm.
Prior to joining Gurstel, Brown was chief compliance officer at the U.S. Securities and Exchange Commission, leading a team of compliance attorneys and professionals to oversee government ethics compliance for all agency employees. Prior, she developed and implemented the enterprise ethics and compliance program at the Consumer Financial Protection Bureau. She joined CFPB in its start-up phase and over the course of eight years helped to establish and build its in-house legal department.
Prior to CFPB, Brown served in legal department management positions at the U.S. Department of the Treasury, and the U.S. Small Business Administration. She is a 1988 graduate of Washington College of Law, The American University, Washington, D.C., and is licensed in California.
What You’ll Learn on This Episode:
- [1:42] What sparked Brown’s interest in ethics and compliance, and how has her career path led to her to where she is today?
- [5:00] What are some of the challenges of conducting E&C in a federal agency and what are the differences in doing E&C in the private sector?
- [7:26] What is Brown’s experience in joining Gurstel in the middle of the Covid-19 pandemic? How can E&C programs help employees who join a company in the middle of remote work?
- [11:05] From Brown’s experience in government transitions, what did she see taking place in the current presidential transition?
- [14:00] What changes does Brown anticipate as the United States is back under Democratic Party leadership?
- [15:46] What is the “Aloha Spirit,” and how can E&C officers help incorporate it into their work to make them more effective?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
Sandra Guerra, Managing Director of Better Governance, talks about how she went from journalist to corporate executive to board member, what attracted her to the field of ethics and compliance, and what we can learn from Vale S.A.’s two deadly dam collapses as it relates to corporate culture, and acting when issues are brought forward by whistleblowers.
“The main change that happened is precisely related to culture. Culture is something that takes time to change...this issue was so big, so important, that it opened eyes and hearts and minds of everyone, creating the condition to change the culture.”
- Sandra Guerra
One of the forerunners of corporate governance in Brazil, Sandra Guerra has served as a board member and chairperson of boards of directors since 1995. She presently is managing director of Better Governance, and sits on two public company boards. Her experience includes acting on the boards of listed, closed, family-controlled and state-controlled companies, as well as for nonprofit organizations in Brazil and abroad.
With 25 years of experience in corporate governance, Guerra was one of the founding members of the Brazilian Institute of Corporate Governance, where from 2012 to 2016 she was board chair. On two occasions, she was also a member of the board of directors of the International Corporate Governance Network, and served as a director of Global Reporting Initiative from 2017 to 2019.
Ever since she completed her Master's degree in business administration at FEA-USP in 2009, Guerra's research has been focused on the board of directors. Certified as a board member by the IBGC, and as a mediator by the CEDR-Center for Effective Dispute Resolution, Guerra continues to serve as a board member, currently at Vale S.A. and GranBio S.A. In 2017 she published the book, “The Black Box of Governance: Boards of Directors Revealed by Those Who Are Part of Them.”
What You’ll Learn on This Episode:
- [1:06] What sparked Guerra’s interest in ethics and compliance and how has her career path led to her to where she is today?
- [3:26] What sparked Guerra’s interest in corporate governance?
- [5:36] Why didn’t the first dam incident at Vale lead to changes to prevent the second one?
- [12:40] What can organizations learn from Vale’s experiences, especially as it relates to ethics and compliances issues?
- [15:20] Beyond Vale, what are some issues Guerra sees driving corporate boards in 2021?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
Maria Fernandez, head of ethics and compliance at Direct Energy, talks with LRN’s Ben DiPietro about her journey from law to ethics and compliance; how she uses her psychology degree to advance her program’s goals; and what companies need to do to turn their rhetoric about diversity, equity, and inclusion into action.
“Corporations are suddenly saying, ‘Oh, I need to stop talking about it, and I need to do something.’ If the corporations continue that focus, and people continue to push the need for diversity, equity, and inclusion, I think it will continue.” - Maria Fernandez
Maria Fernandez is vice president, head of ethics and compliance at Direct Energy. Maria supports Direct Energy’s lines of business to ensure they are operating in accordance with all relevant standards and regulations. Direct Energy is one of North America’s largest energy and energy-related service providers; it merged with NRG Energy in January 2021.
Prior to her position at Direct Energy, Fernandez worked at IBM where she held various leadership positions. including being responsible for the design and implementation of IBM’s global compliance program, communication strategies and employee training modules. She was senior regional counsel of Latin America for IBM, where she managed all legal and compliance matters for the Latin America organization.
Fernandez received her B.A. in psychology from Lehman College, and received her J.D. from Cornell Law. She is admitted to the bars of the states of New York and California, and the United States Supreme Court. She currently is vice chair of the membership committee of the President's Council of Cornell Women; and a member on the Houston Integrated School District district advisory committee.
What You’ll Learn on This Episode:
- [1:30] What sparked Fernandez’s interest in ethics and compliance and how has her career path led to her to where she is today?
- [5:00] How does Fernandez’s background in psychology help her in her current role?
- [6:26] What are the impacts to the energy industry and ethics and compliance as the world transitions away from fossil fuels?
- [8:36] How is Covid-19 impacting Direct Energy's ethics and compliance department?
- [10:58] Does Fernandez believe the current conversation about social justice will result in long-term change?
- [14:28] As a woman in compliance, what advice does Fernandez give to women, and specifically women of color, who are thinking about entering the field?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
Hui Chen is an internationally renowned leader in ethics and compliance who regularly consults with companies, and regulatory and enforcement authorities around the world, advising them on the design, implementation, and assessment of ethics and compliance programs. In addition to her work at Hui Chen Ethics, she serves as the chief integrity adviser to the attorney general for the state of Hawaii.
As the first-ever compliance counsel expert at the U.S. Department of Justice, Chen was the exclusive consultant to the federal prosecutors in the fraud section, evaluating corporate ethics and compliance programs in areas such as anti-fraud, anti-bribery, healthcare, quality control, manipulation of financial markets, process safety, and environmental protection.
Prior to joining the DOJ, Chen served as a senior compliance leader at companies including Microsoft, Pfizer, and Standard Chartered Bank.
“Listening is a very undervalued art in life. People yearn for respect, and the way you show respect is to listen to them. Listening doesn’t mean you agree with them, listening to people is you let them know you hear what they are saying...and that you sympathize with what they’re experiencing.”
- Hui Chen
What You’ll Learn on This Episode:
- [2:42] What sparked Chen’s interest in ethics and compliance, and how has her career path led to her to where she is?
- [8:08] What are the things companies most often do wrong when creating and managing their ethics and compliance programs? What do they do well?
- [11:00] As someone who has been involved in government, how does Chen anticipate the new U.S. administration will help build trust, and how can businesses help?
- [13:55] Looking back at the Covid-19 pandemic, what are the biggest changes Chen anticipates businesses adopting?
- [16:10] As someone of Asian ancestry, what are Chen’s personal experiences with racism, and how have those experiences shaped the way she views race relations in the U.S.?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
Michael Blackshear of Ryan Specialty Group talks with LRN’s Ben DiPietro about why he enjoys being a chief compliance officer, what risks he sees emerging for 2021, and his experiences as a Black man and the son of a police officer and a judge, and how that shapes his own encounters with prejudice.
“Using the passage of the Voting Rights Act of 1965 as the official end of Jim Crow, that’s 246 years of slavery plus 88 years of legal apartheid. This history has a direct impact on how our nation’s struggling to incorporate diversity, equity, and inclusion programs in our industry.”
- Michael Blackshear
Michael Blackshear serves as senior vice president and global chief compliance officer for insurer Ryan Specialty Group, with responsibilities for maintaining and growing an effective compliance and regulatory risk framework. He has over 29 years of financial service and executive experience in the areas of compliance and risk management.
Prior to joining RSG, Blackshear was the North America chief compliance officer for Chubb Insurance Group, developing and maintaining the company’s North American compliance program. Before that, he held various leadership roles with Marsh & McLennan Companies, focusing on compliance and government affairs. Before joining Marsh, he held compliance and risk management-oriented advisory roles for both KPMG and PricewaterhouseCoopers.
Blackshear, recently named in Insurance Business America’s Hot 100 insurance practitioners for 2020, currently lectures as an adjunct professor at Fordham Law School. He earned his Juris Doctorate from Fordham Law School; his MBA from St. John’s University School of Risk Management, Insurance, and Actuarial Science; and his BS in Finance from Syracuse University.
What You’ll Learn on This Episode:
[1:09] What sparked Blackshear’s interest in ethics and compliance? How has his career path led to his current role?
[5:22] How has COVID-19 impacted the insurance business? What are some of the risks being exacerbated by the pandemic?
[7:16] How are ethics and compliance officers being stretched during the pandemic? What are some tips Blackshear has to navigate the changing landscape?
[8:50] How does Blackshear see the role of businesses in helping to promote reform and change in light of the recent call to racial justice?
[11:23] As a black man, how has Blackshear personally been impacted by the current movement for racial justice?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
Cindy Morrison of Post Holdings discusses her passion for ethics and compliance, the difference between compliance at a holding company and a wholly owned business, and how she's maintained a focus on the company's values during the pandemic.
“I think it is incredibly important, as a compliance professional, to put yourself in the shoes of your employees. Whether it’s someone in the C-suite, or someone on the shop floor, it’s really important that you understand what their work life is like.”
- Cindy Morrison
Cindy Morrison is the director of compliance at Post Holdings, Inc. She is responsible for implementing and overseeing global compliance in partnership with the chief safety and compliance officer, corporate business functions and business units.
Her background includes building and sustaining effective compliance programs for multinational organizations. Morrison has conducted investigations related to fraud, conflicts of interest and employee misconduct. She has extensive experience in developing codes of conduct, legal compliance policies and training content.
Morrison is a founding member of the Compliance Association of St. Louis, a network of compliance professionals in the St. Louis region. She sits on the board of directors of a non-profit, Home Sweet Home, a furniture bank whose mission is to furnish hope.
What You’ll Learn on This Episode:
[0:57] What sparked Morrison’s interest in ethics and compliance and how has her career path led to her current role?
[5:39] How has working at a holdings company impacted the way that Morrison approaches ethics and compliance?
[6:59] How does Morrison mediate when disagreements arise when trying to achieve a a consensus.
[10:18] How is Covid changing the way that Morrison communicated and maintains company culture?
[13:26] What are some of the core values at Post Holdings and how are those values maintained with employees in remote locations?
[14:57] How does being on the board at Home Sweet Home help her be better in her current position?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
LRN’s Ben DiPietro talks with Mary Shirley of Fresenius Medical Care about the importance of recognizing contributions of colleagues; how putting leaders on notice about retaliation is necessary to build trust and set the tone; and the move of E&C teams to take on more issues of social justice, racial inequality, and ethics.
“Compliance departments seem to have been taking on more of a role beyond the usual key tenets of compliance, and really addressing social injustices, and moral failings, wider ethical issues that haven’t been part of our portfolio, at least traditionally.”
- Mary Shirley
Mary Shirley is a New Zealand-qualified lawyer with extensive experience implementing, evaluating, and monitoring compliance programs for multinational corporations. Currently the senior director of ethics and compliance at Fresenius Medical Care in Boston, Shirley has a large international footprint of experience, having held global ethics and compliance roles in Singapore, Hong Kong, and Dubai. She has spent time working as an investigator for regulators in New Zealand in the areas of data privacy and antitrust.
She co-hosts the Great Women in Compliance podcast with Lisa Fine, co-hosts the Boston Compliance Professionals Networking Meet Ups with Matt Kelly, and contributes to thought leadership opportunities in the field regularly. She’s been named a Compliance Week Top Mind 2019, and a Trust Across America 2020 Top Thought Leader in Trust.
What You’ll Learn on This Episode:
[1:54] What sparked Shirley’s interest in ethics and compliance and how has her career path led to her current role?
[5:32] What has Shirley learned from working in ethics and compliance in so many different regions and cultures?
[6:33] How should companies work with police departments to bring about the change they would like to see?
[7:01] How has Shirley’s methods for ethics and compliance changed with so many employees working from home and how does she help maintain a “speak-up culture” at work?
[13:26] What has Shirley’s experience with the Black Lives Matter movement been like and how has it caused her to reflect on her own experiences as an Asian woman?
[12:01] What prompted Shirley to start her podcast and what are the main lessons’s she has learned from women who work in the ethics and compliance space?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
LRN's Ben DiPietro speaks with Daniel Trujillo, Walmart's global chief ethics and compliance officer, about the company's 14 subject matters covered by E&C, his program's six building blocks, five pillars, and four key values. He talks about how COVID-19 is changing the program, and how the company is using its D&I program to bring about more racial equality.
“We are covering 14 different subject matters. I think there are very few companies that do that.… We want to be sure we have a whole culture of integrity, and that we are taking care of not only the program itself...but that we invest a fair amount of time and resources in improving our culture overall.”
- Daniel Trujillo
Daniel Trujillo is executive vice president and global chief ethics and compliance officer for Walmart Inc. As the leader of Walmart’s global E&C team, Trujillo develops the company’s strategic vision for our ethics and compliance program. Trujillo joined Walmart in 2012 as senior vice president and international chief compliance officer.
Prior to joining Walmart, Trujillo spent more than 15 years with Schlumberger Ltd., where he served in many roles, including legal counsel for Europe and Africa; global senior legal counsel; general counsel for Latin America; senior legal counsel for mergers and acquisitions; and deputy general counsel and director of compliance for Schlumberger Ltd. Prior to Schlumberger, Daniel worked for Cargill, Impregilo S.p.A., a litigation boutique firm, and a civil court in Argentina.
Originally from Argentina, Trujillo worked in more than 60 countries before relocating to Walmart headquarters at Bentonville, Ark. He graduated from Buenos Aires University Law School and has a master of business administration degree (MBA) from Salvador University in Argentina and Deusto, Spain, as well as a master in international commercial law from the University of California, Davis. He speaks five languages. Trujillo and his wife have two children.
What You’ll Learn on This Episode:
[1:37] What sparked Trujillo’s interest in ethics and compliance and how has his career path led to her current role at Walmart?
[3:25] How is Walmart’s ethics and compliance program designed and how and why has the structure changed over the years?
[8:42] How has the Walmart ethics and compliance program evolved over the last six months in light of the Covid-19 crisis?
[11:20] What can ethics and compliance programs do to maintain the Walmart key values during the pandemic?
[13:34] How important are the company’s values as Walmart works out protocols for employees to return back from working from home?
[14:54] What role can ethics and compliance teams play in the dialogue on racial justice and equality?
[16:53] What metrics help determine the effectiveness of diversity and inclusion programs?
Don’t miss our next episode! Be sure to subscribe to Principled on Spotify, Apple Podcasts, Google Play or wherever you listen to podcasts.
Darja Galante of Nokia speaks with LRN’s Ben DiPietro about how regional differences impact the way ethics and compliance programs can operate effectively; how COVID-19 has changed the nature of investigations; and why diversity, equity, and inclusion are vital to a company’s success.
“It was possible to at least partially replace this face-to-face atmosphere with this video connection, but it’s way more challenging to not being able to read the facial expressions, the mimics, and the rest of the non-verbal communication that is usually very helpful during our interviews.”
- Darja Galante
Darja Galante is Nokia’s senior business integrity manager and regional investigations lead in its Munich office. Previously, she led a global ethics and compliance function for a major NASDAQ-listed medical device company based in the Asia-Pacific region, and where she had a strong focus on third-party risk management, data privacy, and localization of global processes.
Galante’s experience includes providing anti-corruption compliance counseling and program management; local content counselling; developing and delivering compliance training to employees and third-party partners; conducting intermediary and transactional due diligence; conducting complex risk assessments; and overseeing corporate investigations.
She has a degree in business administration and management, a certificate in corporate law, and can speak seven languages.
What You’ll Learn on This Episode:
[1:36] What sparked Galante’s interest in ethics and compliance and how has her career path led to her current role at Nokia?
[4:09] How has the experience of working all over the world shaped the way that Galante views ethics and compliance?
[6:56] What is the role of a business integrity manager and how has Covid changed that part of Galante’s job?
[8:26] Are there advantages to doing investigations that don’t involve sitting in front of someone?
[9:34] Is there an uptick of reporting in the pandemic? Why or why not?
[11:03] How are Nokia’s diversity and inclusion programs involving?
[13:39] What measurements help determine the effectiveness of diversity and inclusion programs?
Don’t miss our next episode! Be sure to subscribe to Principled on Spotify, Apple Podcasts, Google Play or wherever you listen to podcasts.
Kim Urbanchuk, chief ethics and compliance counsel for engineering firm Parsons Corp., talks with LRN’s Ben DiPietro about how she seemed destined to a career in ethics and compliance, how COVID-19 is changing how she manages her program, and what role E&C programs can play in being champions for racial equality.
“It owes to our continuous engagement with employees. Out top-line management, our executive management, our first-line managers, are in constant communications with their teams. And as teams are working remotely, it’s even more important to keep that level of engagement.”
- Kim Urbanchuk
Kim Urbanchuk specializes in ethics, compliance, oversight, investigations, governance, due diligence, anti-corruption, data privacy, FCPA, lobbying restrictions, PAC and political law. She joined Parsons Corp. in July 2018 as chief ethics and compliance counsel from Airbus, North America, where she provided operational leadership and strategic direction to develop, sustain, and enhance the North American regional ethics and anti-corruption compliance program.
Before that, she worked on oversight and investigations for the Committee on Transportation and Infrastructure at the U.S. House of Representatives, after having been appointed by the U.S. director of transportation to revise thee ethics, procurement, travel, personnel, and governance polices for the Metropolitan Washington Airports Authority. She started her career as an assistant attorney in Portsmouth, Va.
Urbanchuk is a graduate of the William & Mary-Marshall Wythe Law School, and also has a degree from Indiana University of Pennsylvania.
What You’ll Learn on This Episode:
[1:14] What sparked Urbanchuk’s interest in ethics and compliance and how has her career path led to her current role at Parsons Corp.?
[4:42] How has the Covid crisis impacted the way that Urbanchuk views and facilitates her work responsibilities?
[9:23] As companies begin to reopen their offices what are Urbanchuk’s concerns from an ethics and compliance perspective?
[12:15] What is Parsons Corp. doing to increase buy-in for their re-opening strategy?
[9:34] Is there an uptick of reporting in the pandemic? Why or why not?
[14:19] How can the ethics and compliance community play a leading role in the ongoing discussions on racial equality and justice?
[16:31] What does corporate America need to do to address these issues of inequality and what are the right ways to measure progress?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
Terry Stringer, head of ethics at HP, speaks with LRN’s Ben DiPietro about the mission work she does in Africa with her husband, what it’s like to be a Black female executive in 2020, and how she is adapting her ethics initiatives to account for COVID-19.
“I’ve always been very self-confident, so those types of, we’ll call them micro-aggressions, that I might have experienced, I could just slough them off...Where it gets harder is if that individual has some sort of control over your pay, or your ability to be promoted.”
- Terry Stringer
Terry Stringer has been called “the Ethics Whisperer” for her work in enabling leaders and organizations foster cultures of integrity. She has worked in ethics and compliance and HR for over 15 years in the energy industry, and as founder of a consulting firm and now is with HP, where she heads the company’s ethics office and the Center of Excellence. HP was named for the first time in 2020 as one of the world’s most ethical companies by Ethisphere Institute.
In addition to her work in E&C, Terry is passionate about developing a pipeline of STEM-educated talent in minority and under-served communities and has worked with several organizations to help prepare today’s youth for the jobs of the future.
She is married to Bishop Martin Stringer, and together they conduct mission trips to African countries including Zimbabwe, Liberia, South Africa and Zambia. She is the mother of three children and a chocolate Labrador-mix named Jackie Robinson.
What You’ll Learn on This Episode:
[2:04] What kind of work have Springer and her husband done in Africa and what are they currently doing?
[3:12] What sparked Springer’s interest in ethics and compliance and how has her career path led to her current role at HP?
[5:36] As a black woman, what experiences are informing the way that Springer engages with the social justice issues of today?
[10:40] How has Covid-19 impacted HP’s operations and how is Springer planning the return of employees to their offices?
Don’t miss our next episode! Be sure to subscribe to Principled on Spotify, Apple Podcasts, Google Play or wherever you listen to podcasts.
LRN’s Ben DiPietro speaks with Stephen H. Weinstein, senior vice president, chief compliance officer, group corporate counsel, and corporate secretary of reinsurance company Renaissance Re, about the risks associated with climate change, the importance of accurate data when assessing risks, and how he handles his dual roles of chief legal officer and head of compliance.
“All firms should recognize the importance of climate as a means of engagement with stakeholders, including their staff. It’s no accident that “E” is part of ESG.”
- Stephen H. Weinstein
Stephen H. Weinstein serves as RenaissanceRe’s chief legal officer, with responsibility for legal, regulatory, government affairs and compliance matters on a global basis. Weinstein has served as RenaissanceRe’s group general counsel and corporate secretary since joining the company in 2002, as chief compliance officer since 2004, and as senior vice president since 2005.
Prior to joining RenaissanceRe, Weinstein specialized in corporate law as an attorney at law firm Willkie Farr & Gallagher. He is a frequent speaker on legal and regulatory matters, serves on the boards of several industry groups and is a member of the American Bar Association, the New York State Bar Association and the District of Columbia Bar Association. He is a graduate of Columbia College and Harvard Law School.
What You’ll Learn on This Episode:
[1:32] What sparked Weinstein’s interest in ethics and compliance and how has his career path led to his current role?
[6:25] What are some of challenges associated with gathering data for risk assessments?
[9:38] How does Weinstein navigate the conflicts between legal and ethics and compliance in his company?
[11:42] What are some lessons Renaissance Re has learned from the Covid-19 pandemic?
[13:42] What steps are Renaissance Re taking as they look to allow employees to return to work?
[15:20] What are the ethical considerations for offices reopening and employees coming bask to work?
[16:39] What is Renaissance Re working on to improve its diversity and inclusion efforts?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
Dr. Andrea Bonime-Blanc, compliance executive, board member, entrepreneur, and author, discusses with LRN’s Ben DiPietro the risks and opportunities companies face as they address issues of racial injustice, and the COVID-19 pandemic.
"We have businesses that are having to decide between the health and safety of their workers, or the well-being, quote unquote, of their shareholders, to keep the business running. This, I think, is almost unprecedented in terms of its massive scale.”
- Dr. Andrea Bonime-Blanc
Dr. Andrea Bonime-Blanc is CEO and founder of GEC Risk Advisory, and is a global governance, risk, ESG, ethics, cyber, and crisis strategist who works with a broad cross-section of business, nonprofits, and government agencies. Since 2017, she has served as the independent ethics advisor to the Financial Oversight and Management Board for Puerto Rico.
Dr. Bonime-Blanc spent two decades as a C-suite global corporate executive at Bertelsmann, Verint, and PSEG, overseeing legal; governance; risk; ethics; corporate responsibility; crisis management; compliance; audit; information security; and environmental health and safety, among other functions. She began her career as an international corporate lawyer at Cleary Gottlieb.
She is an extensively published author of many articles and several books, including her latest, “Gloom to Boom: How Leaders Transform Risk into Resilience and Value,” which earlier this year debuted as an Amazon No. 1 Hot Release in business ethics and game theory.
What You’ll Learn on This Episode:
[1:34] What sparked Dr. Andrea Bonime-Blanc interest in ethics and compliance and how has her career path led to her current role?
[4:28] What should companies do in order to turn their words about social justice into action?
[6:33] How should companies work with police departments to bring about the change they would like to see?
[8:14] What are some of the lessons learned that Dr. Bonime-Blanc is seeing in the organization she is working with?
[10:27] What are some things that Dr. Bonime-Blanc recommends that businesses to to keep their employees safe during the pandemic?
[12:01] What do companies do to navigate the privacy issues that come from monitoring their employees for Covid?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
This episode features Louis Sapirman, chief ethics and compliance officer at Panasonic North America, who talks with LRN’s Ben DiPietro about the need for empathy by companies during the pandemic, the ways companies can help address racial injustice, and what it means to be the white parent of an adopted Black teen-aged son in 2020 America.
“Corporate America is a great Petri dish for building the type of society that we actually want externally. I would challenge all companies to take the time, not just to talk, not just to communicate...but to take the time to look within themselves and say what can we do to strengthen our own cultures...so that it reflects the way we want society as a whole to be.”
- Louis Sapirman
Louis A. Sapirman is the chief ethics and compliance officer and chief compliance counsel for Panasonic Corporation of North America, the principal North American subsidiary of Panasonic Corp. He oversees the company’s regulatory and compliance function, maintaining a culture of ethics, and ensuring all employees are upholding Panasonic's values in their work.
Sapirman previously served as associate general counsel and chief compliance officer for the Dun & Bradstreet Corp. During his tenure, the company was recognized as one of the World’s Most Ethical Companies by the Ethisphere Institute. Prior to moving in-house, Louis worked in private practice with several law firms, including Wilmer Cutler Pickering Hale & Dorr, and Buchanan Ingersoll.
He earned his bachelor’s degree in philosophy from the State University of New York-College at Geneseo, and his Juris Doctorate from Rutgers School of Law in Newark, N.J. Outside of work, Sapirman is an avid volunteer, including his work with the Giving Network, and as a former member of the Board of Trustees of Rutgers University.
What You’ll Learn on This Episode:
[1:06] What sparked Sapirman’s interest in ethics and compliance and how has his career path led him to his current role?
[3:43] What are some of Panasonic’s core values?
[4:41] What were Sapirman’s goals after joining the company and how has Covid affected their progress?
[6:50] What are some of Sapirman’s concerns from a ethics and compliance perspective as it relates to reopening post-Covid?
[8:23] How can employers handle employees who are reluctant to return to in-office work?
[13:38] How has Sapirman’s experience with his own son shaped how he views the current climate?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
LRN’s Ben DiPietro talks with Ethical Systems Executive Director Alison Taylor about how COVID-19 is changing the world; what it means for ethics, compliance, ESG, and corporate activism; and how prescient her husband Peter Christian Hall was when he was years ahead of reality when he wrote a book about a pandemic and New York City.
“It’s not so easy to do benchmarking, and look at what your peers are doing, and then just copy that. We would argue that you really need to experiment, we really need to come up with something bigger and better, and that academics have many great ideas that can be applied and used by companies with the right mindset and creativity.”
- Alison Taylor
Alison Taylor is executive director at Ethical Systems, a research collaboration on ethical culture, housed in New York University's Stern School of Business. Previously, Alison led BSR’s sustainability practice, and oversaw the supply chain practice and the Sustainable Futures Lab.
She focuses on approaches to sustainability through risk management, strategy, stakeholder engagement, transparency, ethics and governance, and organizational change.
Taylor has worked as a senior managing director at Control Risks, and for Transparency International, PricewaterhouseCoopers, and IHS Global Insight. She has experience in strategic intelligence, market entry assistance, risk consulting, due diligence, internal investigations, enterprise risk management, and ethics and compliance. She speaks and writes regularly on risk and organizational culture.
She is a board member of the ethics organization Center for Business Ethics and Corporate Governance, and a member of the World Economic Forum’s Global Future Council on Transparency and Anti-Corruption. She is an adjunct professor at Stern School of Business.
What You’ll Learn on This Episode:
[1:33] How did Alison become interested in risk ethics and culture?
[3:24] What prompted Alison’s move to become the executive director at Ethical Systems and what are her goals there?
[5:08] What impact is the Covid-19 crisis having on Alison’s company and her transition to executive director?
[6:36] What are the biggest changes that will come from the Covid-19 crisis?
[12:27] Will the current culture lead organizations to be better corporate citizens, or is it going to lead to a culture of survivalism?
[16:15] How has Alison’s husband’s book (American Fever) affected the way they are living through Covid-19.
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
“The question is going to be how police departments carry out these reforms. Corporations and businesses can offer a lot of unique expertise to help the policing profession with the how. We can take what corporations are doing well right now...and transfer these skills from the business world to the policing world.”
- Florence Chung
Florence Chung, chief engagement officer of The Hetty Groups, speaks with LRN’s Ben DiPietro about her work to encourage dialogue between police departments, companies, and communities.
She talks about the seven root causes of police misconduct, why good police remain loyal to those who break the rules, and what companies can teach police about management to help them bring about the necessary changes to their cultures and policies.
Florence Chung is the chief engagement officer of The Hetty Group, a community engagement strategy firm. She has 20 years of experience at the intersection of law enforcement and the community, and has created multiple cross-sector partnership and engagement initiatives for organizations, including Fortune 500 companies such as Amazon, Ross Dress for Less, and Target.
She has launched three new police foundations in partnership with business leaders and police departments to create platforms for community engagement in public safety. This work led her to create Police Foundation Partners, a Hetty Group initiative that provides support and resources to a national network of police foundations to help them become the most effective bridge between communities and police for enhanced public safety.
She’s served on the board of directors of the Los Angeles Police Foundation, New York City Police Foundation, Los Angeles Regional Crime Stoppers and the University of Southern California’s Asian American Alumni Association. She holds a bachelor’s degree in psychology and education from the University of California, Los Angeles, and a master’s degree in social work from the University of Southern California.
What You’ll Learn on This Episode:
[1:55] What has her career path looked like and how has she found herself at The Hetty Groups?
[3:45] What are the seven root causes that effect policing and how do they frame the debate over police in the U.S.?
[7:50] If there are so many good police officers, why do they remain silent when it only serves to put them at risk more?
[10:36] How does current police culture halt reform and what actions can police departments take to enforce reform?
[12:22] How does having access to military equipment exacerbate the problems with police culture?
[14:30] Can the Camden, N.J. police reform be used as a model for police reform across the U.S.?
[17:24] What role can businesses and institutions play in joining the dialogue that’s going to be needed to create change?
[20:16] What are some skills companies can share with police departments?
[23:48] How did a conversation with Millennials and Gen Z unfold, and how does she view the voice of youth in this dialogue?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
“It’s about the values we actually pursue at Roche, which are courage, integrity, and passion. For those three values, which are worldwide and well-known within the Roche environment, they actually give us the North Star on not only how people should actually behave, and how much openness we give to them.”
- Patrick Eckert
Patrick Eckert, who leads Roche Pharma’s operations in Brazil as their general manager, talks to LRN’s Ben DiPietro about what the company is doing to respond to the COVID-19 crisis, how it handled the transition of getting workers able to conduct business from their homes, and how it is working with its competitors to find ways to help people.
Patrick Eckert is general manager of Roche Pharma Brazil, where he has worked since February 2017. In September 2018, he was appointed as the Brazilian Enabler Team Lead, responsible for the management of the pharma company’s Brazil business.
He has a clear focus on results while leading the challenges and managing/developing opportunities for access to our innovation supported by a large team of professionals.
Eckert has a bachelor degree in administration by Business School Lausanne in Switzerland, where he is from, and has lived in many different countries. He enjoys very much the diversity of cultures and people. Eckert is married with three children; in his free time he likes to cook, travel, and play tennis.
What You’ll Learn on This Episode:
[0:54] What has Patrick’s career path looked like and how did he wind up leading Roche Brazil operations?
[2:16] As the company’s leading executive, how important does Patrick see ethics and strong engaged inclusive and transparent cultures in creating the foundation for financial success?
[4:29] How often does Patrick communicate messages of ethical behavior, messages of assuring people it’s safe to speak up and raise concerns, and messages that endorse transparency and accountability?
[6:29] In relation to COVID-19, what is the company’s plan of action going forward now as it pertains to employees, to customers, and to helping the government and public health agencies. How is Patrick working with hospitals and healthcare providers, and how much collaboration is there in the industry with companies that are usually Roche Pharma’s competitors?
[10:50] How much of Roche Pharma’s workforce worked mobile before COVID-19, what percentage is working mobile now, and what have been some of the challenges that Patrick has had to deal with to get everyone on board?
[13:23] How much effort is being put into preparing for a return to the workplace versus dealing with the immediacies of dealing with what’s happening with the virus? How are resources being deployed to deal with what is happening, and what is expected to happen once the worst parts of this are over?
“Directors are harnessing the power of dialogue to navigate the economic, business and human implications of this crisis.”
- Marsha Ershaghi Hames
Longtime ethics and compliance expert and former LRN executive Dr. Marsha Ershaghi Hames speaks with LRN’s Ben DiPietro about what boards and audit committee chairs are grappling with in the midst of the COVID-19 outbreak. She shares her insights after holding a series of virtual roundtable discussions with directors, and also talks about how ethics and compliance teams will need to adapt to be effective in a post-COVID world.
Dr. Marsha Ershaghi Hames is a partner at Tapestry Networks, where she advises non executive directors, C-suite executives, and in-house counsel on issues related to corporate governance, culture transformation, board leadership, and stakeholder engagement. At Tapestry she co-leads the corporate governance practice focused on the U.S. regional audit committee networks in Chicago, New York, Washington, D.C., and Atlanta. She is a contributing leader to the compensation and talent committees.
Prior to joining Tapestry, Ershaghi Hames was a managing director of strategy and development at LRN. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation, and was a former co-host of this podcast.
She is an industry thought leader, interviewed and cited by the media including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics, and more. She serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making, and on the advisory boards of LMH Strategies Inc., and Compliance.ai.
Ershaghi Hames holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.
What You’ll Learn on This Episode:
- [1:04] How are Marsha and her family doing amid the COVID-19 crisis?
- [1:26] Marsha spent almost two decades at LRN and played a leading role in the company’s success during that time. She left earlier this year for her new role at Tapestry Networks. What prompted that decision to leave and what is she doing now in her new job?
- [4:29] How has the pandemic changed the way Marsha is approaching her new job, and what is different from what she was planning to do?
- [6:07] Marsha has recently held a series of virtual meetings with audit committee chairs from many of the nation’s top corporations. What did she learn in those sessions as to what boards are doing and thinking about in the midst of the pandemic?
- [10:29] How can a board engage and make better use of the ethics and compliance programs and assets that are there when it comes to the COVID-19 response, and for how to move forward?
- [12:36] When the time comes for people to come back to the office, how is that office going to be changed, and what changes does Marsha expect to see in how people work? Will the viability and now widespread adoption of people working from home make offices obsolete?
- [15:13] How will the ethics and compliance programs need to change to be effective in a post-COVID world?
“If we treat our people right, if we treat people with respect, and expect them to treat each other the way they should be treated, then things will flow from that, financial results will follow, and it will be a place where people will want to work.”
- Kevin Tubbs
Kevin Tubbs of Oshkosh Corp. talks to LRN's Ben DiPietro about the company's people-first culture, what that means for the ethics and compliance program, and how fostering a speak-up culture helped to save one employee's life.
Prior to his current role, Tubbs held senior environmental management and sustainability positions at Ingersoll Rand Co., Trane Co., and American Standard. He began his career at Exxon Corp.
Tubbs holds a Bachelor’s of Science degree in chemical engineering from Clarkson University, and Master’s degrees in engineering management and occupational safety and health from the New Jersey Institute of Technology. He holds a certificate from the Wharton School’s Executive Development Program.
For three years Kevin was the mayor of Chatham Township, N.J. during which time Chatham was named the “Best Place to Live in New Jersey,” and was one of the first communities to receive “Sustainable Jersey” certification from the Sustainable Jersey organization.
What You’ll Learn on This Episode:
- [0:50] What does Oshkosh Corp. do?
- [1:55] What sparked Kevin’s interest in having a career in ethics and compliance, and how does he describe the path that he took that led him to Oshkosh?
- [3:49] How has being mayor of a town in New Jersey impacted Kevin’s view on ethics and compliance? What has he learned from that experience and how does that shape what he does now?
- [4:58] Kevin recently spoke about Oshkosh’s “people-first” culture at LRN’s “25 and Beyond” event. What does that term mean and how does Kevin meld it into what happens to each employee every day at work?
- [6:28] How is the “people-first” culture actually embedded and how does Kevin discuss it with employees? What are some of the ways he transmits those messages?
- [8:21] How does that emphasis get driven down into middle managers, supervisors, and then into the employees? What role or importance do the middle managers play in all of that?
- [10:22] As the workplace is being transformed by diversity inclusion initiatives and a blending in of machines and technologies to work alongside people, how can ethics and compliance teams work to minimize disruptions to the employees involved while maintaining compliance and building strong cultures? What role can the board and the executive leadership play in setting that standard?
- [12:29] Was there a time that Kevin and his team faced a hardship related to ethics and compliance? How did Kevin deal with that situation, what did he learn from it, and how has that lesson shaped some of what he does today in his current role?
“What I learned in academia is that, when you publish it sits on a shelf. Some of the joy I have at Culture@Work is working so closely with organizations who implement policies and programs. Your insights, your wisdom, doesn’t sit on a shelf – it really comes to life.”
- Laura Sherbin
Laura Sherbin, managing director of Culture@Work, speaks with LRN's Ben DiPietro about the joy she gets from taking academic research about how people behave, and sharing it with organizations to help them improve their corporate cultures. She discusses the vital role diversity and inclusion play in creating strong, values-base cultures of ethics and integrity.
Sherbin is an economist who specializes in the creation of advantage through inclusion and diversity. She earned her Ph.D in economics from American University. Most recently, she served as co-president at the Center for Talent Innovation in New York, a think tank and content provider that studies global workplace diversity.
Sherbin built a rigorous data analytics machine and team that have been core to innovative approaches to measuring and tracking employee experiences. She is known as a leading expert in applying diversity and inclusion data to human behavior in organizations, and using such data to quantify how workforce sentiments and satisfaction affect company bottom lines.
She taught "Women and Globalization" at the School of International and public affairs at Columbia University, and is a coauthor of Harvard Business Review articles "How Diversity Can Drive Innovation;" "How Gen Y and Boomers Will Reshape Your Agenda;" and "Off-Ramps and On-Ramps Revisited," and several Harvard Business Review research reports.
What You’ll Learn on This Episode:
- [0:51] What is the mission of Culture@Work, what does the firm do to help companies improve culture, and are there specific areas on which Laura focuses?
- [1:53] What’s an example of a lagging indicator and one of a leading indicator?
- [3:42] What inspired Laura’s interest in culture in organizations and what was the career path that led her to become the managing director of Culture@Work?
- [4:54] One of the most important times to learn about ethics and integrity is before someone is hired. Do organizations pay enough attention to ethics during onboarding and recruiting, and how they can improve in that area?
- [6:24] Is Laura finding that companies are shifting more towards this, or is there still resistance toward the expense, time and effort required?
- [7:31] Younger people coming into the workforce are probably going to be more committed to some of these value-based standards. Instead of companies interviewing for employees, it’s employees interviewing for companies. It’s going to be the companies who are going to have to answer the questions and meet the standards of the employees more than the other way around. How has Laura seen that in play?
- [8:36] If a strong culture is impossible without ethics, trust, transparency, and accountability, how can organizations work to establish these in their operations if they’re lacking. What are some of the ways they can go about doing that?
- [10:51] What are two of the biggest challenges companies and organizations face when they’re trying to improve their culture? What can they do to overcome these things and make these improvements?
- [13:44] what are two or three red flags that may signal that an organization is having issues with its culture, and why are these sometimes so hard to spot? Or are they actually there, but people just don’t want to acknowledge them?
- [15:40] How can diversity and inclusion help build these robust cultures and how can that make a lot of these red flags disappear?
Scientist, entrepreneur, educator, and author Paul Zak sits down with Ben DiPietro, editor of LRN's E&C Pulse newsletter, to talk about the science behind creating trust, why oxytocin is the key to creating trust, and the need to combine this with purpose to build human connection and strong teams. His two decades of research have taken him from the Pentagon, to Fortune 50 boardrooms, to the rain forest of Papua New Guinea, all this in a quest to understand the neuroscience of human connection, human happiness, and effective teamwork. His academic lab and the companies he has started develop and deploy neuroscience technologies to solve real problems faced by real people. He is founder and chairman of Immersion Neuroscience.
His latest book, “Trust Factor: The Science of Creating High Performance Companies,” uses neuroscience to measure and manage organizational cultures to inspire teamwork and accelerate business outcomes. Zak and his team use neuroscience to quantify the impact of movies, advertising, stories, and consumer experiences. Along the way, he has helped to start several transdisciplinary fields, including neuroeconomics, neuromanagement, and neuromarketing.
Zak serves as the founding director of the Center for Neuroeconomics Studies, and is professor of economics, psychology, and management at Claremont Graduate University. He has degrees in mathematics and economics from San Diego State University, a Ph.D. in economics from University of Pennsylvania, and post-doctoral training in neuroimaging from Harvard.
What You’ll Learn on This Episode:
- [0:57] What was the path Paul took to become a scientist, a businessman, an author, and an educator?
- [2:50] What does neuroscience teach us about how trust works to forge relationships between people, teams, and organizations; and what role does oxytocin play in all of that?
- [4:38] If oxytocin is the link in all of this, is there some way that we can get that to people to increase trust, or is it not a deliverable drug in the way that other drugs are?
- [6:38] Does one exhibit trust by trusting others or by being trustworthy themselves?
- [7:41] Can that trust start with something as simple as a smile?
- [9:28] Is trust enough to get people to be their best and what role does purpose play in bringing that about?
- [11:03] How can organizations combine those two things together to foster these ethical cultures that they want based on values, integrity, and accountability?
- [12:18] Paul’s research has uncovered eight factors that form the foundation for a culture of trust. What are those factors?
- [13:36] How can organizations measure for those factors to see where their employees are or what they need to improve or focus on?
- [14:21] As the workplace gets more automated and machines begin to work alongside people, can these same techniques be used to build trust between humans and machines, or is that going to take a different formula?
- [15:19] There are ethical considerations for the use of some of these things. Is it possible to get people to trust things or people that are bad for them, and, if so, how do we ensure that this is used for good outcomes and not bad ones?
PULL QUOTE: “We just seem to be in a time where...society has in many ways normalized unethical behavior, and for future business leaders, that’s not good.”
Cindy Moehring talks to LRN's Ben DiPietro about taking what she learned after working for 20 years to build and develop Walmart's worldwide ethics and compliance program, and going to the University of Arkansas to embed ethics into the curriculum at the Sam M. Walton School of Business.
Cindy Moehring is the founder and executive chair of the Business Integrity Leadership Initiative for the Sam M. Walton College of Business, at the University of Arkansas. Moehring shifted to academic life following a 20-year career with Walmart, Inc., where she helped to build the company’s ethics and compliance program, and worked with the board and senior leadership on global strategy, corporate governance, and cultural initiatives.
Moehring spearheaded the transformation of Walmart’s global culture of integrity in the wake of Walmart’s foreign corrupt practices act investigation, developing and implementing a global ethics program in 27 countries for more than two million employees. She has served as the immediate past chair of the Board of the Ethics and Compliance Association, and as a director for the Ethics Research Center. She is a member of the National Association of Corporate Directors, and has served locally on the board of the Ruth I. Kolpin Family Foundation, and as a board member of the Northwest Arkansas chapter of Girls on the Run.
Moehring graduated with a Juris Doctorate from Georgetown University Law Center, and graduated from the University of Missouri with a Bachelor of Science degree.
David Greenberg, who leads LRN's Office of the CEO, and also serves as a board member of International Seaways Inc., and earlier in is career served as a chief compliance officer, shares his insights into how each of the people in those positions is handling the COVID-19 crisis. He talk with LRN's Ben DiPietro about why companies that emphasize ethics and purpose are likely to do better in this trying time than those that don't.
PULL QUOTE: “The focus of the D&I programs are to bring people that are different--that think differently, that look differently, that have different backgrounds and experiences-and then create a work environment where all those people can succeed...That, to me, goes hand in hand with what we want from an organization that is focused on ethics, compliance, and integrity.”
Antonio Fernandez of PSEG discusses with LRN's Ben DiPietro his approach to building an ethics and compliance program, and how his coming out as gay helps him serve as a leader for diversity and inclusion.
Antonio Fernández was named PSEG’s chief compliance officer in April 2016 and is responsible for overseeing its compliance program, which involves managing PSEG’s ethics and compliance group and its NERC compliance group.
Fernández joined PSEG from General Electric, where he served as GE Power’s global ombuds leader, and as executive counsel. Fernández started his career at the United States Nuclear Regulatory Commission’s Office of the General Counsel, through its Honors Program. He then served as nuclear counsel for Pacific Gas and Electric Co., where he oversaw all legal matters related to PG&E’s nuclear power plants. After PG&E, he joined NextEra Energy as a senior attorney.
He earned a bachelor’s degree in political science from the University of Dayton; a Juris Doctor degree (Order of Barristers) from St. Mary’s University School of Law; and a Master of Laws in international and comparative law from Georgetown University Law Center.
What You’ll Learn on This Episode:
- [0:48] Antonio talks about his path to the field of ethics and compliance and how that journey took you the PSEG
- [3:22] What is Antonio’s philosophy when it comes to creating an operating an ethics and compliance program? What are the pillars upon which he builds the program
- [6:06] How Antonio use tools to get messages about ethics, compliance, culture, and behavior to all levels of the organization?
- [7:47] Antonio talks about the effectiveness of engagement efforts and whether the right analytics exists in the world today. Do the right set of measurements still needed to be identified?
- [9:40] What are some actions PSEG is taking on issues of diversity and inclusion? How did Antonio’s personal story and the experience of coming out as gay shape the way he approaches D&I issues?
- [13:09] What does Antonio wish someone had told him when he first starting out and how he might have navigated his personal situation? How would the situation gone differently if he didn’t have to go through the experience of learning for himself and maybe fumbling along the way?
Driving cultural change in Latin America, Gabriela Gutierrez of Chile-based extractive company Grupo CAP talks to LRN's Ben DiPietro about her 20-year career in ethics and compliance in Latin America, and the unique challenges that come with working in the region.
PULL QUOTE: “A good way to incentivize cultural change is by bringing all employees and collaborators under one message of why a culture of compliance is important, and that employees feel they and their company will be at an advantage if they reveal an issue than if they do not.” - Gabriela Gutierrez
Gabriela Gutierrez is the chief compliance officer for Grupo CAP, a Chile-based holding company with interests in mining, steel, and extractive resources. She is responsible for the establishment of standards, and the implementation of procedures to ensure the company’s compliance programs are effective and efficient in identifying, preventing, detecting, and correcting noncompliance with applicable laws and regulations.
Gutierrez has extensive executive-level experience at multinational companies in Chile, with more than 20 years in the banking, securities and extractive industries. She has a proven history of building and maintaining excellent working relationships, based on respect and diversity with collaborators of all levels and from different cultural backgrounds.
Prior to joining CAP in June 2019, Gutierrez worked as ethics and compliance manager, Minerals America, for BHP; was the chief compliance officer for China Construction Bank in Chile; and served as head of compliance and operational risk management for Deutsche Bank’s Chile business. She is a CPA from Universidad de Santiago de Chile, has a Master’s Degree in corporate law from Universidad Adolfo Ibañez, a Master’s in humanities from Universidad Adolfo Ibáñez, and an International Compliance & Anti-Corruption Certification, from the Institute for U.S. Law, George Washington University Law School.
What You’ll Learn on This Episode:
- [:56] Gabriela tells us about your career path and how she worked her way to becoming chief compliance officer at Grupo CAP and what cultivated an interest in ethics and compliance?
- [2:53] What does CAP do? What are Gabriela’s goals there as head of the compliance program? How far along is she in implementing those goals and what still needs to be done?
- [4:48] Before joining CAP, Gabriela worked for BHP as their Latin America CCO. What was that experience like for her and how has it informed what she is doing now?
- [6:47] How much risk does regional politics present to Gabriela when designing and carrying out the E&C program?
- [11:17] How hard is it to enact cultural change in Latin America given the way people have been acting and doing business there? What has Gabriela tried to do so far in this to impact the culture at CAP? How successful has she been? What else would she like to accomplish?
Jorge Dajani is the chief ethics officer of the World Bank Group, and has been in the position since June 2018. Dajani directs the Ethics and Business Conduct Department, which promotes the development and application of the highest ethical standards by staff members. He provides overall strategic leadership on ethics and business conduct, ensuring ethics and values are fully incorporated into the strategy of the entire World Bank Group.
Dajani possesses a deep knowledge of multilateral development banks, a proven track record in corporate strategy and development, and a reputation for effective stakeholder engagement. He is widely recognized for his management skills and stewardship of policies and procedures within international financial institutions with a focus on strategy, ethics and governance.
Prior to his current role, Dajani was alternate executive director at the International Monetary Fund. Previously, he served as director general for macroeconomic analysis and international finance at the Ministry of Economy of Spain. He has served on the boards of several multilateral banks, including the World Bank, the Inter-American Development Bank, CAF-Development Bank of Latin America, and the African Development Bank.
He was Spain’s chief negotiator for the establishment of the Asian Infrastructure Investment Bank and the Green Climate Fund, and has been a member of the economic policy committees of the European Union and the Organization for Economic Co-operation and Development.
What You’ll Learn on This Episode
- [0:49] How did you come to find yourself in a career in ethics? What was the path that's taken you to this point?
- [1:54] How did he get to the World Bank? Where did he start his career?
- [2:50] What are his main priorities s chief ethics officer? What is he trying to accomplish?
- [4:46] How often is ethics training offered? What types of trainings are offered? How can technology improve the engagement and knowledge retention of employees and stakeholders? What are some new ways he is using to send ethics messages, beyond training?
- [6:58] What is the World Bank doing to educate about sexual harassment and issues similar to that?
- [10:20] World Bank has taken an innovative step by adopted a reporting system where people can file the complaint, but then they can choose when and with whom they want to share it at their time. What’s the benefit of that?
- [12:34] What does Dajani look at when he measures to decide if what he is doing is successful, or not?
PULL QUOTE: “Sometimes, success can block scrutiny. It’s not always intuitive to say, ‘Oh, things are good in the organization, let’s turn that rock over and see what’s underneath. Sometimes a dangerous silence can develop between the front lines of business and headquarters.” - Richard Bistrong
Richard Bistrong is founder and chief executive of Front-Line Anti-Bribery LLC, a consultancy that works with organizations to enhance their compliance efforts beyond a set of rules and procedures. Bistrong is a recognized consultant, blogger, and speaker in the field of anti-bribery compliance, reflecting on front-line issues that impact international business teams and compliance personnel. In this episode, Bistrong shares his journey from pleading guilty to bribery, to serving 15 months in prison for conspiracy and violating the Foreign Corrupt Practices Act. He then explains how this led to him becoming a major contributor in the field of ethics and compliance. He also discusses his work as a confidential human source and cooperating witnesses for prosecutors in the U.S. and U.K.
What You’ll Learn on This Episode
[00:38] Ben DiPietro introduces Richard Bistrong, founder and chief executive of Front-Line Anti-Bribery LLC.
[2:08] Bistrong describes what it was like to wear a wire for the government and whether he ever came close to being exposed while doing that?
[3:50] Did Bistrong think about the ethics of what he was doing, and did he feel bad at the time he was doing these things? If not, when did he get those feelings?
[6:30] At what point did Bistrong decide he was going to work to promote better corporate behavior, and not just settle his case and make amends?
[8:55] Bistrong responds to critics that say he is cashing in on his bad behavior?
[11:08] How much of his personal life was made public during the trials that you testified in, how did he handle that, and what was the impact it had on his relationships with family, friends, and colleagues?
[12:50] From the perspective of having been involved in corporate corruption, what are two or three of the biggest mistakes organizations make when it comes to the structure and operation of their ethics and compliance programs? What are they being blind to, what can they do better to uncover people like himself who are out there?
In today’s Principled episode, Page Motes shares her history at Dell Technologies as Senior Managing Director, Global Ethics and Compliance Officer and now as Strategy Lead of Sustainability. Motes discusses the difficulties and duties of overseeing and managing Dell’s ethics strategy and sustainability initiatives, and the impact of corporate activism, and she shares some advice for young people entering the E&C profession.
What You’ll Learn on This Episode
- [:50] What led you into ethics and compliance and how that has taken you into this new role as a strategy leader of sustainability at Dell?
- [4:24] How does your E&C background help you in this new role, especially as E&C investor activism and ESG are coming together to push companies?
- [6:34] How does your E&C background help you in this new role, especially as E&C investor activism and ESG are coming together to push companies?
- [11:53] What are two or three issues you're working on now in your new role in sustainability that is taking a lot of your time and focuses?
- [14:32] What do you see now as one or two biggest drivers in this area that organizations need to prepare for, and how will these drivers impact E&C and sustainability teams and how they work?
- [18:19] What advice do you have for young people, particularly women entering this E&C profession, and what do you wish someone had told you when you started that you didn't learn until later, maybe after a tough lesson?
This episode of Principled features Forrest Deegan, Chief Ethics and Compliance Officer for Abercrombie & Fitch, where he is responsible for enhancing the company’s corporate compliance program and third-party risk management program. Deegan has oversight of functional compliance activities, ownership of specific compliance policies, and works with internal partners to foster a speak-up culture throughout the business. He is also a lecturer in Law at the University of Chicago School of Law, and was selected by Compliance Week as a "Top Mind" for 2018. In this episode, Deegan shares his path to success, the relationship between compliance and legal, the importance of communication, the future of ethics and compliance, and how we can better equip students for careers in the field.
What You’ll Learn on This Episode
- [0:46] Tell our listeners about how you became attracted to ethics and compliance, the path you took to get to your present position as the CECO of A&F.
- [0:57] Forrest started in private practice about 15 years ago, and did work for many different types of clients. As he gained their trust, he began to do things that were a little more interesting, and ended up in a compliance career at a law firm. When he and his wife moved to Ohio, he came to Abercrombie & Fitch as their first director of corporate compliance, and finally that evolved into the “chief ethics and compliance officer” title.
- [2:56] What was behind the decision to add ethics into that title and how has that changed what you do?
- [3:03] In in-house retail, people wear more hats, and A&F didn’t need to separate ethics from compliance. It was an easy transition to combine the two together.
- [4:08] As someone with a legal background, you’re well aware of the big debate that was taking place over the last decade in the NC community about whether compliance should be separate from legal and if so, how? And obviously, some companies have made that decoupling. Now that we’re about 10 years into that, what do you see? Are programs better when they’re disassociated from legal’s oversight and why do you feel that way?
- [4:34] The corporate compliance community is very collaborative; they get together and discuss issues like reporting and job responsibility. Forrest has seen a shift in the past couple of years back toward reporting to general counsels. He doesn’t think there is an issue with either as long as the work gets done.
- [5:50] What do you feel about how this has all played out? A lot of the concerns were around general counsels exercising too much control over compliance and not having it be as independent? Has that not really played out in the real world?
- [6:08] Even if you’re not in every meeting, if you have access to the board or audit committee, that can suffice. The communication between parties works well when there is independence and an open channel.
- [7:08] What would you say is the biggest change in the last five to 10 years as to how ethics and compliance is practiced at corporations?
- [7:18] Forrest is the first chief ethics & compliance officer at A&F and his peers at other retailers are the first there. The mindset of corporate compliance has shifted over the last 10 years, and people now understand that it is a broader field.
- [8:29] What do you see driving this profession forward through the 2020s?
- [8:36] There will be change on both the “want-to” and “have-to” sides. A big area of need for change is consistency in risk management and assessment. Forrest hopes to see increased collaboration with all of the lines of defense: hotlines, store health and safety, and a third-party monitoring program. He also wants to learn to have a more coordinated effort with those that help enforce the standards of conduct, the principles, and the value statement.
- [11:10] You also teach a compliance course at the University of Chicago. What does the class cover? How long have you been doing that? What are you trying to accomplish and what do you get out of it personally?
- [11:20] Forrest teaches a seminary called Corporate Compliance and Business Integration. It helps students see how many of the legal and regulatory regimes they’ve been studying play out in a corporate compliance program. Forrest’s class goes through anti-corruption, info stack and data breach rules, AML and OFAC, and employment-related harassment and discrimination issues. Forrest also brings in other speakers from the tech, entertainment, and banking industries to talk about their compliance journeys.
- [14:12] How do you weave in conversations about ethics and culture into all of this? Obviously, compliance doesn’t really work without those things and they’re a key component to this and I’m guessing that’s a part of the curriculum too?
- [14:23] The understanding of your business, evaluation of your risks, and use of your resources adds up to your culture of compliance. If everyone understands their role as an agent of the company, you will maintain a stronger culture of compliance.
- [15:38] How can universities and even high schools do a better job to incorporate lessons about ethics and compliance into their classes and get students ready for these issues that they’re going to have to deal with in their workforce?
- [15:55] The more chances that students have to see the skills in practice, the more concrete some of the concepts they’ve learned about in school become to them. Having access to practitioners and seeing how the things they’re learning apply in everyday life is the best way for students to learn.
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, Spotify or anywhere you listen to podcasts.
“No matter how high your sales performance might be, or how wonderful of an employee you might be, you will never be excellent if you are not conducting yourself in a way that is full of integrity, and demonstrates ethical decision-making and leadership.” - Gwen Hassan
This episode of Principled features Gwen Hassan, the chief compliance officer at CNH Industrial. CNH is a large equipment manufacturing company that is splitting into two companies in the upcoming year. Hassan shares her plans for creating a duplicate compliance program for the new spin company, and iterates the importance of adaptability in a changing organization.
Though she attended law school later in life, Gwen has found her passion in compliance at CNH. She encourages young people and women starting off in their careers to take chances, stand up for their passions, and step out of their comfort zones to find a job they truly love.
What You’ll Learn on This Episode [0:51] What is CNH, what does it do, and where does it operate? [1:43] What are the core values of the company? How does your ethics and compliance program project those values back to employees, stakeholders and anyone else who's interested? [4:12] How did you come up with a different form of messaging that incorporates all of that? [5:46] With CNH’s plan to separate into an on-highway and off-highway company, what are you dealing with and how are you tackling it and how does that all work out? [9:55] Will you be in charge of just one of those, then, or where does your role evolve into? [10:51] CNH does business in more than 100 countries, putting a large emphasis on supply chain risk. How important is training, communications, and tone from top in driving urgency about maintaining diligence over the supply chain? [14:01] What path did you take to wind up in a career in ethics and compliance? What do you find interesting still about the work that keeps you invested in it and passionate about it? What advice would you share with the younger professionals, especially women, who are just entering or looking to enter the E&C profession?
Dr. B. Sarah Haynes, chief executive of Bolt Mobility, a micro-mobility company with a mission to redesign cities and change human behavior, is hosted by LRN’s Dr. Marsha Ershaghi Hames in this episode of Principled.
Haynes talks about how Bolt is entering the market and the impact its products offer in terms of access to education and healthcare. As a non-traditional CEO, with a Ph.D in neuroscience, Sarah brings a different skillset to the role, and describes how women need to have more conversations around putting themselves up for growth positions and embracing opportunities.
What You’ll Learn on This Episode
[0:53] What is Bolt Mobility’s purpose and mission? [2:10] What is micro-mobility? How is it transforming cities? [3:25] How is Bolt being brought into the market? [5:07] How does Bolt go into communities to provide a tangible transit solution to allow access to education and healthcare? [6:34] Was there a transportation dessert and did Bolt emerge to solve that problem, or is the company crafting a new cultural mindset around how we define the concept of access? [9:45] What skills from her career have helped Haynes in her current role as CEO? [12:36] What are the risks and opportunities facing the micro-mobility industry?
This episode of the Principled podcast interviews Ana-Paula Capaldo de Aoun, director of ethics and compliance for Tech Data Corp. Capaldo de Aoun has been passionate about the field of compliance since she was an undergraduate student. She went on to law school and focused her research on the field, while building up a network of like-minded professionals. She has worked in compliance for her entire career, and remains proactive in seeking out mentors from which she can learn. Her focus is on creating programs that resonate across cultures and locations, working collaboratively with other business units, and ensuring the business has a purpose beyond profit.
What You’ll Learn on This Episode
[1:03] How did she find her way to compliance? [3:57] How much did mentorship shape how she approaches compliance? [6:24] How does she challenge some of the defensive ways programs are set up to chart the next course? [9:00] How does she scale policy and principles to a local level, especially outside the U.S.? [12:55] What are some of the areas she thinks ethics and compliance officers need to keep an eye on?
LRN’s Dr. Marsha Ershaghi Hames interviews Bruce Karpati, global chief compliance officer at KKR. Karpati has experience both within the government, when he led the SEC’s Asset Management Unit, and within companies, which gives him an appreciation of the importance for compliance and taking regulations seriously.
He shares the key characteristics for a chief compliance officer to be successful, talks about innovative initiatives he is implementing to get lift-off for his programs across KKR’s portfolio companies. These endeavors help to ensure the company gets ahead of potential threats.
What You’ll Learn on This Episode
[0:53] Karpati shares a bit about KKR as an organization and its reach? [1:32] He talks about his program and how it approaches compliance across a global footprint? [3:09] How does he partner locally to convey some of the core critical messages? How does he hold those local stakeholders accountable? [4:38] How much two-way input is he open to from a cultural compliance standpoint? [5:51] What innovative tactics does Karpati employ as it relates to lift-off of his compliance strategy? [8:51] Karpati recounts his time leading the SEC’s Asset Management Unit and how his approach to E&C was impacted by sitting on both sides of the compliance profession? [11:31] What are some of the characteristics a CCO needs to have to be successful? [15:27] What drew him to a career in compliance?
“Our decisions, to a large extent, are predictable but not rational. Research has also shown that, when faced with ethical dilemmas, people behave virtuously not when they are moved by reason but by their intuition, emotion, and empathy. … If the rational was enough for ethical decision-making, then ethics professors would probably behave better than the rest of the population, right? Curiously, though, there is scientific evidence showing that now even ethics professors behave systematically better than the rest of the population.”
“My key finding was companies that score higher on unethical culture are less profitable. … Companies with lower unethical scores--which is the say, the best ones--exhibit an average return on equity of 14 percent, about twice as much as the worst ones with the highest unethical scores.”
This episode of the Principled podcast is hosted by Ben DiPietro, editor of LRN’s E&C Pulse newsletter, sits down to talk with Alexandre di Miceli, a professor, consultant, researcher, and expert on corporate governance and business ethics. Di MIceli is a founding partner of Direzione Management Consulting in Brazil and has authored several books, including “The Virtuous Barrel: How To Transform Corporate Scandals into Good Business via Behavioral Ethics.”
Behavioral ethics is a new and multi-disciplinary field, which addresses two questions: How do people actually behave when exposed to ethical dilemmas and why do good people do bad things? Because behavioral ethics addresses the inner psychological factors and the contextual pressures that influence a person’s transgressions, di Miceli explains how it has greatly changed how companies address ethics and compliance issues.
What You’ll Learn on This Episode [1:12] How did he develop an interest in behavioral ethics, and what led him down this career path? [4:17] Are companies understanding the importance of developing an ethical corporate culture, or is there still some way to go? [6:49] What role does emotion play in the study of behavioral ethics? [8:52] Is there an economic case to be made for using behavioral ethics? [11:00] What are two challenges companies face when they try to use behavioral ethics and what would you suggest they do to overcome those challenges? [13:45] Are there ethical considerations to companies using behavioral ethics on their employees, in light of things like artificial intelligence and technology?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
“Go out with people in the field. Watch them do their jobs. Ask questions. The challenge for a lot of compliance folks is we’re often telling people how to do things, as opposed to watching and learning how people are doing things and try to identify ways to integrate into their approaches. … In the end, it’s going to make your advice much more effective, much more efficient, and much more tailored to the specific needs of each functional unit that you are engaging with.”
“One-size-fits-all approaches really don’t work. In fact, I think it’s the opposite; compliance risks are local. The best programs, in my view, for multinational companies are almost a series of individually designed programs for each locale. And the consistency surrounds the infrastructure, the rigor and the continued message about the importance of ethics and compliance.”
On this episode of the Principled podcast, host Ben DiPietro, editor of LRN’s ENC Newsletter, interviews Jonathan Drimmer, a Partner of the law firm, Paul Hastings, LLP. Prior to his current role, Jonathan was the Chief Compliance Officer at Barrack Gold, a large mining company, where he worked to improve the programs across five continents, including workforce engagement, training, monitoring through metrics, driving company culture through behavioral modeling, and using values to positively identify third parties to work with. Jonathan explains how a one-size-fits-all Compliance program doesn’t work for a multinational company, and how programs, training and engagement can all be improved by taking a hyper-local approach to each locale.
What You’ll Learn on This Episode [0:58] Drimmer recounts his journey from being a lawyer to getting into ethics and compliance, and what he does in his role at Paul Hastings?
[3:25] During his time at Barrack, what were the main ethics and compliance challenges Drimmer faced and how did he handle those? How did the program change or improve during his tenure?
[6:29] How did he deal with the issues in far-flung jurisdictions when integrating the ethics and compliance program with the human rights program.
[8:49] What are some tips to ensure program consistency and yet still be specific to each locale that you are doing business in?
[10:04] How can training better engage stakeholders in the company’s ethics and compliance program?
[12:15] What are two things that companies should do, but often don’t, to better embed ethics and compliance in the organization?
[14:10] Drimmer provides tips for ethics and compliance professionals to build key relationships that bolster buy-in and support in organizations?
[15:32] What does he predict will be happening in ethics and compliance over the next 10 or 25 years?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey or anywhere you listen to podcasts.
On today’s Principled episode, Ben DiPietro, editor of LRN’s E&C Pulse newsletter, speaks with Lisa Beth Lentini Walker, founder and president of Lumen. Lentini Walker explains why now is a great time to be in the ethics and compliance profession, and how companies, boards and consumers are demanding more in terms of workplace health, inclusion and governance.
She has been a mentor to many successful E&C professionals because she believes it’s a crucial part of developing future leaders and continuing to learn emotional intelligence and empathy as a leader herself. She discusses how fears some men have with mentoring a woman in the wake of #MeToo are unjustified, and how companies can improve and monitor diversity and inclusion going forward.
What You’ll Learn on This Episode
[0:52] What was her path she took to get to the point of starting her own company. [2:49] Was the need for wellness something she noticed as lacking in the marketplace, or did she experience firsthand the burnout in the people around her? [5:49] What can E&C professionals do to improve relationships with other business units, and are there any things that they should avoid? [7:25] What happens if E&C can’t get buy-in and support? [9:15] How important is mentoring in the E&C profession? [11:25] Some men have said they are less likely to mentor a female colleague. How can we ensure there aren’t lost opportunities for mentorship? [12:32] What are some of the biggest obstacles when working through issues of diversity and inclusion in organizations, and how should progress be measured?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
“I tell people that compliance is a misnomer; I really am a risk management, ethics and compliance officer. And if I do those first two jobs well--helping them identify risks, helping them identify the proper controls, helping them make ethical decisions--the third part of my job, compliance, becomes very easy.”
“We’re not dependent on the executive team, the CEO--whether it’s the Braskem CEO overall or the CEO of the U.S.--for our budget. While I sit on our team, I create a good balance by being a good teammate with the ability to say no when necessary. I think that’s very valuable.”
On this episode of the Principled podcast, host Dr. Marsha Ershaghi Hames interviews Joseph Henry, U.S. compliance officer for Braskem, a Brazil-based petrochemical company. Henry started his career as a chemical engineer, and quickly moved into technical sales, program management, and then compliance.
With experience in large and relatively small global companies, Henry heads up many initiatives for Braskem, not only in the U.S. under a compliance monitorship, but also globally on the risk management and anti-corruption front. Henry explains the importance of getting all business owners on board with policies, leading by example, and walking the tightrope between disciplined control and bureaucracy.
What You’ll Learn in This Episode [1:19] Henry shares his career path from engineering into ethics and compliance, and explains a bit about Braskem as an organization. [3:07] He may be U.S. compliance officer, but Henry talks about the need to have a broad global focus in his role. [4:06] In moving to a smaller company, he talks about building the business case for an ethics and compliance strategy. [5:51] How is he leading decision-making on the ground, locally? [7:34] How has he integrated ethics and compliance into the business? [8:23] What is his current reporting structure? What does he think is ideal? [11:23] What is his approach to scale training? [13:19] How does he bring shop-floor employees into his training strategy? [14:54] Over the next three to five years, what priorities does he forecast in the ethics and compliance space?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
What You’ll Learn on This Episode
On this episode of the Principled podcast, host Ben DiPietro, editor of LRN’s E&C Pulse newsletter, interviews Jim Massey, vice president of sustainability at AstraZeneca. Massey is leading his compliance colleagues to expand their role to global sustainability, which has allowed them to get more time during meetings to address larger issues, such as access to healthcare.
Conversations that focus on the “why” behind company values and direction, as well as keeping communications simple and easily translatable across the multinational company have supported E&C buy-in at all levels. AstraZeneca is focusing on improving diversity and inclusion by encouraging employees to speak up, and by treating each person as an individual.
[0:50] How did he come to oversee sustainability and compliance at AstraZeneca? [2:06] What are some of the challenges he’s faced in integrating ethics and compliance with sustainability and social issue awareness? How did he overcome these challenges? [4:02] Now that he’s gone through the process of melding together ethics and compliance and sustainability, what were the outcomes? [5:30] Are there still times when ethics and compliance must be separated from sustainability? [6:33] Does he get pushback from colleagues that are on a different adoption curve than he is? [7:28] How can E&C lay the groundwork for better relationships with other business units? Are other business units now more willing to embrace E&C than in the past? [8:40] How can training and messaging be more effective to get higher levels of support and buy-in from employees, business units, management, and the board? [11:39] How is AstraZeneca working toward diversity and inclusion, and what can other organizations do to improve in this area? [14:32] What are two issues Massey sees as being dominant for ethics and compliance departments in the next five to 10 years? The next 25 years?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
“I have a passionate belief that...really all businesses have a heart and a soul, and the ethics and compliance function has an essential role in finding them when they are not evident, and exploiting them when they exist. The ethics and compliance function can bring out the best in an organization by tapping into real, core human qualities.”
“The power in leveraging values as a cultural driver and a driver of ethics and compliance, is really to focus on how you are doing what it is you are doing. The behavioral guidance they provide to us are a strategic differentiator for us. Folks can copy what we do, but they can’t copy how we do it.”
Host Dr. Marsha Ershaghi Hames interviews Michael Williamson, chief compliance and chief privacy officer for Pacific Dental Services on this episode of the Principled podcast. Williamson brings experience in the regulatory sector to his role in the private equity healthcare space, and says it can be difficult to square up to regulatory imperatives when a private healthcare organization has a primary focus on profit over purpose. When an organization gets the balance of purpose and profit right, and the business is built on ideals and principles, it becomes easier to get support for ethics and compliance as a business driver, a strategic differentiator, and as a means of engaging employees.
What You’ll Learn in This Episode [0:54] Williamson recounts his journey into compliance, and how he found himself shifting into this type of path?
[3:36] How did he transfer his skills from previous roles into his role today with Pacific Dental Services?
[5:56] Does he see ethics and compliance as a potential facilitator to make purpose more actionable and measurable, while meeting regulatory guidelines?
[6:53] How willing does he think the workforce is to share and speak about being a part of culture?
[8:36] Williamson shares a little bit about the values system at Pacific Dental Service?
[12:24] What is his advice to ethics and compliance practitioners that are struggling to build the business case for internal stakeholders that they need to collaborate with?
[14:52] What trends does he forecast in the field over the next five or 10 years?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
“Anytime you’re in a career that involves consultative kind of work, influencing people, you have to understand who your audience is. In order to successfully influence them, you have to understand what pressures they may be under, what obstacles they may be up against. You need to understand, what is their agenda? It’s through understanding that, and listening, and getting to know those people both personally and professionally, that you can best tailor your message so that they can hear it.”
“You may see it clear as day, but if the feedback you are getting is that the audience just isn’t there, then maybe you have to adapt your strategies to get to where you want to go. Or maybe change your direction altogether. … You want to have an idea of where you want to get to, and some tactics on how to get there, but you have to be open to the feedback, the input,the reactions of those people you need to move in that direction.”
This episode of the Principled podcast is hosted by LRN’s Dr. Marsha Ershaghi Hames, who talks with Stephen Harris, senior vice president and chief ethics and compliance officer with Lincoln Financial Group. Harris shares how his unique performance background, in both theater and music, enriches his work in ethics and compliance.
The two discuss the importance of partnering with middle management, tailoring messaging to the particular audience, and live role-based training strategies. Harris explains how central communications are to an E&C strategy, and how content must be distributed across various platforms, above and beyond email.
What You’ll Learn on This Episode
[0:53] What was his career path into ethics and compliance? [3:56] How much does he think listening is teachable or coachable? [7:03] How does he harmonize messaging through the organization, and how did he engage with the middle? [8:56] Harris shares a little bit on his approach to creating and facilitating live E&C training for senior executives? [12:44] How heavily is he involved in the communications and marketing of the programs? [14:56] What is one of the more rewarding aspects of this role? . Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
“It was the opportunity of a lifetime to come in and really build something from the ground up. In some ways I’ve had a very easy time of it as the compliance officer because there’s not many chief compliance officers that can point to a $30 billion issue and say, ‘Look, this is why we need a better compliance program.’ In those ways I’ve had a much easier go of it than someone who doesn’t have that to point to.”
“We want to make sure you see our presence. For an organization that’s never had a large ethics and compliance team before, we just try to get out there and really be a part of the organization, so it’s a normal part of the business to see compliance at a meeting, than to say. ‘Oh my God, why is compliance here?’”
On this episode of the Principled podcast, Ben DiPietro, editor of LRN’s E&C Pulse newsletter, interviews Stephanie Davis, chief ethics and compliance officer for Volkswagen Group of America. Davis joined Volkswagen right after the company’s diesel crisis, and is building the ethics and compliance program for the world’s largest automaker.
In a company that did not have a compliance officer prior to her role, Davis made an effort to get to know all business unit leaders and to understand their business goals and individualized risks. Volkswagen is trying to rebuild trust with its customers through a commitment to improving emissions and by committing to being carbon-neutral. Davis explains how the company is driving diversity and inclusion, and how ethics is directing decisions around the use of AI and machine learning.
What You’ll Learn on This Episode
[0:53] Davis describes her journey to becoming chief ethics and compliance officer for Volkswagen of America. [3:30] Where is she in her efforts to build the ethics and compliance program, what changes she has implemented, and what’s next on her to-do list? [5:30] What is her relationship with other business units, and how has it changed since she came aboard as CECO? [7:20] What is the relationship E&C has developed with the board and the executive team? [8:16] What has VW done to repair and rebuild trust after the diesel crisis, and how far along is the company in that effort? [9:26] Davis started her career in an academic role, so what aspects from that part of her career helped her in her current role? [11:12] How does Volkswagen define diversity and inclusion? What is the company doing in that area, how is E&C measuring progress? [12:53] What types of guidelines are in place for the ethical use of artificial intelligence and machine learning? How big of a risk area is this?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey, or anywhere you listen to podcasts.
On this episode of the Principled podcast, host Ben DiPietro, Editor of LRN’s ENC Pulse Newsletter, interviews Peter Gleason, the CEO of the National Association of Corporate Directors (NACD). Peter explains how the expectations of a board have expanded over the last 10 years, resulting in the need for a certification from the NACD to prepare new board members for the boardroom. In addition, there is increased pressure on boards from investors and activists to improve board composition and to take a stance on controversial social issues. Peter also explains how Ethics and Compliance professionals can position themselves and prepare for the boardroom.
What You’ll Learn on This Episode [0:58] How long has NACD existed and what was his journey to becoming CEO?
[2:34] NACD recently released a new program to certify board members. Why is this being done now and what benefits do you expect to see from this?
[4:39] What will it take to get the majority of boards to embrace diversity, not just in gender and race, but in age and skill sets? Why has progress been so slow?
[7:20] What role are investors and activists having in driving action on board composition and oversight, and how are boards responding?
[10:01] There’s been a lot of focus on CEOs and the stances they take on controversial public issues. Do you see this coming for directors, and are they prepared for it?
[11:55] Why does Gleason think more boards don’t have directors with ethics and compliance backgrounds? What can ethics and compliance professionals do to make themselves more attractive board candidates?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, SoundCloud, Podyssey or anywhere you listen to podcasts.
This episode of the Principled podcast is hosted by Ben DiPietro, editor of LRN’s E&C Pulse newsletter, who interviews Leo S. Mackay, Jr., senior vice president of ethics and enterprise assurance at Lockheed Martin Corp.
Mackay explains the strict compliance landscape within the aerospace and defense industry, and open and collaborative efforts that go beyond the law with a commitment to ethics, both in the industry itself and within the company's supply chain.
Lockheed Martin has five distinct disciplines under the Enterprise Assurance umbrella, but the tools used for risk management within each are largely the same. Mackay describes Lockheed Martin’s commitment to diversity and inclusion, mandatory ethics training in response to #MeToo, and other social activism.
What You’ll Learn on This Episode [1:02] How did you find your way to working at Lockheed Martin? What led you to ethics and compliance?
[3:13] What is unique about leading ethics and compliance at a defense company?
[6:34] What were some of the challenges associated with integrating ethics and compliance with the internal audit enterprise risk function?
[8:22] Are there still times when these issues need to be separated and handled individually?
[9:33] Are you finding other departments more willing to embrace ethics and compliance than they were in the past? What can ethics and compliance do to better lay the groundwork for positive relationships with other business units and executive management?
[11:46] As you move forward, what’s happening at Lockheed Martin in terms of diversity and inclusion, and how is all this being shaped my #MeToo and social activism of employees, investors, and others?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
PULL QUOTE: “Compliance and ethics is not for the faint of heart. All of us, we live for those moments where we can be part of a monumental wake-up call that can really realign an organization and bring them back to their core values.” -Ashlee Foltz
On this episode of the Principled podcast, host Dr. Marsha Ershaghi Hames interviews Ashlee Foltz, founder of ACF Consulting Solutions and the former chief ethics and compliance officer of Cintas Corp. Ashlee describes her own journey into the ethics and compliance field, her passion for business ethics, and how best to integrate the function into an organization. During the episode, trends in business ethics and drivers for socially responsible companies are discussed, as well as how to advance integrity as part of the business mandate. Ashlee explains how the industry is moving away from a top-down approach based on punishment, and toward a bottom-up approach, where the ethics and compliance program is seen as a competitive advantage and a source of pride.
What You’ll Learn on This Episode
[1:09] How did Foltz find her way to ethics and compliance?
[3:27] Coming from an in-house position and evolving into a private practice, what drove her in that direction?
[4:45] How does she view the opportunity to integrate business ethics into an organization?
[7:27] What are the future trends we can expect to see in business ethics?
[10:11] What is the driver for people wanting to work in a more inclusive and socially responsible workplace?
[12:00] How much does she see ethics and compliance professionals being responsible for advancing integrity as part of the business mandate?
[14:53] How can ethics and compliance Leaders balance scaling a program, yet keep it locally and contextually relevant?
Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.
This episode of the Principled podcast is hosted by Ben DiPietro, editor of LRN’s E&C Pulse newsletter, who is interviewing Katie Lawler, global chief ethics officer at U.S. Bank. Most companies will have ethics and compliance as a combined function, but U.S. Bank has a large risk management and compliance department, while ethics sat under human resources.
U.S. Bank saw an opportunity to elevate ethics to a standalone function to build on the company’s strength. Lawler discusses how she transitioned into the newly created role of ethics chief, how she clearly defined business unit roles, and how she gives partners latitude and freedom to do their best work.
What You’ll Learn in This Episode
[0:54] What was the career path that let to her current role at U.S. Bank?
[2:30] Was she happy to be the first chief ethics officer, or did she wish there already was a structure in place?
[6:00] How did her background in human resources help she transitioned into her new role?
[7:09] One of her first tasks was to work with her former HR colleagues; did that change her relationship with them? What were some of the issues she had to deal with?
[9:13] What are some ways ethics and compliance people can foster closer relationships with other business units?
[11:55] Has her successful partnerships resulted in other business units taking notice, and has it changed her relationship with them?
[13:18] How can ethics and compliance better articulate to boardrooms that companies that behave better perform better?
Find this episode of Principled on Apple Podcasts, Google Play, Stitcher, Sound Cloud and Podyssey, or anywhere you listen to podcasts.
This episode of the Principled podcast finds our host, Marsha Ershaghi Hames, speaking with Joseph Kale, executive director of ethics and compliance at Creative Associates International. Kale describes his experience building and running the ethics and compliance program at Lockheed Martin.
The pair discuss the current focus on corporate culture as the ultimate competitive advantage that companies can leverage. They cover why culture matters and how stakeholders are key to change a culture. Kale explains how critical it is all levels of leadership exhibit behavior aligned with company values, and how any inconsistencies can be rectified.
What You’ll Learn on This Episode [0:57] How did you enter the compliance and ethics field?
[3:49] In your career, what levers or influences do you see in the design of effective compliance and ethics programs?
[5:18] As companies are evolving their compliance and ethics strategies, what hallmarks are you seeing for them to scale their impact?
[7:08] Why does company culture matter?
[8:36] Who are the stakeholders that need to be collaborated with on the inside to really improve company culture?
[10:35] How do you catalyze in middle layer of an organization to mobilize the messaging from the top?
[12:57] How can inconsistent behavior be addressed and scaled when you are doing business outside the U.S.?
[14:52] What are some of the potential disruptors to culture being everyone’s responsibility?
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In this episode, LRN's Marsha Ershaghi Hames interviews Deni Anderson, director of global compliance operations at Endeavor, a talent, events, and entertainment management company.
Anderson describes how she broadened her understanding on the compliance issues leaders face when she began to work on the inside of organizations. She shares the key traits of good leaders, and how training is necessary to make sure all levels of management support their employees.
The hidden biases women face in the workplace, and how they can limit opportunities for female leaders, are explored. Anderson offers her thoughts on how to work to eliminate the barriers for women at work, including work/life balance programs, mentorship tracks for women leaders, and eliminating negative gender stereotypes.
WHAT YOU'LL LEARN THIS EPISODE...
[00:35] How did she decide to pursue a career in the compliance and ethics field?
[02:46] What has she seen as she shifted from being on the outside as a solution provider to bringing that in-house to organizations?
[04:33] What skills or traits do leaders today need to carry forward?
[06:23] What is her advice to companies that want to get their middle management teams involved in driving compliance and ethics?
[08:04] What are the most significant barriers to women rising in leadership?
[10:25] What are some of the strategies the next generation of women can use to break through those barriers?
[12:39] What will be some of the biggest disruptors as the compliance and ethics field evolves?
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This Principled podcast series comes in celebration of LRN Corp.’s 25th anniversary. Today, Rashmi Airan is interviewed by LRN’s Marsha Ershaghi Hames.
Airan is someone who once was caught up in the grandeur of goals, rather than paying attention to real and detrimental consequences of her actions. She grew up a perfectionist, and pressured herself to succeed. She achieved tremendous success and eventually opened her own real estate and law practice.
Everything changed when she started working with a big developer client and became mixed up in some “creative” transactions. Not realizing the severity of her actions, Airan stayed quiet. She received a visit from the FBI in May 2011, and was interrogated for four hours.
Two years passed after the interrogation before she was charged with bank fraud. Airan pled guilty and owned her mistakes. She realized she had ignored red flags and was silent when she should have spoken up. She served six months in prison.
Since her release, she’s been sharing her story with others. Looking back, she realizes she got lost trying to keep up with appearances. If she had it to do over again, Airan said she would pay closer attention to details. She learned while the situation happened, it doesn’t define her.
What You’ll Learn on This Episode
[0:58] Could you share a little bit about your background?
[4:53] What happened with the interrogation?
[7:24] What have you learned looking back if you had to go back and coach yourself? What would you do differently and where were the red flags?
[10:07] Were you so focused on the outcome you couldn’t stop and ask the right questions?
[12:53] Are we developing and coaching the next generation of leaders to be culturally aware and culturally sensitive?
[14:52] How are you charting the path forward? What are some of objectives you have?
This episode of Principled podcast finds host Marsha Ershaghi Hames interviewing LRN’s global head of people, Danielle Schlar.
Schlar talks about people management and organizational culture. She shares insights into the role human resources plays in creating a values-based company culture supportive of employees.
The discussion shifts to the role #MeToo has played in shaping the conversation surrounding workplace diversity and sexual harassment. Schlar talks about the responsibility leaders and management have in driving the conversation, and in instilling the right values throughout the organization.
What You’ll Learn on This Episode
[1:50] How do you see your role within an organization crafting and charting organizational culture?
[2:51] Who are the mentors that have helped influence you?
[3:47] In light of some of the outcomes of #MeToo, there is a significant focus on diversifying. How can that impact and help the business?
[5:37] In relation to bias and sexual harassment, where do you see the overlap in responsibility between compliance and HR headed?
[6:27] What role do leaders play in helping drive the conversation?
[7:29] How do you develop and coach leaders on the skills they need?
[8:38] What is some advice on how to deal with implicit bias, and how to develop greater sensitivity?
[10:11] How much do you think the application of what is learned in training is effective? Does measuring matter? Should there be ways for measuring training effectiveness?
[11:43] Where do see you the opportunity in connecting values to behavior and management? What can companies do to put values into action?
[13:39] What is the importance of recognition, both formal and informal, in building a healthy company culture?
This episode of the Principled podcast finds our host Marsha Ershaghi Hames interviewing Head of Global Operations for Education Content and Learning at LRN, Jennifer Farthing. In this episode, Jennifer talks about her passion for teaching. We learn about the publishing career that sparked her fascination with education. In the midst of all the technological developments that would happen in those 20 years, she was happy to see that her work would still be providing people with the knowledge they were seeking. She dives deep into how to develop relatable training policies for optimal retention, best practices in adult learning, and the complexity of anti-harassment training and communication strategies in the #MeToo era.
On this episode of the Principled podcast, host Marsha Ershaghi Hames interviews Michael McIntyre, principal attorney at his firm of the same name. Michael describes how the environmental movement of the 1960s and ‘70s influenced his beginnings as a prosecutor in the environmental enforcement section of the Department of Justice. As a pioneer in requiring compliance programs, the DOJ provided Michael with his first glimpse into global compliance and ethics. He would become a compliance officer at a large-scale paper company, then a senior in-house counsel for a Fortune 150 multinational semiconductor manufacturer. As a professional in the field over three decades, Michael dives into the transformation of global compliance and ethics.
On this episode of Principled, host Marsha Ershagi Hames chats with Jo Anne Hennigan, ethics director at tire manufacturer Michelin. Jo Anne tells us about her background as a litigator, and the skills she gained in that position that led her to a role in corporate compliance and ethics.
Jo Anne discusses her experiences abroad as a lawyer in France, and the incredible value exposure to different cultures and perspectives provided. She talks about her role as a female lawyer in a male-dominated industry, strategies for representing Michelin, and the potential of global ethics strategy.
In Episode 3 of the Principled Podcast, we talk to Samantha Kelen, lead ethics analyst at Duke Energy, about her personal experience in corporate compliance, and her ideas as they relate to the current state--and potential--of ethics. Samantha discusses her beginnings as an administrative assistant to a compliance officer, where her interests were piqued. Through her advancement in the field, Samantha noticed a lack of ethical committees within. She was inspired to focus on and implement policies that were not only contractually and legally compliant, but those that adhered to principled notions of a company’s ethical responsibilities to its employees.
On the inaugural episode of the Principled podcast, LRN’s Susan Divers speaks with Bertrand Andre Rossert, adviser to the chief ethics officer at The World Bank, a global source of financial and technical assistance to developing countries around the world. Bertrand speaks with Susan about The World Bank’s universal values, why integrity is so important, why The World Bank is launching a new aspirational code of conduct, and more. Listen to this episode to learn how a global organizational leverages its cultural diversity as a resource and where The World Bank’s ethics and compliance (E&C) program is heading over the next five years.
LRN’s Ben DiPietro sits down with Ellen Hunt, the senior vice president and head of audit, ethics and compliance at AARP, the largest nonprofit, nonpartisan organization in the United States dedicated to empowering and advocating for Americans 50 and older. Ellen tells LRN how she developed a transparent ethics and compliance (E&C) dashboard that is shared with the Audit Committee and entire organization, her thoughts on retaliation, the benefits of having E&C officers serve on boards and more. Listen to this episode to learn where Ellen sees shortcomings in the profession, how she sees risks converging and how the function could evolve over the next 25 years.