honorable intentions: why compliance assessments fall short€¦ · honorable intentions: why...
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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
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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
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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
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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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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
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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
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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
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The Common Good Approach The Common Good Approach
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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