Odds and Ends

Been a while since I’ve posted, but not for lack of desire or content. Rather, we’ve been extremely busy here at EthicsPoint over the past few months, and I’ve just been remiss in my blogging duties. But no more- today starts a renewed commitment to keeping this space current.

To get started, thought I’d share a bunch of links/news and other material you may find interesting…

For the third straight year, EthicsPoint is hosting our annual Best Ethics Portal Contest – I encourage any of our current customers who have launched a new or revamped Ethics Portal in the past twelve months to nominate their site.

I spent a good part of my late Spring and Summer traveling around the US to EthicsPoint Regional User Forums – one of the best parts of my job. I love meeting with companies that are putting real effort into building a culture of integrity and compliance and seeing the progress of their activities year over year is incredibly rewarding. One of the interesting topics this year was the anticipated impact of the whistleblower “bounties” referenced in the Frank Dodd Act and what this meant to corporate compliance and ethics officers.

EthicsPoint will be hosting a webinar Whistleblowing and the New Race to Report: The Impact of the Dodd-Frank Act and Proposed Changes to the U.S. Federal Sentencing Guidelines with Toby Bishop and Mohammed Ahmed from Deloitte on September 29 for those of you interested in learning more about this topic.

And on the subject of webinars, I’d be remiss if I didn’t direct you to our archives, as we’ve hosted some really valuable sessions over the past few months on topics such as:

• The FCPA Year In Review: How Recent Investigations and Prosecutions Will Impact Compliance Programs
• The UK Bribery Act – Analyzing the Impact for UK and US-based Companies
• Reporting to the Board on your Ethics and Compliance Program New Guidance and Good Practices,
• Global Discrimination, Harassment and Diversity Policies and Strategies for Multinational Workforces
  

...among many others. And we're close to scheduling a number of great sessions for September and October, so watch for your invite or visit our webinar page in the coming weeks:

In the coming weeks, I hope we’ll get a chance to see you at one of the upcoming conferences where EthicsPoint will be speaking and/or exhibiting, including

• The Society of Corporate Compliance and Ethics Compliance Institute,
  
• The Association of College and University Auditors annual conference,
  
• The 18th Annual Ethics and Compliance Officers Association conference,
  
• The Open Compliance and Ethics Group GRC360° Executive Forum to be held in the Netherlands in October and
  
• Ethical Corp’s 4th annual Anti-Corruption Summit Europe later in November

Finally, to keep abreast on a daily basis of new research, interesting articles, and EthicsPoint announcements, follow us on Twitter at http://twitter.com/ethicspoint.

A Proud Time

As we all go through our careers, we have opportunities to observe and experience many different leadership styles. Sometimes, the style may be orthogonal to your values or preference. In other cases, you may appreciate the success achieved, but not the methods. But sometimes you find yourself in a situation in which all things seem to come together - you’re just proud to work for someone because of the vision they display, the integrity they embody, the gusto with which they lead and so on. Today, I describe myself as fortunate and proud to work for David Childers, EthicsPoint president and CEO, and thrilled to announce that he’s been named a finalist for the Ernst & Young Entrepreneur of the Year 2010 Award in the Pacific Northwest region. This designation publicly recognizes David for the talent and work ethic we here already know. Recognizing him for the extraordinary success in the areas of innovation, financial performance and personal commitment to his business and community, the acknowledgment couldn’t be given to anyone more deserving in those aspects.

Early on, David recognized the potential of EthicsPoint long before the current boom in ERM and GRC – before governance, risk and compliance (GRC) even had an “industry.” Coming off a successful stint as Oregon Scientific’s CEO, he was looking for a new opportunity to sink his teeth into and found the product EthicsPoint was built around – an anonymous telephony and web-based reporting system for ethics and compliance violations – to be one with potential to change the business world. A couple years after investing his time, energy and resources in the company, Sarbanes-Oxley was passed and what had previously been a "nice-to-have" hotline for employees to report misconduct became a mandate for publicly traded companies, making EthicsPoint a success – quickly. Having someone at the helm with David’s experience in business management and high-growth industries was one of the keys to EthicsPoint success through that period and on into our current state of maturity. The gradual transformation of our company under his leadership into an overall organizational risk management provider was a natural progression from EthicsPoint’s roots and his foresight has benefited this company from the ground up – from product strategy to acquisitions to the legal and cultural implications of that growth – and we look forward to where we’ll be going next with him at the helm!

Congrats again to David and we look forward to the announcement of the PNW regional winner on June 18, 2010 at the Pacific Northwest Region Award Gala at the Sheraton Hotel in Seattle! More information about the Ernst & Young Entrepreneur of the Year Awards can be found here:

Survival of the most informed

Image via Wikipedia

Read a fascinating study from KPMG today - The Convergence Challenge, which is a global survey into the integration of governance, risk and compliance, originally published in February 2010. I literally wore out my highlighter as I tried to capture all the data, quotes and other material that jumped off the page to me.

For example, in the opening foreward they write, "...Fearful of both business failure and the penalties of non-compliance, many organizations have reacted by swelling their GRC departments. This has lead to a costly and complex web of often uncoordinated structures, policies, committees and reports, creating duplication of effort. Worse still, GRC has lost sight of its prime objective: to improve performance and efficiency. In short: the solution has become part of the problem! (my emphasis)

In recent years, internal auditors, risk officers, compliance offivers and information technology chiefs have begun to work together more closely, finding commonality between disparate GRC projects. Some organizations even formed GRC committees..."

I have seen first-hand at numerous client sites this scenario playing out. Departmental/Organizational silos are being struck down by foreward thinking leaders, because they know the value that is derived when GRC is done right. When we are able to share EthicsPoint's vision for GRC with organizations that have reached this stage of maturity, magical moments happen. The energy in the meeting ratchets up, and we get into really fruitful conversations on how value is created through these programs. As Oliver Engels, the European Head of GRC for KPMG in England states, "GRC convergence is an idea whose time has come. It is not simply a technology tool; it is a way to rationalize risk management and controls, giving management the information they need to improve business performance and achieve compliance."

Some other interesting statistics from the survey:

• 64% of respondents say GRC convergence is a priority for their organization
• 78% agreed strongly or slightly with the statement,"We see compliance encompassing internal policies, not just external rules and legislation."
• 59% believe the ability to identify and manage risks more quickly is among the main benefits of convergence
• 33% list improved corporate performance among the main benefits

What strikes me is that while accurately determining ROI on GRC activities is extremely difficult (how do you put a price on what doesn't occur?), so many leading companies inherently understand that GRC requires doing more than the minimum required, and by taking a proactive, enterprise approach, benefits accrue to their organization. Yet these companies are in the minority - silos still exist in most companies, and many see GRC as an expenditure as opposed to a benefit (just 34% see resources expended for GRC as an investment rather than a cost). When considered in conjunction with Ethisphere's data that Ethical companies outperform their peers and the general market, I do wonder why the momentum and pace of convergence isn't even faster?

World's Most Ethical Companies

Ethisphere announced the winners of their 2010 Most Ethical Companies Award earlier this week, and despite criticism in some quarters, I look forward to announcements such as this. The criticism in Slate highlights that Ethisphere's sister organization, Corpedia, consults on ethics and compliance, so there is the potential for conflicts of interest. I won't argue this point, and will leave it to others to determine for themselves whether to regard such rankings as gospel or with a grain of salt.

But I do believe there is value in rankings if for no other reason than to highlight the great work companies are doing in this space. For the past 1.5 years I've had the good fortune to speak with a broad spectrum of ethics and compliance leaders - across large, medium and small size organizations, across all industries, non-profits and educational institutions, and I do believe that most companies are ethical and working to constantly evolve and improve their compliance programs. Celebrating the efforts of the few recognized still brings positive reinforcement to the profession and helps to underscore the importance of a strong program.

Further, Ethisphere has tracked the stock performance of the companies named to their list, and as you can see below, the companies they recognize as ethical outperform their peers and the market in good times and bad. More justification for the resources companies are devoting to fostering a culture of integrity and compliance!

Please join me in congratulating all the EthicsPoint customers who have been recognized for their high commitment to ethical decision making:

• AstraZeneca
• Avaya
• Best Buy
• Cummins
• Flint Hill Resources
• General Mills
• Henkel
• IKEA
• Johnson Controls
• Noblis
• Parsons
• Premier
• Rezidor Hotel Group
• Ricoh
• Salesforce.com
• The Hartford
• Wisconsin Energy Corporation
• Wisconsin Physicians Service
  

March Madness Dilemmas

Image by ruralocity via Flickr

Once again, my beloved Stanford Cardinal men's basketball team declined to participate in the NCAA Basketball Championship tournament (I am, however, predicting the Mighty Cardinal women will avenge their only loss of the season by beating the University of Connecticut for the title!). But my son still wants me to fill out a bracket, and thus have to make some tough decisions...

Can Vermont be the first 16 seed to upset a number one seed when they play Syracuse? Will 10th seeded Georgia Tech upset #7 Oklahoma State? Can West Virginia prove the selection committee was wrong by not seeding them #1 and run through their side of the bracket to the Final Four? What makes these questions so difficult for me is each of them is an EthicsPoint customer, so I'd like to see each of them do well.

If you're like me and your bracket falls apart after the first weekend leaving you to find some team to cheer on through the next few weeks, perhaps you'll find a favorite in the schools above, or one of the other EthicsPoint customers in the tournament:

• Baylor
• Butler
  
• BYU
  
• University of California
• University of California Santa Barbara
  
• Cornell
• Georgetown
  
• Marquette
• Minnesota
• Northern Iowa
• Ohio
• Ohio State
• Robert Morris
• Sam Houston
• Texas A&M
• Utah State

Congratulations and Good Luck (even to the Cal Bears) to all our customers in this year's Championship Tournament!

Standing Ovation

Image by yuichi.sakuraba via Flickr

I just read Scott McNealy's farewell letter to Sun employees and was struck by a couple of paragraphs I'd like to share:

"What we did right and wrong at Sun over the years might make for interesting reading. However, I am not a book writer. I am a husband, father of four, and a builder and leader of people who want to make a difference.

But spare me a bit of nostalgia. Not of the mistakes we made, and lord knows I made a ton. But of the things we did right and well.

First and foremost, Sun innovated like crazy. We took it to the limit (see Eagles). And though we did not monetize our inventions as well as we could have, few companies have the track record in R&D that we had over the last 28 years. This made working at Sun really cool. Thanks to all of you inventors and risk takers who changed how we live.

Sun cared about its customers. Even more than we cared about our own company at times. We looked at our customer's mission as more important than ours. Maybe we should have asked for more revenue in return, but our employees were always ready to help first. I love this about Sun, which I guess makes me a good capitalist, if not a great capitalist.

Sun did not cheat, lie, or break the rule of law or decency. While we enjoyed breaking the rules of conventional wisdom and archaic business practice, and for sure loved to win in the market, we did so with a solid reputation for integrity. Nearly three decades of competing without a notable incident of our folds going off course morally or legally. Not all executives and big companies are bad. Really. There are good companies out there. Special thanks to all of my employees for this. I never had to hide the newspaper in shame from my children."

While tempted to comment on all I find admirable in these paragraphs, I think it's better to let them stand on their own. I tip my hat to Mr. McNealy and all the employees at Sun.

2009 Most Influential in Business Ethics List

Last week I had the opportunity to spend a day with one of our newer clients, learning about their Compliance and Ethics program, goals for next year and overall philosophy on fostering a culture based on ethical decision making and caring for their customers. One of our topics for discussion was quantifying the return on their ethics and compliance programs, which is often a difficult number to ascertain. While it's somewhat straight forward to calculate time savings in various stages of the various business processes that are part of your GRC programs, it becomes more difficult to calculate the full impact. For instance, how do put a number on not being fined for FCPA violations, or not having a class-action lawsuit filed against you for bad labor practices, or increased sales from consumers who trust your business more than your competitors? It was a lively discussion, and one that I hope to have more often in 2010 as I visit more of our customers.

I was reminded of the conversation when I saw Ethisphere's 2009’s 100 Most Influential People in Business Ethics list last week. The list is comprised of people in eight different categories spanning government, non-profits, education and corporations. When you look at the names of the companies represented by these individuals and consider their market success, you can begin to get a good idea that while it may be difficult to exactly quantify the ROI of a culture of integrity, there clearly is a strong correlation between culture and business success.

I was especially pleased to see a number of EthicsPoint's customers represented on the list, and would like to congratulate the following people for their outstanding efforts and accomplishments in the field of business ethics over the past year:

• Peter Solmssen – General Counsel, Siemens
• Sharon Allen – Chairman, Deloitte
• Bill Gates – Founder, Bill and Melinda Gates Foundation
  
• Kathleen Edmond – Chief Ethics Officer, Best Buy
• Brian Martin– SVP and General Counsel, KLA-Tencor
• Pascal Bourdin – SVP, and GM of European Chocolate Business, Kraft

Congratulations to all the winners!