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Susan Du Becker Cisco Systems BV
SCCE European Conference April 2nd, 2017
A Tale of Two Worlds
Ethics & Compliance
Ruth Steinholtz – AretéWork LLP
Ruth Steinholtz
• Ethics, values & culture guru
• Recovering Lawyer
• Wrote the book on Ethics ambassadors
• European, Road cyclist
Who Are We ?
Susan Du Becker
• Lawyer no more
• Engineer
• Business & Cultural SME
• Star Trek Fan !
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The Cart without the Horse ?
Policies
Regulatory Input
Industry Standards
Structure
ToolsProcess
Striking the Perfect Balance
Ethics,Attitude, Beliefs,Values,People
The Culture
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Compliance is an outcomeNot an approach
Ethics is EVERYONES’S responsibility
Getting the balance right
Ethics,Culture &
ValuesCompliance
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Compliance
Exercise:
Where is your department/company on the culture-compliance continuum?
How are decisions made?Does your programme favour rules or principles?
Culture &
Values
Guiding Principles
Perspective 1One way to do it
There is NO one right or wrong way
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Cisco Story - Framework & Methodology
Business Focused – Risk based Framework- scalable, - consistent
Underpinned By Guiding Principles
- Defining Ownership- Structure & Guidance- Assigning Responsibility &
Accountability
Enforcement, Discipline & Incentives
Investigations & Response
Policies & Processes
Ongoing Risk Assessment
Program Governance &
Resources
Compliance Communications
Monitoring & Auditing
Compliance Training
Cisco Compliance
Anti-Corruption& Bribery
Data Protection/ Privacy
Import/ExportCompliance
Product Regulatory
Third Party Relationships
Environment, Health &Safety
Enterprise Records & Information
Management
Conflict of Interest
Insider Trading
Intellectual Property
Labor & Employment
Antitrust & Competition
Financial Responsibility
Cisco’s Compliance FrameworkElements of an Effective Compliance Program
Risk Assessment Targets are aligned to
YOUR business
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Cisco StoryEthics Compliance
Remediation & Resolution
Investigations
Education,Communications
Risk Management
Travel, Expenses
Anti-Bribery & Corruption
Conflict of Interest
Policies & Guidelines
CoBC
Tools
Internal Audit
External Audit
Compliance Program Outcome
Audit Committee / Board / Authority
Function / Division /
Business Unit input
Risk Assessment /
Audit / Investigations
Market Influence /
Global & Local regulatory /
Environment
Ethics & Culture
Structure & Guides
Effective Compliance Program
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Guiding Principles
Perspective 2Another View
There is NO one right or wrong way
What are Values?
A shorthand way of describing ourindividual and collectivemotivations
and what is important to us.
They are the drivers of ouraspirations, intentions and
sometimes, ourbehaviours.
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Culture is the way we do things around here and influences and, is influenced by:
Humans,especially
leaders
Values
Law & Regulation
Context, Societal Norms
Policies and Procedures
Systems
Culture
Intrinsic Motivation Extrinsic Motivation
Values Rules
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What do I mean by a culture and values approach?
Compliance Assumptions Culture & Values Assumptions
bad people do bad thingsWhat are these?
Most people want to do the right thing butcontext, situation, cognitive & behavioral factors can lead them astray
Deterrence & threats of punishment work best A strong, positive, ethical culture that minimises ability to rationalise is the best approach. Of course, controls for the sociopaths.
Detailed rules and procedures are necessary to ensure everyone does the right thing, values statements are additional.
Strong ethical values that are truly lived will be more inspirational and effective. Rules are important but are often too complicated.
Punishment is key Just culture and open & transparent communication creates improvement. Blame drives behaviour underground.
Compliance is a cost A strong ethical culture is good for business
We need a large compliance department to ensure compliance.
Ethics is everyone’s responsibility so embed it directly in the business, i.e.. Ethics ambassadors.
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Behavioural ethics (economics + psychology)
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What does this mean for communications?
What is your relationship with the rest of the business, and why does it matter?
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“A culture of collective secrecy existed within the engine development department of Volkswagen”
Where do you start to focus on values and culture ?
• Measure/understand the culture• Pick appropriate core values• Inspire/involve/motivate people• Do not to demotivate them• Start with people who are
creating/influencing the culture• Ethics ambassadors
– Consciously vs. unconsciously
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Regulators are increasingly focusing on culture
So, how can we measure and explain our culture in this context?
Exercise
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Exercise: Measuring and Reading Culture
Positive Focus Excessive Focus
Financial StabilityShareholder value, organisational growth, employee health, safety. Control, corruption, greed
BelongingLoyalty, open communication, customer satisfaction, friendship. Manipulation, blame
High PerformanceSystems, processes, quality, best practices, pride in performance. Bureaucracy, complacency
Continuous Renewal and LearningAccountability, adaptability, empowerment, teamwork, goals orientation, personal growth
Building Corporate CommunityShared values, vision, commitment, integrity, trust, passion, creativity, openness, transparency
Strategic Alliances and PartnershipsEnvironmental awareness, community involvement, employee fulfillment, coaching/mentoring
Service To Humanity And The PlanetSocial responsibility, future generations, long-term perspective, ethics, compassion, humility
Stages in the Development of Organizational Consciousness
Service
Making a difference
Internal Cohesion
Transformation
Self-esteem
Relationship
Survival
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What Employees Value at different levels of consciousness
A safe working environment and pay and benefits that are sufficient to take care of family
Opportunities to work in a congenial atmosphere where people care and respect each other
Opportunities to grow professionally with support, feedback and coaching
Opportunities and challenges by being made accountable for projects and processes
Opportunities for personal growth and development to support you in living your life purpose
Opportunities to leverage your contribution by collaborating with other like-minded individuals
Opportunities to serve others and care for the well-being of the Earth’s life support systems
Surviving
Relationship
Self-esteem
Transformation
Internal cohesion
Making a difference
Service
Levels of Consciousness Primary Motivations
Entropy and (Ethical) Culture Risk
Cultural Entropy Most employees are ….
Potentially limiting values showing up in current culture
Culture Risk
10% or less Highly Engaged Low Risk
11% to 20% Engaged Relatively Low Risk
21% to 30% Becoming Disengaged Bureaucracy, Hierarchy, Confusion Medium Risk
31% to 40% Disengaged Bureaucracy, Hierarchy, Confusion, Control, Short-term focus, Silo-mentality, Long hours
High Risk
41% or more Highly Disengaged Bureaucracy, Short-term focus, Hierarchy, Blame, Control, Confusion, Information Hoarding, Silo-mentality
Very High Risk
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Flexlite (53)
Level 7
Level 6
Level 5
Level 4
Level 3
Level 2
Level 1
Personal Values Current Culture Values Desired Culture Values
PL= 10-0 | IRS (P)= 5-5-0 | IRS (L)= 0-0-0 PL= 4-7 | IROS (P)= 0-0-4-0 | IROS (L)= 0-4-3-0 PL= 11-0 | IROS (P)= 1-5-5-0 | IROS (L)= 0-0-0-0
Matches
PV - CC 0CC - DC 1PV - DC 2
1. honesty 27 Level 5
2. commitment 24 Level 5
3. accountability 20 Level 4
4. adaptability 18 Level 4
5. reliability 18 Level 3
6. responsibility 18 Level 4
7. trust 17 Level 5
8. fairness 16 Level 5
9. caring 15 Level 2
10. humor/fun 15 Level 5
Black Underline = PV & CC Orange = CC & DC P = Positive L = Potentially Limiting I =
Individual O = Organizational
Orange = PV, CC & DC Blue = PV & DC (white circle) R =
Relationship S = Societal
1. blame (L) 27 Level 2
2. long hours (L) 24 Level 3
3. profit 23 Level 1
4. bureaucracy (L) 22 Level 3
5. control (L) 21 Level 1
6. cost reduction 20 Level 1
7. productivity 20 Level 3
8. short-term focus (L) 18 Level 1
9. manipulation (L) 15 Level 2
10. continuous improvement 14 Level 4
11. power (L) 14 Level 3
1. customer satisfaction 31 Level 2
2. accountability 26 Level 4
3. continuous improvement 24 Level 4
4. commitment 20 Level 5
5. quality 15 Level 3
6. teamwork 15 Level 4
7. cooperation 14 Level 5
8. employee fulfillment 14 Level 6
9. employee recognition 14 Level 2
10. information sharing 13 Level 4
11. respect 13 Level 2
Values Plot Copyright 2008 Barrett Values Centre August 2008
Compliance & the Enterprise
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Enablement Purpose
- Company identity- Mission Statements- What/Who are you ?
Culture- Purpose shapes your
policies
Strategy- What- How- Where
Goals- What do you want?- How do you want to
get there ?
Portfolio- What are you
selling/doing/buying
Operations- Staff- Mobility- Tools
Metrics- Measure of Success
Culture- Creates the drive towards
your goals
Culture- Creates a clear line of sight from where we are to where
we want to go, together.
Culture- Creates the understanding of the impact of our product
Culture- Drives how we work
together; ethically, emotionally, strategically with
impact
Culture- Continuous alignment with our purpose, goals,
metrics, portfolio and operations
Ethics ambassadors for global reach and input
culture bearersculture bearers
Communicate& trainCommunicate& train
ethical decision-making coach
ethical decision-making coach
listenlisten
provide the local
perspective
provide the local
perspective
be creative& develop material
be creative& develop material
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Culture
Walking the Talk ?Empowerment – are you ?Communications – The 360 ViewTone from the Top – support from the middle Polling – does the company hear, listen and understand the employees ?Are you focused on the right priorities - learning and education ?
Critical meetings – Involvement, Collaboration & Interaction ?
Reporting lines & Visibility & Autonomy – ease of use, respect of the function ?
Compliance function Stature –are you a Partner, Support or a seen as a ‘necessary evil’ ?
Controls – Due Diligence, Investigations, Audit, Compliance Program, Remediation planning
Effective Compliance Program(Compliance activities)
What do Regulators Look for ?
Corporate / Local – the 360 Dilemma
Understand YOUR business Don’t Over Pivot
Communicate
• Are you Global or local
• Listen to your outfield
• Respect differences
• ‘Champions’ at executive level
• Don’t forget middle management
• Stakeholder relationships• Metrics &
Reporting
• Keep your program simple
• Use Tools such as Risk Assessments
to verify• Clarity of roles • Ownership &
Accountability
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ExerciseCultural risk and culture change over time
Entropy 25%
Bank: Current Culture Evolution
1. cost consciousness2. profit3. accountability4. community involvement5. client driven6. process driven7. bureaucracy (L)8. results orientation9. client satisfaction10. silo mentality (L)
2005
1. cost consciousness2. accountability3. client driven4. client satisfaction5. results orientation6. performance driven7. profit8. bureaucracy (L)9. teamwork10. community involvement
2006
1. client driven2. accountability3. client satisfaction4. cost consciousness5. community involvement6. performance driven7. profit8. achievement9. being the best10. results orientation
2007 2008
1. accountability2. client driven3. client satisfaction4. community involvement5. achievement6. cost consciousness7. teamwork8. performance driven9. being the best10. delivery
4 matches 5 Matches4 matches3 matches
Entropy 19% Entropy 17% Entropy 14%
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Bank: Current Culture Evolution
2009 2010 2011
6 matches6 matches6 matches
1. accountability2. client driven3. client satisfaction4. cost consciousness5. community involvement6. achievement7. teamwork8. employee recognition9. being the best10. performance driven
1. accountability2. client satisfaction3. client driven4. teamwork5. brand reputation6. being the best7. achievement8. commitment9. community involvement10. cost consciousness
1. accountability2. client driven3. client satisfaction4. brand reputation5. achievement6. teamwork7. environmental awareness8. commitment9. being the best10. cost consciousness
Entropy 14% Entropy 11%Entropy 13%
Cultural Entropy Evolution
Entropy risk bands
0 -10% Healthy functioning11-20% Some problems 21-30% Significant problems 31-40% Serious situation 41%+ Critical situation
Entropy reduced or stayed the same every year. Entropy reduction led to improved performance through increased employee engagement—increased revenues, productivity, share price, etc.
Working toward entropy of 10% will result in healthy functioning of the organisation and improved staff morale.
25%
19%17%
14% 13% 13%11% 10%
0%
5%
10%
15%
20%
25%
30%
2005 2006 2007 2008 2009 2010 2011 2012
Cutlural Entropy
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Wrap Up
What have we learned
“Culture is vital to overall strategy and performance”
Source: EY Culture and Boards at a glance 2016. Survey of 100 board members of FTSE 350 companies.
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Compliance
Any Change to your view?:
Where is your department/company on the culture-compliance continuum?
How are decisions made?Does your programme favour rules or principles?
Culture &
Values
Key TakeawaysStrategy, Process,
Assessment & Roadmap
Relatable Policies
Defined program
Follow Up – Control, Audit
& Investigation,
Take values seriously
Understand your culture, culture
risk, nurture +
Cooperate w/business/functions
Get the right balance & think
long term
Ethical Behaviours
Compliance Structures
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