Confidenti al Confidenti al February 23, 2012 All-Partner Community Update
Jun 23, 2015
ConfidentialConfidential
February 23, 2012
All-Partner Community Update
ConfidentialConfidential
Findings from the 2011-2012 Ethics & Compliance Survey Report
Mark HelmkampKnowledge and Solutions Leader
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
Today we will focus on: Insight into projected 2012 E&C budget and staffing levels Use of relevant E&C metrics An understanding of the top E&C priorities, challenges and the most critical
risks for 2012 Relevant trends in E&C education and communications
Preview of the Results
Key deliverables in March (middle/end): Final report with responses from more than 150 E&C leaders Webinar with two former CECOs to discuss the results and
implications Detailed industry benchmarking reports on our Ethics & Compliance
Alliance
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
35%
55%
35%
10%
1. A Growing Number of Companies Project an Increase in E&C Budgets
43%
51%
6%
Q: Not including salaries and benefits, how do you plan to allocate your E&C function’s annual budget next year? Please indicate estimated percentages for each budget item (adding up to 100 percent):
Education and Communications 27 %
Administration 14%
Consultants 9%
Technology 8%
Investigations 8%
Travel and Entertainment 7%
Risk Management 6%
Other 5%
N =172
6%
N = 172
KEY INSIGHTS 42% of E&C leaders
project their budgets will increase this year, a 7% increase compared to last year.
22% of E&C leaders expect that their budgets will increase by a margin of 2% to 5% in 2012.
Education and communications remains the biggest budget line item for 2012, followed by Administration then Consultants.
Q: For next year, your projected E&C function's annual budget will:
Increase
Remain Unchanged
Decrease
5%
53%42%
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
Remain unchanged
Incr. by 1 employee
Incr. by 2-5 employees
Incr. by 10+ employees
Decr. by 6-9 employee
Incr. by 6-9 employees
Decr. by 2-5 employees
2. Staffing Levels are Projected to Remain Unchanged
N = 17069%
1%
Q: What changes do you project in your E&C staff size next year?
KEY INSIGHTS
E&C staffing levels are projected to remain largely unchanged for 2012, continuing the 2011 trend.
ADDITIONAL FACTS 18% of participating
companies have only one dedicated E&C employee
55% of participating companies have two to nine E&C employees
27% of participating companies have 10 or more E&C employees
0
15
30
45
60
75
2%
15%
9%
69%
2% 1%
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
General Counsel / Law
CEO
Audit Committee of the Board of Directors
Other C-Suite Executives
Other
Finance
Other Board of Directors committees
Internal Audit
Risk
3. Reporting to the General Counsel is Most Prevalent
N =162
Human Resources
57%
15%
12%
5%
4%
2%
2%
1%
1%
1%
Q: To whom does the E&C function directly report to?
KEY INSIGHTS Not surprisingly, the
majority of all E&C functions continue to report directly to the General Counsel, followed by a direct line to the Chief Executive Officer.
This is also reflected in the importance of functional relationships for E&C programs. E&C leaders indicate that General Counsel / Law (96%) is of critical importance for their E&C program effectiveness, followed by the CEO (92%), Audit (89%) and Board of Directors (87%).
0 15 30 45 60
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
47%
Conflicts
of
InterestGifts
and
Entertainment
Electronic
Data
Protection
Bribery
and
Corruptio
n
Data Priv
acy
Environment,
Health, a
nd Safety
Trade Contro
ls
Government
Contracti
ng
Labor and
Employment
Antitrust
Aggregate Percentage : (5) = High Priority & (4) Moderate-high Priority
4. Conflicts of Interest is the Most Critical Ethics & Compliance Risk
Q: Please indicate your company’s most critical E&C risks.
N = 131
Scale: 5 = High Priority, 1= Very Low Priority
KEY INSIGHTS
67% of E&C leaders indicate that Conflicts of Interest is the most critical compliance risk area, followed closely by Bribery & Corruption and Gifts & Entertainment.
ADDITIONAL FACTSMost risk areas E&C leaders specified as critical in this year’s E&C survey are consistent with last year’s findings. One notable shift is the increased focus on Gifts & Entertainment with a 46% to 67% jump. The top five E&C risks from 2011 were: Conflict of Interest (72%) Data Privacy (64%) Electronic Data Protection
(60%) Environment, Health and
Safety (51%) Bribery & Corruption (50%)
0
15
30
45
60
75
63% 62%
55%
49% 48% 48%
65%67%
65%
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
5. Helpline and Investigations Data is the Top Metric Reported to the BoD
Q: What ethics and compliance metrics do you report to the Board of Directors?
ADDITIONAL FACTS 49% of participants updated
their Board on the E&C program quarterly, followed by 22% annually and 12% bi-annually.
Only 11% of participants update their Board more than four times a year.
KEY INSIGHTS
While E&C leaders almost always report tactical data on helpline trends and Code violations, they rarely discuss the year-over-year effectiveness of the E&C program with the Board of Directors.
0 15 30 45 60 75 90
Helpline and investigations Data and Trends
Code of Conduct Violations
Education Completion Rates and Certification
Key Risk Assessment and Mitigation Plans
Relevant Regulatory Developments
Ethics and Compliance-Related Dismissals
Results of Compliance Audits
Ethical Culture Survey Results
Year-Over-Year Trends on the Effectiveness of the E&C
We don’t report metrics to the Board of Directors
Other
85%
78%
70%
70%
65%
63%
53%
46%
43%
6%
1% N = 141
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
6. Promoting an Ethical Culture a Key 2012 Priority
Q: How important are the following E&C program goals to your company in 2012?
KEY INSIGHTS
The three biggest 2012 priorities for E&C leaders center on promoting an ethical culture. Increasing employee comfort with speaking up on alleged misconduct is a top goal, not surprisingly in the aftermath of Dodd-Frank.
ADDITIONAL FACTSThe 2012 priority focus on promoting an ethical culture suggests a longer term trend in which ethics and compliance programs are moving away from traditional control and risk management activities. Last year’s key priorities also focused on culture:
1. Promote Alignment Between Core Values and Day-to-day Operations
2. Increase Employee Comfort With Speaking Up
0 15 30 45 60 75
Aggregate Percentage : (5) = Very Important & (4) Important
Scale: 5 = Very Important, 1= Not Important
Increase Employee Comfort With Speaking Up
Strengthen Ethical Leadership
Promote Alignment Between Core Values and Day-to-day Operations
Manage Shifting Regulatory Expectations
Innovate Design and Delivery of E&C Education
Adapt Ethics and Compliance Program to Changing Business Needs
Strengthen the Ethical Culture
Drive E&C functional efficiency
Build a More Consistent Global E&C Program
Build a Stronger Case for Ethics and Compliance as an Enabler of Business
Performance
73%
68%
66%
64%
62%
61%
61%
57%
49%
48% N = 144
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
Aggregate Percentage : (5) = High Effectiveness & (4) High-moderate Effectiveness
Corporate Conscience (e.g., promoting an ethical culture through education and addressing employee
concerns)
Overseer (e.g., focusing on controls,
risk management and investigations)
Business Enabler (e.g., providing
advice/counsel, enabling better decision making)
7. E&C Programs Not Seen as Very Effective in Providing Business Support
N = 156
Scale: 5 = High Priority, 1= Low Effectiveness
66%
64%
58%
Q: How do you perceive the effectiveness of the E&C program in the following areas?
KEY INSIGHTS
E&C leaders perceive that their program is most effective in traditional areas of promoting culture and managing risks. Yet, they struggle to align their program with business goals.
ADDITIONAL FACTS
While 25% of E&C leaders assess their program on a need basis (e.g., because of new regulatory requirements), 44% evaluate their program annually and 14% do it every other year. 0 15 30 45 60 75
71%
67%
58%
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
Organizatio
nal
Complexity
Lack of A
ppreciatio
n of
Culture as a
Busin
ess D
river
Lack of S
upport By
Middle Management
Inability t
o Identify
Which
Initiativ
es Enhance
Cultu
re
Lack of C
lear
Accountabilit
yOther
Lack of C
EO/Board
Sponsorsh
ip
Lack of C
learly S
tated
Corporate Values
Lack of a
Clear S
tatement
of Ethica
l Standards
8. Organizational Complexity is the Largest Barrier to Promoting an Ethical Culture
N = 131
ADDITIONAL FACTS
The most critical obstacles reported in 2011 were: Organizational complexity
(58%) Lack of appreciation of
culture as a business driver (34%)
Lack of support by middle management (34%)
Q: What are the biggest obstacles to building a strong ethical culture in your company?
KEY INSIGHTS Organizational
complexity (i.e., dispersed operations) is the most significant obstacle to building a strong ethical culture.
0
15
30
45
60
75
36%
26%
21%
8% 8% 7%
40%
69%
5%
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
3%
Moderate Impact
Moderate-High Impact
Low-Moderate Impact
High Impact
Low Impact
9. A Minority of E&C Leaders Believe That Education Has a High Impact
N = 129
0
25
50
12%
40%38%
6%
Q: What impact does your current E&C education have on employee behavior and decision-making?
KEY INSIGHTS
Only 6% of E&C leaders believe that their education has a high impact on employee behavior and decision-making.
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
Relevance of Educatio
n to Day-
to-Day W
ork
Online Education
Fatigue
Limite
d Financial Resources
Cultural D
ifferences in
Global
Locations
Technology Constra
ints
Functional R
esistance
Regulatory Diffe
rences in G
lobal
Locations
Lack of Dedicated Sponsorship
From Senior Management Other
10. Lack of Relevance to Work is the Biggest Educational Challenge
N = 130
0
15
30
45
60
75
Q: What are the biggest challenges you face when providing E&C education?
KEY INSIGHTS
E&C leaders continue to struggle with making education applicable to daily work and online education fatigue, similar to last year’s challenges:
Online Education Fatigue (59%)
Relevance of Education to Day-to-Day Work (49%)
Technology Constraints (34%)
Cultural Differences in Global Locations (32%)
Limited Financial Resources (27%)
49%
34%32%
27%
15%12%
59%
9%7%
© 2011 LRN®
LRN Proprietary and Confidential. Not for Redistribution.
Intranet
E-mail campaigns
Team meetings
Print materials (e.g., quick reference guides,
brochures)
Newsletters
Web-enabled Interactive Code
Award or recognition programs
Social media
Other
11. The Intranet is Top Channel to Raise Awareness about E&C Programs
N = 131
0 15 30 45 60 75 90
87%
77%
60%
52%
46%
24%
22%
6%
5%
Q: Which communications channels do you use to raise awareness and reinforce your E&C program? Please select all that apply:
KEY INSIGHTS
The Intranet continues to be the top channel to raise awareness and reinforce E&C programs, followed by: E-mail campaigns (77%) Print materials (60%) Newsletters (52%) Team meetings (46%)
ADDITIONAL FACTS
In 2011, 84% of participants used the Intranet as a channel to raise awareness and reinforce their E&C programs, followed by: E-mail campaigns (72%) Posters (62%) Newsletters (50%) Team meetings (38%)