global ethics & compliance programs - language & culture

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Global Ethics & Compliance Programs2012 Survey Report

2011/12 Survey Report: Global Ethics & Compliance Programs2

Table of Contents Preface..............................................................................................................1

1. Building a Culture of Ethical Behavior...........................................................2 Compliance-driven or Values-driven 2 StrategiesforDevelopingtheEthics/ComplienceStaff 3 Tools for Building a Culture of Ethical Behavior 4 An Ethics Culture that is Reinforced by Managers 5 Building a Culture of Ethical Behavior—Survey Data 6-7

2. Global Infastructure: Local Representatives..................................................8 TheNetworkofLocalRepresentatives 8 ServingasaLocalRepresentative 8 CollaborationwiththeCentralEthics/ComplianceOffice 9 GlobalInfrastructure:LocalRepresentatives—SurveyData 10-12

3. Code of Conduct.........................................................................................13 CodeDevelopment 13 Translation&Localization 14 SeparateCodefortheBoardofDirectors? 15 SeparateCodesforVendors,Suppliers,andOther3rdParties? 15 CodeofConduct—SupportingData 16-18

4. Education & Awareness..............................................................................19Training-General 19ClassroomTrainingvs.e-Learning 20TrainingInternationalEmployees 21Management&EvaluationofLearning 22Education&Awareness—SurveyData 23-26

5. Monitoring, Auditing, & Reporting..............................................................27Code Development 27ReportingbyInternationalLocations 27AnonymousE-mailReporting 28HelplineAccess 28HelplineUsage 28HelplineTesting 29

Monitoring,Auditing,&Reporting—SurveyData 30-32

6. Investigations & Enforcement.....................................................................33 InvestigationsatInternationalLocations 33

DisciplinaryActionsatInternationalLocations 33Investigations&Enforcement—SurveyData 34

7. Risk Assessment & Continuous Improvement.............................................35RiskAssessment 35ContinuousImprovement 35RiskAssessment&ContinuousImprovement—SurveyData 37

8. About the Survey........................................................................................38SurveyMethodology 38SurveyDemographics 38-40Acknowledgements 41About the Sponsor 42

© 2012, Language & Culture Worldwide, LLC 1

PrefaceThe Global Ethics and Compliance Programs Survey was conducted for the first time in 2005, and again in 2007 and 2009, with minor modifications. Since its inception in 2005, the goal of this survey by LCW has been to introduce a meaningful measurement tool that can support a common discourse around practitioners’ standard practice, best practice, and innovations in the transference of corporate ethics messages and compliance standards across organizational, geographical, cultural, and linguistic boundaries. Though it is intuitive that there are unique issues associated with creating a successful global ethics and compliance program, the need for information on the topic is increasing especially because very few surveys have been done that focus on global initiatives. LCW has introduced significant additions and changes to the 2012 version of it’s survey to mirror the growth in complexity of global business, as well as how organizations have adapted their approach to global compliance and ethics. The changes are based primarily on feedback and trends identified from previous years.

The objectives of the survey have remained the same since 2005, to include: 1. Identify standards of comparison for global ethics and compliance professionals

2. Establish benchmarks and uncover best practices 3. Share results with the ethics and compliance community 4. Create a baseline to conduct meaningful research on a future periodic basis

Each section of the survey report opens with analysis and insights, followed by the presentation of specific survey data tables and charts. Additional details about survey demographics and the survey structure are included in the back of this report, while key facts and terms useful in understanding the report are highlighted here.

KEY FACTS • 147 organizations responded to the 2012 survey• 73% of respondents are based in the U.S., 13% are based in the U.K., and 4% are based in France• 20% of respondents describe their current role as “Chief Ethics/ Compliance Officer”• 63% of respondents describe their current role as Ethics/Compliance “Manager”, “Staff”, or

“Officer”• 95% of respondents report having operations in North America (greatest percentage)• 56% of respondents report having operations in Africa (least percentage)

KEY TERMS USED IN THE SURVEY REPORT

Global Ethics and Compliance Program: Given the survey’s focus on global programs, survey responses were accepted from any multinational company with operations in multiple

countries. It is noteworthy to mention that all world regions are represented as places where survey respondents reported having operations. The least amount of respondents reported having operations in Africa, the most in North America.

Home Country: For purposes of this survey, it is important to note that “home country” refers to operations within the country where an organization’s headquarters is located. Headquarter

locations of survey respondents included U.S., U.K. France, Ireland, Japan, Germany, Australia, Finland, Panama, Singapore, and Switzerland.

International: For purposes of this survey, “international” refers to operations in all countries outside the home country (or headquarters.)

Local: The survey asked about the role of local ethics/compliance representatives at responding organizations’ international locations. The distinction worth noting is that these ‘local

representatives’ are in-country resources that support the global ethics and compliance program—sometimes formally and sometimes informally—from their positions around the world.


1. Building a Culture of Ethical Behavior Compliance-driven or Values-driven?

There is on-going debate in the field as to what approach should be taken, in order to build, maintain, and support a culture of ethics within an organization. Many believe the answer lies in a ‘compliance’ or rules driven frame-work—the primary benefit being clarity and specifics as to what is and what is not allowable. Citing that no one set of rules can possibly take into account the complexity facing a global organization; instead, others have argued that the best approach is one that is a ‘values’-based approach. A values-based approach focuses more on the process of ethical decision-making as an attitude and skill that well-intentioned employees can apply to navigate complex situations that require a larger frame than prescribed in a black and white rule.

Though the debate is large and looming in the ethics and compliance field as to whether a compliance or values-based frame is preferable, when asked which approach organizations are adopting, the trend data reveals little change over the past 7 years (See Chart 1-1). As in previous years, the current data in fact still shows that the largest percentage of organi-zations (40%) describe themselves as “primarily compliance-driven, but becoming more values-driven.”

Analyzing that such a large number of organizations over the past 7 years declare themselves as ‘becoming more values-based’, one might expect to see this translate as an increase in the number of organizations that now report having actually arrived at being ‘primarily values-driven’—but that is not the case. Just 20% report being ‘primarily values-driven’ in the 2011/2012 dataset.

In fact, though 2009 data showed that 46% of respondents believed their organization was moving in the direction of becoming more values driven, there is almost no change (2%) in the number of responding organizations report-ing their current state as mostly values-driven.

It is also notable that the number of organizations that identify as being purely compliance-driven (those who were not inclined to select “compliance driven, but becoming more values-driven”) has increased since 2009 (from 12% to 21%.)

INSIGHT What explains the growth in the compliance-driven organizations? And what explains the slow movement for those working to become more values-driven in achieving that culture? 73% of respondents are based in the U.S., 13% are based in the U.K., and 4% are based in France.

One answer lies in the advantages a compliance-driven culture may have over one that is values-driven, such as the fact that compliance-driven approaches are often easier to understand, implement and measure. They can be more manageable and understandable, and thus more likely to emerge among organizations who may aspire to values-driven cultures but find them beyond their means to realize.

HIGHLIGHT48% of survey respondents reported that their Ethics/ Compliance function reports to the General Counsel. Is there a link between this trend and the compliance-based programs? Becoming a values-focus organization can be difficult for a an ethics and compliance function that reports to a General Counsel, given the inherent legal and rules-based frames that are the organizing worldview of a company’s chief attorney.


Strategies for Developing the Ethics/Compliance Staff

Building a culture of ethical behavior in a global organization requires ethics and compliance staff with the skillsets to navigate increasing levels of complexity across time zones, organizational cultures, and national borders. Indeed, one in three respondents reported ‘language and cultural differences between home-country and international em-ployees’ as their primary concern regarding the successful implementation of a global program.

From Wal-Mart in Mexico to Barclay’s LIBOR scandal in the UK, the business case has grown more compelling in 2012 regarding the need to ensure that one’s ethics and compliance staff are skilled in implementing the complexi-ties of a global program. There is an emerging urgency in how best to ensure that ethics and compliance leaders know the local cultural context well-enough to properly navigate where their global operations have to address vulnerabilities, risks, and disconnects. .

Survey respondents reported that the most common strategies for edu-cating the staff of the ethics/compliance department around global issues are: (1) having them attend seminars and workshops on the topic, and (2) providing them with subscriptions or memberships to ethics/compli-ance resources. (see Table 1-2.) While these strategies satisfy the need for awareness, they are at the same time passive by nature and do not demonstrate a commitment to skill-building in terms of how to apply this knowledge to properly navigate and guide global, cross-cultural complexity.

Two notable trends regarding strategies for developing ethics and compliance functions are (1) an increase in site visits to international locations, which have more than doubled from 24% in 2009 to 51% in 2011/2012, and (2) a decrease in cross-cultural training specific to ethics/compliance functions, which has dropped from 47% to 26% of responding organizations.

Perhaps another answer lies in the fact that 48% of survey respondents reported that their Ethics/Compliance function reports to the General Counsel. (See Table 1-1.) Becoming a values-focus organization can be difficult for a an ethics and compliance function that reports to a General Counsel, given the inherent legal and rules-based frames that are the organizing worldview of a company’s chief attorney. In contrast, a value-integration approach is often more familiar to a CEO or President, or even a Board of Directors.

There are a few questions worth exploring for the 40% of companies who report that they are becoming more values-driven, but who are not yet there after several years.• If your ethics and compliance function today reports to the General Counsel, can this be changed? If so,

is the change one your organization might consider?• What best practices can you adopt from the 20% who report being primarily values-driven—how did

they achieve a values-based culture? • What structural aspects of your program (akin to reporting to the General Counsel) might be hindering

your ability to achieve a values-based approach?

Resources for global awareness and training are not easily obtained despite assurances that the program would have those available; walking the talk is a step in the evolution of our program.”

INSIGHT What explains the decline in cross-cultural training specific to ethics/compliance functions, and what accounts for the rise in site visits to international locations—at a time when global firms as a whole are trending in the opposite direction?

One answer may be that ethics and compliance functions often operate out of separate budgets and under different structures than the rest of an organization—at times resulting in their being insulated from restrictions that apply to others (i.e. travel) and at other times resulting in a disconnect from an organization’s best practices (i.e. capacity building among key global roles.)

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For example, CIOs, sales, global sourcing, and L&D are increasingly well-versed regarding tools for cross-cultural capacity-building and leaders in these roles generally prioritize their budgets to ensure their teams are adequately developed to guarantee the success of global operations. At the same time, though, we generally see that General Counsels and ethics and compliance functions are in silos that frequently leave them out of the loop regarding what the rest of the organization is doing to build cultural competence and global skills.

There are also many cases where cross-cultural training for ethics and compliance functions was done, but was poorly executed, and thereby left many questioning its potential value given other competing priorities. This is often the case when cross-cultural training approaches have been rooted in knowledge-based, ‘about the other culture’ frames—which while helpful in satisfying curiosity and building superficial awareness, have been proven by experts to not support the level of behavioral change and skill needed to successfully navigate the worldviews and local context of international locations.

Today’s best practices for developing cross-cultural skills reveal a much greater return on the investment made when approaches are anchored in cultural self-awareness and managing cultural basis, as a necessary precondition for successfully applying country-specific information about a target culture. For organizations seeking to equip their ethics and compliance functions with skills for navigating the complexities of a global program—and ensuring that the program is locally relevant and not home country-centric—tremendous opportunity exists to:

1. Link the ethics and compliance function more closely with an organization’s global talent or learning and development leaders

2. Map the need for cross-cultural skills into job description, competency models, and development plans for those in global ethics and compliance roles.

3. Make sure that ethics and compliance staff prioritize (and are at least made aware of) the organization’s global leadership, global mindset, and intercultural competence development initiatives.

Tools for Building a Culture of Ethical Behavior

To support their program goals of building an ethical culture, respondents reported using a wide range of tools to reinforce ethics and compliance initiatives across their organizations. The top 5 tools being used both at home and at international locations continue to be: (1) the organization’s code of conduct, (2) helplines, (3) communications from senior management, (4) e-learning, and (5) classroom learning. Later sections in this report will go into the trends regarding code development, helplines, communications and learning.

In most cases, we see overall growth in the use of all tools since 2009, arguably indicating that more organizations are leveraging a larger variety of tools than previously. The only tools to decline since 2009 are the use of a compli-ance certification requirement, the use of webcasts/webinars, and the two least commonly used tools: competi-tions or reward programs to build awareness, and the use of financial rewards for reporting misconduct.

Several respondents also indicated the use of certain tools which were not explicitly listed, including web-based tools such as searchable policy databases, an “Ask the Ethics Officer” blog, an interactive code of conduct, and compliance websites or intranet portals.

INSIGHT

Why do organizations tend to use the tools they have at their disposal less often internationally?

In almost all cases, the tools being used to support an organization’s ethics/compliance program are used slightly less often with international locations (the exceptions being classroom training and compliance liaisons). Why is this noteworthy in the context of building an organization-wide, global culture of ethical behavior?


An Ethics Culture that is Reinforced by Managers

Another trend in this year’s data is that organizations are working to more fully engage middle managers in their pursuit of driving a culture of ethical behavior.

As organizations evolve in their whole-systems and organization-wide approach to driving an ethics culture, many respondents report that better engagement of middle managers is a necessary and evolutionary step in that process. Beyond training and education, working with middle management to reinforce ethical practices in day-to-day operations is required to drive any meaningful, sustainable culture change.

Although numerous respondents shared that they do not currently have formal methods of ensuring that managers are addressing ethics and compliance issues in their day-to-day roles, among those who do have formal methods, there were a wide variety of approaches used. Specifically, the following were highlighted as methods regularly used, in order to ensure that managers address ethics/compliance issues in an on-going fashion:

• Incorporating ethics/compliance components in employees’ performance appraisals and reviews structures, thereby ensuring managers and employees must focus on ethics/compliance during any review periods

• Creating “tone in the middle” by providing managers with toolkits, encouragement, and targeted training

• Providing a “leader’s guide” to accompany the code of conduct• Embedding ethics/compliance officers in each business unit• Using employee surveys to measure manager impact• Monitoring frequency of helpline inquiries by location• Leveraging managers to provide the face-to-face ethics/compliance training• Requiring an annual/regular certification by managers – confirming that

appropriate steps have been taken to meet organizational expectations for communicating ethics/compliance messages

Our analysis reveals two possible explanations: either planful bias, or unintended bias.

That is, the data may indicate a planful and strategic bias toward the headquarters country in terms of resource allocation—for example, in such cases where the international locations present a smaller percentage of the global workforce. In many cases, however, the data is likely indicative of an unconscious bias. If an organization is not intentional in its bias toward its headquarters country, a tremendous opportunity then exists for addressing the bias to assure a more effective program.

For those who have a goal to expand their program’s reach and effectiveness globally, we recommend asking:

1. What is the risk presented if our international locations lag behind the rest of the organization in the use of ethical culture- building tools? 2. Where would a shift or expansion of resources toward non-home country operations make the most sense this year, next year, and in 5 years?

In addition to training and provisions in our Code which emphasis the heightened E&C duties and example-setting obligations of managers, all employee performance ap-praisal forms include a category regarding ethics and compliance -- such that each manager must review that attribute with each employee who reports to him/her. Final performance appraisals are done annually, but progress reviews against performance criteria (including ethics and compliance) are done at least quarterly.”

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Building a Culture of Ethical Behavior—Survey Data

Chart1-1

Table1-1

Table1-2

21%12% 14% 10%

40%46% 44% 51%

19% 24% 19%22%

20% 18% 24% 17%

0%

25%

50%

75%

100%

2011/122 0092 0072 005

Primarily VALUES-DRIVEN

Primarily values-driven, butbecoming more compliance-driven

Primarily compliance-driven, butbecoming more values-driven

Primarily COMPLIANCE-DRIVEN

How would you describe your organization’s current approach to Ethics and Compliance?

2011/12General Counsel 48%CEO/President 16%A Company Officer other than CEO (e.g., CFO, COO, SVP) 14%Other 14%Board of Directors 7%A committee (audit committee, board committee) 2%

To whom does your Ethics/Compliance function report?

2011/12 2009

Attendance at seminars/workshops that focus on international ethics/compliance programs

84%81%

Subscriptions/Memberships to Ethics/Compliance community resources 84%Trainings/webinars sponsored by global ethics vendors 65% 51%Attendance at industry/ethics tradeshows and exhibitions 58% 49%Site visits to international locations 51% 24%Trainings/webinars created by internal senior Ethics/Compliance staff 48% 58%Cross-cultural training focused on Ethics/Compliance 26% 47%

Which of the following strategies are used to educate the staff of the ethics/compliance department?


Chart1-2


2. Global Infastructure: Local RepresentativesThe Network of Local Representatives

The survey asked about the role of local ethics/compliance representatives at responding organizations’ interna-tional locations. The distinction worth noting is that these ‘local representatives’ are in-country resources that sup-port the program—sometimes formally and sometimes informally—from their positions around the world.

One key finding from the survey is just how critical organizations report local representatives to be, in driving a culture of ethical behavior that is sustainable. Approximately 71% of responding organizations have local ethics/compliance representatives at their international locations.

Although this number is up slightly from 2009’s 64%, it is in the same range as previous years (70% in 2007 and 62% in 2005). Nearly ¾ of those organizations which have local ethics/compliance representatives describe that network as a formal network. (see Chart 2-5.) On the whole, this formal network number is largely unchanged over the past 7 years, but there is a significant jump in the percentage of organizations with formal networks between those orga-nizations with less than 10,000 employees, and those with more. (Note: the sample size of organizations with less than 1000 employees that have local representatives is insufficient to draw any meaningful conclusions.)

INSIGHT Who uses local representatives the most?

Generally speaking, the more complex a program becomes—we find that the use of local representatives tends to increase. For example, the percentage of organizations that have local ethics/compliance representatives grows in tandem with the size of the organization. While just over 50% of organizations with less than 10,000 employees have in-country representatives, almost 85% of the organizations with over 50,000 employees do.

Full-time or part-time local reps?

Across all sizes of responding organizations, over 60% reported full-time local representatives, that is, local reps who are fully dedicated to the ethics/compliance function. In the cases of the largest organizations (50k+ employees) and the smallest organizations (less than 10k employees), they also tend to have additional part-time local representatives. Although there are some organizations that have *only* full-time dedicated local representatives, and some which have *only* part-time dedicated local representatives, the large majority have a combination of both.

Serving as a Local Representative

Nearly two-thirds of local representatives are invited, appointed, or assigned to the role, whereas just over one quarter is hired specifically into an ethics/compliance representative role. For those organizations that do lever-age local representatives, at least twice as many come from legal, auditing, finance, and HR backgrounds, as from other functional backgrounds. Those most common functional areas identified as “other” ranged from corporate/government relations, communications, quality, environmental health and safety, and operational roles. Most local representatives (90%) serve in their role for an indefinite period of time. Respondent comments have highlighted

Who are Local Representatives?

In-country resources that support the global ethics and compliance program—sometimes formally andsometimes informally—from their

positionsaroundtheworld.


that many who are appointed or assigned into the role indefinitely will serve until such time as they are promoted or accept another position in the organization.

Collaboration with the Central Ethics/Compliance Office

While conference calls continue to be the primary method for collaborating with the central Ethics/Compliance office, the use of in-person meetings and conferences is also very high (only about 10% lower than the number of organizations that use conference calls). There has been significant growth in the use of web-based virtual collaboration tools since the 2005 survey, from a mere 2% to over 50% in the current survey (see Table 2-10). The most commonly identified form of collaboration included in the “other” category was annual summits/conferences.

A more sobering data point—given the indicators elsewhere in the survey that organizations require more collaboration to address the increasing lev-els of complexity in global ethics and compliance—is that fact that several respondents stated there were “no meetings”, “little collaboration”, or “no budget for face-to-face meetings” with their local representatives. Though such comments were the minority, the fact that some organizations lack any meaningful global collaboration with their local networks is nonetheless noteworthy.

Global Collaboration?

A sobering data point: several respondents stated there were “nomeetings”,“littlecollabora-tion”,or“nobudgetforface-to-facemeetings”forcollaboration

withlocalrepresentatives.

Though such responses were in the minority, it is noteworthy

given indicators elsewhere that organizationsrequiremore(notless)collaborationwiththeirlo-calrepresentativescurrently—iftheyaretoadequatelyaddress

the increasing levels of complex-ity and risk facing the global eth-icsandcompliancefunction.

HIGHLIGHTThe network of local representatives tends to interact with the central ethics/compliance group on a monthly basis, or as needed. Note that NO organizations indicated that the interaction was annual, which would seem to indicate that annually is not a reasonable frequency to interact and communicate with local reps.

The responsibilities of local representatives are broad and varied. Over 80% of all respondents leverage local representatives to communicate initiatives to local employees, answer questions, and provide feedback to the ethics/compliance department. Less than a quarter of all organizations leverage them for such tasks as implementing disciplinary action, conducting or assisting in training, and conducting or assisting in audits.


Global Infrastructure: Local Representatives—Survey Data

Table2-1

less than 10k 10k-50k Over 50k% with FULL-TIME local reps 63% 84% 62%

Average # of reps 4 26 100Median # of reps 3 8 14

% with PART-TIME local reps 75% 54% 86%Average # of reps 7 22 117Median # of reps 6 16 50

How many local representatives are in your network?

Table 2-2

2011/12 2009 2007 2005Auditing / Finance 67% 66% 63% 55%Country Manager / Head of business unit 29% 32% 39% 33%Human Resources / Training / Education 62% 81% 65% 57%Marketing 14% 20% - -

Legal 72% 77% 81% 71%Administrative 21% 19% - -Line staff / Production / Hourly 16% - - -Other areas 25% 18% 40% 43%

From what functional backgrounds do your local representatives come?

Table2-3

Answe r Op tio ns 2007 2009 2011/12

COMMUNICATE INITIATIVES to local employees 98% 99% 91%ANSWER QUESTIONS about company standards and policies 86% 88%Give FEEDBACK to Ethics/Compliance officer 83% 74% 85%REVIEW & ADAPT MATERIALS (communication and training) for local employees 72%Conduct or assist in RISK ASSESSMENTS 65%INVESTIGATE incidents 85% 81% 62%TRANSLATE MATERIALS (communication and training) for local employees 63% 52%CREATE MATERIALS (communication and training) for local employees 73% 69% 50%Create or approve LOCAL STANDARDS AND POLICIES 46% 54% 47%Receive or review LOCAL HELPLINE calls 55% 53% 42%Coordinate FOCUS GROUPS, pilot tests, or training roll-outs 48% 46% 40%Review AUDIT results 31% 40% 40%Implement DISCIPLINARY ACTION 43% 36% 23%Other (please specify) 9% 6% 7%Conduct or assist in TRAINING 1%Conduct or assist in AUDITS 1%

W ha t re sp o ns ib il itie s d o yo ur lo ca l re p re se nta tive s ha ve ? Ple a se che ck a ll tha t a p p ly .


NOTES:(1)Otherresponsesincluded:“doingeverythingahomeofficecomplianceofficerdoes”,ethics/compliancestrategy,provid-ingcontexttolocalleadership,andreportinglocalincidentstocentralteam.(2)Whileitappearsthatthereisanoveralldropintheextenttowhichlocalrepresentativesareleveragedformosttasks(asevidencedbythelowerpercentagesin2011/12,ascomparedto2009),thismaybeduetothefactthatthe2009surveydidnotincludeallofthetaskslistedinthe2011/12version.Therefore,itisprobablethatcurrentdataismorespecific,whilethe2009datamayhavehadlargernumberswhichwerereflectiveofbroader“categories”.

Table 2-4

less than 10k 10k-50k Over 50k

Yes 51% 73% 85%

No 49% 28% 15%

Do you have local (in-country) Ethics/Compliance representatives at your international locations?

Organization Size (# of employees)

Table 2-5

less than 10k 10k-50k Over 50k

Formal Network 47% 85% 74%

Informal Network 53% 15% 26%

How would you describe the structure of your global Organization Size (# of employees)

Table 2-6

2011/12 2009They volunteer. 2% 2%They are hired specifically for an Ethics/Compliance role. 28% 30%They are invited, appointed, or assigned. 67% 63%Other 3% 6%

How are local representatives most frequently identified?

Table 2-7

2011/12 2009 2007 2005For a specific time period (e.g., 1 year, 2 years, etc.)

10% 20% 21% 28%

Indefinitely90% 80% 78% 72%

How long do individuals serve as Ethics/Compliance representatives?


Table2-8

2011/12 2009 2007 2005Conference calls 88% 78% 76% 64%In-person team meetings/conferences 78% 61% 79% 73%Intranet/Website/Virtual collaboration 53% 40% 6% 2%Other 5% 1% 1% 5%

Aside from one-on-one conversations and e-mails, how does your network of local representatives collaborate with the central Ethics/Compliance department?

Table2-9

2011/12 2009Daily 7% 9%Weekly 15% 13%Monthly 42% 40%Annually 0% 7%As needed 35% 31%

How often do the local representatives and the central Ethics/Compliance group interact?


3. Code of ConducuctCode Development

Three things are particularly striking in this edition of the survey regarding codes of conduct among responding organizations, namely: • 86% of responding organizations have updated their code within the last 3 years, with almost half of those

organizations completing the update within the last year • Over 80% of responding organizations indicate there was some level of involvement of international locations

in the development of the code of conduct • In only 18% of cases did respondents indicate that they did not involve international locations in any way. Of

those that did involve international locations, the most common method of involving them was through pilot testing, formal reviews, or soliciting their feedback

INSIGHT

What is the lesson learned in terms of best practices for code updates?

Trends indicate that organizations place a high value on achieving a code that takes into account the local context and realities of their global operations before it is deployed. Respondents shared that the primary way in which international locations were involved in code development was by responding to a solicitation for comments (86% in 2011/2012, up from 70% in 2009) or else participating in focus groups, pilot tests or formal reviews of the code (85% in 2011/2012, up from 64% in 2009.)

With such a high percentage reporting the use of international locations in code updates, there is an opportunity for the remaining 14-15% of organizations who are doing so to consider:

• What do we stand to gain by involving international locations more centrally in the code development?

• Why are some other companies refreshing codes at such a high rate, and using international input to do so?

• How do other organizations reconcile their goal of consistency with the fact that they modify their policies and codes, to take into cultural differences and local context into account?

This last question around balancing consistency with local context can be particularly challenging for some. As an example, one respondent shared:

“As a values-based organization, we feel it is inappropriate to modify our global policy to reflect local customs or cultural differences, as this would present a regionally inconsistent view.”

Best practice organizations understand that an effective global program goes beyond a one-size-fits-all approach, and requires not only cultural adaptation but also a robust level of cultural competence. The following are recommendations for organizations who wish to create a global culture that is integrated worldwide, where employees experience consistent values-based messages across the organization:

1. Address the way that your values-based messages may be interpreted differently around the world, and enlist local counterparts in helping to address such differences in a way that neither relaxes standards, nor approves of unethical or illegal behavior.

2. Apply best practices from the fields of organizational development and culture transformation to achieve a values-based organization that is also successful worldwide.


3. Develop the cross-cultural competence, cultural agility, and global leadership skillset of those in charge of setting global policy—including your ethics and compliance staff, you’re Chief Counsel, your VPs of Talent Development, and your Executive Leadership.

For example:

• Partner them with representatives from your international locations in a reverse mentoring relationship that explores the local history, norms, culture, economy, government, and marketplace so that your organization can better anticipate where local customs—left unaddressed and unexplored—will hinder your efforts to deploy an integrated culture, unified around your common corporate values.

•Explore tools such as “Culture Detective: Global Business Ethics” in order to build cultural competence for global ethics and compliance leaders, and introduce ethnorelative frameworks for achieving a globally consistent organization that also allows reflects local customs and cultural differences.

Translation & Localization

Whether or not an organization has recently updated its code, the majority of responding organizations (60%) shared that they translate their code of conduct into at least one other language. Of those organizations, the large majority are translating the code into anywhere from 5-20 different languages. When doing translation, an over-whelming majority (approximately 83%) of organizations leverage the services of an outside translation agency to translate their code of conduct. The remaining 17% of organizations leverage internal resources – either a formal, internal translation department or informal translation teams.

A clear best practice that emerged from the survey is the fact among those responding organizations who trans-late their code into a different langauge—virtually all of them (97%) reported that they then send the translated codes of conduct (always or sometimes) to the target country for review before they are considered “final”. This serves multiple purposes. Having the target country involved in the translation review not only helps develop a local population of stakeholders to be invested in the quality and use of the code locally, it also helps to innoculate against scenarios where the code would otherwise be seen as a complete and total ‘import’ thrust upon them by headquarters.

That said, the data suggests that more can be done by many responding organizations to engage their local popula-tions in ‘owning’ and becoming stakeholders in the code. For example, although 60% of organizations translate their code of conduct, only 24% of responding organizations modify the content of their code to reflect differences in local laws, policies, customs, or cultural values. Respondents noted that in some cases, although the code is unchanged, the code does include verbiage that explains that there may be differences between local laws in dif-ferent locations. Several respondents noted that they use footnotes, additional sections, or side-boxes to highlight relevant differences in a localized/modified code of conduct. The most commonly highlighted differences related to legal differences in ethics/compliance elements such as helplines, data privacy policies, and works council re-quirements.


INSIGHT How can organizations inoculate against the code being seen as a HQ import?

A common sentiment expressed by responding organizations is that their compliance and ethics program should not be seen as an ‘import’ from headquarters and that it instead be seen as locally relevant and applicable to in-country contexts. For organizations working in this direction—i.e., hoping to make their code of conduct a tool that in which all operations feel invested and connected to—consider the following:

1. Even if English is your organization’s official working language—consider the cost effectiveness of translating your code into all or most local languages. Not only does this demonstrate to local staff your commitment to operating as a truly global organization, it also has the added advantage of making your code available for sharing to the local community, governments, and in-country vendors and suppliers.

2. Whether your code has been translated or not, and whether it has been recently updated or not—consider inviting your local population to help you identify where supplemental communication or training may be needed to support your code of conduct, by pointing out risk areas from their perspective, where for example your current code content is misaligned with differences in local laws, policies, customs, or cultural values. In this way, should you consider an update of the code in the future—you have this information ready. And if you do not update your code, you are still able to issue additional guidelines or engage in meaningful dialogue with your local operations about how to better address their local context in a way that ensures compliance with your overall program.

Separate Code for the Board of Directors?

A resounding majority of responding organizations (70%) believe there should not be a separate code of conduct for the board of directors. This is unchanged from 2009. The remaining respondents were split in their opinion on the matter—with 14% believing there should be a separate code, and 16% reporting they are unsure.

Regardless of whether respondents believe there should or should not be a separate code, only 10% of responding organizations indicated that they currently have a separate code for the board of directors, and 1% were currently in the process of developing a separate code. Of the 14% who re-sponded to the previous question indicating that they believe there should be a separate code, only one-half of them actually have a separate code.

Separate Codes for Vendors, Suppliers, and Other 3rd Parties?

Almost half (45%) of responding organizations currently have a separate code of conduct for vendors, suppliers, or other 3rd parties, while an additional 10% are in the process of developing one.

Interestingly, despite the fact that over half of the organizations have or are developing a separate code for other parties (as noted above), only one-third would actually agree to adhere to another organization’s code of conduct as part of the contracting process. That is—at a time when companies are exploring best practices for ensuring compliance among their vendors and third parties—the data reveals an intriguing contradic-tion: 67% of responding organizations said they would either not agree to adhere to another organization’s code of conduct, or else, were unsure if they would agree.

Codes of Conduct for Board of Directors

11%ofrespondingorganizationsindicated that they either have or are currently developing a separate code fortheboardofdirectors.Ofthosewho

responded there should be a separate code for the Board of

Directors, only half have one.

Follow our code, but we won’t follow yours…

67%ofrespondingorganizationssaidthateither(a)theywouldnotadheretoanotherorganization’scodeofconduct,

or(b)theywereunsure.


Code of Conduct—Supporting Data

Table3-1

Table3-2

Chart3-3

2009 2011/12

The content of the code is modified to incorporate local LAWS and POLICIES.

27% 38%

The content of the code is modified to incorporate local CUSTOMS and CULTURAL DIFFERENCES.

19% 22%

UNIQUE CODES are created at each location and approved by a central authority for consistency.

4% 2%

Other (please specify)

Other than translat ion, please describe the dif ferences between your modif ied/adapted code(s) of conduct. Check all that apply.

2011/12 2009Responded to solicitation for comments 86% 70%Participated in employee survey 21% 19%Participated in focus groups 30% 26%Participated in pilot testing or formal reviews of the code 55% 38%Provided translation of the code 38% 51%Provided local examples or cases 24% 26%

Which statements best describe the TYPE OF INVOLVEMENT in the development of your code by international locations?


Chart3-4

Table3-5

2011/12 2009Less than 5 22% 23%5-20 58% 64%More than 20 20% 13%

In how many languages is your code of conduct currently available?

Table3-6

2011/12 2009Our code was developed with NO involvement from international locations. 18% 6%Our code was developed with LIMITED involvement from international locations. 58% 46%Our code was developed with SIGNIFICANT involvement from international locations. 24% 39%Other 0% 8%100% 100%

Which statement best describes the LEVEL OF INVOLVEMENT in the development of your code by international locations?

Table3-7

83%

7%

4%6%

How is your Code of Conduct translated?

By an external translation agency.

By an internal translationdepartment.

By informal translation teams in thehome country.

By informal translation teams in thetarget countries.

2011/12 2009Our code was developed primarily by an external vendor. 4% 4%

Our code was developed by an external vendor, but adapted internally. 11% 10%

Our code was developed primarily by an internal department (e.g., Legal, Ethics & Compliance, etc.).

85% 86%

Which statement best describes HOW your code of conduct was developed?


Table3-8

2011/12 2009Yes 14% 14%No 70% 70%I'm not sure. 16% 16%

Should there be a separate code of conduct for Boards of Directors?

NOTE:The2011/12percentagesareexactlythesameasin2009.

Table3-9

2011/12Yes 10%No 89%Not yet, but one is being developed. 1%

Do you CURRENTLY HAVE a separate code for your Board of Directors?

Table3-10

2011/12Yes 45%No 46%Not yet, but one is being developed. 10%

Do you CURRENTLY HAVE a separate code for vendors, suppliers, or other 3rd parties?

Table3-11

2011/12Yes 33%No 32%I'm not sure 35%

As part of the contracting process, would your organization agree to adhere to another organization's code of conduct?


4. Education & AwarenessTraining - General

There is a clear indicator that organizations prioritize training in their global ethics and compliance programs. For example, 95% of responding organizations provide ethics/compliance training of some sort to their employees. Of those, 98% of them offer Code of Conduct training for all or some of the employees and 95% provide other ethics/compliance related training.

For Code of Conduct training, 87% of organizations have made it mandatory for everyone, while 11% have made it mandatory for certain employees or em-ployee groups. The most commonly noted groups that do not receive Code of Conduct training were described as skilled labor, unionized labor, blue collar labor, and production workers.A substantial group (25%) of respondents is currently focusing heavily on their Code of Conduct training, including finding new and unique ways to make it interesting, relevant, and impactful, and finding appropriate technologies for delivering such training.

The vast majority (81%) of responding organizations track employee completion of mandatory training with a formal Learning Management Systems (LMS). The remaining 19% of organizations use more informal approaches such as attendance rosters, verbal reporting, or a combination thereof.In general, both international and home-country employee groups are trained at similar intervals, with roughly half of all groups being trained annually. Both high-risk international and home-country employees are more likely to be trained several times each year. The board of directors, as compared to other employee groups, is generally trained less frequently than any other group.

Roughly 2/3 of responding organizations provide formal ethics/compliance communications or training to other stakeholders outside the organization. For those organizations, international consultants/vendors are the most common recipients of such information, followed by home-country consultants/vendors. There are no dramatic changes from the 2009 data, although the 2011/2012 data does reflect a continued drop from 2005 and 2007.

For other ethics/compliance-related training, 47% of respond-ing organizations provide such training to everyone, while 49% provide it only to some employees. Since 2009, there has been a decrease in the number that offer such training to all employ-ees and a corresponding increase in the number that offer it to some employees. It is unclear as to if—but nevertheless, probable—that this change reflects a more focused approach, that of providing the necessary train-ing to the relevant groups.

Approximately one-third of respondents indicated that the primary focus of their ethics/compliance training is currently anti-corruption (focusing on FCPA together with the impact of the UK Bribery Act). Although much less frequently than anti-corruption and the code of conduct, a small percentage of organizations are also focusing on other specific topics such as conflicts of interest or data privacy.

Related to the earlier discussion in this report regarding ways that organizations report driving an ethical culture by trying to increase engagement of middle managers, the survey data shows us that roughly a third of organiza-tions are currently focusing on such topics as:

When our program was established, code of conduct training was conducted in a classroom setting. The second generation was mostly eLearn-ing. We are now developing the third generation which will be eLearning as the foundational awareness for code of conduct and classroom training for managers. This approach will provide managers the opportunity to discuss case studies amongst their peers.”

[Our] organization struggles to separate compli-ance and ethics training. The learning strategies used to support a culture of compliance, obedience and accountability [are different from those used to support the] spirit of the rules and the understanding of personal values.”

“

“


• Ethical decision making, ethical leadership, and value-based behaviors• Empowering employees and enabling them to speak up (including non-retaliation education and reporting

resources)• Increasing “tone in the middle”

INSIGHT Who receives training least and most frequently?

Least Training and Communication:• The board of directors, as compared to other employee groups, is generally trained less frequently than

any other group.• The most commonly noted groups that do not receive Code of Conduct training were:

• Skilled labor• Unionized labor• Blue collar labor• Production workers

Most Training and Communication:• Among stakeholders outside the organization who receive training and communication, the most

frequent are international consultants/vendors.• The most commonly noted employee groups that receive training multiple times a year were:

• High-risk international employees• Home-country employees

Classroom Training vs. e-Learning

The rise of e-learning dependency is strong in responding organizations, with three out of four saying they rely exclusively or primarily on e-learning for their ethics/compliance training programs. Also noteworthy is the fact that 98% of respondents who use e-learning offer traditional self-paced interactive modules. Of those use e-learning, 29% report use of blended learning modalities such as videos and 26% leverage virtual classrooms which are web-based, and facilitator-led. There is a slight increase in this use of technologies that have participants interact with a live facilitator.

Based on the 2011/2012 responses, international audiences appear to receive slightly less e-learning than their home-country colleagues. Nonetheless, there has been overall growth in the number of organizations who offer in-ternational employees e-learning, especially on topics that relate to the code of conduct and general ethics-related content.

It is notable to mention that in an era of heavy technology investments for employee training and education, one in four responding organizations rely more heavily on classroom training than on e-learning tools. Moreover, there are still a few organizations (2%) who report relying exclusively on ‘live’, facilitator-led classroom training.

Classroom training, when provided, appears to be led primarily by either ethics/compliance staff or by other inter-nal resources such as line managers, HR staff, or other staff members. Only 16 to 17% of responding organizations indicated that they have used external facilitators to deliver classroom training. These numbers are fairly consis-tent with 2009 data.


When it comes to classroom training, the topics covered appear to be relatively uniform between home-country and international locations. Since 2009, there has been a marginal increase in the number of organizations that are providing classroom training to international employees on topics such as general ethics content, the Code of Conduct, and subject matter training specific to select employees. At the same time, there has been a slight decrease in the number of organizations which are providing location-specific training on key risk areas.

Training International Employees

Several trends emerge from the data regarding practices that organizations are undertaking to close the linguistic and cultural gap among their global operations, when it comes to delivering ethics and compliance related training. One example is the majority of responding organizations translate their training materials into different languages, two-thirds reported that they conduct training in the local language all or most of the time. There is also a reported increase in the percentage of organizations that are moving away from “usually providing content in English” to “mostly providing content in the local language”.

In terms of modifying training content for international locations, anywhere from 30-40% reported that they make modifications to reflect such differences as local laws and policies, customs and cultural differences, and unique region-specific risks. How did they modify the content? Of responding organizations, 65% report involving their local offices in the creation of training materials. That involvement ranged from providing comments (a practice common at 61% of organizations) down to participation in employee surveys (common at 24% of organizations). Since 2009, the data indicates significant growth in the number of organizations reporting that they leverage local offices to translate or adapt materials, as well as pilot testing and focus groups.

In contrast, one in four of the 2011/2012 responding organizations reports that they do not modify their training in any way for international locations. Similarly, one in ten responding organizations who report having a global compliance and ethics program also report that they conduct all training in only one language (i.e., either English or the language of the headquarters country). In some such cases, but not all, the native language of a given international location is the same as that of the headquarters country (for example, a U.S.-based company with operations in Australia.)

There has been an increase, from 25% to 33%, of organizations who leverage an external vendor for their training materials development. It is noteworthy that 2/3 of the organizations who leverage external vendors, re-work the materials as necessary for their organization’s specific needs. About half (46%) of responding organizations report developing their own training materials directly with their ethics/compliance department. This number is slightly lower than in 2007 and 2009.

INSIGHT

Responding organizations reported that the most difficult content on which to train international locations include:

• Anti-corruption & Bribery (including FCPA and the UK Bribery Act)• Conflicts of Interest • Applicability of US laws to non-US locations

HIGHLIGHTTwo-thirds of responding organizations conduct ethics and compliance training in the local language all or most of the time.


Management & Evaluation of Learning

The 2011/2012 survey data indicates a need for more robust tools and means for evaluating the effectiveness of ethics and compliance related training. For example, based on responses to “how do you track effectiveness”, the data indicates that a majority of respondents equate training effectiveness with program awareness. Whereas a minority of respondents equates training effectiveness with behavioral changes in reporting. In other words, training is more likely to be measured in terms of awareness building rather than achieving behavioral changes.

Respondents in 2011/2012 were also most likely to report that they are “unsure if it has been worth the investment” to train international locations on ethics and compliance topics. Given how important it is for organizations to be able to show the return on investment regarding their programs and learning budgets, it is noteworthy that so many organizations do not feel they have a way to assess if the resources spent to train their international locations has been worthwhile. Especially because a large percentage of respondents reported that the cost to train international employees was very much worth the investment in previous years.

Data shows that only half (46%) of responding organizations reported that they currently track the effectiveness of their ethics/compliance training. Among those who do, the most commonly identified methods include:

• Tracking completion rates• Employee surveys• Quizzes and assessments• Monitoring post-training reporting trends

The high number of respondents who identified surveys as the primary tool appears to indicate that organizations believe that participants are able to self-report whether the training was effective.

Approximately the same percentage of organizations that measure effectiveness also measure learner satisfaction (currently 47%). The number one most commonly mentioned factor that led to greater satisfaction was interactiv-ity. There were also numerous responses that mentioned that in-person/live trainings, especially with local manag-ers, led to the greatest satisfaction. Other factors which appear to lead to learner satisfaction included: practicality of scenarios, humor, the “entertainment value”, the flexibility/access of e-learning.


Education & Awareness—Survey Data

Table4-1

*Employeesinpositionswithgreaterrisksforethicalandcomplianceincidents(e.g.,sales,pricing,mar-keting,procurement,etc.)

Chart 4-2

Table4-3

2011/12 2009 2007

There are NO DIFFERENCES. The training is uniform, unchanged, and globally applicable. 29% 25%International content is TRANSLATED from home country materials. 55% 38% 52%International content is modified to incorporate LOCAL LAWS, POLICIES, AND PROCEDURES. 42% 45% 39%International content is modified to incorporate LOCAL CUSTOMS AND CULTURAL DIFFERENCES. 29% 30% 36%International content is modified to reflect the GREATEST RISKS in each region. 32% 35%

Please describe differences between training provided to international employees and training provided to home country employees.

Never/Not YetLess than Annually

AnnuallySeveral times

each year

Board of Directors 16% 35% 35% 8%Home country senior management 1% 27% 53% 18%Other home country employees 1% 26% 53% 20%International senior management 1% 24% 56% 17%Other international employees 1% 27% 50% 20%HIGH-RISK home country employees* 1% 15% 53% 27%HIGH-RISK international employees* 1% 15% 53% 29%

How often do the following employee groups participate in Ethics/Compliance training?


Table 4-4

Table 4-5

Table 4-6

Table 4-7

Table4-8

2011/12 2009 2007 2005We are not sure 35% 15% 23% 31%No, not worth the investment 0% 0% 1% 0%Yes, somewhat worth the investment 18% 14% 17% 16%Yes, very much worth the investment 48% 70% 60% 53%

Has the additional cost, if any, of providing training to international employees proven to be worth the investment?

2011/12 2009Code of Conduct training is mandatory for ALL employees. 87% 81%Code of Conduct training is mandatory for SOME employees. 11% 14%Code of Conduct training is NOT MANDATORY for any employees. 2% 5%

Which statement about CODE OF CONDUCT training applies to your organization?

2011/12 2009All employees receive training on other Ethics/Compliance related topics. 47% 59%Some employees receive training on other Ethics/Compliance related topics. 49% 35%We do NOT have mandatory training on any Ethics/Compliance related topics for any employees. 5% 6%

Which statement about OTHER Ethics/Compliance related training (for example, ethical decision making, topic-specific, risk-specific, etc.) applies to your organization?

2011/12By a formal Learning Management System (LMS) 81%By keeping and submitting attendance rosters 10%Informally, by verbal or written reports from trainers/managers 4%A combination of the above 5%

How is employee completion of mandatory training programs tracked?

2011/12 2009 2007More training of all types 50% 47% 12%Less classroom training; more e-training 22% 37% 52%No significant changes have been made 16% 10% 29%Less e-training; more classroom training 6% 4% 8%Other (please specify) 4% 1% 1%Less training of all types 2% 1% 0%

Which of the following statements best describes how your ethics/compliance training delivery has changed since the inception of your program?


Table4-9

Home Int'l Home Int'lGeneral ethics training 65% 65% 45% 47%Code of conduct training 73% 74% 68% 68%Training on location-specific risk areas (e.g., gift giving, IP, etc.) 66% 68% 79% 77%Subject matter training for selected employees 75% 76% 77% 71%Other (please specify) 0% 4% 0% 7%

20092011/12

What type of classroom training is used to support your ethics / compliance program? Please check all that apply for both home country locations and international locations.

Table4-10

Home Int'l Home Int'lTraining presented by Ethics/Compliance staff 80% 78% 83% 82%Training presented by line managers, HR, or other staff members 63% 74% 77% 75%Training presented by external (3rd party) facilitators 17% 16% 17% 15%

20092011/12Who typically leads classroom training?

Table4-11

Home Int'l Home Int'lGeneral ethics e-learning 60% 58% 47% 47%Code of conduct e-learning 87% 86% 82% 84%E-learning on location-specific risk areas (e.g., data privacy, FCPA, etc.)

75% 73% 85% 84%

Subject matter training for selected employees 64% 61% 62% 61%Other (please specify) 0% 1% 3% 3%

2009

What type of e-learning tools are used to support your ethics / compliance program? Please check all that apply for both home country locations and

2011/12

Table4-12

What types of e-learning does your organization leverage?2011/12

Self-paced interactive modules (e.g., which requires participants to click through, answer quizzes, etc.) 98%Videos/Non-interactive modules (e.g., which do not require participants to perform any actions) 29%Virtual classrooms/Webinars (e.g., which require participants to communicate with a live facilitator) 26%

Table4-13

2011/12 2009 2007 2005Home country customers 25% 17% 24% 30%Home country consultants/vendors 47% 46% 62% 54%International customers 26% 20% 22% 24%International consultants/vendors 49% 50% 59% 54%Joint Venture partners 42% 38% 55% 48%None of the above 35% 36% 0% 0%

Which of the following stakeholder groups have received formal communications or training on your ethics/compliance initiatives?


Table4-14

2011/12 2009 2007Developed by ethics/compliance office 46% 68% 56%Developed primarily by an external vendor, but re-worked internally 22% 4% N/ADeveloped primarily by an external vendor 11% 4% 25%Developed primarily by legal/corporate counsel 10% 14% 8%Other 6% 9% 9%Developed independently from the ethics/compliance office by international locations 3% 0% 1%

Which of the following statements best describes how your training materials were developed for international employees?

Table4-15

2011/12 2009Responded to solicitation for comments 61% 59%Participated in pilot testing of the training program 54% 33%Translated training materials 46% 34%Adapted training materials 39% 23%Participated in focus groups 31% 20%Participated in employee survey 24% 26%Other 8% 6%

How were international employees involved in the development of training materials?

Table4-16

2011/12 2009 2007 2005Yes, always 18% 20% 16% 12%

Yes, most of the time (with occasional English*-language training for certain topics or certain groups, such as senior managers)

48% 37% 40% 35%

No, it's usually in English* (with occasional local-language training for certain topics or certain groups, such as laborers)

22% 30% 30% 35%

No, all training is conducted in English* 9% 7% 8% 8%Other 2% 7% 6% 9%

Is training for international employees conducted in their local language?

Table4-17

2011/12No 54%Yes 46%

Do you track the effectiveness of your training?


5. Monitoring, Auditing, & ReportingCode Development

The data shows that organizations are putting substantial resources into making anonymous e-mail systems and helplines available to all employees—those in their headquarters country, as well as those located in international locations. At the same time, the data shows that some resources are not widely used by employees to communi-cate violations, questions, and risks regarding how well a company’s ethics and compliance standards are being followed. In fact, the survey data shows a clear decline in the use of some tools by international locations. The survey data below is first presented with a focus on reporting by international locations, and then by the differ-ent types of reporting tools being made available.

Reporting by International Locations

Most reporting by international employees appears to be done through direct reporting to a manager or supervi-sor (34%). The anonymous helpline was the second most common (with 32%), followed by e-mail (with 27%). Although “web-based reporting” was not an option, there were several respondents who mentioned this as being used most often – which if taken in addition to the “e-mail” option would bring it up to the nearly the same level as the anonymous helpline.

There were also numerous responses under “other” which reported that much of the reporting by international employees is to local ethics/compliance reps.

Over one-half of responding organizations report that international locations appear to report misconduct less often than employees in the home country locations.

The most commonly identified reasons for underreporting at international locations include (1) cultural differences towards reporting (either attitudes about reporting on co-workers or differences in what is considered mis-conduct), and (2) fear of retaliation from co-workers or managers (which is linked to the belief that the report will not be kept confidential).

Retaliation continues to be an important concern for employees around the globe. Of the responding organizations, 65% identified it as a concern either globally or in specific regions/locations. This is very similar to 2009, when 69% of organizations believed it to be a concern globally or in specific regions/locations. Approximately one-third of responding organizations do not believe retaliation is a significant concern at this time.

When asked if it was possible that there was actually less misconduct at international locations, only 9% of respon-dents indicated that this may be a possible reason for less reporting.

Organizations identified a variety of methods for managing the perceived under-reporting by international loca-tions, the most common of which included:

• More frequent or ongoing training and awareness campaigns, emphasizing the importance of reporting (including the process and outcomes of reporting)

• More frequent or ongoing messaging around the existence and availability of the helpline• Using a 3rd party helpline (and publicizing the 3rd-party independent status of the helpline) or re-branding

the current helpline• More frequent or ongoing messaging about the organization’s non-retaliation policies

HIGHLIGHTAlthough over half of responding organizations believe international locations report misconduct less often, fewer than 10% of all organizations believe it is because there is actually less misconduct occurring. This would seem to indicate that misconduct is indeed occurring, but is not being reported to the extent the organization would like.


Anonymous E-mail Reporting

The survey data shows a strong and growing trend among organizations in terms of offering anonymous e-mail to employees, with 78% of responding organizations reporting they offer such a system. This reflects a slight but con-sistent increase since 2007, when 68% of organizations indicated they had such an e-mail reporting system in place.

However, an increasing number of responding organizations in this year’s survey also indicate that the usage of their anonymous e-mail reporting systems by international em-ployees is limited or non-existent. Specifically, 42% described the usage by international locations as limited or nonexistent com-pared to 30 to 33% in previous years.

Helpline Access

Overall, 94% of responding organizations have a helpline available to international employees. Notably, trends emerge as to how likely a company is to have a helpline available to international employees, depending on the organization’ size. For example, organizations with less than 1000 employees are much less likely to have a helpline available to international employees, while 100% of responding organizations with 1,000-10,000 employees report having such a helpline and roughly 95% of organizations larger than 10,000 employees report having one.

There has also been a 25% increase in the number of organizations reporting that they offer local or toll-free access to their helpline for international employees – up from roughly 60% in 2007 and 2009, to 85% in 2011/2012.

INSIGHT How do we address helpline access among a global, multi-lingual workforce?

• The most common response from respondents (73%) was to provide interpretation services on the helpline. • The 2nd most common response was to have helpline calls answered locally, in the local language. • Additional responses included: (a) having separate mailboxes for select countries with large non-English speaking populations, or (b)

promoting the helpline as English only, and e-mail reporting for non-English or English language reporting• A few respondents also reported English-only helplines, stating, for example:

- English is expected to be the operating language of their organization - All local employees are believed to “speak English” even if it is not their native language

Helpline Usage

Overall, usage of the helplines by international employees appears to be declining. According to current respon-dents, 47% of organizations indicated that usage was limited or nonexistent, and 10% believed that the number of calls was decreasing. Both of these numbers are higher than in 2009. The percentage of organizations that have perceived an increase in calls has dropped from 55% to 43% since 2009. When it comes to comparing helpline us-age between international and home-country locations, nearly one-half of respondents indicated that international employees do not use the helpline as frequently as home-country employees. This number is relatively consistent with 2009 numbers.

HIGHLIGHT42% of responding organizations indicate that the usage of their anonymous e-mail reporting systems by international employees is limited or non-existent.


INSIGHT What accounts for helpline usage going up or down?

Survey respondents attributed an increase in usage to their organization’s efforts such as: increased communications about the expectations for reporting, increased ethics/compliance program visibility, increased publicity of the helpline telephone numbers, and general awareness campaigns. In addition, survey reposndents reported a link between increased usage of the helpline and the degree to which they are encouraging its use as a source of information – not only as a reporting mechanism. They also attributed an increase in helpline usage to factors such as reinforcement of its confidentiality and anonymity, a growth in the number of international employees/locations, availability of multiple languages, and availability of new toll-free numbers.

Survey respondents attributed a decrease in usage to: greater use of web-based reporting, poor efforts to advertise, addition of other non-reporting tools for employees, and clarification of the purpose of the helpline (which led to the helpline no longer being used for minor issues such as employee/manager disputes, etc.)

Why might usage vary between international and home-country employees?

Of the respondents who stated an opinion as to why usage might be different, the most commonly mentioned reason was “cultural differences”. Other reasons commonly shared by respondents were: an insufficient amount of awareness at international locations, disproportionate number of employees either internationally or domestically—which skews the numbers, and the fact that international employees appear to be less confident with raising issues locally and therefore seek to use resources such as a helpline.

Helpline Testing

The two most common methods for reviewing the effectiveness of the helpline include analyzing trends by type of incident and geographic location. There has also been a notable increase in the number of organizations which report relying on their helpline vendor’s internal quality controls (up from 24% in 2009 to 40% in 2011/2012). Consistent with previous years, approximately 50% of responding organizations test their helpline regularly (quar-terly, annually, etc.). The percentage of organizations that have never tested their helpline has dropped from 20% in previous years to 9% in 2011/2012. Several respondents also indicated that their helpline has not been reviewed or tested because it is too new or operated by their parent company.


Monitoring, Auditing, and Reporting—Survey Data

Table6-1

Table 6-2

Why do you believe international locations tend to report misconduct less often?

Answer Options POSSIBLY NOT LIKELY POSSIBLY NOT LIKELY

There is less misconduct at international locations 9% 91%International employees don’t believe corrective action will be taken 68% 28% 58% 42%They don't know whom to contact 51% 44% 52% 48%They don’t trust that the report will be kept confidential 84% 11% 70% 30%They fear retaliation from coworkers 71% 26% 63% 37%They fear retaliation from a supervisor or manager 87% 10% 73% 27%They have limited access to reporting mechanisms such as e-mail or private 33% 64% 28% 72%There are cultural differences regarding what is considered misconduct 90% 7% 74% 26%There are different cultural attitudes toward reporting on co-workers 90% 10%There is a lack of information or training 45% 51% 40% 60%Language barriers prevent reporting 46% 50% 41% 59%

2009 2012

Table6-3

2012 2009 2007Yes 78% 71% 68%No 22% 29% 32%

Do you have an anonymous e-mail reporting process available to employees?

Table 6-4

2012 2009 2007Usage limited or nonexistent 42% 33% 30%Number of e-mails increasing slightly 31% 39% 45%Number of e-mails increasing greatly 11% 9% 13%Number of e-mails comparable to home country usage 16% 19% 11%

Which of the following statements best describes usage of your e-mail reporting process by international employees?

2012 2009 2007The usage of the helpline is very limited or nonexistent 47% 40% 42%Number of calls is decreasing 10% 4%Number of calls is growing 43% 55% 47%

Which statement best describes helpline usage by international employees?


Table 6-5

How are e-mail reports handled?2012 2009

E-mail reports are sent to the Ethics/Compliance office 71% 70%E-mail reports are translated and reviewed by the Ethics/Compliance office 32% 31%

E-mail reports are sent to a local contact who communicates the report to the Ethics/Compliance office

15% 7%

E-mail reports are handled entirely by the local office, with involvement from the Ethics/Compliance office only if needed

7% 13%

Table 6-6

2012 2009 2007Yes 94% 95% 92%No 6% 5% 8%

Do you have a helpline available to international employees?

Table 6-7

2012 2009 2007Via a local or toll-free number 85% 62% 61%Via an international or operator-assisted call 9% 20% 24%Via an internal company extension 2% 7% 6%Other 4% 11% 9%

How do international employees access your hotline?

Table6-8

2012 2009Yes 31% 33%No 48% 50%I do not know 21% 17%

Do international employees appear to use the hotline as frequently as home country employees?

Table6-9

2012 2009 2007We analyze trends by type of incident 64% 54%We analyze trends by geographic location 59% 57% 66%We monitor responsiveness to calls 43% 43% 55%We rely on our helpline vendor's internal quality controls 40% 24%We test quality of interpretation 18% 21% 21%We do not currently test our hotline 9% 13%

How do you review the effectiveness of your helpline? Please check all that apply.


Table6-10

2012 2009 2007We analyze trends by type of incident 64% 54%We analyze trends by geographic location 59% 57% 66%We monitor responsiveness to calls 43% 43% 55%We rely on our helpline vendor's internal quality controls 40% 24%We test quality of interpretation 18% 21% 21%We do not currently test our hotline 9% 13%

How do you review the effectiveness of your helpline? Please check all that apply.

Table6-11

2012 2009 2007We test it annually 50% 56% 60%We test it when an issue arises 20% 0% 0%We have never tested the helpline 9% 20% 20%We tested it once 8%Other 14% 14% 7%

How often do you formally test your helpline?

Table6-12

2012 2009Reporting directly to a manager/supervisor 34% 10%Anonymous Helpline 32% 46%E-mail (to the Ethics/Compliance office) 27% 22%Other 15% 6%Telephone call (to the Ethics/Compliance office) 7% 17%

Which reporting mechanism appears to be used most often by international employees at your organization?

Table6-13

2012 2009 2007International locations appear to report misconduct LESS OFTEN. 58% 61% 65%International locations appear to report misconduct EQUALLY as often. 25% 24% 28%International locations appear to report misconduct MORE OFTEN. 17% 15% 7%

Which of the following statements best describes the reporting done by international locations? (compared to home-country locations)


6. Investigations & EnforcementInvestigations at International Locations

The data shows that organizations are putting substantial resources into making anonymous e-mail systems and Although slightly more respondents (48%) acknowledge there are sometimes different investigation procedures for international locations, it is not signifi-cantly more than the number that report uniformity across home-country and international locations (43%).

INSIGHT Is there an emerging trend toward standardization of investigation procedures and protocols?

Several survey respondents added comments on this topic, suggesting a trend towards standardization of the investigation procedures and protocols in their organizations. Such comments included these:

• “New investigation protocols are causing uniformity now. Not necessarily always the case before the written protocols”

• “We aim for consistency”• “We are now consolidating and standardizing all disciplinary recommendations under the Chief Eth-

ics and Compliance Officer (CECO)”

Disciplinary Actions at International Locations

A slight majority (52%) of organizations report that their disciplinary actions vary by location/country/culture. This is a marked increase from 2009, when only 21% reported that disciplinary actions varied. Respondents commented that this is due primarily to local employment law or limitations from local/regional/national governments.

Several respondents shared details about their efforts to strengthen investigations and enforcement globally. For example, one respondent elaborated:

“Weareplanningtoundertakeglobalcommunicationstoinformallemployeeswhatprocesshappensiftheyreportmisconductandwewillconsidergivingexamples(atahighandanonymisedlevel)oftheoutcomesofreported incidents.”

[We are] working to increase communication to International locations encouraging open communication and emphasizing no tolerance for retaliation. (My organization) will be adding follow up messages to our helpline, encouraging reporters to callback in and report instances of retaliation.”

Good communication and trust are keys to a successful program. We are trying to increase the due diligence process to identify issues early.”

We have compliance committees for each region and business unit.” “

“

“


Investigations & Enforcement—Survey Data

Table7-1

2012Investigation procedures tend to be uniform across all locations, both at home and globally. 43%There are sometimes different investigation procedures at international locations. 48%I do not know or am unfamiliar with our organization's investigation procedures. 8%

Which of the following statements describes the investigation of misconduct?

Table 7-2

2012 2009Disciplinary actions tend to be uniform across the globe. 36% 53%Disciplinary actions vary by location/country/culture. 52% 21%I do not know or am unfamiliar with our organization's disciplinary actions. 12% 27%

Which of the following statements best describes the disciplinary actions for misconduct?


7. Risk Assessment & Continuous ImprovementRisk Assessment

A clear majority of responding organizations (64%) indicated that local in-country representatives were engaged in the risk assessment process. Of those that involve local representatives, the most common methods for gathering their input include:

• Annual/regular formal risk assessments for each global business unit

• Annual/regular questionnaires/surveys• Interviews and feedback• Task Forces

• Regional/international compliance committees

Continuous Improvement

A large majority (79%) of responding organizations report receiving feedback and input from international loca-tions, either formally or informally, to help improve their ethics/compliance program.

Over two-thirds of responding organizations measure the effectiveness of their program by gathering informal feedback, utilizing employee surveys, benchmarking with other organizations, conducting internal audits, and ana-lyzing and trending data about reports/incidents.

The top concerns in 2011/2012 revolve around the idea of integrating the ethics/compliance program into daily operations. This includes such challenges as getting the necessary resources to run the program effectively and finding a way to communicate the ethics/compliance message in such a way that there is broader buy-in. Numerous organizations also report challenges in evaluating the program and in navigating the legal, cultural, and linguistic differences that exist globally.

INSIGHT Training for High-Risk employees?

The survey results show that the majority of responding organizations target high-risk employees for ethics and compliance training each year—and one in four provides training for this group with even greater frequency (see Table 4.1). Specifically:

• 53% of survey respondents reported that high-risk employees both in the home-country and interna-tionally receive ethics and compliance training annually

• 29% reported that high-risk employees internationally receive training multiple times a year• 27% reported that high-risk employees in the home country receive trainings multiple times a year

There is a formal risk assessment done every 1 or 2 years for each busi-ness unit and global function.”

[We are] reinforcing tone from the top, to show that this is mandatory and non-negotiable.”

“

“


INSIGHT What one recent improvement to your Ethics/Compliance program do you believe is most important?

Responses to this question from 2011/2012 survey respondents prompted a range of comments. For example, one respondent stated that there has been “no improvement” and that their program is “actually worse” than in previous years. Responses include:

• Simplificationofonlinetools,rulesandrequirements• Greater engagement by senior management• Engagementofourcompliancecommitteerepresentatives• Improvedcommunicationconcerningthehelpline• Increasedcommunicationregardingethics• PlantorebrandtheHotlineandincreaseemphasisontonefromthemiddle.• Multiplelanguageability• Engagementofourcompliancecommitteerepresentatives• Newcommunicationsvehicles• Updatingthetraining• Reinforcingtonefromthetop,toshowthatthisismandatoryandnon-negotiable• Ethics&compliancechampionsprogramwithinformallocalethicsandcompliancereps• Collaborationandbuyinfromalllocations• (Ethicsandcompliance)wasformallyrecognisedasoneoffourstrategicprioritiesforthecompany• Improvedcommunications• ComplianceProgramAssessment• Under new management• Just placed a person in the compliance role within the past year


Risk Assessment & Continuous Improvement—Survey Data

Table8-1

2011/12No 36%Yes 64%

Are your local in-country representatives engaged in the

Table8-2

2011/12Yes, informally 64%Yes, through a formal process 15%No 21%

Do your global operating locations provide input or feedback to the improvement process for your ethics/compliance program?

Table8-3

2011/12Improved Ethics/Compliance team worldwide 31%Improved or new Training 27%Improved or new Code of Conduct 17%Improved department/reporting structure 13%Other 9%Improved communication 3%

What one recent improvement to your Ethics/Compliance program do you believe is most important to the continued success of your global program?

Other responses included: simplification of online tools/rules/requirements, multiple language abilities, collabo-ration from local offices/local representatives, increased tone in the middle, and greater engagement from senior management and committee representatives.

Table8-4

2012Gathering informal feedback 73%Employee surveys 72%Benchmarking with other organizations 71%Internal audits 69%Data analysis and trending of reports/incidents 65%Data analysis and trending of other data 48%External audits 32%Focus groups 26%Testing and evaluation 20%

How do you measure the quality and effectiveness of your Ethics/Compliance program?


8. About the SurveySurvey Methodology

The 2011/2012 survey was originally opened in August of 2011 and closed in October 2011. Additional interest led to reopening the survey in January of 2012, and it was closed again in March 2012. Over 50% of the responding organizations participated during the winter 2012 window. Assistance was provided in getting the word out about the survey by the Ethics and Compliance Officers Association (ECOA), The Institute of Business Ethics (IBE), and The Greater Houston Business Ethics Roundtable.

The 2011/12 survey included a combination of 74 multiple-choice and open-ended questions. Some of the ques-tions in the 2011/12 survey were modified to increase clarity, and to decrease the number of responses that are not encompassed within the multiple choice answers, thereby reducing the number of open-ended “other” responses. In some cases, this has affected direct comparisons with results from previous years. Other questions may also lack comparative data from previous surveys. This is due to the addition of new questions in each subse-quent survey, as well as the elimination of certain questions that were outdated or did not provide insight or value. As to be expected, not all respondents answered all of the questions, either because they self-selected out (e.g., by indicating that they did not translate any materials into other languages, those respondents were not included in any of the data around languages and translation), or because they chose not to answer certain questions or sec-tions. Percentages presented are all rounded to the nearest whole number. Some open-ended responses have been edited for clarity.

Respondents represented organizations with operations in all world regions (ranging from 95% which had opera-tions in North America, to 56% which had operations in Africa). Global programs among respondents notably also took different forms. For example, several respondents represent organizations which have operations in multiple countries, but which are all English-speaking countries. Also noteworthy, several respondents represent organiza-tions which are global, but which have minimal locations (and employees) outside the home-country.

Survey Demographics

2011/12Ethics/Compliance Manager or Staff 37%Ethics/Compliance Officer 26%Chief Ethics/Compliance Officer 20%Other 6%VP/SVP/Director of Ethics/Compliance 3%VP/SVP/Director/Staff of Corporate [Social] Responsibility 3%Internal Audit department 2%General Counsel / Associate General Counsel 2%

Please describe your current role in your organization.

Under 1,000 7 5%1,000-10,000 32 22%10,001-50,000 54 37%Over 50,000 54 37%

2011/12Number of employees in your


Wha t ind ustry b e st d e scrib e s yo ur o rg a niza tio n?

2011/12

Advertising 0%Aerospace 7%Agriculture 0%Apparel & Accessories 0%Automotive 1%Banking 1%Biotechnology 2%Business Support Services 1%Chemical 1%Computer 5%Consulting / Professional Services 4%Construction / Engineering 4%Consumer Products 3%Defense / Security / Government Contracting 6%Entertainment 0%Finance / Accounting 5%Food & Beverage 3%Government / Government Agency 1%Grocery 0%Health Care / Medical Devices 5%Hotels / Hospitality 1%Insurance 4%Legal 0%Manufacturing 12%Mining 1%Not-for-profit / Development 2%Oil / Gas / Energy 4%Pharmaceuticals 5%Publishing 0%Real Estate 0%Retail 3%Sports 1%Technology 7%Telecommunications 3%Tobacco 0%Transportation 1%Utilities 5%Other (Please describe) 0%


Acknowledgements

Language & Culture Worldwide would like to express sincere gratitude to the following organizations for their valued assistance in getting the word out about this survey.

Ethics & Compliance Officer Association (ECOA)The Ethics & Compliance Officer Association (ECOA), based in Waltham, Massachusetts (USA), is a non-consulting, member-driven association exclusively for individuals who are responsible for their organiza-tion’s ethics, compliance, and business conduct programs. The ECOA brings together worldwide members who are new to the field, as well as those with years of experience to share. The ECOA provides members with ethics, compliance, and corporate governance resources, access to an extensive network of ethics and compliance professionals, and a global forum for the exchange of ideas and strategies. To learn more about the ECOA, please visit www.theecoa.org or phone +1 (781) 647-9333.

The Institute of Business Ethics (IBE)The Institute of Business Ethics (IBE), based in London, England, is a registered charity in the United King-dom established to encourage high standards of corporate and business behavior and the sharing of best practices. Since its founding 20 years ago, the IBE has published over 20 books on business ethics topics, conducted surveys on the use of codes of ethics within companies, and developed training programs in business ethics from induction programs to the boardroom. The IBE offers advice and support to business ethics practitioners and their companies and works with academics and business schools to promote the study of business ethics within MBA and business studies courses. To learn more about the IBE, visit www.ibe.org.uk, phone +44 (0) 20 7798 6040, or e-mail [email protected].

The Greater Houston Business Ethics RoundtableThe Greater Houston Business Ethics Roundtable (GHBER) is a voluntary professional organization dedi-cated to promoting ethical business practices and serving as a forum for the exchange of information and strategies regarding implementation, administration and compliance of ethical business conduct programs. To learn more about the GHBER, visit http://ghber.org.

LCW would also like to thank Greg Triguba (Compliance Integrity Solutions, LLC) and Diana Lutz (STEELE) for their tire-less assistance in the creation and analysis of the survey structure and questions.


About the Sponsor

LCW (Language & Culture Worldwide, LLC) is a cross-cultural research, training, and consulting firm based in Chicago, Illinois (USA). LCW specializes in helping organizations adapt their ethics and com-pliance messages to be more effective across cultural, linguistic, and geographic boundaries. To learn more about LCW, visit www.LanguageAndCulture.com.

For more information about the 2011/12 Global Ethics & Compliance Programs Survey, to request parsed data, or for copies of previous surveys, please contact LCW:

Language & Culture Worldwide, LLC4753 N. Broadway St. Suite #518Chicago, IL 60640 USAPhone: +1 (773) 769-9595

©2012, Language & Culture Worldwide - www.LanguageAndCulture.com

l’éthique

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2011/12 Survey Report: Global Ethics & Compliance Programs

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2011/12 Survey Report: Global Ethics & Compliance Programs

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