The E&C Pulse - April 11, 2019

April 11, 2019 LRN Corporation
The E&C Pulse | April 11, 2019
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TOPICS OF CONVERSATION
 
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Commitment to Ethics Messaging Signature of Top-Performing Programs

profile_pics_5The annual list of the World’s Most Ethical Companies was published last month by Ethisphere Institute, recognizing those organizations that are most deeply committed to creating and maintaining effective ethics and compliance programs.

To make the list, organizations are measured by their programs, policies, practices, and methodologies, with 135 companies making the list. Ethisphere found companies on the list had stock prices that performed better than those in the large-cap stock universe by 10.5% over three years and 14.4% over five years.

Ethisphere and EthicOne, its exclusive brand marketing partner for the most ethical companies list, delved into the data provided by each of the honored companies--and did extensive analysis on eight of the companies that provided additional information about how their marketing and communications teams engaged on the topics of ethics, values, trust and transparency.

Every one of the companies said their chief executive and/or board was either “more engaged” or “significantly more engaged” about matters involving ethics, values, trust and transparency than they were three years ago.

When looking at the eight companies on which it did a deep dive, it found every one of them utilized the CEO as the company’s primary spokesman for values, culture and ethics. Among this group, three-quarters said someone from the C-suite or a business unit leaders speaks at least once a month on these topics; the rest did so quarterly.

The commitment to engagement goes even further at the most-ethical companies, with more than half those that made the list saying they have daily or weekly interactions about ethics and related issues between the CEO and the marketing, communications and public relations leaders, EthicOne and Ethisphere reported. And 71% of communications and PR people, and 86% of marketing leaders, said they had regular contact with their board.

“It’s very clear that leadership is critical when it comes to communicating about being an ethical company; it’s not a grassroots sport, it’s a leadership-led effort,” said David Herrick, principal of EthicOne. “That was common across all of these: Marketing communications plays a critical role and had frequent CEO and board engagement.”

All of this is further substantiated through research conducted by LRN, in reports about board involvement with compliance, moral leadership, and program effectiveness--all of which found the more engaged and involved boards and leadership are with issues of ethics, culture and inspiring good behavior, the better likelihood of having a strong and meaningful program.

LRN’s Ethics and Compliance Program Effectiveness Report 2019 found 74% of the approximately 500 respondents said their organization has to a great degree shifted the focus of their ethics and compliance program to one based on values and not just obeying rules. Organizations that exhibit moral leadership, and operate based on their values and mission, are more likely to be more successful than those that don’t, LRN’s State of Moral Leadership in Business Report 2019 found.

A survey by Deloitte of 102 public companies who are members of the Society of Corporate Governance found 42% said their boards are increasing their focus on corporate culture, while 75% said their full board is responsible for corporate culture risk.

Using all avenues

Along with leadership signaling through words and actions the importance of the ethics and compliance message, the best organizations are speaking to employees and other stakeholders through as many channels as they can. EthicOne and Ethisphere found 75% of the full survey group using at least eight ways to communicate about ethics and values.

It is encouraging to see ethics leaders and leading companies approach ethics in the same way they approach a campaign for a new product, said Herrick. Just as a new product campaign would include advertising, public relations, social media, and internal communications, the work of promoting ethics and values requires the same commitment.

“You get to a heart of an employee or stakeholder by communicating consistently over time, all year long, in many many ways, to show how big of a priority it is for the company,” he said.

The endorsement of the board and C-suite is further hammered home by having leaders providing a personal message to announcements introducing a new code of conduct, or to kick off the next series of learnings. And 84% of companies endorse the use by leaders of their personal experiences about how they handled their own ethical dilemmas.

This reflects the evolution of the whole E&C space, said Herrick, from the “long, dry, rigid policies that they would only dig up when there was trouble, or when something bad happened," to now, where we are seeing ethics leaders who truly want to make it a part of the company's culture.

“If they can get 100,000 employees to think much more about doing the right thing and deeply considering their decisions in ethical gray areas, that will prevent far more issues than by having a highly detailed written policy tucked away on a corner of their intranet,” said Herrick.

“The storytelling by CEOs and leadership teams is part of that evolution to make ethics and values come alive in organizations. It also points to the critical role corporate communications and marketing leaders play in this transition to humanize the story of ethics, to make it tangible for everyone from a plant employee to a senior executive,” he said.

One area even the most ethical companies are struggling with is artificial intelligence. The Ethisphere/EthicOne research found while nearly all the companies on the list have a written code of conduct for how to handle and collect data, just one had a written policy to guide the use of AI. 

“What I believe will happen is leaders will emerge and best practices will start to be shared,” said Herrick. “It’s on the radar, but they were pretty clear about having a long way to go at many of the companies in addressing AI.”

 

Ben DiPietro
@BenDiPietro1
ben.dipietro@lrn.com

 

 
MIND NUMBERS
 
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Research from Ethisphere Institute and EthicOne from the World's Most Ethical Companies list found 100% of those honored said their chief executive or board was either “more engaged” or “significantly more engaged” about matters involving ethics, values, trust and transparency than they were three years ago.

 

 
WHAT'S NEWS
 

Around 4,500 Amazon.com employees wrote a letter to Chief Executive Jeff Bezos and the board asking them to take more of a leadership role in addressing climate change, Seattle Times reports.

The European Union is giving the U.K. until Oct. 31 to work out its Brexit, BBC reports.

Reuters reports Airbus in 2018 dismissed more than 100 employees and sent warning letters to more than 300 others for ethics and compliance violations.

Authorities in Indonesia arrested eight people after breaking up what they say was a huge human trafficking operation, Reuters reports.

Standard Chartered agreed to pay $1.1 billion to settle allegations with U.S. and British regulators it violated sanctions on Iran, Agence France Presse reports.

A court ruled claims made by people in Zambia that toxic runoff from a mine is ruining their lives will be heard in the U.K., the home country of the mining company, Vedanta Resources, which wanted the case heard in Zambia, Guardian reports.  

Yoshua Bengio, a pioneer in the development of artificial intelligence, said in an interview with Nature the dangers of misusing AI are "very real."

A former federal attorney writes in Washington Post about the need to better protect whistleblowers.

The World Economic Forum offers a three-step process for how to bring pay equity to an organization.

 

  

 
FROM THE
WORLD OF LRN
 
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Earlier this week, bestselling author Daniel Pink and LRN Founder & CEO Dov Seidman had a great conversation about Daniel's book WHEN and the science of timing and its impact on elevating human behavior. See clips from other #HOW Matters conversations.

VIEW THE CLIPS HERE 

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A recent story about a company taking a second look at harassment claims originally dismissed shows the need for effective compliance oversight of human resources and other functions. Learn more in LRN's latest blog post by Ben DiPietro.

CLICK HERE TO READ MORE 

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