symposium faculty Matthew Pachman VP, Compliance-Ethics and - - PDF document

ETHICAL LEADERSHIP REQUIRES A SEAT AT THE TABLE Matthew Pachman VP, Compliance-Ethics and Business Practices Freddie Mac matthew_pachman@freddiemac.com Erica Salmon Byrne

Assistant General Counsel Corpedia esalmonbyrne@corpedia.com

symposium faculty

Today’s Schedule Symposium Topics –

• Writing/Rewriting the Code
• Process of Rewriting and Reviewing – Pitfalls to Avoid

50 Codes of Conduct Rated

• Each Code was rated by a panel
• f experts from the Ethisphere

Council

• An aggregate score was derived

through application of the following weighted subscores

• Public Availability (5%); Tone from the Top

(15%); Readability and Tone (20%); Non- Retaliation (10%); Values & Commitments (10%); Risk Topics (20%); Learning Aids (5%); Presentation and Style (15%).

Some Good Samples…

Graphic from Kellogg Code Context from GAP Code

Writing/Rewriting the Code

Overview:

Overall Structure and Design Overall Style and Language Integration with Other Aspects of the Compliance and Ethics Program Reporting, Discipline/Enforcement and Non-retaliation Risk Exposure Industry and Peer Best Practices

The Importance of Planning

Did you think about your costs and secure budget money? Did you set realistic goals and milestones?

Drafting Reviews

Legal, Human Resources, Communications, etc. CEO and senior executives The Board

Did you plan for printing and distribution?

• Hard copies

Review of proofs Mail room

Electronic version

Web (.pdf, HTML), e-mail

Values Based vs. Rules Based

Rules Policies Values Principles

Overall Structure and Design

How well structured and organized is the Code?

• Can be structured in a variety of ways:

Alphabetical Thematic Coverage, “Our Workplace”, “Our Relationship” Should be organized in a way that fits the organization’s culture

Does the Code contain a mission statement or guiding ethical principles?

• Common practice is to start the code with a values statement
• Statement must echo employees’ “real” values
• What kind of code do you want?

Overall Structure and Design

Does the Code articulate the tone from the top? Is the CEO statement adapted to the company culture and vocabulary or is it formulaic recitation?

The CEO statement needs to be written in the CEO’s voice Personalized with some well-known experience Ideally, the CEO would help to draft the statement CEO’s association with the code is only part of setting the overall

tone from the top

More Helpful – Let’s Learn from Some Less Ideal Codes…

Tone from the Top

Common Pitfalls

Tone from the Top

Common Pitfalls

Tone from the Top

Overall Structure and Design

Does the Code contain disclaimers/reminders?

The Code does not alter an employee’s status Code should note that other organizational policies exist, and

can be added, deleted, or changed

Managers and supervisors should be held to higher standards Compliance with the code is a condition of employment Make sure that this is part of the employment contract overseas?

Overall Structure and Design

Does the Code identify who is covered by the Code?

• Typically codes are developed for

directors, officers & employees

• But, a company may have separate codes
• f ethics for different types of officers
• Multiple codes run the risk of inconsistent

statement of expectations

Can have a basic code of conduct that

covers all officers along with more specific codes to different subsets of officers

• Need to consider application of the code

to contractors, temporary employees, and vendors

Overall Structure and Design

Does the Code contain a listing of available resources for

• btaining guidance and for good faith reporting of

suspected misconduct?

• Should identify ways in which employees can obtain guidance in

interpreting the requirements of the code or an organizational policy

• Identifying how an employee can make a good faith report of

suspected misconduct is essential

Hotlines Notes to the board?

Overall Structure and Design

Does the Code contain a non-retaliation commitment?

Convincing employees that they will not suffer retaliation is one is one of

the more significant challenges

A strong statement in the code is an important part of meeting that

challenge

As a matter of regulation, retaliation is prohibited

Does the Code contain acknowledgment of receipt and compliance form?

Common element is a final page that includes an acknowledgment of

receipt

Common Pitfalls

Non-Retaliation Language

Section 22 of 22 Last page

Overall Structure and Design

Does the Code provide Q&A, examples or case studies? Are topics communicated with expected behaviors/rules: do’s and don'ts?

Be judicious using dry recitations of “thou shalt nots.” The code has to be looked at as a teaching device Many employees are poor visual learners Q&A, hypothetical situations are excellent teaching devices

Common Pitfalls

Learning Aids

Overall Style and Language

Overall Style of the Code:

Written in the active voice Write at a level that is easily

digested by the target audience

Style consistent with the

target audience and company culture

Standard grammar, spelling,

punctuation

Overall Style and Language

Overall Style of the Code:

Concise and clear communication Content is constant throughout Easy and/or engaging to read How was translation done? Test-marketed?

Common Pitfalls

Document Presentation

Common Pitfalls

Document Presentation

Integration of the Code

Integration into the Compliance and Ethics Program:

New hire training Periodic re-training of employees Performance evaluations Ethics activities Publicly available

Reporting, Enforcement and Non-retaliation

Reporting:

• “Snitch Rule” -- employees must report suspected violations

Insufficient to have just an “open door” policy

Must have misconduct reporting alternatives

Clearly communicate the enforcement policy and local laws

Enforcement mechanisms need to be clearly defined

Reporting, Enforcement and Non-retaliation

Reporting

24/7/365 reporting tool Email reporting tool Non-English language

reporting tool

Risk Exposure

Code must respond to analyzed risks.

Covers areas of risk Topics must match risk profile Consistent with… The Industry The Law

The Prosecutor’s Perspective on Codes

Revised United State Sentencing Guidelines

• Effective compliance and ethics program requires more than

policies/procedures

• Entails a focus on organizational culture promoting abidance

with the law and ethical behavior

The Prosecutor’s Perspective cont…

Justice Department (Thompson Memo)

In determining whether to charge a corporation for the criminal

misconduct of its employees, prosecutors should consider “the existence and adequacy of the corporation’s compliance program.”