CRO Association Our mission is to accelerate the profession of corporate responsibility.
Issue link: http://www.e-digitaleditions.com/i/139175
CR/HR Managers and the behaviors they model demonstrate the path to success for the company's future leaders. Values-based management encourages trust, open dialogue, and transparency, and incentivizes positive behavior. Conversely, management teams that ignore undesirable behavior, or otherwise sacrifice the company values to the performance objectives of the department, will (perhaps unknowingly) perpetuate and courage non-compliant behavior and disengage their employees. Building Better Business While ensuring compliance with laws and regulations reduces the potential for legal action, fines, and reputational damage, it's also the right thing to do for business. Building a values-based culture can also have a significant effect on the bottom line. Research shows that companies with a focus on high ethical standards have better financial performance. To support and uphold the company's values, it is imperative to create The organization Ethisphere has found a clear correlation an environment of trust so that employees know the organization between ethical business practices and financial performance. It will respond positively in the face of adversity and challenge. distributes its list of the world's most ethical companies (WME) yearly. WME companies, if indexed together, have routinely Reporting resources. When issues of noncompliance arise, a wide- and significantly outpaced the S&P 500 index every year since ranging approach is necessary because violations of policies and Ethisphere started researching such correlation in 2007. law can surface anywhere in the company. Without question, employees should be encouraged to address issues directly with their On average, WME companies outperformed the S&P 500 by 7.3 management; however, even with management support, confronting percent each year. Further, the indexed WME outperformed the unethical or non-compliant issues in the workplace can be scary for S&P 500 by delivering a nearly 27 percent return to shareholders many employees. They may feel that they won't be believed, that since 2007, compared to the S&P's negative 8.5 percent their career may be put in jeopardy, or that they may even lose shareholder return during the same period. their job. For these reasons, a company should also promote and encourage the use of other channels to report concerns, such as One factor explaining this correlation to superior performance is through human resources, the law department, an internal audit, or that employees respond favorably in an environment that reflects anonymous web and phone reporting. their values, is governed by a sense of fair play, and is open to improvement. This drives engagement, which leads to better Such an empowering culture requires strong institutional productivity, more innovation, and a commitment to quality. underpinnings. The company must have adequate internal resources to investigate reports, make recommendations, and take action. Investigators have a crucial role. They look into each complaint in a A successful program that empowers employees to address noncompliance is built on a solid foundation of company values. fair and impartial way, and ensure that all issues raised are addressed. Refreshing the emphasis on culture's importance is an active They also make recommendations about actions to take, including and continuous ongoing process of reinforcing trust in the disciplinary procedures, process improvements, and increased training organization and its management. Training and communications and awareness. programs that foster education and discussion of compliance To have a successful program, employers must build trust in the process—trust that issues will be addressed fully, fairly, and confidentially, and that those who speak up to report issues and concerns will not suffer retaliation for good faith complaints. Employees must understand that reporting suspected violations or raising concerns in good faith means that they have made a genuine attempt to provide honest and accurate information, even if the information can't be substantiated or if the employee was mistaken. Training should be rolled out across the organization to reinforce issues will ensure that new employees understand the company's expectations at the outset, and reinforce the behaviors of long tenure employees. A robust reporting and investigation process can complement these goals and further empower employees. While compliance is the goal, the core message is that values are central—not ancillary—to a company's success. As more companies recognize the value of a culture of compliance, they are taking an active role in empowering their employees to be the first and best defense against noncompliance. the message that confidentiality will be protected and the company will not tolerate retaliation. Likewise, the company must send the message that abuse of the reporting process through bad faith, knowingly false accusations will not be tolerated. Christine Stickler is assistant general counsel and chief ethics and compliance officer for TE Connectivity. MAY/JUNE 2013 | www.thecro.com [31]