The E&C Pulse - September 18, 2019


Sept. 18, 2019

BFFs: Nurturing the Compliance-Board Relationship


As boards become cognizant of the need to be focused on ethics, compliance, corporate culture, and inspiring better behavior, they need to build open, honest and enduring relationships with their ethics and compliance teams. 


LRN in 2018 conducted research with chief ethics and compliance officers of major corporations in the U.S. and Europe about their relationship with their board, and the news was not encouraging. We found:

- 52% of respondents estimated their boards spend two hours or less a year on ethics and compliance; one-third stayed under that two-hour limit even when accounting for time spent on ethics and compliance in board committees;

- 40% said their board didn't receive education and training related to E&C in the past year; and

- Nearly 6 in 10 chief ethics and compliance officers said they don’t collect any metrics on ethical culture; for some of those that do, metrics may just include answers to one or two questions on general employment surveys.

What that means is most CECOs feel their boards don’t fully understand the ethics and compliance programs they are supposed to be overseeing, they feel most boards don’t go into depth on E&C programs and outcomes, and they say boards need a more systematic approach to their E&C oversight.


But E&C has a role to play here, too, including creating better understanding of board members about why E&C matters, getting on the agenda, connecting E&C issues to the bottom line, and setting ethical expectations.


I was fortunate to moderate panel this week at the annual conference of the Society of Corporate Compliance and Ethics featuring Joan Ruff, chair of the AARP board of directors, and AARP's ethics and compliance chief Ellen Hunt.


The two women shared insights on how they were able to forge a trusting and effective working relationship, and provided thoughts on how other E&C pros can initiate, cultivate and nurture positive relationships with their boards and the individual directors.



Ruff said one of the best ways to get time with the board is to ask for it. "Get time on my calendar," she said. "Start building that trust, then it's easy to reach out and have a discussion after that." This open dialogue is one of the things Ruff said she likes most about her relationship with Hunt.


Ask is also the advice Ruff offers if a CECO isn't sure what the board wants to hear from them. Business unit leaders too often don't want to approach the board unless they have polished and perfected presentations, when Ruff said what the needs more is ongoing conversation. "You are spending too much time trying to look perfect, when what we really need is your brainpower," she said.


Hunt said it's important to remember to paint E&C issues in a way that they are understood as business risks by the board, because that is what the board is focused on. "So when they talk about strategy and enterprise risk, it includes ethics and compliance," she said. "That has made a huge difference in the type of dialogue we have."


To help keep the board informed, Hunt shares articles, trends, and talks to the chair of the audit committee before every meeting to go over what is on the agenda and why.


"You're there to help them. You have information that is going to be helpful to them as they make decisions about what kinds of risks the organization is going to take, or not take," said Hunt. For boards to effectively carry out their fiduciary duty to the company, they must realize "ethics and compliance is there to help build the organization, not tear it down."



                                                                                                          BEN DIPIETRO




Are Boards Equipped to Handle Disruptive Technologies? Disruptive technology comes with a number of risks, often unexpected or inadvertent, that include ethical concerns and failures. 




Tune into the latest episode of Principled podcast where Lockheed Martin Corporation's SVP of ethics and enterprise assurance, Leo S. Mackay, Jr. shares his insights on collaborative commitment to ethics that go beyond the law.






A survey of 400 men by Fairygodboss Inc. found 88% said they want to help women advance in the workplace, but 56% expressed uncertainty with what type of support to offer, and how to offer it. 




Having women serve on a board helps to temper the overconfidence of male chief executives, researchers write in Harvard Business Review.


Nearly 150 chief executives sent a letter to leaders of the U.S. Senate demanding action to help deter gun violence, New York Times reports. Levi Strauss CEO Chip Bergh writes in Forbes about why he signed the letter. Richard Levick calls CEOs stepping into the void left by lawmakers "mercantile activism."


New Jersey will stop doing business with gun manufacturers that don't extend their policies beyond what is required under federal law, New York Times reports.


California passed into law provisions that could allow independent contractors to become full-time employees of companies, New York Times reports.


Organizations need to prioritize inclusion above diversity, Pritika Padhi writes in Workforce.


Deloitte shares insights from AARP's Scott Frisch and Joe Pugh about how the organization determines and then manages its risk appetite, and also examines changes to biopharma compliance caused by digital transformation.


Mike Volkov looks into the current state of the partnership between compliance and internal audit.


Eight CEOs share their thoughts with Fast Company on the importance of staying upbeat during a crisis.


A startup has many factors to work through when creating a board, and National Law Review offers some key business and legal matters for them to consider.


Axios explores the question of whether the concepts of human rights and spyware can ever be reconciled, while Time looks at Microsoft's efforts to restore trust to Big Tech.


Whistleblower Edward Snowden tells Guardian the biggest surveillance threats lie ahead, as artificial intelligence focuses more on behavior and pattern recognition.




"Even the most rational approach to ethics is defenseless if there isn't the will to do what is right."


-Alexander Solzhenitsyn, Russian novelist and historian



Thank you to everyone at the Society of Corporate Compliance and Ethics for another successful conference, and for all the time and effort they put in to make it such a worthwhile event. It's always good to catch up with old friends, and make new contacts, and there's always something to learn at the many sessions and panel discussions. It's through conferences such as this one that the ethics and compliance profession gains stature, and helps promote the importance of ethical behavior in business.  





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