I am attending the Global Ethics Summit 2010, hosted by Dow Jones and Ethisphere. Here are my notes, live from this session:
Let’s face it: compliance is usually seen as a cost center. While there’s been some good and interesting research about the positive impact on the business of a good ethical culture and brand, that message has not permeated everywhere. So in tough economic times, those responsible for their company’s compliance programs are forced to do more with less. How do you work with a smaller budget without sacrificing the quality or effectiveness of your efforts? And what are the best companies doing to demonstrate the value of and return on their own efforts?
Speakers:
- Ronnie Kann, Managing Director, CELC, Corporate Executive Board
- Alexandra Wrage, President, Trace International
- Keith Abrams, Vice President & Associate General Counsel, Bayer NA
- Dean Krehmeyer, Executive Director, Business Roundtable Institute for Corporate Ethics
- Jeremy Wilson, Senior Manager, Ethics Office, Cisco Systems
Resource Allocation
Jeremy looked to collaboration to help maximize resources. Start by figuring out resources you have internally to limit external expenditures. Cisco has lots internal technology resources. Take advantage of your technology resources. They leverage internal social media tools to help communicate with employees and managers. Since they own WebEx they do lots of videoconferencing.
Dean is seeing the compliance and ethics trying to push activities upward to get boards and C-level executives more involved in their programs. There is an emphasis on making the business case.
Keith pointed out that there as much interest throughout organizations to do the right thing. The board is sometimes behind.
Alexandra pointed out that in a time of decreasing budgets, legal and compliance should not have a disproportionate cut. Working with shoddy partners and illegal conduct has real business costs.You need to make compliance business-relevant.
Enhancing the Program
Look to your peers and competitors to show what others are doing. Complying with regulations are important but meeting the level of your industry is even more important when the practice exceeds regulatory standards.
Storytelling is important. Stories are one of the best ways to demonstrate corporate culture.
Risk Management
The 2008 financial crisis had a much bigger financial loss than the Enron era wave of corporate governance changes. The outrage is bigger also. But we are not seeing as many perp-walks and prosecutions. The crisis may have been more about failures of risk management than a failure of corporate governance. You still need ethics and compliance to be a fundamental part of corporate operations.
We need to make it clear that bribery is not a victimless crime. It sometimes seems that it does not have the headline issues of environmental violations. Hopefully, the SEC and DOJ prosecutions will cause companies to focus on the dangers of bribery. The result is not just fines, but people are going to jail for bribery.
Broken Trust
How can your company help restore the public trust in it? It’s a business issue. You should have your ethics and compliance program show the lead in restoring that broken trust. Show your internal employees how you are restoring trust so it will be apparent externally. Empower your employees so they know the answers.
Strategic Implications
It’s hard to tap into the business processes. Compliance is usually outside the flow of business processes. Don’t talk “at” people. You need to engage them and have a dialogue. If the issues were easy, they wouldn’t be issues.
Alexandra points out that compliance has an important role when entering new markets. There are natural allies in the markets to help deter bribery. Bribery is theft and increases the costs to consumers. She has case studies and reports that shows that you can succeed by not paying bribes. You have to go with a strong message at the beginning. After the first time you pay a bribe, the government officials will line up with their hands out.
There are lots of stakeholders who were damaged by the current corporate ethics wave. More than the Enron-era corporate ethics wave. Companies need to find the balance between innovation and compliance. You don’t want to be a barrier to new business (as long as it is ethical and compliant.)