honorable intentions: why compliance assessments fall short€¦ · honorable intentions: why...

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1 Honorable Intentions: Why Honorable Intentions: Why Compliance Assessments Compliance Assessments Fall Short Fall Short SCCE Utilities & Energy Conference March 2, 2009 Catherine Finamore Henry, MBA, CIA The Agenda The Agenda SmartPros Legal & Ethics, Ltd. 2 Our Responsibility The Evidence The Opportunity Best Principles The Common Good Approach The Culture Connection The Trailblazers

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Page 1: Honorable Intentions: Why Compliance Assessments Fall Short€¦ · Honorable Intentions: Why Compliance Assessments Fall Short SCCE Utilities & Energy Conference March 2, 2009 Catherine

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Honorable Intentions: Why Honorable Intentions: Why

Compliance Assessments Compliance Assessments

Fall ShortFall ShortSCCE Utilities & Energy Conference

March 2, 2009

Catherine Finamore Henry, MBA, CIA

The Agenda The Agenda SmartPros Legal & Ethics, Ltd. 2

� Our Responsibility

� The Evidence

� The Opportunity

� Best Principles

� The Common Good Approach

� The Culture Connection

� The Trailblazers

Page 2: Honorable Intentions: Why Compliance Assessments Fall Short€¦ · Honorable Intentions: Why Compliance Assessments Fall Short SCCE Utilities & Energy Conference March 2, 2009 Catherine

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Our Responsibility Our Responsibility SmartPros Legal & Ethics, Ltd. 3

� Consideration for relevant legal risks

� Regulator expectations

� FSGO §8B2.1

The Evidence The Evidence SmartPros Legal & Ethics, Ltd. 4

� Fannie, Freddie, sub-prime mortgages, housing crisis

� Tennessee Valley Authority

� AIG, Lehman Brothers, Merrill Lynch, IndyMac

� Car Czar

� Madoff, Nadel, Forte, Schrenker, James…

� Satyam Computer Services

� Global economic crisis

� $780B bailout

� Limits on executive pay

� Bill Richardson, Timothy Geithner, Tom Daschle, Nancy Killefer

� Davos

Page 3: Honorable Intentions: Why Compliance Assessments Fall Short€¦ · Honorable Intentions: Why Compliance Assessments Fall Short SCCE Utilities & Energy Conference March 2, 2009 Catherine

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The Opportunity The Opportunity SmartPros Legal & Ethics, Ltd. 5

� Wake-up call

� Best practice is not best practice

� Rebuild and restore

� A seat at the table

SmartPros Legal & Ethics, Ltd. 6

Best Principles

Organisation for Economic Co-operation and Development (OCED)

“Corporate governance is one key element in improving economic efficiency and growth as well as enhancing investor confidence. Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.”

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SmartPros Legal & Ethics, Ltd. 7

Best Principles - OCED

I. Ensuring the Basis for an Effective Corporate Governance Framework

II. The Rights of Shareholders and Key Ownership Functions

III. The Equitable Treatment of Shareholders

IV. The Role of Stakeholders in Corporate Governance

V. Disclosure and Transparency

VI. The Responsibilities of the Board

SmartPros Legal & Ethics, Ltd. 8

Best Principles

Principles of Corporate Governance

OCED

Risk Assessment, Response & Remedial Action

Incentives & Discipline

Values & Culture

Measuring, Monitoring, Auditing & Reporting

Training & Communication

Personnel Screening

Authority, Responsibility & Structural Alignment

Standards & Procedures

Compliance & Ethics Program

Page 5: Honorable Intentions: Why Compliance Assessments Fall Short€¦ · Honorable Intentions: Why Compliance Assessments Fall Short SCCE Utilities & Energy Conference March 2, 2009 Catherine

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The Common Good Approach The Common Good Approach SmartPros Legal & Ethics, Ltd. 9

Honor

Ethics

Compliance Doing things right

Doing the right thing

Looking for the right thing to do

The Common Good Approach The Common Good Approach SmartPros Legal & Ethics, Ltd. 10

Organization

Primary Stakeholders

Secondary Stakeholders

Compliance, Ethics & Honor

Organization

Primary Stakeholders

Compliance & Ethics

OrganizationCompliance

Business Focus

Page 6: Honorable Intentions: Why Compliance Assessments Fall Short€¦ · Honorable Intentions: Why Compliance Assessments Fall Short SCCE Utilities & Energy Conference March 2, 2009 Catherine

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The Common Good Approach The Common Good Approach

SmartPros Legal & Ethics, Ltd. 11

Organization

Primary Stakeholders

Secondary Stakeholders

Compliance, Ethics & Honor

Organization

Primary Stakeholders

Compliance & Ethics

OrganizationCompliance

Business Focus

Risk Assessment, Response and Remedial Action

Incentives & Discipline

Values & Culture

Measuring, Monitoring , Auditing & Reporting

Training & Communication

Personnel Screening

Authority, Responsibility & Structural Alignment

Standards & Procedures

Compliance & Ethics Program

The Culture Connection The Culture Connection SmartPros Legal & Ethics, Ltd. 12

A four year study of 9 - 10 firms in each of 20 industries, carried out by Kotter and Heskett of Harvard Business School, found that firms with a strong adaptive culture based on shared values, outperformed firms with rigid or weak cultures by a significant margin.

Source: Corporate Culture and Performance, Kotter and Heskett, 1992

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The Culture Connection The Culture Connection SmartPros Legal & Ethics, Ltd. 13

• Which of the following values and behaviours most represent who you are?

• Which of the following values and behaviours most represent who you are?

• Which of the following values and behaviours most represent how your organisation operates?

• Which of the following values and behaviours most represent how your organisation operates?

• Which of the following values and behaviours most represent how you would like your organisation to operate?

• Which of the following values and behaviours most represent how you would like your organisation to operate?

Three questions:

Measuring Culture

The Culture Connection The Culture Connection SmartPros Legal & Ethics, Ltd. 14

Service

Making a Difference

Internal Cohesion

Transformation

Self-Esteem

Relationship

Survival

Service to Humanity

Societal focused. Compassionate. Future Generations

Collaboration

Strategic alliances, employee fulfillment, mentoring, environmental care.

Community Involvement and Development

Positive corporate culture, shared vision and values, personal integrity.

Continuous Renewal

Learning, innovation, adaptability, employee participation.

Being the Best, Best Practice

Productivity, efficiency, quality, systems and processes, self-respect.

Relationships that Support the Organization

Honest and open communication, respect, camaraderie

Feeling Safe & Secure

Financial Stability, Health and Safety

Values Framework

Barrett Values Centre

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The Trailblazers The Trailblazers SmartPros Legal & Ethics, Ltd. 15

� Built on shared values, principles and platforms

� Benefits include:

◦ Integration and collaboration

◦ Empowerment in the field

◦ Innovation

◦ A stronger basis for partnering

◦ Motivation

Source: Transforming Giants, Harvard Business Review, January 2008

IBM, Procter & Gamble, CEMEX, Banco Real, Cisco