Survival of the most informed

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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!